As state energy ministers faced off with their Federal counterpart Angus Taylor during the Council of Australian Governments (COAG) Energy Council meeting in Adelaide this morning, CEO of the Clean Energy Council, Kane Thornton was optimistic for the renewables industry, bullish on the future of solar!
Thornton said the pre-meeting call by NSW Energy Minister Don Harwin to “end the ‘climate wars’ and put science, economics and engineering ahead of ideology,” was “a fascinating development” and added weight to what he feels is a tipping point in the energy debate.
“People realise we need new investment” in new generation capacity, says Thornton, “and that the lowest-cost most effective form of that investment is renewables. What we saw today from the NSW Government is recognition of that.”
This publicly stated recognition by the incumbent NSW Liberal/Nationals coalition — Harwin expressed his support for integration of climate and energy policy in an opinion piece in the Australian Financial Review — leaves the Federal Government alienated from most of the states.
Accounts from attendees of the COAG meeting said Harwin’s proposal that “the Energy Security Board provide policy options to ministers” on how to achieve his government’s “net zero by 2050” vision, were rejected by Taylor, despite majority support from other state ministers. To the outrage of some delegates, the Federal Energy Minister quoted obscure regulations to prohibit discussion of the proposal and put his own case for a regulated default electricity tariff, designed to lower prices for consumers who don’t shop around for the lowest market rate.
There was some face saving, in the form of a submission from South Australia that the request to integrate climate and energy policy as addressed by the COAG Energy Council be considered “out of session” in February 2019.
Great to see NSW Government emphasising need for strong federal climate & energy policy. Here is what NSW can do in the meantime… pic.twitter.com/XVtKTwhLkQ
— Kane Thornton (@kanethornton) December 18, 2018
With the NSW Government facing an election in March, the hope says Thornton is that Harwin’s party will not only meet public demand for strong policies and targets for reducing emissions and increasing penetration of renewables in the state, but continue to “put pressure on the Commonwealth” to do the same.
After the COAG meeting, Harwin seemed to promise just that, saying, “NSW is not giving up on this. It’s absolutely imperative that we end the Canberra climate wars.”
Call for certainty becomes a roar
Recent weeks have seen escalating demands from industry and government for national policies that set a framework for ongoing investment. Frustrated calls from diverse sides of industry included CEO of Woodside Energy, Peter Coleman’s argument for a carbon price; and yesterday’s urging by Brett Redman, newly appointed CEO of AGL, that the Government pick an energy policy and “stick to it”.
On her return from the COP24 talks in Poland, Professor Hilary Bambrick, Head of The School of Public Health and Social Work at QUT and a councillor with the Climate Council, said Australia has made fantastic gains in transitioning to renewable energy, “but we could have done so much better and we should be able to do so much better with some leadership and certainty at the Federal level”.
Thornton agrees, saying that more than $20 billion has been committed in the past 12 months by private investors on wind and solar projects in Australia, demonstrating that: “Private investors are prepared to invest in new generation in this country. But it’s a fragile environment.”
“We need long-term policy certainty. And secondly, there’s a risk that if Government were to underwrite new coal or extend the life of existing coal, when everyone knows those assets are more expensive, that would really rattle the confidence of investors.”
Thornton is referring to Angus Taylor’s call last week for Registrations of Interest in the Government’s controversial Underwriting New Generation Investments Program, which, invites existing fossil fuel generators to apply for life extensions, alongside submissions by new “firmed” renewable-energy projects. Its criteria for selection seem directed toward low-emissions projects, but, the Government notes in the ROI document that it can change these criteria at any time.
Solar penetration driven by benefits, stalled by connection
The potential for wind and solar in Australia is extraordinary, says Thornton. He quotes this year’s “incredible milestone of two million homes with rooftop solar”, and increasing numbers of businesses defraying energy costs by taking on rooftop installations or signing long-term power purchase agreements with renewable providers.
“We’re seeing more and more segments of the customer base looking at how they can embed solar as they realise how economic it is — whether that’s the oil-and-gas industry, the traditional resources industry, or waves of solar going into wineries and dairy farms,” says Thornton.
Demand is high, investors are willing, but a third area of uncertainty is the ability of the grid to accept and facilitate new connections from renewable energy projects.
A new Clean Energy Council survey of 60 executives in renewable-energy businesses with a combined net worth of more than $17 billion, showed confidence is high, but the number-one business challenge facing the industry is grid connection and network access.
In discussing the outcomes of the December 2018 Confidence Index, Thornton said, “We absolutely acknowledge that grid operators and network businesses are dealing with more applications to connect to the grid than they have ever seen, but project developers need transparency and certainty about how long the process will take and what it is likely to cost,.”
Clear policies and certainty are called for by all stakeholders, and the Clean Energy Council CEO sees sustainable light at the end of the tunnel. “Investors are on board, community and the public are on board, almost every major political party in the country is on board, so it feels like a turning point. There’s a sense of excitement and optimism for the renewable-energy industry in 2019.”
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