Day 30: 'Clarity is unlikely any time soon'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 30.
Today in summary: Ratings agency S&P says the energy policy vacuum is holding back investment needed to ensure reliability, and proposed market intervention could actually reduce competition; distributed, renewable energy is essential for the sustainability of Australian cities, according to a new House committee report; and AGL is threatened with losing its license to operate in Victoria.
— Charis
Current policy spin level: 💨
System reliability and capacity is being threatened by uncertainty on Australian energy policy says Standard & Poor’s. And the ratings agency doesn’t expect this to change in the near future.
“With state and federal elections looming over the next six to nine months, we believe any clarity is unlikely to come anytime soon.”
State targets, and the falling cost of renewables will spur some new generation, S&P said, but regulatory intervention at the federal level could be credit negative for the sector as it reduces incentives for investment. It could also price some smaller players out of the market, harming competition.
Business InsiderAustralian cities consume more than 60% of the nation’s energy demand (through buildings, manufacturing and transport-related activities), according to a new report from the House Committee on Infrastructure, Transport and Cities. The inquiry into the Australian government’s role in the development of cities recommended owners of CBD office buildings larger than 1,000 square meters be forced to disclose data on their energy efficiency. Energy giant AGL told the committee
“the sustainable development of Australia’s cities into the future is inextricably linked to the effective design of Australia’s energy and climate policies”.
AGL may be good at having its say on government inquiries, but it’s failing when it comes to sharing data with regulators. This has Victoria’s Essential Services Commission fuming, threatening to take away the energy retailer’s license to sell electricity and gas in the state.
"It is extraordinary to think that AGL, the biggest retailer in the state, can't even tell us how many customers it has at the moment," said commission chair Ron Ben-David.
Geopolitics
The UK’s oil and gas regulator has told the country’s industry it must “use it or lose it”, after exploration in the UK North Sea fell to record lows. The Oil and Gas Authority urged operators to exploit their North Sea licenses or have them revoked. "We believe the oil price is at a level there is no excuse not to invest.”
Petroleum Economist
The Commentariat
Reporters don’t bother writing stories about how nuclear power plants stood up well to hurricanes, writes Axios’ Amy Harder. She argues more of them should -- it would make more of us thankful when the lights come on.
“Energy is the thing we all need but don’t notice until it’s gone, expensive or going awry. Energy facilities — particularly nuclear plants — appear to be withstanding (Hurricane) Florence well. We saw a tragically different outcome in Massachusetts Thursday, with one death and roughly two dozen injuries. They both inject a consciousness into our energy dependence we usually overlook.”
Energy should be afforded the same protection from foreign interests as Australia’s 5G telecommunications network, writes NSW Liberal Senator Jim Molan. He wants CKI‘s bid for pipeline owner APA Group to be rejected by the government’s Critical Infrastructure Centre on national security grounds.
“Allowing Chinese to own APA would not only assist Beijing’s intelligence-gathering, it increases our vulnerability to sabotage. A hostile actor could wreak havoc by deploying malware into these industrial control systems. This is hardly an idle concern — in December 2015, Russia disabled part of Ukraine’s electricity grid that way.”
Three more things
Emissions reductions targets won’t drive up power prices, according to a new report from the Australian Council of Social Service and the Brotherhood of St Laurence. The modelling by Frontier Economics found even with a target of 65% by 2030, power prices for households will fall.
“The idea that we need to choose between cheaper energy prices and limiting global warming is misleading and short-sighted, and does a huge disservice to our community, especially to people on low incomes,” ACOSS chief Cassandra Goldie said.
The Victorian Greens want a transition to 100% renewables and a complete end to coal-fired power generation by 2030 as part of their energy and climate policy. The policy also includes a new publicly-owned energy retailer, A$100 million for solar and batteries in all public schools, and A$500 million for large batteries and pumped hydro in the Latrobe Valley.
Saudi Arabia is investing more than US$1 billion of its sovereign wealth fund into US electric vehicle maker and potential Tesla competitor Lucid Motors. The company said the investment would allow it to launch its first car into the US market in 2020.
This is an introductory service while we’re building a comprehensive daily paid online publication, coming in early 2019.
We’re not here to take sides, simply to cut through the noise, and help you make sense of the emerging policy and market trends you need to be across. We call it pure intel. You can read more about us here.