The expected glow at Friday’s final gathering of energy ministers for 2023 in Perth won’t just be from a record heatwave set to broil the city on six 35C-plus days in a row.
Sharing the spotlight will be Chris Bowen’s surprise expansion of a federal scheme, lifting six gigawatts of storage to 32GW of batteries, wind and solar farms.
Bowen certainly got an ovation from most of the energy sector and rightly so. The plan was a shot in the arm for a sector that’s been big on promise but lately lagging in delivery, particularly with 2030 emission targets just a tad more than six years away.
Myriad challenges remain, though. A lot has to go right if the nation’s main power grid is to get through periods of peak demand – such as this summer – without blackouts.
As Bowen has noted previously, the pipeline of potential projects has been running in the many gigawatt-levels for years. The Clean Energy Council will soon announce another meagre quarter of ventures reaching final investment decision, adding to recent poor outcomes.
Developers single out New South Wales as the state with the most pressing need for new capacity – and hence, some of the best returns – but also the hardest in which to get anything approved. The last windfarm to get the nod was almost three years ago.
That’s despite the previous Coalition government developing a clean energy roadmap with near unanimous parliamentary support and a Labor energy minister, Penny Sharpe, who is an outspoken supporter of climate action and renewables.
The planning department, industry insiders say, could hardly be less helpful, with officials frustratingly hard to meet.
Last week planning released a draft wind energy guideline that declared much of the state, including two designated renewable energy zones, to be “less suitable” for windfarms. After howls from the sector, the map was summarily tweaked and “less” was dropped, so those areas were suddenly “suitable”.
Even though the guideline was a “draft”, some of the new rules were apparently being enforced, with the department rejecting developers’ visual impact assessments citing updated standards.
Landholders, meanwhile, merely have to lodge an application for a structure near a boundary to force a developer to alter the location or numbers of wind towers. Victoria, for instance, won’t accept such “hypothetical houses”.
And that’s before the issue of getting thousands of kilometres of new transmission built. As one investor noted, without electricity to store, new batteries aren’t much good. Another wondered, are developers supposed to build wind and solar farms where they think power lines might go in?
As far as Bowen’s scheme itself goes, many features of its design have merits if the ACT experience is any guide. The so-called “contracts for difference” do expose taxpayers if wholesale prices fall too low but they also offer windfall gains if they go too high.
The ACT’s auctions secured bids in the low $80s per megawatt-hour and later down to the mid $50s per megawatt-hour as technology improved. The scheme cost the budget in the early years and has lately turned over a surplus.
Auctions held in NSW this year have put solar farm bids at $35/MWh and sub-$50/MWh for wind, the Reneweconomy website has reported.
Bruce Mountain, head of the Victoria Energy Policy Institute, said Bowen’s scheme would be hard for a Coalition government to unwind – unlike, say, an extension of the renewable energy target as some had advocated. “It’ll be hard to rip up signed contracts but they could stop writing [new ones],” he said.
Another issue, though, will be the role of state-owned entities. Bowen’s office has confirmed organisations such as the revived SEC Victoria would be able to make bids, a provision that is not surprising since Queensland and Tasmania’s electricity suppliers have remained mostly in state hands.
The commonwealth-owned Snowy Hydro, too, could be among the bidders, potentially creating a conflict of interest, said Dylan McConnell, an energy expert at the University of NSW.
The intervention of the federal government was the latest step away from a markets-based solution, he said. It was also proof the market wasn’t delivering decarbonisation of the grid at the pace needed.
On the other hand, the commonwealth was in a position to dangle carrots for states doing better and exclude them for laggards, he said.
Something for those ministers meeting in Perth to wrangle over.
The Guardian sought comment from the planning department.
