Credit John Englart

15 FEBRUARY 2024

VICTORIA BLACKOUT: TIME TO DOUBLE DOWN ON DISTRIBUTED FIRMED RENEWABLES

This week, storms damaged power lines across Victoria taking all four generators at AGL’s massive end-of-life coal clunker Loy Yang A offline, and with it a third of the state’s power supply. This pushed Victorian wholesale electricity prices to a staggering peak of $16,600/MWh. Massive profits for generators, a nightmare for Victorian energy users. To add insult to injury, users will probably have to compensate AGL at the $16,600/ MWh rate for LYA's non-delivery.

A graphic illustration of the volatility, unreliability and hyperinflation of inflexible, centralised, ageing fossil fuel energy in a system in transition, with coal generators in terminal decline. 

The root of the current problem is in the devastating decade of energy policy failure under the climate luddites of the Coalition. We have known for decades that LYA would retire in the next decade, as will the rest of the coal fleet, and we needed to invest ahead of this in replacement capacity. This debacle would have been avoided or its impact dramatically reduced if we hadn’t lost a decade. A functioning climate and energy policy architecture and large-scale strategic investment in transitioning from the centralised model to distributed firmed renewables and a modernised grid infrastructure is critical to energy reliability and security.

With the adults back in charge, massive pressure is now on to build firmed replacement capacity ahead of schedule, as Victorian Energy Minister Lily D’Ambrosio is doing in partnership with Federal Energy Minister Minister Chris Bowen, leveraging the landmark federal Capacity Investment Scheme, which underpins a quadrupling of investment in firmed renewables.

For example, in 18 months, Victoria’s State Electricity Commission will have completed the new Melbourne Renewable Energy Hub with Equis Developments – the biggest battery in Australia once fully developed, and one of the largest in the world, capable of powering 200,000 homes.

Decentralised, distributed zero-emissions consumer energy resources (CER) are also vital to building energy system resilience – a key imperative as climate change related extreme weather escalates. CER, e.g. residential and commercial rooftop solar, batteries and batteries-on-wheels (i.e. EVs), reduce on-grid load at times of short-duration emergencies, like this week. If one strand breaks, the whole web doesn't go down. 

What does need breaking is the fossil fuel cartel gouging Australians, coupled with an accelerated deployment of renewables and storage. 3GW of wind and 5-15GW per annum of solar and 2-3GW per annum of batteries nationally will drive decarbonisation at speed and scale, ensuring secure and stable supply of clean, cheap power for consumers and industry. And the lights will stay on.

>>See our media on the Loy Yang debacle: op ed in The Age, op ed in Renew Economy, Tim's extensive interview on ABC Melbourne Mornings, stories in SMH, The Age, PV Magazine and more.

>> See the case study by guest contributor Owen Evans on the benefits of a major commercial rooftop solar installation at Northern Beaches Indoor Sports Centre.

FELS CALLS OUT ENERGY GENTAILERS' PRICE GOUGING

Australians have been smashed by a cost of living crisis over the last 3 years, and undue market power and concentration in many sectors is a leading cause, as concluded by the inquiry into price gouging chaired by Professor Allan Fels AO and released last week.

The energy sector is a prime example, with automotive fuel prices up 45%, gas 36% and electricity 22%, a rise of double to quadruple the underlying inflation rate of 13% (March 2021 to Sept 2023).

The report found price gouging in the electricity market and widespread gaming of the system by gentailers, as there has been in transmission, meaning consumers are paying too much.

>>See our response to the report and Tim's analysis in a TV interview on AusBiz.

MEANWHILE THE COALITION WAS STILL AT IT...

...fomenting Climate Wars 2.0 by spreading inflammatory disinformation designed to wreck the energy transition and deny the community the benefits of low- or no cost renewable power.

>>We gave their 'Reckless Renewables' jamboree in Canberra a serve in an op ed in the SMH, in a feature interview by Tim on ABC TV News Channel, across multiple mastheads via AAP and in Renew Economy.

CARBON LEVY TO FUND ZERO-EMISSIONS SOLUTIONS: WHAT’S NOT TO LIKE?

CEF emphatically supports the proposal put this week by Professor Ross Garnaut and Rod Sims of the Superpower Institute for a carbon price – regulated, economy-wide and ratcheting up progressively – in line with the climate science, an entirely economically sensible proposition.

It is apt that they have named their proposed initiative a Carbon Solutions Levy (CSL). Every dollar of a carbon emissions tax is an extra dollar of revenue to the government to give back to those most impacted by fossil fuel cartel-driven energy bill hyperinflation, and to offset some of the damage to our environment. Critically, this levy could fund the investment needed to pivot our economy to its zero-emissions future. User pays would raise $50-100 billion annually for reinvestment in decarbonisation solutions, currently foregone revenue which imposes a huge opportunity cost on all Australians.

"Expect nothing less than protracted bleating from self-serving fossil multinationals in their foreign tax havens as they lobby aggressively to preserve the privilege of externalising the costs of their climate-destroying pollution scot-free, trashing the interests of everyone but themselves all the way to the bank. And bogan-slogans from their bought-and-paid-for politician brethren.

Time to end their strangulating grip on Australian climate policy and send a credible price signal to drive emissions reduction – at the same signalling certainty to finance, and crowding hundreds of billions of new private capital investment into cleantech." – Tim Buckley

QLD Treasurer Cameron Dick courageously stood up to the fossil fuel shills and won when he put the public interest first, introducing a progressive coal export royalty on superprofits and raising some ~$12bn pa in revenue, as we wrote in The Guardian.

This enabled the government to offset much of the energy bill pressure inflicted on everyday Queenslanders through substantial rebates, and to invest into nation-building large-scale firmed renewables and transmission infrastructure, as well as removing cost barriers to CER, most recently via the ~$4000 household Battery Booster rebate scheme announced this week – see our comments in Renew Economy's One Step off the Grid. Pity NSW citizens missed out entirely on a remotely fair share of the coal industry's $50bn gross profits annually over the last two years; it's obvious who pays the piper here!

While the federal Safeguard Mechanism and the New Vehicle Standards are a good start, it’s past time to see this level of courage and conviction at federal level. 

QUEENSLAND: BEAUTIFUL ONE DAY, DECARBONISING THE NEXT (DECADE)

Still on QLD, CEF was pleased to see the Miles government massively stepping up the pace on its pathway to net zero by introducing into parliament this week its Climate Bill, which targets a 75% emissions reduction by 2035. This is a significant advance on its existing weak 30% by 2030 on 2005 levels. And great to see the Maroons beat the Blues’ 70% by 2035 Climate Act of November 2023.

QLD’s new 2035 target (subject to passage through parliament) complements, underpins and is a sign of confidence in the ambitious program of investment in firmed renewables and transmission currently underway in the sunshine state, off the back of the transformational Energy and Jobs Plan, a $62bn climate, energy and future industries policy designed to eliminate the state’s reliance on fossil fuels and position it as a zero-emissions investment, employment and trade leader.

Our new report led by CEF analyst Matt Pollard, releasing next week, maps this transformation and its impacts in detail. Watch this space!

>>See our commentary in The Guardian on the Climate Bill.

TAKING THE WIND OFFSHORE

Following the release of the review into community engagement on renewable energy projects by the Renewable Energy Infrastructure Commissioner, Naomi Campbell, co-founder of Energise Renewables and member of the Climate Capital Forum, explains the complex processes around seeking feasibility licences for offshore wind from both federal and state governments.

>>See Naomi’s opinion piece in the Newcastle Herald, the key regional platform for the growing public conversation on this topic in the area earmarked for the proposed Hunter offshore wind zone. 

“Exploring the feasibility of offshore wind is a multi-faceted exercise. It's therefore not surprising that the government is allowing developers up to seven years to successfully navigate and complete the necessary raft of approvals - even before any construction and operations can begin.”

CLIMATE RELATED FINANCIAL DISCLOSURES

Climate Energy Finance applauds the Government’s move to establish common disclosure requirements for climate-related financial risks and opportunities for Australian companies. We applaud the draft legislation’s focus on materiality, substance and speed, rather than delay and perfection. We would welcome additional measures to ensure disclosures are underpinned by the principles of information completeness, cross-sector comparability and integrity. 

>>See our Position Statement on Climate Related Financial Disclosures Exposure Draft Legislation, by Nishtha Aggarwal.

SMART ENERGY COUNCIL CONFERENCE 6-7 MARCH 2024 SYDNEY

You can hear from CEF experts and colleagues in the Climate Capital Forum at the Smart Energy Council’s conference and expo in Sydney next month. Registration is free, with an excellent program of speakers.
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