There is much community dismay at Australia’s failure to meet its power system needs. Intermittent, renewable power sources, such as wind and solar, have increased their share of the energy mix. However, governments are only beginning to understand the implications of this for energy policy.
The power system must be able to respond to changes in supply when the wind doesn’t blow or the sun doesn’t shine. Why? Because we have to keep the lights on, the schools open, the trains running and the factories operating.
At the same time, we have to ensure that the power system remains affordable.
Keeping the lights on at an affordable cost requires a technology-neutral approach to energy policy – an approach that caters for all possible solutions without prejudice to, or predisposition against, any single option.
Technology neutrality must be embraced as the core principle of modern energy policy. There are two reasons for this: first, because it allows for the deployment of both intermittent and dispatchable power; and second, because it optimises the operation of the power system at the lowest possible cost.
Australia lacks energy policy certainty
Australia’s lack of energy policy certainty has two causes: the first is an insufficient understanding of power system technology; the second is excessive politicisation of the policy debate.
Decisions affecting the electricity sector, rather than being directed by a clear policy framework, have been made on an ad hoc basis in response to, and sometimes in ignorance of, a range of issues that are not so often spoken about, such as how we plan our cities as populations grow, what are the changing energy needs of our transportation and other infrastructure, and what new technologies are available to us.
More overtly, over the past ten years, the two main drivers of energy policy have been the increasing cost of electricity and, even more emphatically, environmental concerns over climate change.
Australian policy has now come to be driven by the risk of blackouts, a risk that is likely to continue as older coal-powered stations are retired and the lost capacity is not replaced, potentially creating a cliff over which the entire power system could fall.
Policymakers have failed to provide an effective, apolitical mechanism for consideration of the energy mix and emissions reduction targets.
The major explanation for policy uncertainty has been the effective failure, for over a decade, of the Commonwealth and the states to articulate and debate the range of practicable, technology-neutral options for the energy mix for Australia, and to seek industry and community guidance.
One discussant at a recent Energy Policy Institute meeting quipped that technology-neutral in Australia means anything that doesn’t have nuclear or coal in it.
The Finkel Review of the Future Security of the National Electricity Market in 2016/2017 promised relief for a while. However, its fate and future direction is being mainly driven by the competing interests of the Commonwealth and the states. The contrast might be made with a country like Japan, which regularly listens to industry and indicates to the market what new power generation infrastructure needs to be planned.
Policymakers have also failed to outline a truly technology-neutral approach to achieving Australia’s emission reduction targets.
To achieve significant reductions in emissions within the time-frame set by governments, and without also harming GDP, it will be necessary to continue relying for some time on natural gas and coal and to utilise carbon capture and storage technology. As well, there has been almost no discussion about the nuclear power option in Australia; either in public or in government.
There is increasing community frustration with governments about the lack of proper debate on technology options and inattention to the core principle of technology neutrality.
Robert Pritchard is the Executive Director of the Energy Policy Institute of Australia, Australia’s only independent, apolitical, technology-neutral energy policy body. The author’s views do not necessarily reflect the views of the institute or any of its members.