NSW and Victoria insist energy targets will be met but need investment in generation
States and the federal government are moving as fast as possible toward clean energy but development of zero-emission generators must be ramped up, a conference has heard.
Australia’s most populous states will meet ambitious renewable energy targets but the transition could be bumpy without an urgent increase in developing new zero-emission generation, state energy ministers say.
The concession comes amid heightened concern about the pace of building new renewable energy generation. If Australia fails to keep pace with the retirement of coal – still the dominant source of electricity for the country – prices will go up.
Speaking at the Australian Clean Energy Summit in Sydney, NSW Energy Minister Penny Sharpe said states and the federal Labor government were working as quickly as possible to hasten the transition, and she hoped that by the end of the decade those efforts would be recognised.
“I hope in the end that those who are part of it … will say in 2030 that it was bumpy but NSW tried to smooth that out as best as possible,” Ms Sharpe said.
Australian officials are under growing pressure to hasten the development of new renewable energy generation as coal-fired power stations are retired due to heightened social and economic pressure.
Coal power stations operate constantly, and the influx of renewable energy means wholesale prices are so low that many fossil fuel operators are running at a low level until evening peak hours.
If more coal-fired power stations are retired, prices will spike during the evening or during periods when the sun is not shining or the wind is not blowing.
A growing chorus of heavyweights are increasingly alarmed. Former RBA deputy governor Guy Debelle on Tuesday said electricity prices could surge for many years to come if renewable energy were not prioritised.
Australia has endured two consecutive years of increases to electricity bills of more than 20 per cent amid a global energy crunch that propelled coal and gas prices to record levels.
But new developments continue to be bogged down, with transmission the most notable sticking point.
Australia needs more than 10,000km of new high-voltage power lines across the country’s east coast, but the development of the infrastructure has been slowed by community opposition.
States have increasingly upped financial compensation offers, but a pocket of resistance remains – stoking expectations that Australia will have to force compulsory acquisitions.
The federal government and state counterparts will be reluctant to implement such a step, but renewable energy developers will stay on the sidelines until they have security that electricity can be supplied to the grid.
Federal Energy Minister Chris Bowen has urged developers to do better with local consultation, but Australia can ill afford to wait until universal support is secured.
A hiatus could cause would-be developers to look elsewhere and Australia is already losing ground to the United States as a plethora of investors are lured by enticing sweeteners offered by President Joe Biden’s administration.
To supplement development, Victoria has re-established the State Energy Commission which has been armed with a budget of $1bn and tasked it with developing 4.5GW of generation and storage capacity, enough to replace the state’s dominant source of electricity – AGL Energy’s Loy Yang A coal power station, which will close in 2035.
The presence of the state body has caused some concern among would-be investors, which worry that SEC-backed developments would have the inside lane on things such as transmission access.
Victoria cannot afford to discourage any developers after it legislated Australia’s most aggressive carbon reduction plan.
Victoria plans to have zero emission sources account for 95 per cent of its energy needs by 2035 and to be net-zero by 2045.
In a plea to potential investors, Victorian Energy Minister Lily D’Ambrosio said the SEC would provide seed capital to renewable energy projects, complementing private investment to drive the transition away from coal.
“I want to make it really clear to the private sector that there is a lot to be done and there are plenty of opportunities for everyone,” Ms D’Ambrosio told the Australian Clean Energy Summit.
The SEC has invited submissions of interest, which closed late last month. The agency is working through those and will make a shortlist.
Industry sources said the SEC received significant interest for seed capital, but said the agency was still in its embryonic stage and it was still unsure of its own remit.
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