Day 120: 'Misses the critical point'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 120.
Today in summary: the AER has released its rate of return decision for 2018, and the networks aren’t happy; the CEFC says its investment in renewable technology will continue after the government changed its mandate; and Labor announces plans for an environment protection agency.
— Sophie
Today’s policy spin level: 💨💨💨
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The Australian Energy Regulator has released both its final decision on its rate of return review and its final report on changes to its regulatory tax approach. On the rate of return, the regulator has released its new rate of return instrument, which is now legally binding after legislation passed last week. It has allowed a slightly lower overall indicative rate at 5.36% for 2018 from a previous 5.76%.
On tax, the AER says there is a gap between the regulatory allowance and the tax actually paid by regulated networks; it recommends changes to depreciation which will “narrow the gap, but not close it entirely”.
In a media release this morning, Andrew Dillon, chief executive of Energy Networks Australia, said the rate of return decision was “disappointing” and “not in the long-term interests of consumers”.
“The rate of return decision misses the critical point that a key part of lowering long-term power prices is strategic investment in the grid, increasing the risk that timely investment will not occur.”
The Clean Energy Finance Corporation says the government’s new mandate doesn’t change its plans to invest in renewables. On Friday, energy minister Angus Taylor and finance minister Mathias Cormann issued a statement saying the government had directed the CEFC to “prioritise its investments with a view to support increased reliability and security of electricity supplies” and continue to focus on emerging clean technologies to reduce the risk of it crowding out private investment.
CEFC chief executive Ian Learmonth said its investment pipeline includes large-scale pumped hydro, household and grid-scale batteries and synchronous condensers, and:
“importantly the new mandate does not prevent the CEFC from continuing to invest in intermittent renewable energy such as wind and solar, after the CEFC has considered effects on the reliability and security of the grid.”
If elected, Labor would create a national environment protection agency and pass a new environment act, leader Bill Shorten announced at his opening address of the party’s national conference in Adelaide on Sunday. His speech was interrupted by protestors urging Labor to oppose the Adani Carmichael coalmine.
The Guardian | SMH | AFR
Geopolitics
UN climate change talks in Poland have ended with an agreement on rules to implement the Paris commitments. The SMH reports that under the rulebook, Australia will face pressure to adjust its targets upwards by 2020.
The Commentariat
Bill Shorten was “smart on populism” at the ALP’s national conference yesterday, writes Katharine Murphy for The Guardian.
“When progressive preoccupations featured – like climate change – they were refracted through a materialist lens. A booming renewables sector meant Australian jobs, and manufactured products. Batteries, Shorten reflected at one point, were the “bridge that turns renewable energy into the conservative solution”, and they could be made in Australia, given we possessed all the necessary raw materials.
When the post-material constituency forced themselves on Sunday’s proceedings, as anti-Adani protesters stormed the stage and rallied in significant numbers outside the event, Shorten wondered, just who were they helping?”
Three more things
SIMEC Zen Energy plans to submit two of its renewable energy projects for funding under the government’s Underwriting New Generation Investments Program, reports The Australian. The Sanjeev Gupta-backed energy group is also considering an IPO to help raise the capital it needs for its planned expansion in Australia. The company plans to include its Cultana solar farm project in South Australia’s Upper Spencer Gulf, along with a new giant battery to be installed in the state’s Port Augusta, in its pitch to the government.
Global asset management firm Capital Dynamics is talking up large-scale batteries in the US as it seeks to tap into solar power opportunities made more lucrative by falling costs. The company sees load shifting as the major engine for the improving commerciality of grid-scale solar, however is not yet planning to invest in Australian renewables because "the returns are not supporting that level of risk”.
California plans to make its entire fleet of 12,000 transit buses carbon free by 2029 following a vote by the California Air Resources Board. The move is the first of its kind in the US and comes as California seeks to meet its greenhouse gas emission reduction target of 80% below 1990 levels by 2050. 40% of California’s emissions currently come from the transport sector.