Coming together again — to what end?

A (very welcome) wet three days in Sydney and a large part of New South Wales provides an interesting window on the State’s ability to meet its power needs outside of sunny and/or windy periods.

The Open NEM widget is the data source for Thursday through Saturday.

It’s notable for a start that NSW imports (mainly from Queensland) provided 38 gigawatt hours, as much as in-State wind and solar put together (22 GWh from wind farms, 4.5 GWh from solar farms, 11.3 GWh via rooftop PVs). Gas plants (11.2 GWh) and hydro systems (13.2 GWh) came in handy – but by far the largest contribution (82.5 per cent) came from NSW’s black coal generation, which delivered 475.4 GWh.

The green boosters tend to play games with capacity because it often makes their love objects appear shinier to the public at large, so it is also interesting to look at the load requirement at 6.30pm on Friday: nowt from solar after dusk and 294 megawatts on line from wind, with 668 MW from hydro and 726 MW from gas plants – while the State’s coal generators provided 7,265 MW and imports (mainly more coal power from Queensland) access to another 527 MW.

The supply picture shifts shape all the time, of course, depending on the weather, time of day and the availability and cost of generation resources, but it is handy to keep in mind the production statistics above when considering that NSW is destined, in strategy being envisaged by the Australian Energy Market Operator for a mooted big shift from conventional resources to wind, solar and storage, to be the NEM region subjected to greatest change.

One wonders how much appreciation (beyond the industry’s technical experts) there is that the system will need a lot more generation capacity to deliver the same amount of product when variable renewables replace today’s major supply sources? And the issue is not just generation.

In this context, I see the Energy Networks Association, in a submission on rule changes to the Australian Energy Market Commission, making the point that, while three years’ notice of mainstream generation closures may be adequate for investors looking at building wind or solar farms, it is not likely to be for infrastructure such as new transmission lines, including interconnectors.

Transmission planners, ENA points out, work on 10-year horizons and have to take in to account long lead times on such issues as corridor and site selection, stakeholder and landholder engagement, acquisition of easements and environmental approvals.

How much of this stuff weighs on the minds of the federation’s energy ministers and their office advisors, not to mention their political colleagues looking for angles to impress voters, is something I also often wonder about. (For example, this one-liner from Premier Daniel Andrews last month: “It’s simple — greater supply of renewable energy means lower prices.” An echo of Jay Weatherill’s claim in Adelaide last February that “(lots) more renewable energy means cheaper power for South Australians.”  That played well with SA voters as we know.)

The transition challenges, for the NEM as a whole and for the large-demand States (Victoria, NSW and Queensland) in particular, are dealt with far too airily in the public debate for my liking.

Now, we are about to witness another ministerial gathering – it is reported this weekend that the CoAG Energy Council is to meet again in Sydney on 26 October. (This will be the fourteenth such chinwag in the wild gyrations of current policy contention over the past three years.)

For one government (Victoria’s), participation will be on the eve of a challenging election campaign – and it will also be in the week after the Wentworth by-election with all its portents for Scott Morrison’s federal government.

What will be on the council’s agenda apart from updating reports by AEMO, the ACCC, the AEMC and the Energy Security Board?

The ministers got some advice from the ACCC’s Rod Sims in a conference speech in the past week. The best way to move the policy process forward, he said, is to separate out affordability, reliability and emissions reduction for attention rather than trying to address all three in a single package. Australia’s political parties, he observed, right now have seemingly “irreconcilable differences” on carbon abatement.

Is the most appropriate game plan, then, to press on with actions that will have an impact on power bills in the relatively short term while pursuing consensus on measures that will sustain downward price pressures beyond the decade’s end through underpinning supply reliability?

One path ministers could choose to take is to focus more strongly on energy productivity, bearing in mind that there is momentum in this direction from consumers, especially those in commerce and industry (responsible for 60 per cent of consumption), as a defence against painful present prices and the ongoing high level of policy uncertainty.

Meanwhile, federal Energy Minister Angus Taylor is still taking the Morrison government’s price-oriented energy messages to consumers via radio interviews. Here’s the thrust of one he had with an Adelaide radio station late in September: “There are three parts to what we are doing. The first is stopping the rip-offs by big energy companies. (The second is) a default market offer so that, if you don’t have time to negotiate (a contract), you still get a fair deal. The third is (to) make sure there is enough investment in generation capacity in the market. Through these three areas we are (aiming to) drive down prices while keeping the lights on. That’s energy policy.”

It will be interesting to hear what he has to say after he has chaired the next Energy Council meeting. And to discover what the ministers have found to agree on.

PS: Here’s the key statement from the 7 October 2016 council communiqué: “Ministers agreed that their primary responsibility is to ensure the security, reliability and affordability of the energy system for all Australians.”

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