by Catherine Tanna, Managing Director, EnergyAustralia
There’s a well-known joke about a tourist in the Australian outback who asks a local for directions to Sydney. The local, a farmer leaning on a fence post, thinks for a while, then replies: “Well, if I were you I wouldn’t start from here…” That’s energy. If we wanted to build a modern, efficient energy system in Australia, we wouldn’t start from where we are right now, either.
It seems like the situation has come on us with little warning. It’s more shocking because for the past two decades energy supply has been reliable and prices have been steady – even falling.
But energy is vital to the health and wellbeing of all Australians. So, we have to fix it.
And, I believe we will fix it.
First, we need to agree what success looks like.
To a normal person, with far better things to do with their lives, energy must be desperately difficult to make sense of.
In their eyes it must seem politicians, electricity and gas retailers, generators, green groups and consumer organisations are pulling in different directions.
In 2017, we had more than a dozen examples of governments directly intervening in energy markets.
On the surface, action on international gas contracts, compulsory arbitration in pipeline disputes and the removal of rights of appeal for poles and wires networks all seem good for retailers and for customers.
Perversely though, these polices add risk, which discourages investment. You can make the case that, in hindsight, many of these interventions were less about providing policy certainty, and more about finding an immediate solution to a political problem.
It hasn’t been all bad, though.
We welcomed moves by the Federal Government to make power bills and offers more transparent.
We will always support measures which make energy easier to understand, so customers can get a deal that’s right for them.
But what’s next?
Snowy 2.0, more coal-fired power stations backed by government, using taxpayers’ money to fix a problem the private sector is willing to solve?
These assets aren’t cheap and tie up capital for decades.
In a competitive market, government and industry share responsibility for energy.
Right now, the politics are making it very hard for good politicians to do the right thing.
So, we are where we are. What do we do about it?
I think success means delivering affordable, reliable and cleaner supplies of energy for everyone in Australia, no matter what they earn or where they live.
When we prioritise one of those things over another, we get the situation we have now: high power prices and, in some states, the lights going out.
The answer is simpler than you might think. It’s this: confidence, in fact, restoring the confidence of the private sector to make the long-term investments needed.
Don’t mistake simple for easy, though.
Yes, the National Energy Market needs tweaking, but not an overhaul.
Attracting investment in new generation is critical to restoring the vitality of the NEM. If we’re to do that, there is no substitute for stable, bipartisan energy policy, one that provides transparency in generation markets and sets a long-term trajectory for carbon emissions.
That kind of policy is integral to giving business the confidence to invest, whether that’s backing new, cleaner generation to replace coal or entering long-term energy contracts.
Confidence fixes most things.
Yes, a mechanism for pricing carbon will impose cost for industry. So why would the three largest energy retailers advocate for such a thing?
Because of the certainty it provides. The knowledge that the rules won’t change as governments change is far more valuable.
We’re already working hard to ease the pressure on families and businesses from power prices:
- We’re continuing to invest in the reliability and efficiency of our big power stations at Yallourn and Mt Piper, so they’re there when needed. These plants are giving us time to make an orderly transition to cleaner sources of generation.
- We’ve committed an additional $1.5 billion to supporting the development of new wind and solar projects in eastern Australia,
representing 500MW of additional capacity.
- We’ve brought to market the next generation Redback Smart Hybrid System; this new technology combines a solar inverter, battery enclosure and intelligent energy management software into one package. The Redback system was specifically created to put families and businesses in control of their energy consumption.
- We’ve established partnerships with the Sydney Opera House and Melbourne Cricket Ground to help these remarkable icons use energy more sustainably, in ways which one day may be applied in homes around the country.
- We’re investigating $1 billion of potential new gas-fired generation, a $480 million pumped hydro project in South Australia and a $160 million energy recovery project in New South Wales, all of which could provide new supplies and stability to the grid.
- We’ve started an exciting trial with the Australian Renewable Energy Agency and the Australian Energy Market Operator aimed at securing 50MW of demand response reserve capacity in New South Wales, Victoria and South Australia.
- We’re investing an additional $10 million in our national hardship program which provides financial and other support to people in need.
- We’ve launched a new rate-fix product, Secure Saver, that allows households to avoid rises in energy tariffs for the next two years, while we work to ease the pressure on power prices.
That’s just a fraction of the things we’ve done and what we’re doing. Of course, there is much more to do.
But imagine what we could achieve with the confidence that comes from stable policy, with knowing that a major investment today won’t be rendered obsolete tomorrow.
EnergyAustralia doesn’t have all the answers – we can only deliver reliable, affordable and cleaner energy for all as part of a much broader response, one that involves all parts of industry and governments working together.
The National Energy Guarantee is a serious proposal to address reliability and emissions reductions. We hope it can lead to agreement between State and Federal Governments on a national approach that reduces duplication and unnecessary cost for customers.
It’s an opportunity for our politicians to do the right thing for families and small business across the country.
Rarely, if ever, has there been so much attention on energy. And rightly so, because of the good it does for our community.
It’s precisely the right time for this brand-new publication Energy to harness the focus on the sector and lead the way forward.
I wish you all the best and look forward to future editions, when we can say energy has been fixed.
People are looking to us to get it right.