Commentary

Issue 79, November 2011

Contents

Welcome to the second-last issue for 2011 in a month where, in New South Wales at least, the report in to the State’s electricity industry, and the prospects for its privatisation, have overtaken the federal carbon price legislation as the top energy story. This issue leads off with an important report on the prospects for geothermal energy in Australia and looks at the fevered coal seam gas debate as environmentalists turn against gas as a transition fuel to a lower carbon economy. It also canvasses the problems posed by the NSW Cobbora coal mine project and reveals the O’Farrell government’s first estimate of the State’s energy future.

Hot rock hassle

As the federal government touts geothermal energy as a major plank in its long-term electricity policy while driving the “clean energy future” legislation through parliament, consultants have told it that investors are concerned about the potential returns from the technology’s development and the level of risk involved.

In a report to the federal Department of Resources & Energy, The Allen Consulting Group says the geothermal sector has lost investor confidence because it has downplayed the risks.

Allen Consulting says investors rate the sector as speculative, requiring high returns for the risks involved. “This is a difficult challenge in a utility market with large, long-term investments.”

It says there seem to be good prospects for the industry in Australia and the Gillard government has to confront the question of whether it wants to accelerate development. It notes that a carbon price will improve geothermal’s prospects.

Allen Consulting says it is clear that the vast majority of geothermal companies will struggle to raise adequate capital to develop to a demonstration stage, let alone to a commercial stage, under current conditions.

Power puzzle

NSW Premier Barry O’Farrell says he is puzzled by conflicting reports on the Keneally government’s “gen-trader” privatisation process.

On the one side, O’Farrell’s hand-picked investigator, former judge Brian Tamberlin, has given the deal mostly a tick of approval – but virtually simultaneously the State’s independent Auditor-General has reported that the generation sales were $1.83 billion below the value of the assets.

Auditor-General Peter Achterstraat finds that the Delta West and Eraring Energy assets were worth $3.15 billion but were sold for $1.32 billion.

Tamberlin, who found that the privatisation was “not a fire sale,” said the overall deal, which included selling the State’s energy retailing business for a profit of $3.08 billion, “represented value for money.”

He has put forward this view despite a report to him by Don Challen, a former Secretary of the Treasury in Tasmania and now chair of transmission business Transend, that argues the Keneally government should have withdrawn the gen-trader offering and only proceeded with the energy retailer sales.

Achterstraat has also highlighted that the terms of the gen-trader sale will involve Eraring and Delta in potentially paying tens of millions of dollars in “availability liquidated damages” when they can’t meet their contractual obligations to supply electricity.

The issue has been underlined by a major transformer fire at Eraring, crippling part of its production.

O’Farrell has promised that his government will state its reaction to the Tamberlin report “before Christmas,” with far more media and business interest over whether there will be further privatisation than how good or bad the previous process was.

He told media that the gen-trader sales might have been given “a technical tick” by Tamberlin but they had got a “certain thumbs down” from the electorate at the March State poll.

“The thumbs down was largely about the way in which it was done,” he added, “the five-minutes-to-midnight sale, all the cloak-and-dagger drama and the shutting down of parliament in an attempt to prevent an inquiry.”

The most immediate issue for the O’Farrell government is whether it will take up Tamberlin’s view that the current State generation set-up created by the gen-trader deal is not sustainable. 

Tamberlin points out that Eraring Energy and Delta Electricity have been hamstrung managerially by the process while having the major Macquarie Generation operation plus the rest of Delta still wholly State-run raises significant issues for the market.

Tamberlin does not believe “the objectives of a competitive electricity market or reliability of supply are advanced by maintaining the status quo in generation.”

While many see a decision to sell all the generation assets as a virtual given, the fate of the four networks businesses, claimed by analysts to be worth $20 billion to $30 billion, remains unclear.
Tamberlin recommends their sale, but can’t find “empirical evidence” to support the recommendation, while O’Farrell made an election promise earlier this year not to sell these businesses.

One thing appears clear: the prospect of the existing “gen-trader” deals being un-done seems to have vanished in the wake of Tamberlin’s warnings against unravelling them.

However, as the judge’s report points out, substantial market power issues will need to be taken in to account in selling Macquarie Generation and the remaining Delta assets. 

With Origin Energy and TRUenergy having won all the spoils in the Keneally government sales, the market power issue appears to throw up a fresh opportunity for AGL Energy to take a stronger NSW position.

Meanwhile a public opinion poll undertaken by Essential Media for trade unions reports that 59 per cent of 915 people interviewed in Sydney and regional NSW in the last week of October said they opposed electricity industry privation versus 11 per cent who supported it, 13 per cent  “don’t know” replies and 17 per cent who said they neither supported nor opposed it.

Unions NSW called for further privatisation to be ruled out, arguing it would lead to higher power prices through “manipulation of supply and demand.”

Cobbora conundrum

While the coal mine problem the Keneally government has bequeathed O’Farrell has received far less attention than the privatisation issue, it is one of the biggest concerns to be addressed in the wake of the Tamberlin report.

In a 33-page “report within the Tamberlin report” by professor Tony Owen, who undertook the 2007 electricity review for the Iemma government, the NSW government is warned that the subsidies proposed under the $1.5 billion Cobbora project will impede the introduction of low-carbon technologies in the State.

Cobbora is expected to start operations by 2013 and to be in full production by 2015, delivering 30 million tonnes of coal annually to the NSW power stations.

Owen says the Cobbora scheme will give “unwarranted competitive advantage” to coal generation, especially when, as expected, the cost of gas for power generation on the east coast rises towards export parity.

Judge Brian Tamberlin’s other adviser, Don Challen, says in his contribution that, without a large subsidy to keep coal prices down, the gen-trader sales could not have been completed as “potential buyers for the rights might well have regarded the fuel supply and price risk as too high.”

Challen says the NSW government faces big risks with Cobbora, including whether it can be fully operational as planned and, as it will be a loss-making project, whether it can acquire the skills and expertise needed for a large-scale mine.

Meanwhile Auditor-General Peter Achterstraat has called on the O’Farrell government to release the Keneally government-originated strategy for Cobbora for public scrutiny. “There should be a clearly-articulated business plan (available) to demonstrate to the people of NSW the benefits of the project.”

Income dip

The NSW Auditor-General says State government income from its seven electricity businesses was lower last financial year than in 2009-10. The government’s total income was $2.3 billion versus almost $2.6 billion the previous financial year. Profits fell $100 million and income tax rose $41 million, but dividends dipped by $230 million.

Deflated spot price

The Auditor-General says that the average wholesale energy spot price for NSW in 2010-11 was $36.74 per megawatt hour, a fall of 16.9 per cent on 2009-10. The reduction resulted from less extreme weather and fewer periods of high demand, the availability of more generation capacity after the end of the drought and fewer constraints on the flow of power through interconnections. 

The average wholesale price in NSW over five years has been $38/MWh, trending as high as $58.72 in 2007 during the worst of the drought.   Energy costs make up 48 per cent of end-user bills in NSW.

NSW outlook

The new O’Farrell government has provided its first perspective on the outlook for NSW energy supply, but it has been buried in the hundreds of submissions received by the State Legislative Council inquiry in to coal seam gas.

Ensuring security of gas supply for NSW electricity generation will require bringing the State’s CSG reserves in to production and/or the expansion of transmission pipeline capacity from interstate, the government tells the LegCo committee in a submission delivered on 30 September.

Failure to do will expose customers to potentially significant price rises for business and residential customers using gas directly and for wholesale electricity charges.

It is estimated that the State will require about 500MW of new electricity generation by 2019-20 and 800MW by 2020-21, the government says.

In the absence of gas-fired generation, the only currently available technologies to deliver new capacity are low cost but high emission coal-fired generation, with its associated carbon price risks, or higher cost intermittent renewables (wind and solar PV) with associated challenges for energy reliability.”

The government suggests that new generation capacity commissioned in NSW between now and 2030 could be made up of 679MW of baseload gas plant, 6,757MW of peaking gas plant and 392MW of renewable energy.

Currently, it says, the State has about 11,000MW of generation proposals for development approval – including 3,500MW of gas plant and 4,700MW of gas or coal (a reference to the large proposals for development at Mt Piper 2 and Bayswater B put forward by Delta Electricity and Macquarie Generation under the Keneally government).

It says there are also another 10,000MW of generation proposals in the planning system, including 3,300MW based on gas supply.

The development list includes 1,967MW of wind power and the planning pipeline includes 6,769MW of wind projects.

The submission points out that there has been a sharp rise in gas demand in NSW in the past two years due to the commissioning of three new power plants (Tallawarra, Uranquinty and Colongra).

“While on an annual average basis, the share of gas used for power generation in NSW is around 25 per cent,” it adds, “during periods of peak demand, the proportion could go up to 45 per cent.”

The government says new gas-fuelled generation is expected to come on line in NSW from 2017 and it forecasts that annual power plant demand for gas will rise from 30 petajoules today to 350PJ by 2030.

At present the State imports 96 per cent of its annual gas needs – which total 160PJ – from Victoria and South Australia. The Moomba pipeline and the Longford processing plant in Gippsland are both more than 40 years old.

Power quiz

A large-scale survey of Queensland households is being completed this month to identify trends in electricity use and attitudes to energy efficiency. The survey, the third of its kind, is being conducted by Colmar Brunton for the three State government-owned network businesses.

The 2010 survey, released in March this year, revealed that householders in Queensland are buying close to 3,000 air-conditioning systems a week with three-quarters of homes now have cooling systems. Energex has estimated that, if this trend continues, 85 per cent of south-eastern Queensland homes will have air-conditioning by 2016.

New review

Seven years after the landmark Somerville review of Queensland network businesses, the State government has launched a new inquiry.

State Energy Minister Stephen Robertson says the review will again be headed by Darryl Somerville and his panel will include the Commissioner for Electrical Safety, Jack Camp, and energy and management expert Stephen Blanch.

Robertson says more than $12 billion has been invested in expanding and improving the State’s networks since Somerville last reported in 2004.

The resulting improvements in supply reliability, he says, “mean that Queensland will never return to the bad old days of widespread blackouts and brownouts.”

Somerville’s brief includes considering what changes should be made to network capital programs to balance the objectives of price and reliability for customers.

Energex chief executive Terry Effeney says the business believes there may be opportunities to better balance supply outcomes and prices at a time when there are significant public concerns about increases in power bills.

The panel is required to report by the end of this month.

Australian Energy Regulator data show that annual energy consumption in Queensland has risen from 41,000 GWh in 1999-2000 financial year to 51,400 GWh in 2010-11.

Secrecy and spin

Liberal Senator Mathias Cormann is sustaining an attack on the federal government over Treasury modelling as its “clean energy future” legislation moves through parliament in Canberra.

Cormann wants the Gillard government to release all of the economic modelling of the carbon regime and says that “secrecy and spin cannot hide the carbon tax’s flaws.”

The West Australian senator, who chaired a Senate committee scrutinising the carbon proposals, asks: “What does the government have to hide?”

He argues that the refusal by Treasurer Wayne Swan to release all of the modelling has “tarnished” the work of his department.

Not wanted

An Essential Report survey of public opinion shows that opposition to the Gillard government’s carbon price proposals has risen steadily since May despite a multi-million dollar promotion of the policies.
A poll on 17 October showed 53 per cent of respondents opposed the policy, up from 44 per cent in May, 49 per cent in July and 52 per cent in September.

Support for the government’s plans was 41 per cent last May and is now 39 per cent. The poll shows that 24 per cent of people saying they plan to vote Labor oppose the legislation.

Essential Report says that the only demographic group to support the scheme are the under-35s – with 46 per cent in favor and 43 per cent against. Sixty-three per cent of respondents over 55 are opposed to the measures.

Asked what should happen if the Coalition wins the next federal election, only 21 per cent of respondents believe the policy should be retained, 33 per cent say it should be retained only if it proves to be effective in reducing emissions and 34 per cent believe that, if necessary, a double dissolution of parliament should be pursued to deliver the numbers to overcome Labor and the Greens blocking an abolition move in the Senate.

Driver for renewables

In a written answer to questions posed during Senate estimates hearings last month, the federal Climate Change & Energy Efficiency Department has claimed government modelling shows that, without a carbon price, renewable energy would deliver only 10 per cent of generation output by mid-century – but, with the carbon measure, about 40 per cent of production will be from renewable resources.

The departments adds that, modelling undertaken for the Treasury, shows that, without the carbon measures, there is a risk that the renewable energy target would deliver only 15 per cent of power consumption in 2020 instead of the RET’s 20 per cent goal.

The department says it has commissioned updated modelling of the impacts of the RET to inform a Council of Australian Goverments review of the scheme.

Smart meters

Three energy retailers – AGL Energy, Origin Energy and Simply Energy – have told the Australian Energy Regulator that a national approach is needed to the roll-out of smart meters and cost recovery.

Their submissions were made to an AER review of smart meter budgets and charges in Victoria, which has been the lead State for the introduction of the technology amid considerable controversy.

The AER has approved budgets for 2012-15 totalling $1,096 million for the five Victorian distribution businesses engaged in the State roll-out. This is estimated to bring expenditure on the project between 2009 and 2015 to more than $2 billion.

The AER was accused by the Melbourne media of “sneakiness” for announcing price rises associated with the capex outlay on the eve of the Melbourne Cup.

The decision, which follows a successful appeal by the distributors against an AER determination that their costs be limited to $760 million between 2012 and 2015, will involve an average rise in Victorian householder power bills of between $8 and $40 a year. 

The distributors had initially sought AER approval for expenditure of $1.24 billion.

Victorian Energy Minister Michael O’Brien, who has imposed a moratorium on the pass-through of costs while the State government reviews the program, says he is committed to “turning this program upside down and inside out to try to see how it benefits customers.”

Meanwhile in Britain a House of Commons committee has been told that British households can expect to pay six pounds a year to cover the costs of a 12 billion pound roll-out of smart meters by 2019. The British Department of Energy says “the plug could yet be pulled” on the roll-out, scheduled to commence in 2012-13, if consumer benefits cannot be adequately identified.

The technology industry is pushing hard to establish the inevitability of smart meters. It cites new research by analysts Berg Insight in the US claiming that there will be almost 603 million meter installed worldwide by 2016, with penetration reaching 50 per cent of European and American households.

New CEO

The Energy Supply Association has a new chief executive and the Clean Energy Council will have to find a new one following the appoint of the CEC’s Matthew Warren to run ESAA.

Announcing the appointment, ESAA chairman Tony Concannon said: “Australia currently stands at a crossroad, confronting critical climate and energy challenges that will impact on the reliability of supply, the needs of investors and the cost of our energy for generations to come.”

Warren has led the CEC since 2008 and will take up the ESAA role in mid-January.

The appointment is another in a series of leadership changes for national energy industry associations. Malcolm Roberts has shifted from the National Generators Forum to the Energy Networks Association. Nikki Williams is moving from the NSW Minerals Council to lead the Australian Coal Association and Brad Page moved from ESAA to run the Global CCS Institute.

Capital path

A paper in AGL Energy’s applied economics and policy research series has traced the path of capital investment in electricity assets in what is now the “national electricity market” – the interconnected east coast grid – from the middle of the past century.

Using constant 2011 dollars, AGL says investment in generation, transmission and distribution was largely stable at $5 billion a year from 1955 to 1978 with load growth averaging 7.9 per cent a year.

Load growth slowed to an average of 5.4 per cent annually between 1979 and 1990 but industry investment soared to about $9 billion a year.

“The period between 1990 and 2000 could best be described as an investment blackout,” AGL says, with aggregate annual investment on the east coast slumping to just $2 billion and then reverted to growth between 2000 and 2006 at $5 billion annually.

“The investment megacycle is visible from 2007 onwards,” it adds.

Core question

John Pierce, chairman of the Australian Energy Market Commission, says the core question to be answered in considering electricity network development is “how can energy services in terms of cooling, heating, lighting etcetera be maintained while increasing the utilisation of the capital invested in infrastructure?”

The AEMC is currently considering proposals for rule changes put forward by the Australian Energy Regulator, supported by energy-intensive industries but hotly contested by the network service providers.

Uncertainty certain

Origin Energy managing director Grant King says the passage of the Gillard government’s “clean energy future” legislation will not put an end to investment uncertainty for investors.

“There will be the same uncertainty the day after the legislation passes the Senate as the day before,” King told a Sydney forum of the Committee for the Economic Development of Australia.

But King said he does not believe this situation will result in risk to the supply of electricity. “The power will be there irrespective of the uncertainty,” he said, but we may look back in 10 or 20 years and wonder why we built what we built.”

King also told CEDA that it was hard to sustain an argument that energy costs have become materially more burdensome to consumers despite recent sharp rises in power bills. “The energy share of household expenditure has hardly changed over 25 years,” he argued, pointing to Australian Bureau of Statistics data that show energy costs have been static at 2.6 per cent for residential users since 1998-99 and were 2.8 per cent in 1993-94.

However, he said Origin expects the wholesale cost of energy to rise in coming years because of (a) increases in coal and gas prices, (b) increasing costs of State and federal renewable schemes and (c) the impact of the carbon price. “We expect that network costs have peaked and will moderate over the next few years.”

In terms of international comparisons, King said Australian energy prices, which are at the lower end of a list of developed countries, are “likely to move towards the middle of the pack over the next few years,” but Australia will continue to enjoy competitive energy costs compared with major trading partners.

Gas to triple

Santos says it expects gas demand to triple over the next 10 years in eastern Australia with steady domestic residential and industrial use, an expanding role in power generation and the requirements of “at least five” LNG trains.

James Baulderstone, the company’s east Australian vice-president, forecasts that the use of gas for power generation in the domestic market will triple by 2030.

Baulderstone says there is sufficient gas in eastern Australia to meet such demand – but “it is important to note that much of this gas cannot be economically developed at current domestic prices of around $4 per gigajoule, some of the cheapest gas in the developed world.”

Santos predicts that domestic gas prices will move to between $6 and $9 per gigajoule.

“Historically,” he says, “east coast domestic gas prices have been relatively flat. We believe that a move to moderately higher prices is affordable. Gas cost is a relatively small percentage of the end-user price of electricity – circa 20 per cent.”

Meanwhile federal Resources & Energy Minister Martin Ferguson says Australia is “in a golden age of gas,”

Speaking to the Australian Pipeline Industry Association annual conference in Sydney, Ferguson said $4 billion has been invested in, or committed to, new gas transmission pipelines in the past decade.

LNG exports will reach 20 million tonnes next year, he added, and this will rise to 24Mt annually when Woodside’s Pluto project gets in to full production. The seven new LNG developments in various stages of construction will boost exports to 50Mt a year.

He forecast that gas-fired generation will account for 37 per cent of electricity supply in two decades.

TRU’s two

TRUenergy is pursuing development approval for gas-fired power stations in Gladstone and Ipswich, looking at beginning construction in 2013.

The plants will be developed in stages, with initial units sized around 500MW and total planned capacity for each at about 1,500MW.

TRUenergy managing director Richard McIndoe says: “They are expected to be able to meet the projected growth in demand for electricity in Queensland for the next 10 years and, at full capacity, could increase the State’s generation by 20 per cent.”

Initial investment in the plants will be about $400 million each and final investment could be $1.8 billion each.

The Blackstone power station will be built in an industrial park in Ipswich, close to the Swanbank B coal-fired plant that is scheduled to be closed next year. The Aldoga plant will be built in the Gladstone State development area.

The Australian Energy Market Operator has forecast that power requirements in Queensland will grow by 4.1 per cent a year over the next 10 years and demand in the State’s central region, driven by resource developments, is claimed by the Gladstone development agency to be likely to rise by 25 per cent this decade.

The Queensland government says about 500MW of capacity needs to be built each year.

Apart from TRUenergy’s plans, ERM Power is working on a 500MW Braemar 3 development and Origin Energy on a 500MW stage 2 for its Darling Downs project, both gas-fired.

Wind jam

Environmental lobbyists Friends of the Earth claim that $955 million worth of wind farm developments have been “lost or stalled” as a result of the Victorian government’s changes to planning approval rules for the technology.

Meanwhile Brisbane’s “Courier Mail” newspaper reports that there is active planning at present for six wind farms in Queensland involving almost 600 turbines and with a proposed capital outlay of $3.68 billion.

The two biggest developments are a $1 billion wind farm at Coopers Gap in the South Burnett region (AGL Energy) and a $1.5 billion project near Mt Isa (Windlab) which is probably stymied at this point by the failure of the CopperString transmission development.

The Courier Mail claims that there is growing adverse reaction to the proposed developments from farming communities.

Meanwhile, in one of his last acts as Premier of South Australia, Mike Rann announced that the Labor State government would legislate to block wind turbines being erected within a kilometre of any home without householder consent.

Urban Development Minister John Rau said $2.8 billion has been invested in wind farm development in SA to date. Rann said another $1.8 billion worth of wind projects is in the planning pipeline.

Price of a pilot

The Baillieu government in Victoria will contribute $25 million towards an effort to demonstrate geothermal energy potential near Geelong.

Greenearth Energy is also seeking support from the federal government’s $126 million fund to promote “emerging renewables.”

The company says it will cost $18 million to drill a four kilometre deep well to test the geothermal resource. If this is successful, it will need to drill a second well at a cost of $14 million and then spend about $100 million on developing a 12MW pilot plant.

The State government is giving $5 million towards the cost of the first well and has promised a further $20 million if the pilot plant is built.

Last word

The reality of the promotion of 100 per cent renewable energy for Australia’s electricity production is that it isn’t going to happen in any time frame we need be concerned about.

While it is no doubt academically interesting to have this debate, it is a side issue and there are far more important matters for attention.

Whatever the federal government’s energy white paper may say – this is a work in progress under the direction of Martin Ferguson – the current official state of play, as set out by the Prime Minister, the Treasurer and the Climate Change Minister in the “clean energy future” statements, is that we are working towards having just 40 per cent renewables-sourced power generation in 2050.

In their perspective, almost half this renewable supply will come from geothermal energy – “hot rocks” – which are seen at present as a very long way from being commercially viable (see above).

What we use to fuel the remaining 60 per cent of non-renewable generation is the big issue because these sources will also be needed to fill any gaps left by the renewable ambitions falling short of reality.

The Gillard government, constrained by its political unwillingness to even contemplate nuclear power, claims we will be using carbon capture and storage to deal with emissions from gas-fired and coal-fired power plants in the middle of the century.

Proponents of nuclear power argue that, because CCS is yet to be proved as a commercially viable option, serious attention should be given to their preferred fuel. 

Their current view could be paraphrased as being that Australia will be forced to consider nuclear power by the end of this decade, that the first reactors will be operational in the next decade and that there will be a large-scale shift to this energy source in the 2030s and 2040s.

Even if this is the case, the major issue for policymakers today is how we will both fuel power supply over the next 15-20 years and reduce the growth of greenhouse gas emissions.

The government’s assertions that we will cut Australia’s emissions to less than they were in 2000 all rest on our being able to buy two-thirds of the abatement in the form of credits from overseas. The pros and cons of this approach are an endless source of dissension in current debate.

While this continues, we still need to be building power generation and the recent TRUenergy announcements for new gas-fired developments in Queensland (see above) are a harbinger of where we will go as are the views of the NSW government (also see above).

The big problem here is that the past 12 months have seen turmoil in public debate over onshore coal seam gas exploration and development.

Environmentalists, populist politicians and local communities are now locked in a wild argument with the upstream petroleum industry over the pros and cons.

Origin Energy CEO Grant King summed up the disdain many industry leaders and senior figures in policymaking feel for the present debate when he said in his CEDA speech (see above) that “much of the discussion has not been troubled by the facts.”

The ideological rhetoric about energy and carbon issues, King said, is making a sensible debate of the choices available to us more difficult than it needs to be.  As he noted, misinformation and misrepresentation are the weapons of choice in promoting many points of view.

King also made the very good point that green groups, and the Greens as a political party I’d add, tolerated the notion of gas as a transitional fuel to a carbon-constrained future until they suddenly woke up to the fact that what he describes as the “unconventional gas revolution” – the rocket-like emergence of coal seam gas here and shale gas in America as major energy sources –  burst their belief that this was a relatively limited substitute for coal-fired power generation.

“Natural gas,” says King, “has a central and enduring role in reducing carbon emissions – and gas is no longer perceived as a friend of renewables, assisting in an orderly transition, but as the enemy, delaying progress to a world fuelled entirely by renewables.”

He made another key point, too. “Consumers want competitively-priced energy,” he said, “but even more important (to them) is a reliable supply of energy.”

Responding to the ongoing vilification of fraccing, King pointed out that it is also central to unlocking unconventional geothermal resources – in which Origin is a major player. Coal seam gas’s impact on the Great Artesian Basin, he said, is small relative to the potential impact of geothermal energy and other water users on the basin.

In another example of the hypocrisy of the current debate, the green promoters of exclusion zones for CSG projects are the opponents of exclusion zones around wind farms.

The stand-out message from all of this is that populism and political opportunism represent a huge threat to a stable, efficient electricity supply.

International Power chief executive Tony Concannon summed it all up this month. “Australia,” he said, “stands at a crossroad, confronting critical climate and energy challenges that will impact on the reliability of supply, the needs of investors and the cost of our energy supply for generations to come.”

In the same vein, in a report for the federal government on geothermal energy (see above), The Allen Consulting Group provided this summary of the overall context: “Economic activity and standards of living more generally are underpinned by access to supplies of reliable, competitively-priced energy. The role played by the energy sector is of critical importance to both our society and our economy.”

These are thoughts to remember as the media get excited this month about the Greens and Gillard pushing the carbon legislation through federal parliament.

Keith Orchison
6 November 2011

 

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