Retaining control of its electricity assets has given Queensland an edge over other regions in coordinating and funding the race to decarbonise the economy, the state’s energy minister, Mick de Brenni, says.
Queensland last month unveiled a $62bn plan to rid its power grid of coal by 2036, replacing the generation with 25GW of large-scale wind and solar farms, new transmission lines and two giant pumped hydro plants for storage.
With its dominant ownership position of electricity generation and distribution assets, the government has been able to offset the impact of higher energy prices following Russia’s invasion of Ukraine.
Rebates of $175 a household will this year total $385m “that would otherwise have gone to overseas shareholders”, de Brenni said.
“We should expect there to be some continued elevation of wholesale electricity prices, that’s likely to flow through to retail bills,” he said, adding Queensland could shield households “in a way that no other state on the east coast can”.
De Brenni said public ownership of the energy system allowed the state to ensure new large-scale generation, transmission, and storage infrastructure could be built in time, potentially ahead of when ordinary market signals would allow.
“Because Queenslanders chose to keep energy assets in public hands, we have unprecedented control to guide the transformation of our energy system,” he said.
“We’re going to deploy those natural advantages that Queensland has to make sure that at all times the lights stay on and power remains affordable.”
The introduction in June of three new tiers for mining royalties to bolster state coffers has also helped pay for the energy transition, de Brenni said.
New South Wales, which has a similar mix of coal for domestic use and export in its economy, has so far resisted lifting its royalty rates to collect a higher share of the record profits being garnered by miners. Queensland’s resources sector, which complained it wasn’t consulted on the changes, has estimated the impost would collect an extra $15bn this financial year alone.
“Queenslanders have a right to be rewarded when their resources are attracting incredibly high profits on global markets,” de Brenni said.
“We’ve been able to utilise some of those coal royalties in terms of supporting our transition to renewable energy. So high coal royalties in Queensland equal cleaner energy in Queensland.”
Despite criticism from miners, de Brenni said “citizens the world over want to see more investment by governments into the transition”. “Citizens would welcome the deployment of those returns to addressing climate change.”
The transformation of the energy sector won’t come cheap and will likely add costs to power bills across Australia in the near term to pay for new capacity and transmission. But the near zero cost of generating renewable energy should bring down power prices, analysts say.
Queensland has been the clean energy laggard among Australian states, with just under 20% of electricity generated last year sourced from renewables. Nationally, the average was almost one-third.
The head of the Victoria Energy Policy Centre, Bruce Mountain, said Queensland’s ownership of electricity assets would ease coordination issues, although the state’s vested interest might explain why its transition away from fossil fuels lagged most other states to date.
“Fossil fuel resources are horribly undertaxed in Australia,” Mountain said. “The Queensland government’s policy to tax a ‘bad’ to fund a ‘good’ is excellent policy that other states should emulate.”
But Mountain did query the government’s plan for pumped hydro, which includes spending $270m to advance the Borumba and Pioneer-Burdekin sites to supply as much as 7GW of storage. Pioneer-Burdekin alone would be 5GW, or 2.5 times the size of Snowy Hydro’s 2.0 project, and the largest in the world.
“I think there is a reason that pumped hydro gets so little attention internationally,” he said. “To the government’s credit it is funding proper studies and no doubt Queenslanders will be seeking a good reason if [it] does commit huge capital” to the projects, he said.
