Archive for May, 2017

Role of renewables

The core story of electricity supply in Australia today is still about conventional generation; without it we would be up that well-known creek sans paddle.

In the wider world, conventional generation includes nuclear power – but politics has seen that off in Australia over a half century and rumor has it that the Finkel report, now only a few sleeps away, is not going to float it as a 21st Century option here.

Last month the New South Wales Deputy Premier, John Barilaro, in a speech to his National Party conference, lamented our national inability to even have a meaningful conversation about nuclear generation despite this country’s huge uranium resources.  “It seems to me that political correctness and our obsession with minimizing risk of a media backlash is also restricting our ability to talk about solutions because they will be unpopular with some sections of the community,” Barilaro said. “We know we have a power crisis, that energy costs are crushing businesses, farmers and families, yet we don’t talk about nuclear energy.”

And thus it is likely to continue to be – at least for the time being. But, even without nuclear power, the Australian supply mix (in terms of energy produced) remains overwhelmingly conventional: based on coal plants, gas turbines and hydro-electric systems.

According to the federal Department of Environment & Energy, calendar 2016 saw production of just over 258,000 gigawatt hours of electricity across the country compared with just over 255,000 GWh in 2015.

Despite the hoopla in the media and boosting by its devotees, wind and solar power contributed just under 20,400 GWh (or 7.9 per cent) of this.

Higher figures for renewable energy that get tossed about take in the contributions of hydro power and biomass (such as sugar cane residue) plants that have been around for donkeys’ years. In 2016 this pair – hydro 17,925 GWh and biomass 3,712 GWh – contributed almost 8.4 per cent to the national power output.

The runaway leader in our electricity supply, as it has been for a long time, is black coal generation – operating in three States, New South Wales, Queensland and Western Australia, and contributor of almost 115,400 GWh in calendar 2016 (3.3 per cent up on the previous calendar year, a bit of a bummer for those who harp on the “coal is dead” mantra).

When you add almost 47,000 GWh from brown coal generation and almost 47,700 GWh from gas turbines, as well as nearly 6,000 GWh from diesel plant, fossil fuels last year delivered 83.7 per cent of Australia’s electricity.

Of course this is going to change; the core issue is to what extent and over what time? And, one should add, with what consequences in terms of supply security and reliability plus affordability? Because there will be consequences; the big question is what they will be.

Whether next week’s Finkel report will throw this up in a clear new light remains to be seen; the perception that the national chief scientist and his team will produce Holy Writ on the future of electricity (as the Australian Financial Review writer Jennifer Hewett wryly puts it in a commentary) is a bit of a long reach, really – and that’s before the “furious argument” (Hewett also) about energy policy revs up again after a quieter month while politicians had a shouting match about the federal budget instead.

One of my own hobby horses is that, despite working ourselves in to a collective lather about what may or may not have caused the recent problems in South Australia, this State is a relatively tiny part of the national power picture: in 2016 SA generation accounted for just 4.6 per cent of the national total. The “national” electricity market (NEM) of which it is part accounts for 83.5 per cent of the Australian power production total – and South Australia provides just 5.6 per cent of this. Where the weight lies is in NSW (70,335 GWh), Queensland (68,076 GWh) and Victoria (53,947 GWh) – and fossil fuels contributed 87.9 per cent of their power production in 2016. By comparison, wind farms and all solar PVs met 6.6 per cent of generation in these three States.

There is an element of “never mind the quality, feel the width” (a Melbourne rag trade joke from the late 19th Century) in the efforts of green boosters to play up the variable renewables contribution, not least by factoring in hydro and biomass but also by concentrating on capacity rather than output and on percentage increases in capacity from a tiny base.

In the real world, however, mainland Australian homes, factories, shops, schools, hospitals and lives – Tasmania, as we all know, is different – depend to a huge extent on fossil-fuelled generation: in the case of the NEM, 69.4 per cent of all production or, if you leave out hydro-based Tasmania, 73.2 per cent of the eastern mainland market.

It is these facts that should be borne in mind when the promoters of green electricity declaim, as they are doing this week, that last year saw “the highest proportion this century” of power produced by renewables (counting in hydro and biomass). This is declared “extraordinary” and, by extrapolation, the cue for the Finkel task force to provide a roadmap for the green brick road – and, because of the way this stuff is reported by the media without context, this news is encouragement to the population at large to embrace the green revolution, adding to pressure on the federal Coalition government with respect to the “energy crisis” and climate change policy (for which another report is also due this year).

To repeat myself, there is no doubt that the generation mix is going to change, that new technology will continue to be embraced, that many existing coal-fired plants (unless they are upgraded) are moving towards the end of their design life and that, without our embracing nuclear energy, there is a growing role for such resources as wind and solar power (“hot rock” geothermal energy, a darling of the debate last decade, having fallen to earth with a bump in recent times).

But, when we properly contemplate the generation picture, especially in the three States that make up most of the NEM and a large proportion of national power output, it should be obvious that this evolution is not simple, easy or without significant risk.

How nice it will be if the Finkel task force spells this out next week in a way our political leaders, the media and, eventually, the community at large can fully comprehend. Sadly, I’m not holding my breath.

Deep decarbonization & the market

Here and in some places overseas we are careering down a path (to quote the chairman of Bloomberg New Energy Finance) to more and more regulatory intervention in the electricity marketplace.

This, says Michael Liebreich, is one of the main products of the ongoing debate about “deep re-regulation required to meet the challenge of providing cheap, clean, reliable power in the face of new technologies, new types of user behavior and the need to address climate change.” (I jib at this use of “cheap,” which is quite widespread. Its users don’t mean much lower cost than now but the lowest cost available from the measures taken to address the “trilemma” in the “transition.” It’s sophistry to talk about “cheap” in an environment where users across the spectrum see their bills continue to rise.)

Put another way, the over-arching issue is whether the rise of politically-pushed subsidized variable renewable energy (or in the case, for example, of New York state, payments to aid struggling old nuclear plants) is causing competitive power markets to misfire and what can be done about it?

America’s Federal Energy Regulatory Commission is examining whether and how government policies supporting generation that suits political purposes are distorting US competitive energy markets – and we will very soon know whether Alan Finkel and his task force have given thought to this issue.

As another BNEF commentator says, it makes all energy market purists wince when policymakers reach for yet more layers of incentives and mechanisms (a prime local example. I guess, being the current goings-on in South Australia) – but, he asks, “how (else) will power markets function as the energy system travels down a path of deeper decarbonization?”

It’s an issue I hope to see well-explored when the Quest Events’ second Australian Energy Week conference is staged in Melbourne from 21 to 23 June, not least in the opening plenary session (which will include a presentation by Finkel) and the “energy policy forum” I am to chair on the final day which will include addresses by Josh Frydenberg and Labor’s Mark Butler.

In this context, it is interesting to read a submission made a few days ago by the Australian Energy Regulator (much in the news at present after the Federal Court ruling largely in favor of power networks) to the House of Representatives standing committee on environment and energy – which is examining modernization of the electricity grid.

The AER says the inquiry “comes at a critical juncture in the evolution of Australia’s energy markets” with technological change putting them under “significant pressure.”

The regulator declares “competitive markets are (still) best placed to deliver new products and services to ensure customers can capture the value of their choices” – and it warns that “the scope for market-based innovation will be limited if (governments) require particular technologies to be adopted or specify in advance how desired objectives and outcomes (are to be) achieved.”

It joins the chorus enjoining governments to opt for policy and regulations that are technology neutral, calling for frameworks under which new products and services are developed to be “enabling” rather than “promoting.”

AER rightly observes that what we are seeing at present is “jostling” by providers of these new products and services to have their wares accepted as “the solution” – which all too often involves the boosters seeking subsidies rather than exposing themselves to market competition. We are best off, the regulator argues, where consumers bear the costs of their choices as well as the benefits and it yet again pushes out the boat for cost-reflective tariffs.

AER also reminds the committee MPs that, when additional power interconnection is talked up (to reduce wholesale power costs in States where they are high), it needs to be understood that such links may increase bills in other regions – and it’s investment that also plays in to network charges.

Another late May submission reaching the standing committee comes from the Business Council and includes a warning to policymakers against “putting all eggs in one basket (in moving away from) emission-intensive generation.”

The BCA says: “Should the cost of solar PV and/or batteries not reduce as expected or if gas is less available and/or more expensive than forecast, (we) may have insufficient electricity supply options in the face of binding emission constraints.”

The Australian Energy Council tells the standing committee it has urged the Finkel task force to appreciate, when considering the NEM, that “policy is the problem, not markets.” It repeats its argument for cost-reflective pricing and user/causer-pays allocation of grid costs plus the removal of barriers to the market-led roll-out of smart meters.

To come back to the BNEF point, Tony Wood of the Grattan Institute, in a recent op-ed in the Australian Financial Review, nails the issue, I think, in asserting that the biggest challenge for politicians, “and one that may determine whether reliability and affordability (in electricity supply) are sustained,” will be the decision on “where we choose to sit on the spectrum between markets and central planning/regulation.”

Wood points to what seems to me to be one of the more serious hurdles facing resolution of this: since appointing the Finkel task force last year, the federal government and several State governments have pre-empted its report with “well-intended but unco-ordinated and potentially counterproductive interventions.”

He writes that policy choices made this year will impact on the ongoing primacy of the market or a shift towards central planning and greater regulation – and argues that it should be a conscious choice, not (my words) another sleepwalk in to future “major regrets.”

This, it may turn out, is the most important aspect in the long run of the whole game.

Approaching Argentinian moment?

Just how much is perceived to be hanging on the Finkel task force report to the Council of Australian Governments is illustrated by a comment to market analysts last week by AusNet Services CEO Nino Ficca, who is also the chairman of Energy Networks Australia. “We see the Finkel Review as a once-in-a-generation reform opportunity. It can deliver an instructive template with a long-term focus,” he said.

No pressure, then!

Seriously, as important as the task force report is, it needs to be remembered that another review is no less so – this is the climate change policy re-assessment being undertaken by the Turnbull government itself. The opportunity for submissions to this have now closed and a report will be published later this year, well after the Finkel report reaches the CoAG leadership early next month.

Law firm Herbert Smith Freehills recently summed up the climate change project like this: “The review reminds us that Australia’s climate change policies and regulations continue to be in a state of flux and the ongoing impact on business is uncertain.”

Something of an understatement, perhaps.

When you take in to account that the media commentariat in Canberra is now starting to talk of the possibility of the next federal election as early as the first half of 2018, the prospect that the body politic can latch on to a long-term focus après Finkel and the climate change review and lead the energy industry and consumers to sunnier uplands (where prices will be acceptable to users) remains very challenging to say the least.

Getting the public debate focused on genuine factors in all this is not exactly easy. To quote AGL Energy CEO Andy Vesey: we’re embarking on “something incredibly complex but the communications environment demands a simple explanation (and) there isn’t one.”

Ficca, whose company operates energy networks in Victoria, qualified his comment by telling analysts that “continuing partisan politics will only exacerbate the very real issues” facing suppliers and consumers. He also made the point that a cohesive national (ie east coast) system will be far stronger than State-by-State attempts to pursue a new policy model.

Ficca’s comments can be read with the reaction of Energy Networks Australia to this month’s federal budget. It welcomed the parts of the budget focusing on energy security with the rider that “widespread federal funding of new energy projects should not be necessary if State and federal governments can rapidly agree on a national energy transition plan.”

The association added: “With stable, national energy and carbon policy, we can return to an environment where investors have the confidence to allocate private capital, avoiding the need for support from the public purse.”

I covered some of this ground in a post on this site on 11 May (“The exam question”) and a trip in the past week to Perth to attend the Australian Petroleum Production & Exploration Association annual conference just laid extra emphasis on the fact that this latter sentiment is widely shared in the energy sector – and that, behind the statements calling for a mature approach to policy, there is considerable disquiet among suppliers across the board about whether our political leaders are up for this task, always assuming that the Finkel report lives up to stakeholder expectations.

Some of the flavor of the situation is conveyed by comments made to Adelaide media by Tom Koutsantonis, the South Australian Treasurer and Energy Minister (who was a participant at the APPEA conference).

Reacting to academic suggestions that the east coast gas shortfall is overblown, Koutsantonis said: “There is absolutely a shortage of affordable gas, created by gas exploration and development bans in Victoria, NSW and the Northern Territory, which are driving up power prices across the NEM.” And he gave the Turnbull government a backhander by adding that its gas export policy “rewards the bad behaviour of other States and does nothing to address the cause of the problem.”

Koutsantonis also reacted to the latest Australian Energy Market Operator report on the reliability of the grid by saying it is “another reminder that the market is broken.”

He blames a lack of policy direction on carbon pricing at the federal level for the “disorderly exit” of coal generation from the NEM because there is no incentive for replacement power.

It’s also notable, I think, that there is a new front opening in the “energy war” in which proponents of renewables are arguing that continuing high gas costs and falling costs for renewables generation and storage technology mean “we have outgrown gas in the electricity sector.”

The upstream petroleum industry’s reply is that “the road to (greater use of) renewables goes via the nation’s gas fields,” arguing that what’s going on here is that energy policies and climate change policies are pulling in opposite directions.

How far the Finkel task force report can address the “pulling” issue is open to question – and, in any event, whatever debate we get on Finkel will run in to the inevitable row about abatement when the Turnbull government comes round to releasing the climate change study.

The Grattan Institute, in a new commentary released this week (and the topic of an op-ed in yesterday’s Australian Financial Review by Tony Wood), makes the point that the transition from centralized power supply based on fossil fuels to low-emissions technology is not being primarily driven by efficient climate change policies but “by a grab-bag of subsidies to support renewable energy,” noting that the failure to integrate intermittent generation in to the existing market system is leading to plant shutdowns and greater dependence on gas just at the time when poor policy has seen the fuel’s price more than double.

Wood asserts that the energy policy choices made in 2017 will determine whether markets have ongoing supply primacy or we embark on a shift to central planning and regulation. This choice, he adds, needs to be made consciously to avoid major regrets later.

Senator Nick Xenephon, always one for a quotable quote, has declared that “Australia is approaching an Argentinian moment” because of bad energy strategic and policy decisions.

Beyond such rhetoric, the prospect that we could sleepwalk in to “major regrets” is real and it’s understandable that players see the Finkel report as a key to avoiding this pitfall.

We just need to remember that it is only part of what is coming down the road this year and all the parts need to mesh.

Sailing in to the wind

It’s a helluva challenge to pick the most interesting topic at the wide-ranging 57th Australian Petroleum Production & Exploration Association conference in Perth this week.

With 2,020 delegates, 165 exhibitors in more than 8,000 square metres of Perth’s cavernous Convention Centre and more than 100 presentations, the event is a big affair and the industry is canvassing a smorgasbord of issues.

The key point, however, is not a new one. APPEA and its members have wrestled with it literally for decades in various forms. It’s politics. “Accumulated policy failures are weighing us down,” says APPEA chairman, Bruce Lake, expressing “alarm” at the pace of reform of areas that impact on his members’ businesses — which include many small and ambitious companies (something not well-recognized in the media) as well as the elephants of exploration and oil and gas production.

Part of the PR problem for the sector is switching communication gears effectively after years of talking up huge gas developments to now win community understanding that the key challenge goes beyond the immediate domestic supply crunch. It extends also to the lowest exploration effort in 30 years, a harbinger of still more supply problems down the track.

Even though upstream petroleum companies found Australia a high cost country over the past two decades, low risk for investors saw some $200 billion invested in pursuing gas development — but mainly for export. Today’s political problem is the domestic situation, which the Prime Minister declares to be in crisis.

More broadly,Lake points out, the big issue is that Australia is on a path to being a high cost, high risk country and there are plenty of other regions when investor dollars can be directed.

In a sentence, Australians can’t expect $50 billion to be invested here in locating new gas and oil resources and bringing them to market by 2030 in an environment that is seen by the industry as being significantly negative.

The inability of the industry, the major gas users in manufacturing and the body politic to secure a “Goldilocks” situation where investor and consumer desires, along with the need for safe environmental management and the concerns of farmers are all being served has delivered what Lake and others now keep calling a “tipping point.”

Some would argue that the “tipping point” actually occurred about two years ago and the political locusts have consumed critical time for remedial action.

The Woodside CEO, Peter Coleman, sums this up by saying that what should be a time of opportunity for the industry, as our markets reach for reliable supplies of affordable, low emissions energy, is instead a period for multiple regrets in which the sector is seen by more and more in the community as creating problems rather than solving them.

The semi-spoken fear of the industry is that, because there can be no quick fixes and because politicians at federal, State and Territory levels keep kneejerking in response to community unhappiness, the operating environment for its members may already be spoiled for a longish time and opportunities will be foregone that cannot be readily recouped (including, for example, the Australian electricity generation market becoming a no-go zone for gas plants where only seven years ago the annual conference was seriously discussing a “golden age” for gas as a transition fuel).

One executive attending the conference laments that “we haven’t really tried to understand what the future might look like and prepare ourselves for a different world — I think we have done a bad job here.”

His focus is on the impending east coast gas shortfall, the prices factory users find unacceptably high and the intervention now being pursued by the Turnbull government — but this stricture can be pursued more broadly for the industry. It’s the qualifier that’s important here — really (that is, effectively) tried as opposed to the various efforts pursued across the broad canvas of energy policy and regulation that, especially in places like Victoria and New South Wales, have not produced outcomes to the industry’s advantage.

“Could have done better” in the time-honored teacher’s scribble on kids’ report cards.

One observer in the international energy trade media sums up the situation as the industry being “under the cosh” across the range of issues affecting its present and future, noting that the key remedial step “trumpeted by the industry” is to develop more gas, but suggesting that a lack of policy support at state level indicates there can be “no easy fix anytime soon.”

APPEA’s chief executive, Malcolm Roberts, prefers a different metaphor, telling another trade magazine that the industry is “buffeted by commercial and political headwinds.”

Victoria, he says, now finds itself stuck in the contradictory position of both depending on gas and prohibiting all onshore exploration and development. “I don’t expect the State government to re-assess its unsustainable position as a free rider for some time yet,” adding that New South Wales claims to be open for business, but this needs to be backed up by action.

The key focus by policymakers, Roberts says, should be on barriers to investment, not least the delays and costs of State regulation.

Meanwhile, Woodside’s Coleman argues that there is little to be gained from “continuing the blame game” and that “it is time for the nature of the conversation to change.”

The devil lies in how and over what time.

Of course, the mainstream media attention in situations like this tends to be grabbed by the “big picture” solutions, in this case the proposal for a “nation-building” coast-to-coast pipeline transporting gas 4,030 kilometres from the North-West Shelf and WA’s Kimberley to meet eastern energy hunger. It’s not seen as a silver bullet by many at the APPEA conference or, indeed, beyond it despite Turnbull being prepared to allocate funds to support a feasibility study. The shorthand for this view is that prohibitive development costs, economies of scale and challenging terrain load the dice against this “artery.”

Hovering in the wings of this conference is the imminent report of the Finkel task force, then the outcome of the federal climate change policy review and how the “animal spirits” of the political jungle will handle the challenges these throw up.

The prospect that the present headwinds will veer round to following ones is, frankly, not high. It’s hard to come away from this event in Perth without a strong sense of uneasiness.




The exam question

The Energy Networks Australia CEO, John Bradley, makes a sound point in the wake of this week’s federal budget.

His association welcomes the steps taken by the Turnbull government – including seeking to boost customer confidence in electricity retail and wholesale gas markets as well as support for new energy sources and pipelines plus money for scientific assessment related to onshore gas development – but emphasizes that “government funding is not the biggest challenge facing the energy system.”

Bradley says “widespread federal funding of new energy projects should not be necessary if governments can rapidly agree on a national energy transition plan” that, he adds, can return investors to an environment where they have confidence in allocating private capital, avoiding calls on the public purse.

Meanwhile, the Australian Petroleum Production & Exploration Association, which is holding its big annual conference in Perth next week, says $50 billion needs to be spent on east coast gas developments over 15 years to meet demand.

CEO Malcolm Roberts adds: “The industry is capable of delivering this provided State governments stop their political games. The only genuine, lasting solution to the tight east coast gas market is more supply (to) boost liquidity and competition, putting downward pressure on prices.”

In a nutshell, Bradley and Roberts, while commending the federal government for its positive approach in the budget, are nailing the ongoing over-arching issue: the willingness of jurisdictions to get real about the weaknesses in the system – and to do so soon.

As an example of the games being played, APPEA points to the (Coalition) NSW government creating an elaborate new regulatory regime for gas development – but failing so far to release acreage for a fresh round of exploration.

The Australian Energy Council’s Matthew Warren made a similar point a week ago. ““More renewables are part of the solution, not the solution itself,” he said. “We still need a durable national energy and climate policy that unlocks all types of energy investment and allows the market to coordinate energy technologies to deliver reliability and lower emissions at the lowest cost to consumers. We are yet to the fix high energy costs and increased reliability risks faced by Australian businesses and households. We are still to address how we will efficiently and reliably integrate higher levels of renewables into the grid.”

Riding back home on a train yesterday from attending an ENA forum in Sydney on “grid edge innovation,” I found a commentary by Catherine Tanna, managing director of EnergyAustralia (one of our three largest producers of electricity), in the new issue of a utility trade magazine – and some of her comments resonate with these budget reactions.

“Any transition,” she writes, “from large, older coal-fired power station to newer technologies will require an orderly, realistic plan and stable energy policy.”

She says: “The staggering thing is that there is no shortage of existing and potential energy supply in Australia. The problem isn’t capacity – it’s planning. We have enough electricity generation capacity – just not where and when it’s needed. There are abundant supplies of gas – but they stay in the ground.”

The exam question, says Tanna, is how to deliver reliable, affordable and cleaner energy for everyone in Australia.

She points out that, when one element in this equation is given priority over the others, you get the situation in which we are mired now: volatile markets, problems with security of supply and rising prices.

The answer, Tanna argues, “isn’t rocket science – it’s giving business confidence to invest,” the point also being made by Bradley, Roberts and Warren (and not a few others). “We get problems when we play favorites out of cleaner energy, reliability and affordability.”

The Grattan Institute’s Tony Wood, offers another, not unreasonable, view that the federal budget contains “modest commitments” to energy security, more gas and better regulation but he questions public funding for further feasibility studies on large-scale developments (like Snowy 2.0, power interconnection and major pipelines). “If the gas crisis can’t galvanize support from companies and consumers for pipelines,” he says, “why should governments reach a different conclusion?”

The Turnbull government may think him harsh, but I feel he’s on the money in declaring that, on energy, the budget is really “small fry” ahead of the outcomes of the Finkel task force review (next month) and climate change policy review (later this year).

The truth of the present situation is that, even as they ask us to perceive them as farsighted, our political leaders (across the board) are still pursuing short term agendas to win headlines, opinion polls and, they hope, “the only poll that matters.”

What will come out of the Council of Australian Governments meeting to be chaired by the Prime Minister on 9 June when confronted by Finkel’s report? Will it be a firm purpose of amendment on the part of governments collectively? Or will it be more rhetoric and game playing?

Among business stakeholders (whether suppliers across the energy spectrum or large-scale consumers) there is consensus that the status quo is unsustainable.

This past week the international resources company Glencore warned that “Australia has drifted past a tipping point of industrial energy demand destruction.” Global coal executive Peter Freyberg told The Australian Financial Review “Australia has to meet its energy needs now, in five years, in 10 years and in 15 years – and can’t rely on blue sky thinking.”

Real solutions are needed, he declared.

This, surely, is the exam question and the policymakers’ answer has to engender confidence on the past of investors (and their financiers) that policies and regulations will not continue to be capriciously adjusted.

Back in March of 2014, chairing a Quest Events conference in its “energy outlook” series, I said that, unless the policy process inculcates a balance of trust, confidence and understanding across investors and the community at large, “we are going to go on digging deeper and deeper holes rather than providing affordable energy with a lower environmental footprint.”

The political leadership’s approach in the past three years has been to launch inquiry after inquiry. The Australian Energy Council says on its website that there are now 25 reviews and assessments under way in the federation arena, “Are we now effectively beginning to see reviews in to reviews,” it asks?

As Glencore asserts, we are now at the very least on the brink of a tipping point – and the ultimate question is how do we avoid falling really hard? It can’t be argued that the federal budget provides the answer, so what must be done?

Evolution, not revolution

It seems that one of the harder things for lay people to get their heads around in the energy debate is that scenarios are not predictions.

I reflect on this having watched some of the coverage (including by “our” ABC) of the Electricity Network Transformation Roadmap produced by CSIRO and Energy Networks Australia with a 2050 horizon.

The Roadmap, the organizations point out, is “informed by an evidence based approach, referencing over 19 reports that summarise expert analyses, scenario analyses and quantitative modelling to 2050.”  Which from my perspective, given that 2050 is 33 years from here (the equivalent of looking at today from 1984) or 11 federal elections, makes the project interesting but not predictive.

There is no allowance for nuclear power, for example, in this work. Given our concerns here about climate change and a whole range of other factors, like the issues bedevilling gas development, would you care to bet that Australia will not buy in to nuclear energy (especially small reactors) in the next three decades? My regret is that I won’t be around to take your money.

Having said this, the CSIRO/ENA project is helpful in considering some pathways towards a different electricity supply mix.

At every turn, the public needs reminding that our immediate challenge in meaningful terms – hopefully being taken up by the Finkel task force, due to report in the near future – is to get to 2025 and 2030 in better shape.

(As an exercise in understatement I rather like this extract from an op-ed by Josh Frydenberg in today’s Australian Financial Review: “Integrating (much more) renewables into the system will present some challenges but with the right planning energy security can be maintained and challenges overcome.” By contrast there is this comment by the Australian Energy Market Commission this week to a South Australian parliamentary committee looking at last year’s blackout: “The widespread deployment of new technologies in the electricity market is having major impacts on the maintenance of power system security.”)

The CSIRO/ENA report asserts that “the next decade to 2027 is likely to see a step change in the rapid adoption of new technologies driven by falling costs and global carbon abatement measures.” CSIRO/ENA go on to declare that “this decade provides a limited window of opportunity to reposition Australia’s electricity system to deliver efficient outcomes to customers.”

Which is not (or shouldn’t be) an invitation to the body politic to plunge ahead with shutting down or curbing existing conventional generation and bidding the farm solely on the exciting future of intermittent renewables and battery storage.

We all need to be conscious, I think, that a transition is an evolution not a revolution.

(And just by the by, when you contemplate 2030, bear in mind that this is the equivalent of standing in 2004 and looking at today. We have had no less than three federal government white papers on energy security since 2004. Did any of them scope, let alone predict, the domestic energy supply shemozzle we have on our hands in 2017?)

Apart from all the stuff about 2050, the CSIRO/ENA modelling shows a scenario where, in 2030, we could be looking at about 181 terawatt hours of generation in the NEM under a carbon price scheme – with 19 TWh from brown coal (45 TWh today with Hazelwood included), 82 TWh of black coal (114 TWh at present), 73 TWh from gas (versus 19 TWh now), 64 TWh of non-hydro renewables (20 TWh now) and a continuing 16 TWh of hydro power (not reflecting the recent Turnbull lunges towards Snowy 2.0 and Hydro Tasmania 2.0).

Even this level of change, which is nothing like the Apocalypse Now for fossil fuels desired by the Greens et al, poses substantial market management challenges.

And it doesn’t take a great deal more thinking to conclude that whatever policymaking delivers us in the next 13 years (along with the developments in technology we actually take up as opposed to talk up and the reactions of the community to what is proposed, including smart meters and cost-reflective network charges) will be big factors influencing what then happens from 2030 to 2050.

All of which, and not for the first time, brings me to point to the report by South Australian nuclear royal commissioner Kevin Scarce, who has urged our federated system to “collaborate on the development of a comprehensive national energy policy that enables all technologies, including nuclear, to contribute to a reliable, low-carbon electricity network at the lowest possible system cost.” Is this what Finkel & Co are pursuing?

Scarce added: “identifying whether a particular generation portfolio will deliver electricity at the lowest possible cost requires analysis of the future cost of the whole system, ie the total costs of generation, transmission and distribution.” And he observed that claims made to date do not take account of the uncertainty surrounding assumed costs reductions in some technologies.

Coming back to the Roadmap, it is postulated on electricity sector carbon abatement reaching 40 per cent by 2030, a lot more than the across-the-board national target of 26 to 28 per cent, something which carries considerable implications for NEM security and the cost of power to consumers.

In the CSIRO/ENA scenario this would involve an investment in solar PVs reaching 29,000 megawatts and in battery storage able to contribute 34,000 megawatt hours a year at the end of the next decade.

Buried in the report (it runs to 116 pages) is a graph showing household electricity bills rising from $1,500 a year (an average) to $1,900 annually in 2030 whether under today’s trends or a system that includes a carbon price. Is this what Us Outdoors think we are hearing from the Coalition and Labor?

Now it’s simply not possible to do justice to the CSIRO/ENA research in 1,100 words.

Their project is an interesting exercise and one they should be complimented for pursuing. It contains many references to the challenges of resilience for a market undergoing fundamental, long-term change. But the risk that the charge of The Green Light Brigade will use the desirable (to them) highlights of the report to run over the more cautious tones of Scarce and others is real. They did that with the AEMO 100 per cent renewables report five years ago.