Getting it together

As we drift uneasily on a sea of media blather about the 2014 federal budget, none are probably more queasy than those with renewable energy interests, expecting, as they do, that Tuesday evening’s announcements by the Treasurer will contain harbingers of worse to come.

The next waves heading our way after the budget is delivered are the energy green paper, to be expected close to the end of the month, I am told, and the RET review.

Like the recent Commission of Audit, which is a Business Council wish list as much as anything, the RET report from Dick Warburton and his fellow panelists will be no more than advice; what the Abbott government does may be to take up some of the recommendations and to use it as a backdrop for pursuing a rather different path.

The green commentariat, huddled around their solar panels, alternate between telling themselves scare stories and waving any propaganda that comes to hand to claim the government’s actions will harm the public weal.

One symbol just grabbed is the announcement by Barack Obama that solar panels will be re-installed on the White House roof – they were originally put there by Jimmy Carter (now seen by more than a few as Obama’s doppelganger as the most ineffectual US president of the past half century) and later removed.

What the local solar boosters don’t say is that the solar PVs Obama is planning to deploy will produce enough power a day (when the sun is shining) to operate just a score of light bulbs.

Even a casual visitor to the White House (which I have been) knows that it uses rather more energy than this – and who knows what the power needs actually are for the HQ of the free world when all the gizmos installed there are taken in to account?

Of rather more moment is the claim by investment bankers UBS that, even if the Abbott government dumps the RET provisions affecting solar power, the rooftop PVs’ momentum is unstoppable and we are on our way to having half of the nation’s households using the technology (versus 1.1 million out of just over 10 million homes across the country today).

This leads the bolder (or something) of the green commentariat to assert that we will see a large number of households disconnecting entirely from the power grid by “as soon as 2018.”

My reaction is a five-letter word beginning with “b.”

(The one Jim Hacker bowdlerized by writing “round objects” in the margin of advice, leading Sir Humphrey, in turn, to enquire “Who is Round and why does he object?”)

All of which is by way of preface to asserting that two of the key challenges for the RET review and the eventual white paper, from where I sit, are a really decent evaluation of solar power and the need for us to embark on a radical overhaul of network charges to cope with the different supply environment created by PVs and air-conditioners.

One of the most significant failures of the past decade in national policymaking – and, let’s face it, this is a wide and well-populated field – has been, on the one hand, an inability by all concerned until just recently to appreciate that the network pricing regime is no longer wholly fit for purpose (even though much of the past 10 years has been spent playing around with network regulation) and, on the other, the cockamamie approach to solar power pursued by the Rudd/Gillard regime and every State government in the land.

All of which has helped to land us in a situation where power prices are unacceptably high, wholesale generation is dangerously unviable and network costs are no longer imposed equitably – while we have a large new pool of voters with a vested interest who are not going to be happy with the appropriate reforms plus a radical environmental movement whose goal is the demise of the fossil-fuelled power sector, an end to which they will strive regardless of commonsense.

It says a lot about this situation that, at the same time, no-one in authority seems prepared to speak up for the fact that one facet of policy, the pursuit of energy efficiency, which has had bipartisan support, is now delivering a reduction in power demand and savings for consumers (in the sense that they are paying less than they would have done without appliance MEPs and so forth).

We laud a stuffed-up situation and barely acknowledge a success story.

Some in the green commentariat choose to focus on the tariff “can of worms” (as one has described it) as being solely an attempt to punish those who have taken up PVs.

In fact, the need is for development of grid tariff structures that are cost-effective and avoid cross-subsidies between customers.

A really worthwhile green (and subsequently white) paper will take up this issue in its full context and a genuinely pro-active Council of Australian Governments, using its Energy Council as the delivery vehicle, will pursue the necessary reform with speed, efficiency and a high-quality communications program.

This task can only succeed if both the Coalition and Labor are prepared to embrace the necessary changes.

The only party leader to focus on this issue (and then only in part and for egregious political gain) in the past six years has been Julia Gillard, who probably made things worse by waving her “big stick” at new Coalition State governments.

The recent AECOM report on the issue to the Energy Supply Association proposes three steps towards achieving a sensible outcome here: (1) prioritise consumer participation in the reform, (2) pursue tariff simplicity, and (3) don’t copycat what is going on overseas (where this is also an important issue in a number of countries) but develop an approach appropriate for local conditions.

The line offered by ESAA’s Matthew Warren in launching the AECOM study seems right to me: “electricity prices must reflect the real cost of supply, sending a better signal to consumers and encouraging them to take control of how much energy they use, when they use it and how much they pay.”

The Greens and their fellow travellers would be doing much more for Australian consumers if they embraced this view, too, rather than pursuing their version of “Animal Farm”: solar good, fossil fuels bad.

This, however, is not going to happen and it is in the national interest for the Coalition, via the green/white papers for starters, and Labor to embrace a policy for the long term that delivers energy security, market stability, efficient pricing and consumer benefits.

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