NT government’s botched signature renewable energy policy a disgrace

After committing to its ambitious renewable energy target, the NT government realised what it was promising could have disastrous consequences for people, writes MATT CUNNINGHAM.

After committing to an ambitious target for renewable energy, the NT government realised what it was promising could have disastrous consequences for people, writes Matt Cunningham.

IF you take a drive about 40 minutes down the Stuart Highway from Darwin, you’ll find evidence of the debacle that is the Northern Territory’s renewable energy policy.

On the left-hand side of the highway there’s a big solar farm, although it might be hard to find. The sign that once alerted motorists to its existence has been removed.

Perhaps that was the work of young punks looking for a souvenir, although the NT government might be happy for as a few people as possible to know of the solar farm’s existence.

Construction at the Manton Solar Farm finished months ago but the only sign of energy generation there is coming from a diesel generator.

It’s a similar story up the road at Batchelor.

The solar farms – and another at Katherine – are owned by Italian company ENI. They invested in them following the NT government’s commitment to a 50 per cent renewable energy target by 2030.

The government promised this would deliver Territorians “cheaper, greener” energy. The reality is proving anything but.

After committing to its ambitious target, the government realised all this renewable energy it was promising could have disastrous consequences for the security of the Darwin-Katherine energy grid.

So, after ENI had made its final investment decision in the three solar farms, the Utilities Commission allowed rule changes, forcing the company to provide the capacity forecasting requirements that would maintain the stability of the grid.

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For a solar farm, dealing with an intermittent energy source, this can be a difficult and expensive task.

The NT government and ENI are now locked in an ugly stoush many believe could end up in court.

The details of that dispute are outlined in two submissions the company made last year that were quietly published on a government website in January.

ENI estimates the cost of providing the new provisions will be more than $25m and notes this cost will ultimately be passed on to consumers.

“It should first be acknowledged that electricity consumers ultimately fund all costs of operating a power system,” ENI commercial and renewables manager Simone Rizzi writes in his submission to the Review of Essential System Services last July.

“If a cost is attributed to any other participant, they will only be then passed on to consumers, often with an added margin.”

Mr Rizzi says the rule changes have made the company’s projects financially unviable.

“The effect of the forecasting provisions is to introduce either an unacceptable loss of solar production to guarantee accuracy, or the installation of sufficient battery capacity to guarantee compliance, which is up to 100 per cent of solar farm output for half an hour,” he writes.

“Either one of the above options will make projects that have been already sanctioned uneconomic.”

ENI also notes it is having “overwhelming challenges” funding the $5.40/mwh it is charged for Essential System Services.

And it’s questioned why Territory Generation is building the government’s much-hyped “big battery”, arguing the cost could be reduced if there was a competitive procurement process.

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The whole situation is a giant mess, and it appears one result will be more expensive – not cheaper – electricity.

More concerningly, ENI says the way the issue has been handled could drive away investors.

“The retroactive imposition of these very significant curtailments/costs on investors such as (ENI Australia Ltd) is a stark warning for future investors to not invest in the NT power system,” Mr Rizzi writes.

Power and Water says the forecasting requirements are essential to ensure our isolated grid remains secure.

“The people of the Territory must have a robust and reliable electricity system and the new standards – created after extensive consultation and investigation – are designed to do that,” the company said in a statement.

Power and Water is right. It needs to keep the lights on. Yet some of its executives have been having sleepless nights wondering how they will make this happen, given the government has committed to an ambitions renewable energy target without first making the necessary infrastructure investments.

It’s hard to believe a government so committed to its signature green energy policy could end up in such a blue with the company providing most of that renewable energy.

Minister for Renewables and Energy Eva Lawler – left holding this poisoned chalice after last year’s election following the ideologically driven decisions during Labor’s first term – says she’s working with ENI to resolve the issues.

“The Territory government is undertaking a program of reforms to address system security and reliability, encourage private investors and maximise the amount of renewable power in the network,” she says.

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That sober statement might have been a better starting point for the government, rather than heading at full steam towards an arbitrary number without any apparent understanding of the complexities involved.

The Utilities Commissioner has already warned that achieving the 50 per cent renewable energy target will be “extremely challenging (if not unrealistic), and that doing so will be “complex and expensive”.

Just how expensive, the government has never been willing to say. But Territorians shouldn’t expect that “cheaper” electricity they’ve been promised any time soon.