Prime Minister Scott Morrison has issued an ultimatum regarding the replacement of the Liddell coal-fired station, threatening to step in if the private energy sector fails to find a solution.
The prime minister said electricity generators must come up with a plan for 1,000MW of new dispatchable energy in time for the end of 2023 and if there is no investment secured by April 2021, the Federal Government will build a state-run gas generator.
The Liddell Taskforce found closing the plant without adequate dispatchable replacement capacity risks prices rising by around 30 per cent over two years, or $20 per megawatt hour to $80 in 2024 and up to $105 per MWH by 2030.
The Prime Minister said the potential price increases were unacceptable and would represent a huge hit to families, businesses and job creating industries in NSW if the energy generated by Liddell wasn’t replaced.
“Affordable, reliable and a secure electricity supply is critical to our JobMaker plan for households, businesses and industry,” Mr Morrison said..
“We won’t risk the affordability and reliability of the NSW energy system and will step in unless the industry steps up.”
Snowy Hydro Limited has been tasked with drawing up plans for a gas generator in the Hunter Valley at Kurri Kurri.
Energy Minister, Angus Taylor, said the new, dispatchable power should be the focus of the energy market, warning that current plans fall “far short of what is required”.
Mr Taylor said the market has a clear obligation, as an essential service, to step up and deliver affordable, reliable power for consumers.
Mr Taylor said that since 2010, investment in dispatchable capacity had slowed to a trickle, with only around 1.6 GW of new dispatchable capacity connected in the national electricity market.
“Over the last decade, the private sector has not built a single new reliable power plant in NSW,” Mr Taylor said.
“The Government has always been clear — we need to see life extension or like-for-like replacement of Liddell.
“If industry steps up, we’ll step back.”
Mr Morrison is set to announce a suite of measures to combat an imbalance in high gas prices for commercial and industrial gas users, compared to a profitable liquefied natural gas export market.
Concerns that local commercial and industrial users are paying more for gas than exporters are selling it for on international markets is one that the Australian Competition and Consumer Commission (ACCC) has raised for some time.
Mr Morrison said there will be a new gas hub at Wallumbilla in Queensland that would form part of an east coast gas network that the Narrabri gas field in NSW could feed into once it is approved.
This gas hub is expected to see Australians reap the benefits of gas reserves while the nation remained a top exporter.
“Our competitive advantage has always been based on affordable, reliable energy. As we turn to our economic recovery from COVID-19, affordable gas will play a central role in re-establishing the strong economy we need,” Mr Morrison said.
Mr Morrison said the Government would also work with state governments through a program worth up to $250 million to accelerate three critical projects – the Marinus Link, Project Energy Connect and VNI West interconnectors.
“These links will help put downward pressure on prices, shore up the reliability of our energy grid and create over 4,000 jobs,” Mr Morrison said.
“Our plan for Australia’s energy future is squarely focused on bringing down prices, keeping the lights on and reducing our emissions and these interconnectors bring us a step closer to that reality.”
Photo credit: AAP Image/Mick Tsikas