Key industry leaders met with members of the government to discuss issues affecting the energy sector, such as the Clean Energy Target (CET), at the Australian Financial Review Energy Summit, held on 9 -10 October in Sydney.
A speech from the Minister for Environment and Energy, Josh Frydenberg, indicated the Federal Government’s intention to turn away from the CET as emissions from the energy industry had fallen in the past two quarters after the closure of coal-fired power stations and flatlining demand.
“It is against this backdrop of a declining cost curve for renewables and storage, greater efficiencies that can be found in thermal generation and the need for sufficient dispatchable power in the system that we are considering the Finkel Review’s 50th recommendation to which we’ll respond before the end of the year,” Mr Frydenberg said.
“Globally in the past seven years, the cost of wind-powered generation has more than halved. Domestically, solar PV costs have dropped more than 50 per cent.
“By 2020, costs of battery technologies are expected to fall 40-60 per cent and over 70 per cent to 2030.”
Opposition leader, Bill Shorten, along with major gas corporations including BHP and Origin are backing the CET.
Origin CEO, Frank Calabria, said the CET never claimed to be the best solutions, but it is a workable solution.
“Some have questioned why we need a CET at all when renewables are already the lowest cost investment in new generation. Unlike the RET, which is a blunt target for a fixed volume of renewable generation to be introduced, the role of the CET is to provide a technology-neutral investment signal that sets a trajectory for reduced emissions over time,” Mr Calabria said.
Transgrid CEO, Paul Italiano, said the government should endorse the Finkel Review’s recommendations.
“The Finkel Review has provided an economically rational and socially responsible path to planning and implementing an affordable, sustainable energy system of the future, and we would call on government to adopt the recommendations,” Mr Italiano said.
A focus on the gas supply crisis
The gas supply crisis was also discussed at the Energy Summit.
Strategy Chief at Santos, Angus Jaffray, said Australia already has sufficient gas supply and warned that bans on gas exploration could risk squeezing gas out of the energy market.
Mr Jaffray said the government needs to get out into communities to help create public confidence and companies such as Santos have to find their “strongest supporters, such as current landowners, whom we have an exceptional relationship with, to get the positive message out there”.
Origin CEO, Frank Calabria, said Australia has exhausted lower cost gas supply that delivered the historical low prices for customers and are now accessing resources with a much higher cost of production.
“As we’ve seen more supply brought into the market in recent months as east coast LNG projects have responded, we have seen gas prices come down quickly and substantially from their peak of around $16/GJ in April to below $10/GJ at Wallumbilla and getting close to export parity – this is the market working,” Mr Calabria said.
“There’s potential for prices to come down further but we will need new supply to help do this and we also need to stop creating the expectation that we can return to historical low levels of pricing.”