Our energy-rich nation in transition without a plan

It would be reasonable to expect that a clever country blessed with cheap and abundant electricity would be loath to squander this advantage without first having a master plan for how the system that delivered it could be replaced. But it is becoming ever more obvious that the nation’s renewable energy experiment has been and continues to be an exercise in making things up on the run. The signature recommendation of Chief Scientist Alan Finkel’s review of Australia’s renewable energy transition was not his support for Malcolm Turnbull’s politically driven national energy guarantee but that the nation get a plan. It underscores the fact that to date the various manifestations of renewables policy in this country, as elsewhere, have been less about electricity supply and more an exercise in corporate self-interest, virtue-signalling by government and national self-harm.

Households, workers and businesses have been the losers as a patchwork of ill-considered and contradictory policies have failed to deliver what they have promised. It is clear the road ahead remains littered with wishful thinking rather than any concrete response. Submissions to the Australian Energy Market Operator integrated system plan show there are deep divisions within the electricity industry over what the future should be. Is it time to declare renewable energy zones rather than let the generators decide? This would require another round of multi-billion-dollar investments in network infrastructure to make sure future renewable projects could get their wares to market when they were available. These additional costs would be passed on to consumers.

Or should we continue with an existing system that encourages generators to build new projects in less than optimum locations because the cost of grid connection is cheaper? On top of this, experience in Australia and overseas has shown that wind and solar projects cannot be relied on for dependable power. Mooted solutions such as demand management, better storage and distributed energy systems may work, but they remain a work in progress and therefore a risk. This does not prevent ridicule being heaped on those who favour a more conservative response by extending the life of some existing coal-fired power stations or building more efficient ones.

Lobby group pressure has made it an article of faith that new coal-fired plants are too expensive to compete with renewables and too risky to finance in a carbon-constrained world. But these rules do not seem to apply to the hundreds of coal-fired plants being built around the world, many of which will use Australian coal. The logical answer of gas backup remains frustrated by a mix of state intransigence that bans exploration and development of new reserves and corporate indifference as developed reserves are sent to export with little thought for domestic needs.

Environment and Energy Minister Josh Frydenberg will weigh into these issues again today in a speech to the National Press Club. He will lament the rise of ideology over engineering in the framing of energy positions. “Energy policy in Australia is no longer simply an economic issue,” Mr Frydenberg says. “It has also become a cultural one. As politicians set their battlelines, it is consumers who are the casualties. This is the hard truth. The future of energy policy must be determined by the proper consideration of the public’s best interest, not ideologically driven predisposition. The answer lies neither in a war on coal nor the nationalisation of our energy assets.” Refreshingly frank, this is, nonetheless, a statement of the obvious. The Prime Minister and his team must act decisively to put solutions in place — which, to be fair, they are working towards — as they battle disunity within the Coalition on this issue. Virtually all of Mr Turnbull’s faith, and that of his Energy Minister, is placed in the NEG which, if all goes well with winning support from the states, won’t even be legislated until the end of the year. Then we will see, across time, whether it prompts the required investment in dispatchable power. It may help, but it hardly can repair faults built into the system under the longstanding and bipartisan renewable energy target. This is not only the fault of Labor and Coalition governments in Canberra but also in the states. Energy had been a state responsibility, yet with the advent of the National Electricity Market and then the RET it seems no one realised a national plan was needed.

It is inconceivable to think, given the need to transition from the coal-based system that has served the nation for a century, that responsible authorities could have allowed things to end up where they are now. To blame political division over the nation’s climate change response is not good enough. To imagine it has taken a decade to work out there should have been a master plan beggars belief. The more depressing reality is that in the absence of genuine political courage a workable plan remains as far away as ever.