Issue 227, March 2024
Now we are in the lunar new year of the dragon, thought in mythology to signify unprecedented opportunities for those able to harness the creature’s intelligence and leadership. Here in Australia, in the depths of the ongoing energy brawl, that may be asking a lot. Certainly February, when the new year began, saw little to encourage optimism, not least as a result of reactions to a significant weather event in Victoria and also because of the as-you-were politicking brought on by forthcoming elections as well as signs and portents from opinion polls. Mid-March will see the latest retail price proposal by the Australian Energy Regulator, a fresh opportunity for noisy debate by the political players and the motley crew of activists pushing their power supply barrows while the community contemplates bills that remain a substantial part of their cost-of-living burdens. The smart money is on not much change to 2024-25 retail tariffs after two years in which they rose some 40 per cent — and this is not likely to be a cause for rejoicing in households and small businesses. Also not to be overlooked in this rolling maul is the ongoing unhappiness in non-metropolitan areas, especially in south-east Australia, caused by the intrusion of power transition infrastructure, an essential part of ALP governments’ net zero plans.
“Even as extreme weather topples huge transmission towers, State and federal governments are pressing ahead to build more. Expanding transmission capacity is important to decarbonise our electricity supply. But, if not done well, it will increase exposure to weather risk” – Bruce Mountain, Victoria Energy Policy Centre.
“A national inquiry is needed to ensure Australia's entire energy transmission and distribution network is future-proof” – Tony Wood, Grattan Institute. “It’s worth reviewing the fundamental economics of the circumstances in which undergrounding could work.”
“Australia needs to think of ways to weatherproof power supply” – Dylan McConnell, University of New South Wales.
“Expanding the transmission network will make the nation’s electricity supply more resilient as the climate changes” – Federal Climate Change & Energy Minister Chris Bowen.
“Australia needs an electricity system resilient to the weather, not reliant on it” – federal energy spokesman Ted O’Brien, criticizing Labor’s “blinkered renewables-only approach.”
“Talkback radio in Melbourne has been set alight with callers urging for more of Victoria’s power lines to be shifted underground after 530,000 homes and businesses lost power during wild weather” – The Age newspaper.
“On average, it costs five times more burying transmission lines than using overhead construction” – Ausgrid’s Junayd Hollis in evidence to a New South Wales inquiry.
“Wholesale burying of powerlines is not economically plausible because it can be anywhere from two times to 10 times more expensive” – Bruce Mountain.
The Victorian government has initiated an independent review in to the “preparedness and response” of electricity networks after storms on 13 February that included destructive winds of up to 150 kilometres an hour – while the State opposition, dissatisfied with the “narrowness” of the inquiry has plans to set up a separate parliamentary review.
The Victorian Chamber of Commerce & Industry reacted to the event by asserting “the outage highlights how fragile the system is.”
Monash Energy Institute director Roger Dargaville is unconvinced of the merits of any review in to grid performance, declaring “there weren’t any really significant system failures.”
Dargaville says the State system showed resilience to the collapse of 500kv transmission pylons between Melbourne and Geelong and the widespread damage to the distribution system was “inevitable” in such weather conditions.
He adds: “Loy Yang A tripped to protect itself from permanent damage and, in doing so, actually kept the system stable. This is what the system is designed to do.”
Dylan McConnell of the University of NSW says suggestions that renewable energy could have saved the day are “nonsense – because the damage to networks can affect all forms of power, regardless how generated.”
He adds: “It is not practical to build a system that can withstand every possible eventuality, including major storms.”
Andrew Richards, CEO of the Energy Users Association of Australia, chimed in: “When bad things happen to the energy system, everyone with a hobby horse gets on board, riding it more often than not in the wrong direction.”
He argued: “The discussion that should come (from the 13 February event) is the degree to which we need to harden the network, how much that will cost and to what extent energy users are prepared to pay for any improvement in resilience.”
While most immediate media attention focussed on the downing of six high voltage pylons near Geelong, causing the four-unit Loy Yang generator in the Morwell Valley, 200 kilometres away, to trip, the longer-term effect of the storm was loss of power to some 400,000 customers because of distribution system damage. The power problems also affected mobile telephone and internet networks, isolating 22 communities from all public communications.
The mass blackout is the second in three years in Victoria. Devasting storms in 2021 wreaked similar damage there.
The State government’s inquiry panel in to the latest outage will be chaired by Rosemary Sinclair, former chief executive of Energy Consumers Australia, and will focus on the 148,000 kilometre distribution system.
The panel’s reference does not include reviewing the State government’s role in facilitating resilience in Victoria’s 6,000k HV network, which is owned and operated by AusNet.
A report is required by August.
Meanwhile, Bruce Mountain, director of the Victoria Energy Policy Centre at Victoria University, has seized on the outage event to repeat the findings of a study last year that argued VNI-West, the proposed major new transmission line between NSW and Victoria, presents a major supply risk – “much more so than the lines that failed (in February).”
He says the market operator has “brushed off” the centre’s critique “without reason,” adding that “Victoria dodged a bullet this time; it could have been far worse.”
Mountain is calling for a bipartisan State parliamentary inquiry in to the February events, with specific focus on whether VNI-West could survive a similar storm “and what would happen if it did not.”
The Victorian government is seeking a change to the NEM rules – administered by the Australian Energy Market Commission – in the wake of the latest State blackout.
The request, endorsed by the nation-wide climate change and energy ministerial council meeting in Canberra on 1 March, is aimed at “ensuring that the resilience of networks is up to date with natural disasters that are increasingly frequent, severe and unnatural as a result of climate change,” according to federal minister Chris Bowen.
The ministerial meeting also agreed to ask the Australian Energy Regulator to broaden its current review of the value of reliability for customers to “establish a value of customer resilience associated with long duration outages.”
Australia’s main agricultural industry lobbying group is speaking out against the pace of the energy transition and calling for a balance to be found between electricity infrastructure expansion and national food and fibre requirements.
Speaking to Australian Associated Press, David Jochinke, president of the National Farmers Federation, said taxpayer funds being used to contribute to the transition energy projects, such as through the federal government’s $20 billion Rewiring the Nation scheme, “must be tied to social licence outcomes.”
In a media statement at the end of February, the NFF urged State and federal energy ministers “to address the fierce discontent in farming communities” over developers engagement with rural communities.
Jochinke says the ministers “need to make meaningful changes to ensure energy projects work with communities rather than bulldozing through.”
He points to a report by Energy Infrastructure commissioner Andrew Dyer that 92 per cent of community members surveyed are dissatisfied with how engagement is being pursued.
The NFF is asking for enforceable obligations to be imposed on project developers to cover engagement, compensation, land access arrangements and the minimising of impacts on land use.
“We also want to see significant action on planning reform, including requiring energy infrastructure planners to find sensible routes for transmission lines, not simply tearing through farmland as an easy option,” Jochinke declares.
The Clean Energy Investor Group is campaigning for governments, and especially the New South Wales government, to speed up regulatory approval of large-scale wind and solar projects.
CEIG chief executive Simon Corbell says a study by his lobby group and lawyers Herbert Smith Freehills has found that, over the past five years, the average approval time for large renewable developments in NSW has been 746 days. This has meant, he adds, that some companies are choosing to pursue projects in Queensland, “which has a State-owned electricity network and much clearer planning rules.”
The study also complains about federal environmental reviews “generally taking up to three years” and “slowing the pace of the transition,” says Corbell. He argues that reviews by both federal and State governments should, together, take no longer than 18 months.
“The planet,” he says, “needs unnecessary bureaucratic red tape to be taken out of the equation.”
A survey of leading energy company CEO opinion by the Australian Financial Review at the end of February highlights the unlikelihood of the looming energy transition targets being met.
Alinta Energy’s CEO, Jeff Dimery, told the paper that the rate of clean energy project development is “well below” what is needed to meet government goals – 82 per cent in the NEM for renewable energy by 2030 and 95 per cent for Victoria by 2035. Dimery added: “The situation has gone backwards in the past 18 months.”
EnergyAustralia’s Mark Collette told the paper that the 82 per cent goal relies on the pace of investment and the pace of projects approvals – “and, on both fronts, we are not yet at the required pace.”
Collette added that “the crux of the transition is to build the new (supply) system before the old one closes,” saying that “the pace of renewables coming forward is too slow.”
Origin Energy’s Frank Calabria said transmission development “remains the huge sticking point.”
The Financial Review also quotes UNSW’s Dylan McConnell as pointing out that, to meet the market operator’s “step change” scenario for the NEM transition, coal power will need to fall annually at four times the rate it did in 2022-23 while new wind and solar generation will need to double last financial year’s rate of development. “We need to pull our fingers out to achieve this,” he told the paper.
Other media quote the Clean Energy Council as saying that only three wind farms with a total of 115 turbines were commissioned in grids across the whole of Australia last year. They point to Chris Bowen saying that 40 turbines need to be added Australia-wide every month until 2030.
The ABC’s national regional affairs reporter, Jane Norman, records that “on any given day (at present), roughly 60 per cent of Australia’s power comes from black and brown coal and about 32 per cent from wind, solar and hydro.”
She adds: “The political stakes are high for a government that needs to keep the lights on and power prices down.”
The latest Newspoll survey, conducted for The Australian newspaper, has found that 65 per cent of people aged 18 to 34 included in the canvass said they support “the idea of small modular nuclear reactors as a replacement technology for coal-fired power.”
Twenty-two per cent of all participants in the poll “strongly approved” the idea and 33 per cent “somewhat approved” versus 17 per cent voicing “strong disapproval” and 14 per cent “some disapproval”.
Newspoll also report that 51 per cent of Labor voters and 53 per cent of Greens voters included in the survey were in support of SMRs.
The newspaper’s political editor, Simon Benson, comments: “The acceptance among younger Australians is as potent as it will be surprising for the Albanese government, which has ruled a line through ever overturning a ban that was imposed a generation ago.”
He adds that Chris Bowen’s “frenzied opposition, which appears rooted in an old-world ideology framed by Labor’s historical antagonism, is at odds with even ALP and Greens voters. Pragmatic sections of the Left now embrace nuclear as a net zero option to firm renewables.”
Collisions with reality are the bane of politicians’ lived experience, and not infrequently of political careers.
Viewing the goings on in the energy arena over the months since our federal government changed hands leads me to wonder increasingly whether and to what extent the Albanese administration (and its energy minister) is due to encounter such a collision.
The Chanticleer column in the Australian Financial Review suggested in late February that “momentum in the broader community around climate policy is being eroded by a combination of concerns about the cost-of-living crisis and some good old-fashioned wedge politics.”
The blame game that erupted after a mid-February blackout hit Victoria is a good example of the latter, but it seems to me that concerns about existing costs of power, and about where prices will head between now and 2030, have the most potential for a political pratfall.
Matthew Warren, in an op-ed in the “Fin” after the storm, made a good point – “electricity has become so political that even commentary around a technical failure, like (the) Victorian blackout, was overwhelmed by spin and misinformation.”
And he went on to put up, in my view, an even better point that is currently almost wholly passing by the community (and the bulk of the media with their easy-rider coverage of the PV sensation): “Rooftop solar is more likely to be the culprit than the saviour. It is now easily the biggest generator in the grid, even powering entire States momentarily, but completely invisible to grid operators. Built to meet political objectives, massed rooftop solar is an increasingly fragile generator because all the power comes from behind residential inverters designed to trip off at the first sign of trouble. Any significant fault in the system could set off a cascading chain reaction of inverter trips, spiralling rapidly to zero energy. This was the cause of a series of system blackouts in solar-rich Alice Springs, some triggered just by passing clouds.
“More utility batteries would help, but the scale needed would be expensive. There’s still the issue of where emergency back-up generation would come from when the only generation is rooftop solar and all other power stations have been forced off.”
A really potent problem for Albanese and Bowen is their big sell in the last federal election on how their “net zero” plan and all its highly costly bells and whistles would, without a doubt, lead to lower bills for users. And, they said then, we have the modelling to prove it – a model that has never seen the light of public gaze.
Conservative commentators like Alan Moran keep tearing at what they see as a major sore point for the government. “Rather than abandoning the folly of an energy policy dictated by ideology and bereft of industry knowledge,” he writes in The Spectator, “governments are responding with ever more market interventions. These attempts to remedy adverse effects will aggravate the economic injuries.”
Moran claims that existing federal and State measures – including regulations plus direct spending on renewables and the costs of system management, transmission and battery support – impose a cost on energy customers of $10 billion a year. He declares politicians are now discovering the economic, and above all political, penalty being incurred.
To pick up a useful cliché, time will tell – but will this lead to timely remedies?
Given how far we have travelled down the green brick road, conveyed by political players of both sides through commission and omission, it is hard to see how a relatively pain-free exit can be achieved.
Keith Orchison
2 March 2024