Day 36: 'It needs to be a smooth transition'
An introductory weekday newsletter from Australian Energy Daily. Counting the days since Australia's latest energy minister was sworn in.
Good morning and welcome to day 36.
Today in summary: Energy giant AGL racked up another fine from a regulator, and this time it was a big one; industry leaders are worried about security of supply in the absence of a federal policy locking in reliability; and despite next month’s COAG meeting being called off, the Energy Security Board is pressing on with the long list of tasks set for it by energy ministers.
— Charis
Current policy spin level: 💨💨
AGL has paid a A$2.99 million fine for failing to provide Victoria’s Essential Services Commission with more than 64,000 energy efficiency certificates. It's the second fine for AGL for the same crime, but the last one was $12,000. Retailers buy the certificates from people who install energy efficient appliances or upgrade energy systems, and are then meant to pass them onto the regulator. AGL was fined A$60,000 by the Australian Energy Regulator in February for failing to tell more than 1,000 customers their fixed-term contracts were coming to an end. The latest fine comes after AGL was warned it could lose its Victorian operating license for failing to share customer data with the ESC.
Supporters of the National Energy Guarantee say the reliability of Australia’s energy system is at risk now that the policy has been dropped.
"It needs to be a smooth transition. And without talking about emissions it's not going to be smooth. And we've got to talk about reliability or it's not going to be smooth," Energy Australia chief Cath Tanna reportedly said.
Many insiders expect the reliability guarantee part of the NEG to be pushed forward when state and territory ministers meet in December, but the government’s focus on affordability alone has some worried reliability and security are being overlooked.
Australian Financial ReviewThe Energy Security Board is pushing ahead with its Integrated System Plan, consulting with industry as part of a Finkel recommendation that AEMO prepare an integrated grid plan for the National Energy Market. Previously it published an annual development plan. The new plan includes transmission, generation, gas pipelines and distributed energy resources, forecasting the overall transmission system requirements for the NEM over the next 20 years. It groups energy projects into those required over the short. Medium and long term. The ESB is now consulting on how to put the projects into action.
Geopolitics
China actually gave some ground in the trade war with the US by lowering its proposed tax on LNG imported from the United States from 25% to 10%. Now analysts are saying this gives the country a chance to use fuel as a weapon as the trade war escalates.
Interfax Global Energy
Coming up
Western Australian energy players are awaiting news on the state’s temporary ban on onshore fracking. An independent inquiry panel set up by the state government last year last week handed its final report to the government. A group of more than 50 experts have urged the West Australian government to permanently ban fracking in the state.
The Commentariat
There’s a growing chasm between America’s climate commitments and the actual reality, writes Rice University Professor Daniel Cohan. Despite the many promises from local governments at last week’s Global Climate Action Summit in San Francisco, Cohan says it’s unclear how many will meet the pledges they made.
“Even if they succeed, emissions would still be falling at just over one percent per year. That pace would need to zoom up by a factor of five to reach Obama's subsequent target for an 80 percent reduction by 2050.”
“The fundamental problem of the renewable energy policy in Victoria is the refusal to learn from the problems of the South Australian experiment” writes The Australian’s Judith Sloan. Victoria risks repeating South Australia’s errors by failing to “impose any firming obligations on renewable energy projects to ensure 24/7 supply of electricity,” account for the expense incurred in connecting “far-flung [renewable energy] projects to the grid,” and take into account “the destruction of the economics of existing [brown coal-fired] generators and the effects of … early retirement of these assets.”
Three more things
Solar panel-paved roads, once seen as an innovative solution to the world’s energy problems, are proving underwhelming in reality. One of the first roads installed in cost €5m to install and delivered a maximum output of 420 kWs, implying a cost of €11,905 per installed kW.
OPEC has forecast global oil demand rising until at least 2040. The cartel’s 2018 World Oil Outlook aligns with International Energy Agency forecasts, but is out of step with others, including Royal Dutch Shell, which has predicted the peak will be more likely in the 2020s.
The world’s first AP1000 nuclear reactor could soon be online in China, after National Nuclear Power Co told the local exchange the plant had completed a 168-hour test run. The plants have been beset by years of delays and billion-dollar cost blowouts. Chinese policymakers want nuclear capacity to reach 58 gigawatts by the end of the decade, compared with about 38 gigawatts currently.
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