Day 110: In desperate need of certainty
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 110.
Today in summary: the big stick laws are likely dead; major power companies reiterate that they won’t invest while energy policy is so uncertain; and there’s little consensus on how the RERT framework should be changed from within the market.
— Sophie
Today’s policy spin level: 💨💨💨
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The much-criticised ‘big stick’ forced divestment powers, which the government hoped to pass yesterday, are basically defunct after the Morrison government filibustered to avoid losing a vote on a bill concerning the treatment of asylum seekers.
The Senate has voted to send the energy legislation to a Senate inquiry, which will report back on March 18th. That means the bill won’t be voted on by parliament until the first week of April - which is also budget week - and gives just two sitting days before the federal election is predicted to be called.
Major power companies Origin Energy and Energy Australia will delay new generation investment until there’s more policy certainty, after a “string of upsets” including the latest hold-up of the big stick laws.
The Australian quotes Energy Australia’s chief executive Graham Bradley - who, along with many other business leaders, has campaigned against the proposal since the Morrison government announced it - as saying:
“We are in desperate need of the certainty before EnergyAustralia can proceed with investment in new capacity that would replace a Liddell, which we have on the drawing board but will have uncertain returns until we have certainty around the direction of energy policy.”
The AFR reports Origin’s chief executive Frank Calabria will give an investor presentation today warning that “the federal government's proposed underwriting measure to support new power plants has the potential to "distort" the market” and Origin “lays the blame for unaffordable energy prices more broadly with the lack of policy consistence from successive governments.”
There’s little consensus on proposed changes to the Reliability and Emergency Reserve Trader (RERT) in submissions published yesterday by the Australian Energy Markets Commission. AEMO wants the reliability standard to be delinked from the RERT and a standing reserve created to help ensure reliability. The majority of responses want the procurement trigger and volume explicitly linked to the reliability standard. Some respondents said there was no evidence consumers wanted a higher level of reliability and, in fact, are more concerned with reducing costs and electricity prices.
The Commentariat
Labor might be emboldened to try to pass the National Energy Guarantee after yesterday coming close to breaking the Coalition’s border policy with support from independents, writes the AFR View.
“Though the Prime Minister has disowned the policy, the passage of the NEG under Labor's banner would still severely – even terminally – rattle confidence in Mr Morrison's ability to govern until an election next May. It is unthinkable that the government could continue when it could not control the numbers in the House of Representatives on significant policy.”
Three more things
The government has moved to crack down on energy meter installation delays with a new AEMC rule giving retailers up to six business days to install new meters and a maximum of 15 business days to replace existing meters. The new rule will also apply to customers wishing to replace their existing meter with a smart meter, for newly built houses or after a customer has solar panels installed.
The US Environmental Protection Agency has rescinded pollution limits on new coal plants that required generators to install costly carbon capture technology. It comes after the agency also moved to remove Obama-era rules on carbon and mercury emissions from existing and modified generators. Despite the rollbacks, the EPA has said new fossil fuel-fired capacity constructed through 2026 and the years following is expected to be natural gas.
Engineers at MIT have developed a “sun in a box” concept that they say would store renewable energy and then deliver it back into the grid on demand. The design, published in the journal Energy and Environmental Science, stores heat generated by excess electricity from solar or wind power in large tanks of white-hot molten silicon, and then converts the light from the glowing metal back into electricity when it's needed. They say it would be significantly cheaper than storage via lithium-ion batteries.