Finding the goalposts

The promise by Premier Gladys Berejiklian that there will be a full-on New South Wales cabinet discussion about energy can only be welcomed, even if it is long overdue.

The political crowbar achieving this development is being wielded by the State’s Nationals, led by Deputy Premier John Barilaro, pushing to have funds from the Lands & Property Information Service privatization spent on a new, coal-fired power station, either built by the government or in a public-private partnership.

It’s not that power needs for NSW have been ignored lately but all the big focus earlier this year was on an attempt by the federal government, led by Malcolm Turnbull himself, to force AGL Energy to agree to extend the life of Liddell power station beyond 2022 or to sell it to an entity that will do so. The company seems to have been successful in fending off this pressure – with about a fortnight to go for CEO Andy Vesey to report back to Turnbull on its plans to replace Liddell.

Vesey told a newspaper forum in mid-November that post-Liddell about 1,000 megawatts of firm capacity – or an energy need of eight terawatt hours a year to avoid a projected market shortfall in supply — could be realized from an efficiency upgrade for Bayswater coal-burning power station (providing about an extra terawatt hour), up to 1,600 megawatts of variable renewable energy (delivering 6 TWh), a 250 MW storage battery, a new gas-fired plant and up to 100 MW of demand response. This was not new news; it had initially been shared with AGL shareholders at the AGM in September.

How much of this will form part of the NSW cabinet discussion is a good question.

Will the debate focus just on whether the State should be engaged in building a new coal plant, will it be broadened to canvass the state of play in NSW gas development and will it include a review of wind and solar power developments for the decade ahead and all the implications inherent in that?

The big context for all this is the dominant role of NSW in NEM electricity demand and supply. The huge amount of attention the situation in South Australia has received in the past year belies the fact that SA accounts for just six per cent of NEM demand – NSW’s share is 37 per cent (with Queenland at 28 per cent, Victoria 24 per cent and Tasmania five per cent). The economic and social impacts of getting NSW electricity supply wrong in the next decade would flow well beyond the State borders.

Earlier this year the NSW Energy Minister, Don Harwin, declared: “Ensuring the security of our energy supply is at the core of the NSW government’s energy policy and increasing the diversity of supply through renewable energy sources is key to our strategy.”

In round terms, the State government says the electricity mix at present is 79 per cent coal-fired, seven per cent gas-burning and 14 per cent renewables – of which almost a third is provided by Snowy Hydro. The third attributed to solar power by the government is substantially on household rooftops.

The actual 2016 numbers for generation to the grid in NSW were 54,271 gigawatt hours of coal-fired production, 2,604 GWh from gas turbines, 3,645 GWh from hydro systems, 2,030 GWh from wind farms and 492 GWh from utility-scale solar. That’s a coal share of 86 per cent (down 1.5 per cent on the 2015 power output mainly because the call on hydro almost doubled last year).

A statement from the Berejiklian cabinet after the foreshadowed discussion on how it sees the supply mix in, say, 2025 and 2030 and what needs to be done to deliver on this picture would be very useful – particularly if it is accompanied by some expert work on the total system cost of this transition and some idea of what this means for business and household users.

Most meaningful of all, perhaps, would be a clear statement of the role the government sees gas playing in the transition, bearing in mind the first half of the dictum from Harwin quoted above.

There’s a trenchant comment on today’s situation in the media at the moment from the federal Resources Minister, Matt Canavan, who is backing the Nationals’ push for a new coal power station: “Gas looks a non-starter in NSW given the (State) government’s on a go-slow on gas developments and the only other option appears to be coal. We hope the NSW government makes decisions to keep its electricity supplies strong so prices can be kept under control.”

When the Liddell controversy first blew up, one of our most senior political journalists commented that, in trying to grapple with energy issues, the Prime Minister is playing on the right field – “but being able to kick goals in another matter.”

It’s a thought that could be extended to the NSW government at present – and starting with defining the State energy playing field would be a good idea along with producing a clear sense of where the goalposts lie.

A quote from the Grattan Institute last week is also relevant: “Our politicians need to focus on the substance of this debate, rather than the headlines. Hitting each other over the head because there are too many – or too few – renewables in the policy basket is pointless and will ultimately prove self-defeating.”

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