Day 71: Competing generation
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 71.
Today in summary: the COAG Energy Council has officially put the NEG to rest, but agreed to progress development of a retailer reliability obligation; Origin Energy’s plan to expand its Shoalhaven hydro scheme has been delayed by Canberra policy paralysis; and Wentworth candidate Kerryn Phelps pledges to return funding to the Climate Change Authority.
— Charis
Today’s policy spin level: 💨💨
Please don’t keep Australian Energy Daily to yourself. Forward this email to your colleagues and encourage them to sign up for free here.
COAG Energy Council members will further consider a reference point for power prices at their next meeting in December, though it will not apply to Victoria, WA, Tasmania and the NT. At the meeting on Friday afternoon, the ministers also agreed to progress development of a retailer reliability obligation, with the Energy Security Board to deliver a final draft bill by December and have it put in place by July 2019. A motion moved by the ACT to consider a national emissions reduction scheme for the electricity sector was not agreed, with states voting along party lines.
Origin Energy says it won’t go ahead with its proposed A$235 million expansion of its Shoalhaven hydro project until it gets more clarity from the government on energy policy. The government has announced A$2 million in ARENA funding towards a feasibility study which is expected to be completed in 2019. If completed, the expansion would almost double the scheme’s existing 240MW to 475MW.
“Any future decision to go ahead on an expansion will depend on circumstances at the time, including a more certain regulatory and political environment and clarity on any competing generation capacity the government may fund.”
Dr Kerryn Phelps, the expected new member for Wentworth, says she wants to reinstate funding for the Climate Change Authority as “the first thing that we could actually do” if she joins Parliament next month. The independent climate advisory body was set up by the Gillard government but had its funding and power cut by the Abbott government, and the Morrison government’s policy is to shut it down this term, though that will require it to pass legislation.
The Commentariat
Australia is in the company of Venezuela with its push to force electricity companies to reduce their prices, writes former Labor minister Craig Emerson. He warns the Morrison government may try and force Labor into supporting forced divestiture by bundling it with the Labor-supported default price for electricity retailers.
“Labor would likely move an amendment to split the bill, voting for the default price but against forced divestiture. But the Morrison government would use its numbers – supported by several independents – to ram through the original bill.”
The Coalition has intervened in the energy market to the benefit of favoured players, writes fund manager Alex Turnbull. He says while the ACCC’s recommendation that the government underwrite new generation projects was designed to make it easier for new players to enter a heavily concentrated market, the government’s low emissions hurdle means it allows redevelopment of existing projects, to extend their life.
“Which could these be? It is unlikely to be AGL, Origin, Alinta or Energy Australia, who all have commitments to decarbonisation and plans to gradually replace coal with renewables, gas and hydro. It could, however, be Sunset Power owned by Brian Flannery and former National party candidate and LNP donor Trevor St Baker.”
Three more things
Queensland solar households and small business are being offered about 50% more for their excess power than they were a year ago, according to a new report from the Queensland Competition Authority. The report shows the range of feed-in tariffs offered to residential solar customers expanded from 6–15 cents per kilowatt hour in the first half of the year to 6–20 cents per kilowatt hour in the second half of the year. This was due to AGL and Mojo Power increasing their highest feed-in tariffs to 20 cents per kilowatt hour. Click Energy was the only retailer to decrease its lowest feed-in tariff during the course of the year.
Australian climate scientist Tom Wigley has joined about three dozen other scientists and energy experts arguing the UN report on climate change is biased against nuclear power. Wigley is a senior fellow of the pro-nuclear Breakthrough Institute. In a letter addressed to heads of G20 countries, the scientists say the IPCC authors make several misleading claims about nuclear in their report, including that nuclear has “mixed effects for human health when replacing fossil fuels”. An IPCC spokesman has rejected the suggestion the panel is biased against nuclear power.
US carmakers are calling for federal regulators to lift fuel economy standards rather than cut them, after the Trump administration proposed removing California’s ability to set its own vehicle efficiency standards and zero-emission vehicle mandate. General Motors’ Mark Reuss told reporters that “we know that the industry can do better than that” and GM wants the federal government to embrace electric cars, while Honda said it disagreed with Trump’s attempt to remove California’s authority and recommended the EPA maintain and increase greenhouse gas targets rather than freezing them.
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.