Day 101: 'Not very cheap, yet very volatile'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 101.
Today in summary: More politicians and businesspeople have backed the NEG; WA lifts its ban on fracking in some parts of the state; and Brookfield Asset Management says Australia’s energy policy is too volatile for it to invest.
— Sophie
Today’s policy spin level: 💨💨💨
Please don’t keep Australian Energy Daily to yourself. Forward this email to your colleagues and encourage them to sign up for free here.
There’s further support for the National Energy Guarantee from politicians and industry. Yesterday, Liberal MP Julie Bishop spoke in support of reviving the NEG; crossbenchers Rebekha Sharkie and Kerryn Phelps have also backed it, in the absence of energy policy from the Morrison government. The ABC quoted Phelps saying:
"The NEG is one way that could provide much-needed certainty and reliability for the energy sector. It may not be perfect but it is better than the policy vacuum of the current Government."
The AFR reports Jeff Dimery, chief executive of Alinta Energy, Innes Willox, chief executive of Australian Industry Group, and Business Council of Australia chief executive Jennifer Westacott as supporting the NEG.
The WA government has lifted its ban on fracking in some areas of the state, after a report found the process had low risks to people and the environment if carried out safely. Bans have been maintained in the most populated regions such as Perth, the Peel and the South West. Landowners and traditional owners will get veto rights and fracking will be restricted to existing petroleum titles, covering 2% of the state. Royalties will be used to support new renewable projects.
Toronto-based Brookfield Asset Management says Australia’s energy policies are a barrier to investment, after selling Quadrant Energy to Santos for nearly A$3 billion. Len Chersky, managing partner for Brookfield in Australia, told the AFR:
"The way we look at businesses conceptually is we categorise them as either good businesses or cheap businesses and, given the amount of local uncertainty both on the pricing side and the regulatory side, then they'd better be really, really cheap for us to invest.”
"And this is where it's difficult because they are not actually very cheap, yet they are very volatile. So the policy setting is definitely a barrier to investment for guys like us."
The Commentariat
Australia’s 2030 climate targets will devastate major industries such as agriculture and transport, writes former Nationals senator Ron Boswell in The Australian. Boswell says there’s a widespread assumption that the transition to renewable energy will cut carbon emissions enough, but that’s based on a misconception.
“Big emissions cuts mean major economic damage far beyond the electricity sector. No sector will be spared. And the farm sector and regional Australia are going to be hit hardest.”
Three more things
German storage battery company Sonnen, which is ramping up local operations, says it’s unfazed by energy policy flip-flopping in Australia. Chief executive Christoph Ostermann told the AFR:
"To be honest, I see flip-flopping all over the world".
Sonnen is hoping to become the market leader in home battery storage and also wants a piece of the growing virtual power network market.
The NSW Government has launched an electricity bill comparison service, promising consumers it will help them save hundreds of dollars a year off their power bill. It comes after a NSW parliamentary inquiry report last week found retail electricity prices have risen 52% in the past ten years in the state and that profit margins for retailers were “excessive”.
More electric cars are headed for Australian shores, despite a lack of government support, according to industry group the Electric Vehicle Council. Price has been a barrier in the past, but with more vehicles in the below A$50,000 range on the way, the Council is hopeful of a breakthrough in uptake.