Day 59: 'Expensive election stunt'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 59.
Today in summary: the South Australian government looks for a fix for the previous government’s costly back-up power plan; a US plan to keep economically struggling coal and nuclear power plants open appears to have been shelved; and the UK government plans an “Energy Data Taskforce” as part of its energy system plan.
— Charis
Today’s policy spin level: 💨💨💨
The South Australian government will privatise the running of emergency generators bought in by the previous government, after an independent report found their cost could blow out to more than A$600 million over their 25-year lifetime. Energy Minister Dan van Holst Pellekaan described the purchase as an “expensive election stunt” by the former Labor government. Report author Mark Livesey QC criticised the Weatherill government’s decision to exercise an option to purchase the generators outright ahead of the peak summer season.
“The opportunity was lost to take the time to reflect on whether the large purchase, relocation and operation and maintenance costs could be avoided, together with reflection on the period of time for which this additional capacity may actually be required.”
“In short, apart from the logistical issues to which I have referred, there does not appear to have been any overall advantage associated with the early exercise of the option to purchase.”
A US plan to invoke national security to force power companies to keep financially struggling coal and nuclear plants running has been shelved, reports Politico. The plan by US Energy Secretary Rick Perry had angered the oil and gas industry, and was reportedly opposed by both the National Security Council and National Economic Council.
The UK government has launched an “Energy Data Taskforce” to identify gaps where data can be used more efficiently and make clear, actionable, recommendations for government, the energy regulator and industry. The taskforce is one of nine new recommendations in the government’s Smart Systems and Flexibility Plan for energy.
“The Taskforce will consider who should access different data sets, proposals for standardisation and interoperability, the roles of different parties in governing data and how risks associated with data should be managed.”
Coming up
Origin Energy will hold its AGM at 10.30am (AEDT) today. The energy major has moved to proactively declare its industry association memberships, amid expectations of a shareholder resolution from activist group Australasian Centre for Corporate Responsibility. The ACCR wants companies to disclose whether their own public stances on issues like energy, climate change and emissions differ from those of their industry associations.
Sydney Morning Herald | Origin Energy
The Commentariat
Competition policy and heavy-handed regulation of the 1990s are to blame for a situation where wholesale market participants are unable to develop a working relationship with distributors, writes In Tempore Consulting’s Mark Christensen.
“Energy Australia managing director Catherine Tanna proposes renewed trust in the independent institutions and industry expertise, but current NEM governance isn’t designed to promote goodwill or a shared purpose. In fact, the vast regulatory regime at its heart is premised on mistrust. Consumers will continue to be disappointed while networks are required to comply with the views of a third party regulator, rather than negotiate directly with other parts of the supply chain.”
Cuadrilla Resources’s fracking for shale gas in Lancashire, UK, the first time fracking has been undertaken in the UK since 2011, won’t deliver any time soon writes Forbes’ Gaurav Sharma.
“The expected returns from fracking have more to do with long-term hopes and potential tax revenues, rather than short-term gains. It took the U.S. nearly 30 years to get its shale bonanza going, the U.K. won't get there overnight.”
Three more things
Tanker tracking data shows US oil exports to China have all but stopped, according to the Wall Street Journal. The fall from an average 350,000 barrels of crude oil exports a day to around 30,000 comes amid the US-China trade war, and despite the fact Beijing has not levied tariffs on US oil.
Tasmania, the ACT and South Australia “are leading the other states and territories across a range of renewable energy measures, based on each state’s proportion of renewable energy, wind and solar capacity per capita, proportion of households with solar, and renewable energy targets and policies,” according to the Climate Council’s report Powering Progress: States Renewable Energy Race. Western Australia and the Northern Territory are coming in at last place, while Queensland has the highest number of renewable energy projects under construction.
The US State of Illinois’ distributed solar program could be headed for market failure, following a “rush” on applications since launching in June 2017.
“Project timelines have been pushed into 2019 and beyond, and developers and solar advocates argue the structure of the ABP — in addition to drawing excitement — has also fostered ‘chaos,’ a ‘waterfall of problems,’ and the risk of a ‘terribly inefficient’ market.”
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