Wild water

The monsoon of media coverage of energy issues over the past 10 days must be making it pretty hard for the community at large to understand what’s going on.

Probably the word that has stuck is “crisis” because no less than the Prime Minister says we have one.

Such is the momentum of the debate today, as a colleague said in an email to me this week, one must wonder if the Finkel task force in to NEM security is being rendered irrelevant by the political forces now at work. It’s a question of timing — and also of political parties taking up positions long before the review’s final report will be delivered.

From a purely personal perspective, what’s going on could actually hardly be better timed.

The Australian Domestic Gas Outlook conference I am co-chairing kicks off in Sydney tomorrow (14 March) with almost 300 attendees. It has a smorgasbord of papers relevant to the drama over the fuel’s availability and price.

Then the second Quest Events Australian Energy Week conference will be held in Melbourne from 21 to 23 June.

Its large slate of speakers drawn from across the spectrum of the energy supply business, customers,the regulatory sphere, NGOs and analysts also includes three ministers — Queensland’s Mark Bailey, Victoria’s Lily D’Ambrosio and the federal government’s Josh Frydenberg — plus federal Labor’s shadow minister Mark Butler and Alan Finkel. The inaugural version of this event last year drew 400 people.

Apart from anything else, the amount of information updating and networking opportunities available from these conferences is a valuable reservoir on which to draw for the rest of the year.

The problem for most of us at present is not the availability of information — it is arriving in torrents from every quarter — but the challenge of drawing meaningful direction from it all.

I was struck this morning by the abstract of a new academic journal article that AGL’s Tim Nelson and colleagues have just had published.

Entitled “The changing nature of the Australian electricity industry” (putting this in to Google will give you all the publication details), it says: “The electricity supply industry has historically offered a homogenous good supplied via economically regulated transmission and distribution networks. Competition was introduced into the contestable generation and retail supply chain components as part of the 1990s Hilmer reform process. After a century of incremental technological developments, the industry is now being transformed by new distributed energy technologies and a global focus on reducing anthropogenic greenhouse gas emissions. Policymakers did not anticipate these changes. A number of key reforms are likely to be required.”

The authors go on to argue that, given the partial substitution of grid-based power in the NEM, policymakers need to consider whether write-downs of regulated asset bases of monopoly network providers is necessary and what is the appropriate role of monopolists and competitive markets in delivering distributed energy resources (ie wind and solar).

As a synopsis of a fair chunk of the current challenges, I think that’s pretty good — although the headline writer in me (and I realized over the weekend that it is now 58 years since I started my communications career as a newspaper reporter) would be inclined to caption this commentary something like “Riding the power sector’s wild waters.”

If you want another insight in to the rapids and whirlpools of all this, you could visit the Senate’s Hansard for the reports of the hearings a select committee has been holding in to “the resilience of electricity infrastructure in a warming world.”

The committee’s three public hearings have thrown up all sorts of energy debate debris, not least because the transcripts give me the impression some South Australian senators are on a witch-hunt to identify the guilty party or parties for their State’s recent power woes.

If only it were that easy. Too often politicians generally give the impression that they just can’t get their heads around the considerable complexity of providing electricity to a modern society even without the complications of emissions abatement and are constantly stretching to pick winners and push barrows in their hunt for votes.

Every reader of the Senate transcripts will find his or her own particular areas of interest. Cherrypicking my way through the Hansard for the latest hearing in Melbourne this month, I noted these:

• “If the NEM architecture is not updated, distributed generation and storage has the potential to become more reliant on policy-based subsidies rather than market mechanisms” (Douglas Jackson, AGL’s executive general manager, group operations)

• “In South Australia, people are pointing to a failure of the NEM. I would claim there is a fair dysfunction in the gas market (that) has created most of the systemic problems we are seeing in SA” (Richard Wrightson, AGL’s general manager wholesale markets)

• “The market participants need time to plan; there are often five to 10 years in planning horizons — and we need some sort of predictability to avoid the disorderly transition we are experiencing today” (Jackson again)

• “Overall I would characterize it (the political debate,KO) as being incoherent. Without coherence we are not going to get a low-cost and secure path to the low-emissions electricity system of the future” (Ross Garnaut)

• “Power system security and reliability (are) visibly deteriorating. It is often said there is some form of market failure causing this. I am confident that it is not the market; it is a political failure to have a national plan for a way in which the market should operate. Investors simply cannot respond to the uncertainty we see in the market. They are basically caught between a rock and a hard place. So they are doing what is completely rational — and that is sitting on their hands.” (consultant Danny Price)

• “What we should be thinking about is what we need to change in the NEM rules to accommodate intermittent generation because it is going to happen anyway” (Price again)

• “If you have a thermal generator connected to the market, you have to bring certain technical characteristics to provide system security. There is no reason at all why intermittent generation should not have the same requirement.” (Price)

• “Energy is a political commodity and, in its technical nature, very complex” (consultant Bruce Mountain).

A random set of thoughts but there is a thread running through them that the body politic has yet to demonstrate it can grasp.

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