It appeared an irresistible political proposal — a wave farm that would harvest the seemingly endless energy generated by the ocean and power homes in a marginal electorate, the idyllic WA south coastal town of Albany.
But while renewable energy projects can make headline-grabbing election promises, like Opposition Leader Bill Shorten’s solar battery promises last week, it can be tricky to live up to the hype once you are in government.
That is one of the lessons the WA Labor Government led by Mark McGowan has been learning about the downside to selling a renewable energy dream.
The Albany wave energy project that the then-opposition leader promised before the 2017 WA election would turn Albany into a globally recognised renewable energy hub, create hundreds of jobs and power homes is now looking increasingly uncertain.
This week, the McGowan Government threw the company driving the project, Carnegie Clean Energy, the latest of several lifelines since it won a competitive tender in October last year.
Aside from Carnegie, its investors and the Government, many want the project to succeed, from Albany residents to the local council, from wave energy developers to renewable energy supporters.
But its problems could be a cautionary tale for any government tempted to flick the switch on that irresistible energy election promise.
Why would you invest in this technology?
The WA Government — and Regional Development Minister Alannah MacTiernan in particular — argued that it was important for governments to help emerging technologies become commercial successes.
“We are in a state with wave technology where solar power was around 20 years ago,” she said.
“For us to help this homegrown WA technology to have an opportunity to break through and be competitive, it does need Government investment.”
But renewable energy analyst Peter Strachan argued public money should not go towards such big research and development projects.
“I think the public needs a better bang for its buck,” he said.
“It’s all well to encourage new technologies, and we must do that, but when it comes to building $30 million, $60 million projects, I don’t know that that’s the best space.”
When the power fizzles out
When an election commitment involves a promise to power homes and put renewable energy into the grid, it would not be unreasonable for shareholders and taxpayers to assume the technology is already at a commercial scale.
Yet there is no requirement in Carnegie’s contract to produce any particular amount of energy.
Carnegie shareholders have complained the company has never publicly announced how much energy its previous incarnation of the technology, dubbed CETO 5, generated at its much-hyped trial at Garden Island.
It said it produced energy into the grid and was the only company in the world to deploy and keep large-scale wave units in the ocean over four seasons of the year.
This project was supported by more than $13 million from the Australian Renewable Energy Agency (ARENA), but the agency would not release any progress reports.
Ms MacTiernan also would not say how much energy was produced by CETO 5.
“I have seen some results,” she said.
“They indicate that CETO 5 took the project to a certain phase and now there is a revised model that hopefully will be, and is designed to be, more productive.”
Carnegie chief executive Jonathan Fievez could not provide details either.
“I do not have that off the top of my head,” he said.
Mr Fievez, the company’s former chief technology officer, said producing energy was not “the main game” at Garden Island.
“It’s not about quantity of energy produced, because these are demonstration projects that are there to take the technology forward, so that when we are deploying at a large scale we are producing energy at the most cost-effective level,” he said.
Milestones missed and payments on pause
Carnegie is considered Australia’s leading wave energy company, but it hit a financial storm this year.
It recently failed to meet the milestones of its contract with the WA Government, with the Albany project looking increasingly unlikely to start producing electricity by the start of next summer.
The company now has until February to prove it can fund its $26 million share of the project.
Both the WA Government and the company say the Federal Government’s plans to cap a research and development tax incentive have jeopardised Carnegie’s ability to finance the project.
The Grattan Institute’s energy director, Tony Wood, said it was a concerning sign that Carnegie was yet to meet its first project milestone.
The company applied to claim its first $5.25 million milestone, but the WA Government only agreed to make a $2.6 million partial payment because the company had only met half of the requirements.
“[That] the first milestone — which is actually you would think one of the easiest milestones, to begin the procurement process for the infrastructure — hasn’t been reached yet is certainly worrying, if not highly questionable,” Mr Wood said.
Ms MacTiernan was determined the project would be built.
But she said the company would not receive any further payments until it proved it could fund its share of the project.
Assuming it generates some power, can you actually use it?
WA’s main power grid — the South West Interconnected System, which supplies Albany — is already struggling to cope with an excess of energy, largely thanks to cheap solar and wind power.
Documents obtained under Freedom of Information show that it was not clear, even to the Government’s own energy utility Synergy, how the wave energy would be fed into the grid before the project was put to tender.
Some potential applicants thought they would be able to connect to the grid via Synergy’s wind farm at Grassmere, near Albany.
“Connection via an Albany Grassmere wind farm substation is not possible due to current capacity issues,” said Synergy’s then-manager of public affairs and corporate communications, Doug White.
“Curtailing existing wind turbine generation in order to accommodate a wave project is also not an option.
“And there seems to be an expectation that Synergy will enter into an offtake agreement with the successful proponents.
“Unfortunately, as there has been no consultation with Synergy in regards to the projects and the EOI projects, we have been flying a bit blind.”
Even once there is a connection, there is no guarantee the WA grid has any capacity to take the wave power generated.
But Carnegie had already told the market that it would build “Australia’s first commercial wave farm” in stages, starting with a 1 megawatt unit, followed by a 20MW wave farm which could lead to a 100MW expansion.
Sources have told the ABC Carnegie has only contacted Western Power about a 1MW connection to trial feeding its wave power into the grid — and any connection for more than this would be potentially uneconomic for the company.
Could the problems have been foreseen?
The WA Opposition has argued the problems which have hit the project could have been foreseen with a business case.
Mr Wood has also questioned why the Government did not prepare a business case to assess the risks of a $19 million project.
While he acknowledged it was not unusual for oppositions to make promises which were not properly scrutinised, he said they had a responsibility to taxpayers once elected.
“It’s incumbent on the new Government to have a hard-headed look with the advice of the department which they then have in government, which they didn’t have in opposition, to properly assess the overall program and make sure the resources, the checks and balances, all the things we would expect of our governments, are then put in place,” Mr Wood said.
The WA Government has argued a business case was not required because it was a research and development project.
“You don’t develop, ever, business cases for these R&D projects because by its very nature, the government investment is in fact there to try to de-risk what is an unknown, in terms of the ability for this project to become commercial,” Ms MacTiernan said.
When asked whether bureaucrats had raised any concerns about Carnegie’s finances before it won the tender, Ms MacTiernan said the company had been recommended as the top applicant.
“The advice we got was that was the company that had been selected,” she said.
“They had gone through a process and this was the company that they believed was best suited to deliver the project.”
Carnegie now has to come up with a funding plan to prove why it should continue to be backed by the Government.