Day 89: 'Real risk over summer'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 89.
Today in summary: the AEMO will again pay businesses to cut power use to avoid blackouts this summer; the ACCC approves Santos’ acquisition of Quadrant Energy; and the chairman of Fortescue Metals says the company won’t invest in thermal coal as it looks to the future.
— Sophie
Today’s policy spin level: 💨💨💨
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The Australian Energy Market Operator has warned that extreme weather over the summer could cause blackouts in Victoria and South Australia, and it will pay major power users to cut or shift their usage. Last summer these payments cost $52 million, which increased annual power bills by about $6 per household.
The warning comes as the Bureau of Meteorology released its three-month climate outlook from December to February, where it said this summer was likely to be hotter than average across Australia.
Energy Minister Angus Taylor criticised Victoria’s state government for the forecast shortfall. He said:
“The levels of intermittent government backed generation in South Australia and Victoria, that has not been firmed, has led to a real risk over summer. AEMO has been forced to step in and mitigate the risk created by poor state Labor government planning.”
Competition regulator the ACCC has approved the US$2.1 billion acquisition of Quadrant Energy by oil and gas giant Santos. The deal is now expected to be completed within weeks. The ACCC took the view a combined Santos/Quadrant would continue to face strong competition from a range of suppliers, including large LNG producers such as Chevron and Woodside.
Fortescue Metals Group’s founder and chairman Andrew Forrest says the company won’t invest in thermal coal and has declined attractive investment opportunities in the sector as it is "really serious" about new forms of energy.
The AFR reported that at the company’s annual meeting, Forrest said:
“We see coal as very much last century, we are looking forward to new energy and I look forward to making announcements about that… We have breaking upon us new forms of energy and Fortescue will participate in that.”
The Commentariat
The Queensland government’s move to open up new gas fields for exploration in the Darling Downs, but reserved for domestic use is innovative, writes the AFR’s Matthew Stevens.
“The Palaszczuk Labor government has avoided the temptation of retrospective reset of production licences and has instead focused on a long-term structural response that forces domestic market priorities on future commercial gas discoveries.”
Three more things
The Australian Greens want to make it illegal to “dig, burn or ship thermal coal,” according to a report in The Australian. The new law is part of the policy they will take to the election, which includes phasing out thermal coal exports and local coal-fired power production by 2030.
The second grid-scale battery funded by ARENA and the Victorian government is expected to be commissioned in time for what experts are saying will be a hot Victorian summer. EnergyAustralia will operate the storage system, in addition to a long-term offtake agreement to buy all the electricity generated from the co-located Gannawarra Solar Farm.
The global race to build a better car battery is focusing in on silicon, which is expected to help boost battery capacity and range. As governments around the world start to mandate cuts to tailpipe emissions by banning gasoline and diesel-powered cars, more companies are investing in ways to cut the costs of electric vehicles.