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21 JULY 2023
_The lights will stay on in NSW, despite coal lobby’s bleating on Eraring – here's how |
A relentless campaign is underway to pressure NSW Minister for Climate Change and Energy Penny Sharpe to delay the planned August 2025 closure of Australia’s biggest coal power station, Eraring. The fossil fuel lobby and its media arms are agitating for an extension to “keep the lights on.” This is a massive furphy and a bad idea.
Our new report released this week, The Lights Will Stay on: NSW Electricity Plan 2023-2030, shows that NSW can close Eraring on-time, secure supply, and put downward pressure on prices by:
Continuing the current run-rate of 1.2 gigawatts (GW) annually of rooftop solar installs.
Front-end loading at least 1.2GW annually of utility wind and solar to 2030.
This would replace the electricity generation capacity equivalent of 2.88GW at Eraring, and the 1.32GW Vales Point coal power station, earmarked for closure in 2028/29.
CEF’s analysis shows that there are more than enough renewable energy projects in the investor pipeline and that capital is ready and available – but the buildout requires that grid connection and approvals be expedited to lock in early final investment decisions by investors and timely construction.
Delaying Eraring’s closure would require NSW to pay at least ~$200-400m pa in public subsidies to its operator, Canada’s Brookfield – funding which should be invested in accelerating the renewables build out.
Delay would also undermine the NSW government’s climate policy, and the Federal 82% by 2030 RE target and 43% emissions reduction target.
Minister Sharpe should lift NSW 2030 RE target to at least 70% and:
Match the Federal program to support rooftop solar, storage and energy efficiency upgrades to 60,000 social housing homes with funding from the $1bn NSW Energy Security Corporation.
Accelerate the rooftop solar and batteries program rollout across 2,200 public schools.
Move the Federal Government to lift the Small-scale Renewable Energy Scheme (SRES) cap from 100kW to 1,000kW, speeding commercial installs of distributed solar (helping deliver half of capacity needs with no grid delays).
Accelerate approvals for utility-scale renewable energy projects, focusing on strategic prioritisation of plants able to gain grid connection.
Accelerate and upscale NSW Renewable Energy Zone (REZ) tenders and long term energy service agreements (LTESA) tenders, providing revenue certainty for private investment in renewables.
Flood the market with an underwritten low cost $25-35/megawatt hour (MWh) electricity floor price and minimum volume offtakes for new utility solar, de-risking these projects for investors; and expedite approvals to bring them online within 2-3 years.
Direct Transgrid and Essential Energy to reassess grid transmission and distribution capacity constraints, in light of Queensland’s PowerLink finding that 10GW of new RE can be added even before major grid transmission projects are completed.
As Clean Energy Investor Group CEO Simon Corbell said on the report:
“Delaying the closure of Eraring creates significant downside risk for investors. Investors have been making decisions on new clean energy projects based upon the expected closure of Eraring in 2025. Changing the date will mean investors will be less confident about future announced closures, and will have less confidence when it comes to making future investment decisions in NSW. We cannot afford to have less investment in new clean energy projects in NSW, or in Australia, at this time.”
>>>Read the full report.
>>> See quotes from our partners, Stephanie Bashir, CEO of Nexa Advisory; Heidi Douglas, CEO of Solar Citizens; Joel Dignam, ED of Better Renting.
>>> See media coverage of the report including a dedicated feature on the report in the AFR by senior writer Ben Potter; Canberra Times and 100+ mastheads via AAP; Newcastle Herald; a story with ABC national energy correspondent Dan Mercer; The Guardian; and an op ed in Renew Economy, with multiple interviews on the ABC and Sky News to be added.
_ In related news, the Australian Energy Regulator released its Wholesale Markets Quarterly Report.
Wholesale electricity prices fell dramatically over the second quarter (2QCY2023) year-on-year (y-o-y), but with the normal temporary seasonal rise due to higher demand in southern states, lower winter solar generation, and reduced coal capacity, post the closure of Liddell. The AER report also notes that June saw record monthly wind output.
While much of the media focussed on the impacts of the closure of Liddell, as CEF’s Tim Buckley told the ABC online and ABC TV 7pm News, renewable projects increased 2QCY2023 generation by 700MW y-o-y, almost entirely offsetting the 800MW decline in thermal power generation.
New renewable projects needed to be accelerated to manage the orderly exit of coal-fired power plants:
"There is more than enough new capacity in the pipeline. It's a question of whether the NSW bureaucracy is going to actually approve it. We have seen a little bit of a lull in new investment decisions. And that's really coming back to regulatory inertia. The energy minister must place pressure on the bureaucracy to approve renewables faster. We've seen batteries have been built in just 12 months once they get to final investment decision."
__ | China’s renewables leadership intact, despite coal capacity additions |
Our monthly China energy update for June 2023 shows that, as China's ongoing strong economic growth fuels the need for ever more electricity, it is expanding both new zero emissions and coal capacity concurrently, while hydropower was heavily impacted by drought. China added another staggering 25GW of variable renewable energy (VRE) capacity in the month of June alone, with 1HCY2023 VRE installs of 108GW, +112% y-o-y.
As the drought and heatwaves test China’s climate resilience, China’s renewables growth remains strong during the first half of CY2023. June saw China add 26.4 GW of zero emissions capacity to the grid, accounting for 87% of the share of newly added capacity in the sixth month.
Notably, If the decade-long growth in annual installed renewables continues, we could well have already witnessed the peak of thermal power electricity generation in 2022, assuming leading renewables powers like China continue to accelerate their cleantech investment.
The growing global climate crisis, evident this month in record breaking heatwaves in the northern hemisphere and deadly flooding in South Korea and India, shows yet again that time’s up – a concerted effort from world economies to decarbonise is beyond urgent.
>>>Read CEF China energy policy analyst Xuyang Dong's full update.
_ | New Advisory Board joins CEF |
We are honoured to announce our distinguished new CEF Advisory Board, which will contribute its collective expertise to guide CEF’s strategic vision: leading entrepreneur and philanthropist Graeme Wood as chair; founder and executive director of The Sunrise Project, John Hepburn; and philanthropy director of Ethinvest, former-CEO and co-founder of 350.org, and founder of the Climate Capital Forum, Blair Palese.
>>> Read more about the Advisory Board here.
_ | Coming soon & in progress … |
CEF’s EV supply chain analyst Matt Pollard is producing a report identifying Australia's opportunity to cap the Diesel Fuel Tax Credit Scheme for large-scale bulk commodity producers to $50 million annually.
Capping the diesel fuel rebate would raise >$25bn by 2030, more than sufficient to be reinvested in building out and commercialising Australian battery and EV heavy haulage manufacturing onshore so as to create high value-jobs and investment, and reduce our energy security reliance on expensive, high-emissions imported diesel, driving mass electrification of transport across Australia’s world-leading resources sector.
It is a key strategic priority to leverage and accelerate BHP, Rio Tinto, Glencore, Woodside Energy and Hancock Prospecting’s collective net zero ambitions to better align with the climate science – as Fortescue leads the world on this front.
An onshore Australian battery and EV heavy haulage manufacturing industry would ideally also gavalanise a shared / common Pilbara grid infrastructure system, to optimise capital deployment in powering the region’s continued growth, whilst cost-effectively driving decarbonisation by utilising VRE at world scale.
We also continue our work on Australia's response to the transformative US Inflation Reduction Act, which is turbocharging decarbonisation.
In the finance space, Paul Oosting continues to lead on reform of Your Future Your Super investment benchmarks and Nishtha Aggarwal on our broader finance work including the Australian Sustainable Finance Institute's (ASFI) sustainable finance taxonomy (as reported in our previous update).
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MEDIA |
We were active in commentary on a range of energy topics. See our other media here, including a feature in US based global investment publication Barron's on Australia as the "awakening giant of the global green transition"; and a feature across Ninefax newspapers on Australia's critical minerals opportunity, reporting on the Smart Energy Council's WA Critical Minerals Summit at which Tim Buckley presented.
OUR WORK |
See more of our latest work.
PREVIOUS NEWS UPDATES |
Our previous newsletters covering major energy news can be accessed here.
Our highlights tracking decarbonisation progress in 2022, and our 2023 wishlist, are here.
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