Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

My electorate, Grey, is the home of some of Australia’s greatest natural resources. Enormous reserves of energy, particularly clean energy, will become increasingly important to the nation’s future. Not only do we have the world’s largest uranium deposits, destined to become increasingly important in a world that is focusing on trying to reduce carbon emissions, some of the best wind generation sites in the world and an abundance of sunshine; we also have some of the best geothermal rock formations in the world. It is about this resource that I wish to speak today.

I took the opportunity during the winter parliamentary recess to visit Geodynamics’ operation at Innamincka in far north-eastern South Australia. Innamincka, population 12, is by any measurement remote. It is over 600 kilometres from a population centre of more than 500 people, apart from the itinerant population working in the Moomba gas fields. Under the sandy ridges of the arid landscape lie beds of radiogenic granite, with uranium deposits embedded in the granite. The natural decomposition of this material provides a heat source which superheats the rock. This granite is located more than four kilometres underground. The company, Geodynamics, with some help from the previous federal government, has raised the capital to purchase a purpose-built drilling rig and has now successfully dug two wells and is currently working on a third. The costs and risks are enormous. This is venture capital of a special sort, investment in a future which will offer rewards for all. How much more expensive electricity is to become as a result of an emissions trading scheme is at this stage unknown, but we do know the world’s reserves of fossil energy are finite and we need new energy sources.

At Innamincka, Geodynamics have succeeded in moving water 550 metres underground at an operating depth of more than 4,200 metres. The water is pushed down one well to full depth and then forced through the natural structure of the rock at high pressures, causing the fissures to fracture, which allows the now superheated water to be retrieved at a paired well, in this case 550 metres away. Current testing indicates that that distance can be extended up to 1.25 kilometres. When the water is recovered at the surface, it is at a temperature of around 200 degrees Celsius. This energy will be harvested using a heat exchange system and the water will then be pumped back down the hole again. It is very early days in this process, but it is thought the fields will operate and supply energy for at least 25 years, after which they will be rested for around 100 years, by which time they will have reheated.

The best estimates for the price of this new source of energy indicate that electricity will be only marginally more expensive than the current generation costs of coal. This makes geothermal one of the truly competitive alternative fuel sources and, even more importantly, it provides the ‘Holy Grail’ of clean generation—it generates baseload energy. It is almost unique and the reserves are in the hundreds of years. All this is incredibly positive; however, the risks and costs are very high. Five kilometres is a very deep hole by anyone’s standards and the rock is incredibly hard. The drilling rig, which, as I said, is purpose-built, can drill continuously for around 36 hours before it must be pulled back to the surface for the drilling head to be replaced. This operation takes up to 2½ days. It takes up to six months to dig one of these wells and, with drilling costs at well over $100,000 a day, all this amounts to very expensive holes indeed.

Geodynamics have invested over $100 million in this operation thus far and will have a pilot one-megawatt generator operating by early next year supplying the power to the operation and the town of Innamincka. The next step is a 50-megawatt generator and transmission lines linking the nearby Moomba gas production area. These steps will prove and refine the technology. From there, the plan is to build a 500-megawatt generator linking to the mainstream South Australian network through Roxby Downs and Port Augusta. The advances in modern high-voltage DC power transmissions, which can now deliver power with losses of less than five per cent per 1,000 kilometres, will make this all achievable.

The challenges for the project and others like it are the short-term investment mentality of our economy. Very few investors are willing to back the long cycle. Much of Australia’s investment capital is tied up in superannuation funds. It is a competitive market and consumers demand high annual returns. What we need to get right for Australia is not just how we finance the geothermal industry but how we encourage our financial institutions to invest in the longer term vision. Setting an investment framework so investors get the return they need but, more importantly, Australia gets the development in the visionary, nation-building projects that we need to maintain our position in the world in the face of increasing competition will present challenges to all of us—but we must get it right.