States diverge on way ahead for renewable energy plans

There is now a clear point of difference between states on renewable energy policy at a time when the federal opposition must decide how it intends to proceed on its support for net zero and nuclear power into the future. New federal Liberal Party leader Sussan Ley and her Nationals partners in the Coalition must make their decisions on what will be relevant for the two electoral cycles between now and 2031. How successful the energy transition is in terms of cost of electricity for business and households, and reliability of supply, will play a big part in how voters will be feeling about things when next they go to the polls.

The success or otherwise of the different renewable energy approaches now being taken across the states will demonstrate whether new technologies really can remove the need for natural gas and baseload power. The energy industry has long argued that what it wants most is for the energy debate to be off the daily news agenda. Politicians share that wish, but for that to happen the high levels of aspiration that have been promised must be turned into reality. The Victorian government has taken a big risk with its latest plan to cover 7 per cent of the state’s landmass with renewable energy projects and transmission lines, and forsake gas backup for something it admits probably won’t work all of the time. The Victorian Transmission Plan – timed to get little attention when it was released late on Friday – proposes seven renewable energy zones and four new transmission lines to achieve 65 per cent renewables by 2030 and 95 per cent by 2035.

The seven renewable energy zones – Central Highlands, Central North, Gippsland, North West, South West, Grampians Wimmera and Wimmera Southern Mallee – will host 5.2 million solar panels, close to 1000 onshore wind turbines and four new transmission projects. As Colin Packham wrote on Monday, unlike many international counterparts that include nuclear, gas or hydro in their energy mix, Victoria is relying almost exclusively on wind, solar and batteries.

That choice has sparked concern about the reliability of supply, particularly during periods of low wind or sunshine. The government’s own policy documents warn of the growing threat posed by renewable energy droughts. Concern about wind drought is not hypothetical, having been experienced previously across southern Australia. It is a major and growing concern for the renewable energy industry in Europe, where it has played havoc with the project economics as well as government projections. Victoria is taking a big risk that the impact of wind droughts can be overcome by using big transmission lines to shift energy around from various areas of the state in the hope that the wind will always be blowing somewhere. This may prove not to be the case. The plan is silent on concerns expressed by the Australian Energy Market Operator that large turbines or other physical machines are necessary to provide grid security and resilience. AEMO does not accept assurances that these services can be supplied artificially by using batteries or grid-forming inverters.

What happens in Victoria will have big consequences for South Australia, which relies on electricity supplies from Victoria when wind and solar resources run short. And by turning its back on gas, Victoria is increasing the risk for its ability to sustain heavy industry in the state and shifting the onus of grid resilience to other states.

The Crisafulli Liberal National Party government in Queensland has taken a different approach to its energy transition to minimise these risks. In April, Queensland Treasurer and Energy Minister David Janetzki set out a five-year energy road map that he described as pragmatic and “geared towards economics and engineering” and that “sets aside ideological bias and preoccupation”. Under Queensland’s new approach, coal-fired power will be extended and bolstered, and gas generation will be greatly expanded. Queensland will remain open for business for renewable energy investments, including in wind, solar and pumped hydro, but it is investing in known technologies as an insurance policy against failure. Mr Janetzki says Queensland remains committed to a bipartisan target of net zero by 2050 because this is critical to unlocking private sector funding for the energy transition. But he wants private funding, not state subsidies, to make it work. Queensland has withdrawn support for pumped hydro and hydrogen projects because they were ill-conceived and deemed neither economically nor technically feasible.

There is no doubt that Victoria will require a good deal of public subsidies to deliver its renewable energy plans. And while wind drought has been identified as a potential issue, little attention has been paid to what the large volumes of excess energy that will be generated when the wind is blowing everywhere at the same time will do for grid stability and project economics. Given the track record of Labor in Victoria it is of little surprise that the state government is willing to risk everything on what might turn out to be an ideological bender.

Ms Ley and the nation have a lot riding on the success or otherwise of the renewable energy experiment that has been given fresh impetus with the result of the federal election.