Energy Minister Angus Taylor warns on ‘gold plating’ lifting power prices
Energy Minister Angus Taylor has warned over-investing in electricity transmission could slug households with higher power bills for decades.
Energy Minister Angus Taylor has warned the federal government will only support “priority” electricity transmission projects over fears that ‘‘gold plating’’ the power grid could slug households with higher energy bills for decades.
Over $14bn of new power transmission lines need to be built over the next decade as part of an urgent rewiring of the grid to handle a rapid influx of renewable energy and storage as coal generation exits the system.
“We will only invest in priority projects,” Mr Taylor told The Australian ahead of a speech to the Energy Networks Australia conference on Friday. “The reason they are priority projects is they go through a cost/benefit process, which ensures that customers are better off.”
While Labor has proposed a $20bn Rewiring the Nation fund to ensure the grid is rebuilt to accommodate growing sources of solar and wind, the government said it would only support transmission projects that made economic sense.
“Labor has not made that commitment and is proposing to invest in non-priority transmission projects. And there’s no assurance that any of those will be of any benefit to consumers. There may be a benefit to someone who wants to get a renewable project a long way from a transparent transmission line. But there certainly is no guarantee that there’ll be any benefit to customers.”
Canberra has committed support to Project EnergyConnect – a $2.2bn power cable between South Australia and NSW – along with the Victoria-NSW interconnector called VNI West and Marinus Link, a second power cable connecting Tasmania to Victoria.
However, Labor says the Morrison government has failed to fund transmission needed to deliver a 20-year blueprint scheme under development by the Australia Energy Market Operator.
Mr Taylor will tell the conference on Friday the government “needs to be careful about transmission investments because these are baked into bills for decades”.
“Many customers continue to pay for this period of over-investment and will for the remainder of the economic life of the assets, which could be up to 50 years,” he will say in his speech.
“Consumers must only pay for what is truly needed to keep our grid reliable and affordable. Households and businesses cannot afford a repeat of the doubling of electricity costs they saw under Labor, driven by the carbon tax and gold-plating of our poles and wires.”
The Clean Energy Finance Corporation, which will announce on Friday it has reached $10 billion in investment commitments since its inception in 2013, said it was willing to play a part in funding transmission developments. Still, the level of commitments may hinge on progress of the government’s stalled $1bn Grid Reliability Fund.
“The current government had proposed $1bn for grid reliability investments. And we continue looking at investments in the grid and there are opportunities in some of the renewable energy zones that are being developed around the country,” CEFC chief executive Ian Learmonth said.
“So it’s important for us to see how we can use our capital in investing in the grid and related technologies to help with this renewable energy transition. The grid numbers in terms of transmission are huge and the time-frames can be long. And that contrasts with the much shorter time frames of building renewable energy projects.”
AEMO said in December that transmission projects would add $29bn in value while allowing renewables to be spread across the grid, with the Victoria-NSW Interconnector and HumeLink projects both seen as critical to guard consumers against the risk of faster than expected coal retirements.
Snowy Hydro has previously warned the lack of transmission could kill the transition to renewables, with a string of major players weighing into the debate.
AEMO, which runs the national electricity network, has plotted a “step-change” scenario to guide power grid investment over the next decades and ensure Australia cuts pollution.
Under the plan, coal is set to be eliminated from Australia’s electricity system up to a decade earlier than planned, and the grid would require a ninefold increase in wind and solar capacity by 2050 to meet the nation’s net zero emissions targets.
Energy Networks Australia said there were fears that transmission would fail to keep up with the rapid change in the power grid.