Energy industry warns Morrison power plans would disrupt market was the story to begin the week in the AFR. Meridian Energy Australia chief executive Ed McManus said that the government intervention risked crowding out investors from the energy market and creating a “spiral effect”:
- “The more the government do things, the more private investors hold back. The more private investors hold back, the more there is a need for government to do things,” he told The Australian Financial Review.
“You get in a position where, looking out several years, the market as we know it disintegrates. When that happens you need very, very deep pockets to fill the gap.”
The Commonwealth government under the tutelage of PM Scott Morrison and the minister for lower power prices Angus Taylor appear to have seriously spooked the market.
Giles Parkinson goes into some detail; about two meetings Taylor had with industry last week in Industry wants capacity payments, as Taylor pushes for new “24/7” power.
- The first didn’t turn out well, with the big retailers rejecting his demands that they cut the level of standing offers, agreeing only on the formulation of “comparison rates” that a consumer might be better able to comprehend.
Just by the way, Victoria’s power networks have just been granted a $30 pa increase by the regulator from January 1, and a draft ruling indicated NSW may increase by $70 for the same reason. Much of the power bill is outside a retailers control, and yelling at them won’t change that.
The second was:
- to get feedback on the Coalition government’s equally controversial proposal to underwrite new investment in “dispatchable generation”, which he defines as 24/7 power, and which many fear is a de-facto call to extend the life of ageing coal generators, or even investment in new facilities.
“24/7 power” seems to be the new buzzword along with “dispatchable”. Perhaps no-one has told him that coal is not particularly dispatchable.
He told the meeting his move was driven by the fact that he could see no investment in dispatchable generation.
- Taylor wants a formal tender for this new investment to be locked away before the next election, and is rushing through the process, calling for submissions to be tendered by the end of this week.
Taylor wants legislation setting up his new powers through the parliament this year. See Taylor confirms race is on to get new coal or gas finalised before federal election.
RenewEconomy was told that:
- the conversation was dominated by Trevor St Baker, the co-owner of the Vales Point coal powered station in NSW that Sunset Power picked up for a bargain. Sunset now wants to extend the life of Vales Point , and is also looking at the Goat Hill pumped hydro project in South Australia.
Of concern was the fact that AEMO, who have been doing forward planning for the NEM, was not consulted and were not at the meeting:
- RenewEconomy understands that AEMO will be consulted once Taylor advances his program and “it gets into actual projects and their viability.” The consultation paper released last week was written by Taylor’s department.
Parkinson points out that AEMO does not speak of 24/7, nor do utilities like Origin Energy who plan to exit coal. AEMO speaks only of the need for “dispatchable” and flexible capacity.
The industry is now pushing back against Taylor’s plans. See:
We also have Woodside’s Peter Coleman slams Australia’s ‘abyss of indecision’ on energy. Who would have thought that the likes of Woodside, BHP and Rio would be calling for a carbon tax? As international operators, these firms know how the world is moving.
However, Coleman does seem to be making a play for using LNG as a fuel to move mineral ore on land and sea, which does not accord with the urgency of reaching zero net emissions.
It’s ironic that the main reason the Commonwealth is involved in electricity markets is their external affairs powers and the fact that they have signed up to the Paris Agreement. Yet they see no need to take action to meet their Paris commitments.
I posted in some detail last month on the National Greenhouse Gas Inventory for March 2018, but did not then have this neat table available:
It comes from the November release by The Australia Institute Climate & Energy Program of their released the latest National Energy Emissions Audit.
My wife heard Taylor on the radio this morning spruiking that meeting our emissions reduction targets was a breeze and all in hand.
The table above shows what happens when you are doing nothing. Who was the Minister for the Environment again? Ah Melissa Price. A quick check shows she’s been busy saving a parrot, heritage listing, cleaning up marine debris on the Great Barrier Reef, and appointing a new chair of the Great Barrier Reef Marine Park Authority. All good and worthy and fills in the day, so she doesn’t have to think about existential threats to life to animal life or the world burning.
See for example:
In the middle of this Victorian Opposition Leader Matthew Guy said a Liberal state government would underwrite a new power station by agreeing to buy the output to run the state’s rail and hospital networks in a tender.
That’s 500 MW of power, when Kane Thornton CEO of the Clean Energy Council pointed out that:
- there were 19 wind, solar, battery and pumped hydro projects under way in Victoria to deliver over 3200 MW of new generation worth more than $5 billion, largely driven by the national and existing Victorian renewable energy targets.
At least Mr Guy said it could be hydro, wind solar, gas, coal, battery or any combination that produced firm power 24 hours a day, and was not plugging coal as such.
However, politics on the right in Australia is so ignorant and/or wrong-headed about climate change and developments in energy that business operators who have other options could well regard Australia as a funny farm, best avoided.