Furious debates about whether to sell electricity assets and what should be the level of the RET highlight the need for an integrated national energy strategy. [31 March 2015 | Peter Boyer]As we know, money makes the world go round. It’s driving today’s two big energy issues, the level of Australia’s renewable energy target and the disposal of state-owned electricity assets.
Focusing attention in energy circles like never before is a looming threat to the income of power utilities, both publicly and privately owned, and regulated protection of that income.
The nervousness around the industry has been stoked by persistent talk of lower network demand and locally-generated renewable electricity making stranded assets of transmission networks and power stations, especially those powered by coal.
But myth and misinformation prevail in this dispute just as they do in so much of what passes for public debate about climate and energy in Australia.
Discussion of the NSW government’s plan to lease state-owned transmission assets is crying out to be broadened to cover the whole future of electricity generation, distribution and use in Australia. Until this happens, old misconceptions and mistakes will keep recurring.
The debate should include Australia’s high proportion of old, inefficient, highly-polluting thermal power stations. In the lead-up to the Paris climate summit in December we’re facing growing international pressure to close down these dinosaurs within a few years.
We also need to revisit the concept underpinning Australia’s established electricity systems, including Tasmanian hydro power: centrally-managed networks delivering electricity from a small number of large-scale power stations.
Today’s debate includes a sly subtext that coal power and the grid represent poor people’s energy while rooftop solar is for rich people. One of those arguing along these lines is Paul Simshauser. Simhauser is professor of economics at Griffith University; he’s also AGL Energy’s chief economist.
AGL Energy was listed as a “top 10 climate polluter” in an Australian Conservation Foundation report published this month. Since September 2014, when it acquired another major generator, it’s been responsible for more carbon emissions than any other Australian company.
Existing tariffs for rooftop solar electricity, which no-one denies disrupt the existing electricity market, are in Simshauser’s eyes a cross-subsidy to renewable energy paid largely by low-income power consumers. If so, this is a significant equity issue.
But “subsidy” is a loaded term. We could instead say that households with solar panels are being pressed to help pay for an error not of their making: a bad company decision, made in times of plenty, to spend up big on new poles and wires that are now being under-utilised.
This has all been going on against the background of a furious, fraught debate about the future of the government’s large-scale Renewable Energy Target (LRET), under which it is currently bound to a 2020 target of 41,000 gigawatt-hours of electricity from large-scale renewable sources.
Environment minister Greg Hunt said before the 2013 election that his party’s policy on the RET was the same as Labor’s, but the government’s post-election policy of lowering the target is the principal reason for an alarming fall in large-scale renewable investment over the past year or so.
This is happening in the face of an expanding global clean energy market. Wherever you look – in Europe, North and South America, China, India, the Middle East and Africa – the trend toward renewable power is undeniable. As it is among both business and home energy users in Australia.
That last point was brought home in an energy efficiency forum in Hobart last week co-sponsored by the Clean Energy Finance Corporation (CEFC) and the Commonwealth Bank. This is the same CEFC that the Abbott government sought to abolish until thwarted in the Senate last year.
The forum showed how businesses replacing or converting old plant using new, largely renewable technologies could recover costs in just a few years. Clear trends included contractor-owned hybrid systems including solar-battery systems, and, notably, a more fragmented electricity grid.
The Abbott government sought to show through the 2014 Warburton Review that renewables push up power prices. But the evidence to the review showed the opposite: that a strong RET had the effect of keeping power prices down while a reduced RET would have the opposite effect.
Members of the industry’s peak body, the Clean Energy Council, are now shedding jobs as the uncertainty continues, which is why the CEC sought to resolve the issue last week by putting a compromise proposal mid-way between the positions of the government and the Labor opposition.
Industry minister Ian Macfarlane rejected the proposal but public opinion and global trends say he should reconsider – and start work on a whole new energy paradigm for Australia.
TONIGHT from 6 pm Climate Tasmania is presenting the first of a series of public forums on current science and a policy vision for Tasmania. In the Aurora Theatre, Institute of Marine and Antarctic Science, Castray Esplanade, Hobart.