Author Archive

Hasten carefully

What east coast energy supply system we will have by the end of 2019 is not an idle question and this point has been accentuated in the past couple of months by a number of developments.

There is, for example, a notable interest in some quarters, mostly green-leaning, in playing off the Australian Energy Market Operator in its current guise against the rule-maker, the Australian Energy Market Commission, portraying the latter as being too conservative, too wedded to reliance on the competitive market and too slow to pursue changes (that it is believed will advance wind and solar power and batteries) in an environment where to quote one report this morning “the (grid) genie is out of the bottle.”

This perspective got a run last week in an Australian Financial Review story about the need asap for a “strategic reserve mechanism” as part of the effort to ward off generation-related supply failures.

The commission’s attitude can be summed up by a paragraph from a discussion paper on NEM reliability it published just before Christmas: “Some form of a safety net, such as a limited and targeted ability for a system operator to pay a premium for capacity that is not otherwise being traded in the market, is appropriate in the event that the market is expected to fail to meet the reliability standard. Given the costs that can be associated with such safety nets, it is important to understand what the existing limitations are with the current safety net in the NEM, the Reliability and Emergency Reserve Trader (RERT), before a balanced solution to these limitations can be developed and assessed to make sure it is in the long-term interests of consumers.”

Behind the agitation led by the warriors of the green revolution is a growing desire in some quarters (by no means all environmentalists) for a return to central planning in power supply, taken to its extremes in recent days by the Greens, hell-bent on winning the Batman by-election in Melbourne, calling for networks to be renationalized (in the States where they have been privatized), and Labor, desperate to cling to the federal seat, making noises that might, in the dark with the light behind them, be taken for an interest in considering the point (at least until the poll closes).

It is interesting to read the AEMC’s comments on central planning in its reliability paper (for which responses closed last week).

“Historically, it has been common for governments around the world to own and operate electricity infrastructure – including generation assets. Australia was no exception. Prior to the start of the NEM, central planners (that is, governments or their agencies) would decide when to invest in new generation, what types of plants to build (for example, base-load, mid-merit or peaking) and where they would be located. The chief advantage of this pure central planning approach is that it can generally be expected to deliver a reliable power system. Put simply, public funds can be allocated directly to try and make sure that the desired level of reliability is met; it is a simple way to make sure that there is enough generation to ‘keep the lights on’ for an acceptable amount of the time

“However, the problem with this approach is associated with high cost to consumers. It is generally accepted that central planners perform this capital investment function far less effectively than private firms and individuals.

“Private investors pursuing profits invariably have superior information about their own forward-looking costs and are subject also to important capital and take-over market disciplines. They will consequently be striving to produce their output at a lower cost than their competitors and to maximise their returns.

“In contrast, central planners generally:

  • have access to only highly imperfect information, that is, much like an economic regulator, they face an asymmetric information problem in that they cannot estimate accurately the respective costs and benefits of different investment options (and)
  • do not have very strong incentives to ensure that the industry is operating at least cost, that is they are not subject to the same market disciplines and may be motivated primarily by ‘keeping the lights on’ at whatever the cost, for reasons of political expediency.

“Centrally planned electricity generation consequently tends to be significantly more expensive to consumers than market-based investments since it passes the risk of ‘getting it wrong’ on to consumers.”

So far as I can see, none of the media types have felt the need to convey this admirably succinct case for the competitive market to their readers or viewers while headlining the nationalization demands.

To all the above the commission adds: “The basic idea of the existing reliability framework in the NEM is to deliver the desired outcomes through the market mechanism as much as possible, albeit within specified price limits. As the supply/demand balance tightens this should manifest in higher spot and contract prices that should provide a spur for efficient entry and expansion that addresses any potential problems before they transpire. Those market-based initiatives are assisted by further information provided by AEMO in various publications and it is only after all else has failed that direct interventions are used as a last resort to minimise the likelihood of involuntary load shedding.”

Well, that’s the theory; the practice, especially since 2016, is for government to knee-jerk in response to every latest piece of news that plays badly in the media, piling interventions or proposals for interventions on top of each other.

Perhaps the core issue is that the “we want it now” brigade, including some politicians and certainly including those who ache for fresh ways to trip up coal-fired power, are for fast moves in new directions, aided and abetted by the media for whom heat and movement is almost always their preference, while the “conservative” AEMC sees its duty in, as it puts it, helping to create “a coherent package for the future” that requires “a detailed design of reforms likely to provide balanced solutions that will address the needs of an evolving system.”

My South African high school had as its motto “festina lente” – which is a Latin take on a Greek adage that roughly translates as “make haste slowly.” Don’t indulge, in other words, in heedless hurrying – which is good advice in many areas of life and should certainly apply to pursuing change in our economically and socially critical power supply market.

The activists, on the other hand, are pushing for use of the new Energy Security Board to bypass the AEMC’s examination of this issue and get CoAG (that is politicians) to make a quick decision on new reliability moves in an election year…………

Data games

Propaganda by the warriors of the “clean energy revolution” – by which they don’t mean nuclear – continues to rely rather too heavily for my taste on pea and thimble word and data games.

A case in point is a current bid to impress on us that, in 2017, more electricity was made from selected renewables than from coal for the first time in the European Union. (Described by some in the media as “the continent as a whole;” take that pesky Russians, the Swiss and a few others like Serbia.)

This, declares boosters, is the tipping point (defined as a threshold for “abrupt and irreversible change”) in European power supply,

But let’s read the fine print.

What is being promoted is that power produced from wind, solar and biomass in the EU last year exceeded that from brown and black coal by 679 terawatt hours to 669 TWh.

However, this outcome includes 196 TWh of biomass-based production, still considered a renewable energy source in Europe despite rising concern in green circles that burning wood pellets is not really a good idea for the environment. In Britain in particular there is a barrage of criticism from green groups, who charge that use of wood-based biomass drives deforestation internationally. Europe is now consuming about 20 million tonnes a year of wood pellets in power generation, importing them from the US, Russia, the Ukraine and Belarus.

In other words, this latest triumph of renewables over coal in the EU is rather a contrivance.

You can break down the union data to 44.4 per cent fossil fueled generation and 30 per cent renewables, as some of the boosters do, but it needs to be appreciated that the latter also includes 9.1 per cent from hydro-power (in a rather poor year for European rain and snow).

Another way of describing the 2017 European situation is that the long-established conventional sources of power (coal, gas, oil, nuclear and hydro) last year contributed just over 79 per cent of electricity – versus 11.2 per cent for wind power (at 364 TWh double what it supplied in 2011) and 3.7 per cent for photovoltaic solar (119 TWh). Oh, and six per cent for biomass.

The 184 TWh rise in production from wind farms this decade has involved a massive outlay since 2011 – construction of 85.3 gigawatts of capacity in seven years, taking the total for this technology to 153 GW.

Nonetheless, the largest single contributor to electricity generation across the EU last year was nuclear – 25.6 per cent, more than double the output of wind farms from 119 GW of reactors. The second-largest was gas (19.7 per cent). Together, they provided almost half the union’s power from non-emitting and low-emitting sources.

For many casual Australian readers of the media (which means those who skim the headline and the first 2-3 paragraphs of a story if they still read newspapers and don’t rely on social media for their “news”), this claimed European triumph of renewables over coal is likely to be reinforcement of the argument by green advocates (including the Labor party as it sweats on outrunning the Greens in the Batman by-election and the upcoming Tasmanian and South Australian polls) that there is no impediment to pursuit of 40-50 per cent renewable power here in the relatively near future.

Now the European Commission, the policymaking energy room of the union, also has a new proposal before the EU parliament and member states: to chase a target for 2030 of 27 per cent of non-hydro renewables (up from 17 per cent in 2016). Sure, the European parliament had earlier voted to pursue 35 per cent – but, to quote a German report, “many national governments are opposed to pursuing a more ambitious binding target.” Put less politely, the EU parliament is a windbags’ castle and the decisions are really made by the EC working with national governments.

From the vantage point of Australia, this is relevant to the local push for a much-increased RET because carefully-massaged EU “news” is used quite frequently to bolster the local greens’ argument. And our alternative federal government – which could be in office by next summer if you take heed of the weekend’s media suggestions that, no matter what he might say, Turnbull is planning a spring election – is committed to the 50-by-30 target.

Here is what Bill Shorten said to the National Press Club last week: “We have all the sun and wind you could want and with it we can make an endless supply of the energy the whole world is moving towards. No serious energy plan, anywhere in the world, is built on the assumption of a decline in renewables investment. It’s like releasing a roads policy based on the resurgence of the horse and cart…or a national broadband network based upon copper. Labor’s objectives are clear, achievable and responsible: 50 per cent renewables by 2030, a 45 per cent cut in pollution by 2030 and zero net pollution by 2050.”  By “pollution” Shorten means carbon emissions.

Not a syllable, you will note, about the cost of going down this path. Not a word about the headline-hogging debate over the past year about the stability of the NEM and the need to balance pursuit of abatement with system reliability.

Malcolm Turnbull had the opportunity to challenge Shorten on this at Toowoomba when he subsequently delivered an opening speech for the new year’s political debate. What he chose to say was this: “We’ve also taken action to make energy more reliable and affordable. Now, 12 months ago, I said that pumped hydro needed to be a vital part of our energy plan; the storage that makes renewables reliable. The feasibility study for Snowy 2.0 proves the project is technically and financially viable. Work is on track to start later this year. This, again, is nation-building infrastructure that will bring thousands of jobs to regional Australia.

“Now, we’ve already reduced wholesale energy prices. With the help of the competition regulator, those savings will be passed on to customers. Longer term, the national energy guarantee will lock in those gains. Independent analysis commissioned by the Energy Security Board predicts that wholesale electricity costs will fall by 23 per cent over the decade. Those actions, along with Snowy 2.0 and others, will cut the average household energy bill by $400.”

Neither of these energy comments got any coverage at all in the mainstream media.

This is not so much a debate as two leaders talking past each other to what they hope is their corner in voter land. Which is what their predecessors (Howard, Rudd, Gillard, Abbott) spent their time from 2007 doing, too, collectively delivering us in to the “energy crisis” we have today.


In the dark

Sunday’s events in Melbourne as Victorians strove to cope with extreme evening heat and humidity while watching Roger Federer demonstrate his wonderful tennis skills have seen the public energy debate descending in to yet another shouting match with the year barely begun — but whether the right questions will get asked in 2018 is another matter.

It, of course, didn’t take long for clueless politicians to seek to connect 50,000 Victorian households deprived of energy with the State Labor government’s commitment to driving investment in variable renewable power – even though a moment’s thought should have told them that this one was down to distribution network hassles. One of these was no less than the Deputy Prime Minister, Barnaby Joyce, tweeting before engaging his brain cells: “We said Labor’s power policy would cause blackouts over summer and it has.” Similar flatulence was produced by the State leader of the opposition.

The noise, I see, has sparked the ANU’s Hugh Saddler in to pointing out on The Conversation that “the reality is that blackouts, trips and intermittency are three very different issues, which should not be conflated.” He adds: “Unfortunately, for reasons of basic physics, electricity distribution systems do not work well when it is very hot, so the combination of extreme heat and high demand is very challenging. It appears that significant parts of the Victorian electricity distribution system were unable to meet the challenge, leading to uncontrolled blackouts.”

Networks United Energy, CitiPower and Powercor sought to make a similar point to the media but the comment was utterly buried in a long report in The Age as Melburnians blearily tried to cope with Monday morning (and an overnight “low” of 28 degrees after a peak of 38 degrees at 5pm Sunday): “A spokeswoman said substation fuse faults were the main cause of most outages as the mercury climbed past 40 degrees. The prolonged high temperatures and humidity through the weekend significantly increased electricity demand at many locations across the network.”

Upfront in the shouting match, it didn’t take long, meanwhile, for the Victorian Premier, Daniel Andrews, to get out a big stick to wave at the distribution businesses – who, at it happens, charge the lowest network costs of any State and who, in real terms, now bill their customers less than two decades ago even while adding hundreds of thousands of homes to their systems and doubling their operating expenditures (which include maintenance) in nominal terms.

As well, this level of performance hasn’t stopped the Greens’ leader, Richard di Natale, rushing out on Monday to declare that the era of power privatization should be over. (Andrews feels sufficiently pressured by this in seats where Greens are rivals, it seems, that he was soon declaring “most Victorians” would prefer that the State electricity system had not been privatized — two decades ago – “but a State take-over is not possible.”)

The Premier is also rabbiting on about “compelling” the networks to consider compensation for affected households and to improve their systems – while asserting they shouldn’t be “ripping off” consumers by “piling” maintenance costs on to bills.  He apparently is paying no heed to the roles of the Australian Energy Regulator or the process of determining network charges. The AER, after all, is not up for election next November……… and Andrews got the headline he sought: “Daniel Andrews lashes power companies over blackouts.”

Is it worth also noting that 320,000 Victorian homes now have rooftop solar PV (14 per cent of the State total)? One wonders how far this contributes to a “let it rip” approach to air-conditioning when the heat is on even when the sun has gone down?

Energy Networks Australia’s CEO, Andrew Dillon, is pointing out that “because of the period of prolonged, intense heat residential customers are using air-conditioners for longer periods of time, putting significant pressure on electricity networks at a local level.” He adds: “What solar power has done is certainly well and truly clicked the load off at midday and it has helped with these peaks at 3pm or 4pm. But what it’s effectively tended to do is shift them to later in the day, so now we’re starting to see the network peak doesn’t happen until 6pm or 7pm.”

Overall peak demand in the State on Sunday was 9,443 MW around 4pm at which stage rooftop solar was estimated to be contributing about 330 MW – but by 7pm this contribution had effectively disappeared while sweating Victorians still wanting much the same supply.

According to the Australian Energy Market Operator, “Victoria experienced its highest operational demand for a Sunday ever, recording 9,144 MW of demand at 7:30pm.” At this point the Victorian in-State load was being borne by brown coal, gas turbines and hydro power (with fossil fuels representing about two-thirds of the required generation) while some 900 MW was being accessed over interconnection with South Australia, Tasmania and New South Wales (which in turn was sourcing almost 600 MW from Queensland).

Blowing wind

As I write this in the middle of the latest south-eastern Australia heatwave yet another small storm has blown up between federal Energy Minister Josh Frydenberg and poll-bound South Australian Premier Jay Weatherill over the intermittency of wind power — with the former today labeling the latter “the Neville Chamberlain of energy.”

To quote Frydenberg: “The wind was blowing so little in SA during (last week’s) heatwave it was only producing 6.5 per cent of its capacity, which meant (SA) needed to import a stack of power from Victoria (which) was able to do this not only because of its coal-fired assets but also because of hydro-electric power from the Snowy and ­Tasmania.”

He points to last Thursday when it was still 30 degrees in parts of SA at 10.30pm and available wind capacity had dropped to 117 MW, a tenth of what the farms had provided just after dawn that day. Frydenberg argues (not for the first time) that, because of variability issues, “an over-reliance on wind power is causing (both) reliability issues and price volatility” in South Australia. Weatherill, he accuses, has failed to ensure the State has access to sufficient dispatchable power at peak demand periods.

Back in the latter part of last year, on the other hand, you may recall green power boosters getting exercised about wind accounting for 52 per cent of large-scale generation in SA in September and 45 per cent in October. This followed (although I saw no mainstream media reports providing the context at the time) June being probably the least windy month in south-eastern Australia for a decade.

As it happens, I looked at a snapshot of NEM capacity at 7pm last Friday when the available generation in South Australia was 2,503 megawatts against a State need of 2,816 MW – with supply (apart from the balance attained over the transmission line to Victoria which was under constraint at this time) at 1,842 MW from gas turbines, 212 MW from Weatherill’s controversial diesel generators and 428 MW from wind farms supported by 21 MW of battery storage.

Earlier (at around 4pm that day Adelaide time) the State grid requirement was 2,717 MW and local supply was 2,286 MW – with wind farms contributing 282 MW, again leaving the heavy lifting to gas plant (1,880 MW) supported by 157 MW from the diesel units and the flow over the interconnector. In addition, South Australians were using an estimated 365 MW from their rooftop solar systems.

There have been times in the current heatwave, I gather, when South Australians have been relying on interstate transmission for as much as 31 per cent of supply.

Looking this (Monday) morning, I see that at 8.40am in Adelaide the wind capacity contribution in SA was 270 MW and most of the in-State supply was again from gas (913 MW). By just after 11am the wind share was still only 290 MW against 969 MW from gas with the State needing 1,665 MW from the overall grid system. (At this latter point in Victoria wind power was contributing just 98 MW versus 4,254 MW from brown coal plant, 793 MW from gas turbines and 914 MW from hydro sources.)

The total wind farm capacity in South Australia at present is 1,698 megawatts (compared with 1,516 MW in Victoria and 826 MW in New South Wales.) NEM-wide current wind capacity is 4,360 MW.

Of course the variability of wind power is not (or shouldn’t be) news anywhere. In Germany last week, for example, available wind capacity on Friday was half what it had been on Thursday and in next-door France (where nuclear power was accounting for 91 per cent of needs) it was down 60 per cent.

This is the nature of the beast. Hence all the discussion here about the “national energy guarantee” for the NEM and disputation about the total system cost of an east coast grid with a much higher level of intermittent energy than today as the Greens and Labor desire.

It’s also worth noting en passant that the current cost of power for German householders (beneficiaries of the Energiewende) is reported to be 0.305 euros compared with 0.168 euros in France (and the cost for commercial and industrial consumers is 0.152 euros in Germany versus 0.099 in France).

If you scan the media here (green-boosting sites as well as the mainstream), it is notable that every opportunity is taken to talk up VREs (variable renewable energy) and to badmouth coal generation in particular (the anti-gas diatribes here are mostly limited to campaigning against exploration and production – the bans and moratoriums naturally feeding in to limitations on NEM gas-fired power generation).

A case in point in recent months has been reporting here of the rise of VREs in Britain and the decline of coal power. It is interesting, therefore, to dig in to the data for England, Wales and Scotland (Ireland is a different set-up) for past year. Supply (in terms of actual energy sent out) is widely reported to have been up sharply for wind generation – reaching 49 terawatt hours after a 20 per cent increase in capacity over 2016.

Barely noted at all in the media is the overall picture: the Brits obtained 70 TWh from nuclear power last year (a level hardly changed this century), 31 TWh from biomass (that is mostly burning wood), 134 TWh from gas turbines, 23 TWh from coal and about half that from solar (mainly available in summer).

Green PR boisterously sells the line that “Britain was completely coal free for 613 hours” last year in “Britain’s greenest power year ever”. I’ve seen that in any number of reports. Nowhere have I seen 613 hours rendered as 25 days.

Nor (except in the UK version of The Conversation) have I seen the fact that the low level of coal generation over 2017 masks its continued importance in providing capacity during hours of critical peak demand. During the highest 10 per cent hours of power demand of 2017, coal provided a sixth of Britain’s electricity. When it mattered most (which is the depths of winter there rather than our heatwaves), coal was relied on more than nuclear and more than the combined output from wind, solar and hydro (which was twice that of PVs over 2017).

What all this demonstrates in our debate is that, rather than the non-stop Punch-and-Judy show, we should be focusing on the best possible power mix in terms of reliability, affordability and carbon abatement. This is not going to be achieved by demonizing different technologies (and in the case of nuclear power maintaining an absurd total ban) nor by playing games with numbers.

PS: For all the fuss about South Australia, it is a tiddler in the NEM scheme of things. In the past week, for example, it appears the market required 3.8 terawatt hours of electricity – of which 3.3 TWh (or nearly 87 per cent) was produced in Victoria, NSW and Queensland. This share holds good for 12 months, too.

Banish the ban

One of the best (or worst) examples of our national inability to think straight about a reliable electricity strategy for Australia in a world hell-bent on reducing carbon emissions is the ongoing legislative ban on any form of nuclear energy production despite years of safe operation of a 20 megawatt reactor at Sydney’s Lucas Heights (for medicinal and research purposes).

John Howard had a stab at turning things round in 2006 with a task force chaired by Ziggy Switkowski which told him that nuclear power here could become competitive with fossil fuel-based generation in Australia if based on international best practice and with the introduction of low to moderate pricing of carbon dioxide emissions. Without a carbon price, such generation would be 20 to 50 per cent more expensive to produce than coal-fired power. The panel also said that, with deployment starting in 2020, it was conceivable a third of national power supply could be nuclear by 2050.

As we know, Howard lost office the following year and, for a time, we got a carbon price but there was no way that federal Labor (ever looking over its shoulder at the Greens) would embrace nuclear energy.

Then the Fukushima fiasco in Japan in 2011 made any such idea politically untenable here for years, but more recently a royal commission in South Australia proposed that the local legal prohibitions on nuclear power should be removed, suggesting the technology has potential to contribute to supply after 2030.

Commissioner Kevin Scarce recommended in 2016 “the development of a comprehensive national energy policy, which would enable all technologies, including nuclear, to contribute to a reliable, low-carbon electricity network at the lowest possible system cost.”

It would be fair to say, I think, that the nuclear bit did not gain even tepid consideration in the mainstream energy debate and then the “energy crisis” swept us all in to fresh fields.

Last year’s Finkel panel report, sparked by the South Australian blackout, irked advocates of a new approach here to nuclear energy by, in effect, failing to acknowledge it could have a role – but the New South Wales Deputy Premier, John Barilaro, subsequently caused a minor stir by declaring a debate on the issue was “crucial.” (Interestingly Premier Gladys Berejiklian, while saying she was “not convinced” reactors could play a role in NSW, declared she was open to discussing the issue at CoAG.)

The Minerals Council is maintaining pressure for a change of approach, telling the Turnbull government in its latest pre-budget submission that the ongoing ban is “hampering debate about future energy and climate change management,” noting that the policy is “at odds with Australia’s export uranium mining industry.”

The MCA adds that small modular reactors could offer a long-term stable electricity supply to underpin household and industrial needs in mining and other remote towns. The association argues that a new generation of venture-capital backed nuclear start-ups are coming through, with designs for smaller reactors with significantly reduced up-front costs.

This led the Sydney Morning Herald to run a story last week asserting that both critics and supporters of nuclear power “see little future for large-scale (generation) in Australia’s energy mix,” quoting Switkowski as acknowledging that “the window (here) for gigawatt-scale nuclear has closed.”

And this led my friend Barry Murphy to pen a short letter to the SMH which apparently has been ignored.

This is what Murphy, former chairman and CEO of Caltex Australia and former chairman of Delta Electricity, an advocate for the use of small modular reactors, wrote: “It is hard to know whether to laugh or cry about Australia’s confused position on nuclear power. The Minerals Council’s call to have the federal ban on this technology lifted makes good sense. The (energy) minister apparently agrees with this position, but bipartisan and State support is “…not evident right now. “  So nothing happens.

“The continuing obfuscation on this issue is putting Australia’s long-term clean energy portfolio at risk. Current developments with solar and wind (both dependent on electromagnetic radiation from nuclear reactions on the sun) and batteries will all play a part, but issues of scale, timing, cost and reliability will have to be assessed for the longer term. Deliberately refusing to look at how nuclear technology in its modern, smaller, modular form could provide a secure base for these renewables is a mistake. No one in their right mind would put a realistic proposal on the table while ever the ban remains in place. Memo to COAG Energy Council: banish the ban.”

I’m with Murphy on this – and also with the Energy Policy Institute when it argues (as it did in the wake of the Finkel report last year): “Recourse to all new technologies should be part and parcel of strategic energy planning.”

Nuclear power poses a particular dilemma for energy planners, EPIA says – it is a dispatchable, base-load form of zero-emissions power but its deployment in Australia is subject to a moratorium. “One might have thought that each State wishing to introduce a new technology, such as small modular reactors, should have the right to do so with appropriate safety and environmental regulation.”

EPIA executive director Robert Pritchard suggests that places like Ipswich, Mount Isa, Broken Hill, Olympic Dam and the Pilbara could all host SMRs a decade from now if the ban is banished. He says the start of a discussion here should not be about the technology – “that’s a given” – but about community support. “We now realise that politicians will follow the community view,” Pritchard said. “We have to get out and get the community on side.”

Sydney-based SMR Nuclear Technology, of which Pritchard is a director, sent a submission to the Energy Security Board in November declaring it will be “imprudent” not to factor the technology in to its thinking.

SMRs with unity capacity of 50 to 300 megawatts would be particularly suitable for the east coast grid, the company says, arguing that the current national legislative prohibitions were put in place “at a time when there was no real appreciation of the contribution that modern, safe nuclear power plants could make to energy security, affordability and emissions reduction in Australia,”

It seems to me that the appropriate launching pad for a discussion specifically about SMRs in the NEM is the CoAG Energy Council when it next meets in April and the appropriate vehicle for pursuing further consideration is the Energy Security Board.

Time to end the obfuscation?

Missing links

One of the things for which 2017 was notable in electricity supply was the replacement of “base load” in the discussion jargon by “dispatchability” (meaning power that can be sent out in response to demand).

In this context, it is being pointed out that the east coast market (the NEM) has some of the highest levels of dispatchable energy in the OECD – but the key load areas are not well-connected so that it is not uncommon for one sub-region to be experiencing a shortage of supply when three others have a surplus. Also of contextual importance is that there are currently development proposals for 20,000 megawatts of wind and solar power in a market that has 53,000 MW capacity.

The Australian Energy Market Operator includes in its critical tasks, first, the non-negotiable operational and technical requirements for a secure and reliable NEM and, second, “the extent and mix of dispatchable capability required to meet consumer reliability expectations.”

In the latter respect, this involves “the provision of firm and flexible dispatchable capability that will in future depend on the relative cost trajectories of pumped hydro, batteries, solar thermal” as well as gas-powered and coal generation.

So far as New South Wales and Queensland (65 per cent of NEM supply and demand) are concerned, I would think this will mean for at least most of the next decade coal generation supported by gas plants and hydro power, providing most of the electrons and vying in the marketplace with wind power and solar PVs for dispatch.

Notwithstanding green boosterism, the potential for battery storage in this large slab of the market remains a matter for speculation while the role of gas will depend on its wholesale price – and that will depend on how much of the fuel is available on the south-east market.

There is another factor in all this that wasn’t by any means ignored in 2017 but will be getting more attention in the public debate this year, not least because AEMO is now engaged in producing a report on it, due out in mid-2018.

This is in response to the Finkel recommendation, taken up by the CoAG Energy Council, that AEMO interprets as saying it should “develop an integrated grid plan to facilitate the efficient development and connection of renewable energy zones across the NEM.” The actual Finkel wording calls for “the introduction of an integrated grid plan to inform investment decisions and ensure security is preserved in each region as the generation mix evolves”. This, the panel added, “will ensure that we can generate and deliver electricity more efficiently”.

The operator chooses to call this task coming up with “an integrated system plan” because, it says, it is necessary to consider “a wide spectrum of interconnected infrastructure and energy developments including transmission, generation, gas pipelines, and distributed energy resources.”

AEMO acknowledges that the key question is the best way to achieve the NEM-wide policy objectives of affordable, reliable, secure power while meeting carbon emission targets.

The Energy Security Board in its December-released report on the “health” of the NEM says this: “In the longer term the pattern of the transmission grid in the NEM must change. The grid was designed in the last century to run from large coal-fired generators to the load in the cities. It must now be reconfigured so that it runs from renewable energy zones (and dispatchable power resources) to the cities. Planning for this long term change has commenced.”

It seems from the new AEMO issues paper that foremost in its thinking is “what makes a successful renewable energy zone” – adding “REZ” to an already overgrown forest of energy acronyms – and then how to link REZs to the load regions. These are dominated, of course, by the greater urban areas of Melbourne, Sydney and south-east Queensland, between them accounting for three-quarters of the east coast power market whether measured in residential and business consumption or in the number of consumers (aka voters).

AEMO defines “REZ” as areas “where clusters of large-scale renewable energy can be developed to promote economies of scale in high-resource areas and capture geographic and technological diversity in renewable resources.” It intends to identify and map “prospective REZs” across the NEM and already tags Far North Queensland, New England, Snowy 2.0, western Victoria, the Eyre Peninsula, Tasmania and the intersection of South Australia, Victoria and NSW among them.

It also is going to consider “what is the optimal balance between a more interconnected NEM, which can reduce the need for local reserves and take advantage of regional diversity, thereby more efficiently sharing resources and services between regions, and a more regionally independent NEM with each region self-sufficient in system security and reliability?”

Coloring its thinking is a view that up to 30,000 megawatts of new wind and large-scale solar PV capacity could be built in the NEM by 2037. No doubt some stakeholders will be pitching in submissions to suggest this is not the only outcome it should be considering.

Some will be comforted by AEMO flagging that it needs to assess the total costs of these “REZ” developments “relative to other options, including the costs of augmenting the existing transmission network or building new transmission to develop each REZ, along with the costs of any other developments to continue to be able to operate the power system securely once the REZs are developed”.

The operator asserts that the need for transmission augmentation “previously driven by load growth, is now predominantly driven by the changing generation mix and the location of new generation”. To which it adds: “transmission networks in the NEM, designed for transporting energy from coal and gas generation centres, must transform if they are to support large-scale development of non-synchronous generation in new areas”.

The deadline for submissions to AEMO on this review is 2 February, which is not far away.

‘It’s not a simple choice’

As we move in to the last days of 2017, the federal government, via the publication of its climate change policy paper, has summed up the electricity supply challenge just at the point when early summer heatwaves have been testing southern State supply resilience.

Simultaneously and coincidentally, I guess, the Energy Security Board has put out a paper that underscores the fragile state of things.

The ESB’s “health of the NEM” diagnosis is that the market is unwell but hopefully on the mend. The three worrying symptoms, it finds, are

▪ electricity bills are not affordable

▪ reliability risks in the system are increasing; and

▪ future carbon emissions policy is uncertain.

To manage a recovery, says the board, “we need governance that is fit for purpose.”

In the policy paper released yesterday, the government says: “Australia’s energy market is undergoing the largest transition since the creation of the NEM. The same transition is happening across the world, driven by retirement of ageing thermal generation, flattening demand for electricity and rapid growth in renewable energy resources. The costs of intermittent generation from wind and solar, once prohibitively expensive, have plummeted in the past decade. At the same time, electricity prices for households, business and industry have increased, and investment has dried up for the kind of dispatchable generation needed to stabilise the grid, such as ready-to-use sources like coal, gas, pumped hydro and batteries. The government’s priority is to deliver a more affordable, more reliable and cleaner electricity supply for all Australians.”

Public sentiment on this, as I indicated in my previous post, using the latest Essential Report poll, is that about one in five of us believes all three goals should be given the policymaking priority and 15 per cent think it should be abatement of emissions. More than a third want energy costs to be the priority and 18 per cent say it should be supply reliability.

In the new paper, the federal government asserts that the “national energy guarantee,” which it and the eight State and Territory governments will again debate at CoAG Energy Council in April, will:

  • incentivize the right investment in the right place at the right time
  • lower wholesale prices and reduce spot price volatility
  • improve reliability, and
  • reduce emissions at lowest cost.

It adds that its policy will level the playing field and be technology neutral. “It will provide an incentive for every single technology to perform within the two constraints of meeting international commitments and maintaining reliability.”

For those in the community wanting cheaper power and hanging out for large cuts in their bills, it would be as well to understand the fine print of the government promise: “Modelling estimates that the (policy) will result in wholesale electricity prices beingan average of 23 per cent lower than without the guarantee over the period 2020 to 2030. The lower wholesale prices drive a reduction in retail prices, with the average household expected to save around $120 compared to business as usual on its electricity bill each year from 2020 to 2030.”

Then they need to appreciate what the Australian Energy Market Commission is saying in its new report – the topic of my post on Monday – to the effect that “without investment in replacement dispatchable capacity, wholesale prices will remain volatile and the (end-user price) rollercoaster will be repeated.”

Unfortunately, of course, the community has its head around very little of this except what its gleans from media soundbites.

For the more engaged stakeholders, there is a need to take the reality pill, too.

“Technology neutrality” has become a catchphrase but what it actually means for the NEM, bearing in mind this version of “neutrality” continues to eschew nuclear energy, is highly debatable.

One of my interlocutors complained to me in an email yesterday with respect to other just-published material about “the sheer lack of understanding of the dearth of system security features of non-synchronous, intermittent, weather-dependent generation technologies,” adding that “the huge costs of add-ons required to go close to accounting for this continues to be under-appreciated.”

So it is time to trot out one more time the wisdom of the admiral – royal commissioner Kevin Scarce in his report to the South Australian government. Scarce, former senior navy officer and former State governor, said 19 months ago that “identifying whether a particular generation portfolio would deliver electricity at the lowest possible cost requires an analysis of the future cost of the system as a whole, that is the total costs of generation, transmission and distribution.” And he added: “For those planning a future electricity system (and the market in which it will operate) the relevant issue is total system cost (including) inter- and intra-regional expansion of networks and grid support costs.” And also, essentially reacting to the “go for renewables” lobbying he received, “it is not a simple choice.”

You won’t find a mention of total system cost in the spruiking pursued by either the federal government or the Labor party (whether federally or in the States).

Here, for example, in the new climate policy document is the Turnbull regime’s hype for the NEG: “The guarantee is a credible, workable, pro-market policy that does not involve subsidies, taxes, or trading schemes. It will lower electricity prices, make the system more reliable, encourage the right investment and reduce emissions. Importantly it is technology-neutral, offering a future for investment in whatever technology the market needs – solar, wind, hydro, coal, gas, batteries or pumped hydro storage.”

I missed a commentary in The Conversation on the NEG by the Grattan Institute’s Tony Wood in late November; reading it today, I am struck by his observation that this may be the first example in the world where policy seeks to integrate emissions reduction and energy security. It’s the design that matters, he adds, and the hard work on this has yet to be done. He declares: “The fundamental elements of the proposal provide a workable framework, its key elements will have to be part of any effective solution, and a credible alternative does not currently exist. The next best step would be for all parties to commit to making the NEG a workable solution to a serious national problem.”

As has been the case for at least a decade, the critical factor with new energy policy development is politics, bearing in mind that today almost a quarter of the actual federal votes cast go to populist parties and independents (and about five per cent of any voting doesn’t count because it is “informal”).

No objective spectator of our political scene can avoid the notion that we could have a different federal government in 12 to 18 months and the big “what if” has to be the make-up of this administration. Will it be a different coalition? Does it necessarily follow that this would headed by Labor? Which leads to the obvious thought: if it is anything other than some form of the present regime, what is the fate of the NEG?

Dem NEM bones

It occurs to me, reading the new Australian Energy Market Commission report to CoAG ministers on household price trends, published today, that the appropriate theme music for the NEM is “Dem Bones.”

You know how it goes: “toe bone connected to the foot bone” all the way through to “neck bone connected to the head bone.”

And here’s the AEMC: “Wholesale market outcomes are increasingly interconnected with environmental policy, the wholesale gas market and system security.”

(The commission offers this soundbite for the media in the “infographic” on the report: “Consumers are riding a power price rollercoaster driven by changes in generation.” And this thought for the politicians: “The key to an orderly restructure of the electricity sector is to keep making market reforms that don’t add to consumer costs.”)

The AEMC notes that wholesale electricity costs now comprise approximately 30 to 40 per cent of residential power bills – which went up by an average 10.2 per cent from 2016-17 to 2017-18 primarily due to rising wholesale prices flowing from power station closures and, says the commission, will decrease by 6.6 per cent in 2018-19 and 2019-20 primarily due to them falling again as a result of the introduction of 4,100 megawatts of new capacity (mostly renewables) and the re-entry to the market of Queensland’s gas-fired Swanbank E plant.

Of course, there are a heap of other factors at play and even the experts can struggle to produce a clear picture of the impacts. Here’s the AEMC again: “In (our) 2016 report interconnectors were expected to have a large effect on the trend in wholesale prices” following the close of Hazelwood – but this didn’t happen.

Perhaps the biggest commission expectation in the new report is that NEM electricity demand will stay flat from 2016-17 to 2019-20, so changes in wholesale costs will relate to what happens to supply.

The AEMC’s working hypothesis includes the view that gas prices on the east coast will remain high from 2017-18 to 2019-20.

And reinforcing my “Dem Bones” whimsy is the point that the projected downward trend in power wholesale costs in the short term is expected to be largely driven by new capacity pushed in to the market by the RET – but, says the commission, in the medium term this can contribute to earlier retirement of large-scale synchronous generation (which can’t recover operating and maintenance costs in the greener market), decreasing competition and increasing wholesale prices.

“Without investment in replacement dispatchable capacity,” the AEMC adds, “wholesale prices will remain volatile and the rollercoaster will be repeated.”

And there is another joker in the NEM pack: the expected decrease in wholesale costs, the commission warns CoAG ministers, “may not necessarily translate in to lower retail prices for consumers” because of increases in environmental and/or network costs in some jurisdictions.

There is also the small matter of the impact of RET flow-on effects on hedging contracts, a key NEM activity for generators and retailers faced with significant trading risks – an issue about which the community knows virtually nothing and cares even less. The commission says, “As traditional generators retire, there will be fewer (power producers) to supply firm hedging contracts (resulting in) upward pressure on wholesale electricity contract prices.”

“Further,” says the AEMC, “(with fewer generators providing contracts) the risk faced by retailers from volatile spot prices may increase” because they can’t hedge. Over the long term “this potentially affects the level of retail competition.”

Green boosters and politicians on the make brush this stuff aside as they rush to promote greater and greater levels of wind and solar investment and, especially the Labor party at federal and State levels, to capitalize on public sentiment favoring renewable energy.

(On this point, after a weekend when Bennelong voters dashed Labor hopes of a boilover in federal government, it is worth, I think, drawing attention to the latest Essential Report poll. The question posed was “when considering the outcomes of energy policy, what do you think should be prioritized?” Thirty-seven per cent of respondents opted for keeping down the cost of energy, 18 per cent for maintaining supply reliability, 15 per cent for reducing carbon emissions and 22 per cent said “we do not need to prioritize, all can be achieved.” Good old “don’t know” achieved seven per cent. Essential Report last posed this question in June when those opting for keeping costs down totaled 28 per cent. That was also when a special Newspoll found 60 per cent of respondents wanted action to push down energy prices as a top priority, with 10 per cent opting for prevention of power blackouts and 24 per cent wanting carbon abatement as the primary policy objective.)

Coming back to the new AEMC report, the commission includes this quiet admonition to CoAG: “A number of governments (have) recently introduced their own energy policies aimed at increasing renewable generation, providing system security or putting downward pressure on wholesale spot prices. These policies, like the RET, have the potential to additionally affect supply/demand dynamics and wholesale electricity costs.”

Considering the amount of shouting in some quarters about the impacts of environmental policies (the RET, solar subsidies and so on), one should also record that the AEMC says they and system security costs range from three to 14 per cent of household bills, depending on jurisdiction – and are higher in the ACT and SEQ. Looking out to 2020, the commission sees them decreasing in SEQ but rising elsewhere in the NEM. The reason they’re going down in SEQ is that the Palaszczuk government has reacted to non-PV community growls by removing the smeared solar bonus scheme charge and shifting it to taxpayers……….

The direct costs of environmental policies are estimated by the commission to rise by around 19 per cent over the next two years mainly due to higher costs for certificates under the large-scale RET and also State environmental feed-in tariffs.

Finally, given the importance of network costs in residential power bills (with transmission charges amounting to 5 to 12 per cent and distribution charges 30 to 45 per cent), the commission expects this component to rise in South Australia between now and mid-2020, to remain stable in south-east Queensland, New South Wales and Victoria, and to fall slightly in the ACT and Tasmania.

The bottom line in the AEMC message to ministers is that short-term gains flowing from fluctuations in wholesale power costs won’t last without investment in new dispatchable generation capacity – and it makes no bones about the problem: “uncertainty is stopping investment and will put upward pressure on prices in the medium term.”

Grounds for optimism?

Given the events of 2017, it might seem a little quirky for the Australian Petroleum Production & Exploration Association to pick “Resilient business – success in the new energy market” as the theme for its 2018 annual conference, but optimism has long been the trademark of oil and gas producers.

Thus we see Kevin Gallagher, Santos CEO and lead industry speaker at the APPEA conference in Adelaide next May, opining that the biggest game-changer for the sector in 2018 would be opening new areas for gas development in New South Wales (where the incumbent Coalition government has made footdragging on this issue an art form) and the Northern Territory (where the relatively new Labor government is torn between the competing lures of considerable future economic benefits and the politics of cosying up to the NIMBY movement).

Gallagher says the Macarthur basin in the NT “has the potential to do for Australia what the shale gas revolution has done for America,” which is a pretty big statement when you consider what the US shale oil and gas boom has accomplished in the past decade, turning that country’s energy environment on its head thanks to embracing the new extraction techniques of drilling horizontal wells and hydraulic fracturing.

Gallagher adds in a promotion for the APPEA conference that the opportunities here to find new solutions integrating gas, renewables and energy storage are “limited only by our imagination” – and, one may add, by the toxic quality of the national energy debate.

APPEA chief executive Malcolm Roberts acknowledges that 2017 has been “challenging” but he, too, sees hope in greater recognition of the importance of natural gas for national energy security and a transition to lower carbon emissions.

In a new submission to the CoAG Energy Council, which is due to hold a potentially critical meeting about policy next April, APPEA argues that time is running out for the development of new unconventional gas resources to replace the declining output from existing eastern Australian fields and ward off further east coast supply tightening and higher prices.

Another worm in the apple comes via the Australian Energy Market Operator, in a just-released statement on gas supply and demand, warning of a domestic shortage in Western Australia if new resources are not brought onstream in the next five to seven years. The cause for concern is that WA petroleum exploration is at its lowest level since 1990 – and the new Labor government has imposed a moratorium on hydraulic fracturing, baulking exploitation of large potential onshore shale resources.

The WA government is embarked on the 14th review of fracking in Australia while the 13th, arranged by the new NT government, has just delivered a report which the panel chair, Justice Rachel Pepper, encapsulates as saying: “The overall conclusion of the report is that risk is inherent in all development and that an onshore shale gas industry is no exception. However, if the recommendations made are adopted and implemented in full, those risks may be mitigated or reduced – and in many cases eliminated altogether – to acceptable levels having regard to the totality of the evidence.”

How far it is realistic for the industry to be hopeful that Pepper-style commonsense will prevail in WA, the NT, NSW and even Victoria (where the Labor government seems determined to shoot the State economy and consumers in the feet despite decades of reliance on gas as an essential service) is debatable – and has been debated many times at the APPEA conferences and the Australian Domestic Gas Outlook conferences (the next is in Sydney in February) over the past six years.

APPEA is taking some further cheer from the latest report in to gas supply by the Australian Competition & Consumer Commission and the coincident Shell announcement that will bring the Arrow resource in Queensland (“the largest undeveloped resource on the east coast”) to both domestic and export markets.

APPEA points out that the ACCC report “confirms that the gas industry and Queensland’s LNG industry in particular has secured east coast domestic gas supply for 2018 and 2019,” following heavying of production companies by the Prime Minister earlier this year which in turn followed dire market operator warnings about potential shortfalls lying ahead.

The association takes particular note of the commission saying that “the best way to address the supply shortage in the southern States is to increase production of gas in the southern States.” As Roberts sees it, the ACCC paper “places the blame for higher-than-necessary gas prices at the feet of governments,” and in particular those in NSW and Victoria. To which APPEA adds that further reform of transmission operations will help, given they “can add $2 to $4 a gigajoule to prices in southern States” when gas has to be ferried long distances.

And Roberts tosses in another sharp point, too: the ACCC report, he says, “continues a trend this year of dramatic revisions of demand forecasts,” in this case converting a 55 petajoule east coast shortfall for 2018 predicted in September in to a 20 PJ surplus six weeks later. “Cooler heads,” he suggests, “need to prevail in 2018.” Now that really is optimism.

Speaking of reports, and hasn’t 2017 seen a tsunami of them, there is also a paper just published by BDO, accounting and management consultants, that looks globally and locally at gas markets – and among its observations is that the mooted Australian west-east gas pipeline, now subject to one of the Turnbull government-funded feasibility studies launched this year, should not be dismissed as a pipedream. Local BDO partner Andrew Hillbeck says: “It’s a possible solution and it’s an opportunity for innovation – at the very least it requires more consideration.”

However much optimism producers want to project, business consumers, and especially the manufacturing industry, still view 2018 with trepidation. Their concerns are summed up by ACCC chairman Rod Sims, who says that “despite increased supply providing important short-term improvements in conditions, the market is still not operating as well as it could.” Prices, he asserts, remain higher than they would be in a well-functioning and competitive market.

Prices offered to large commercial and industrial businesses have fallen back from $16 per gigajoule early this year to between $8 and $12 – but, says Sims, “the picture for smaller C&I customers remains bleak.” Some, he adds, are “in a precarious position.”

And because there is always one more thing to consider in the wild ride that is the gas game these days, bear in mind comments by National Australia Bank a fortnight ago, warning that Victoria is in “a tricky position” for electricity supply this summer (owing to generation issues at Loy Yang A and Yallourn power stations) and that this may lead to greater dependence on gas turbines with flow-on impacts on southern fuel availability and on wholesale electricity prices in the NEM.


Brave new world

It was inevitable that the media would leap on AGL Energy’s Liddell announcement at the weekend to the disadvantage of the federal government and of Malcolm Turnbull in particular as he led the charge to bully the company in to not shutting the plant.

Needless to say, the ALP has leapt on the company announcement, too, with Labor’s Mark Butler taking the hyperbole prize for declaring “Turnbull ends 2017 with his vision for the future of Australian energy in tatters.”

Lord alone knows what was going through the minds of the Prime Minister and others when they pulled this stunt; the proverbial petshop galah could have told them it wouldn’t fly. Their immediate reaction ploy now is to flick what AGL says it plans to do to the Australia Energy Market Operator for assessment – with a response required in February.

Josh Frydenberg, however, is pushing the point that should be uppermost in the minds of all concerned. “We are technology agnostic when it comes to generation,” he’s telling the media. “Our priority is the stability and affordability of power to Australian households and businesses.”

Here on the other hand is Bill Shorten, while campaigning in the seat of Bennelong with Kristina Keneally: “We need more renewables in our energy mix. We need to reform the national energy markets. We need to also make sure that we’re getting the gas that is produced in Australia prioritized to be sold to Australian industry first. Labor is for certainty. This will deliver new jobs in renewables. It will deliver fair dinkum action on climate change. And the fact of the matter is that good energy policy is good environment policy and vice versa. We are determined to make sure that Australians get lower energy prices and we’re going to do it by encouraging investment in renewable energy.”

In all the fuss, it would probably be as well to remind the community how New South Wales gets its power before greenwash wholly obscures the picture. Unfortunately, they seldom get this information – the Punch & Judy show that is our politics is of far more media interest.

Electricity generators in the NEM’s biggest region (accounting for 37 per cent of the market’s power) provide a “baseload” of 5,500 megawatts and are challenged to meet up to 14,000 MW when summer demand is at its peak.

The NSW market is currently serviced in the main by 10,160 MW of black coal-fuelled plant and 4,803 MW of gas and hydro capacity (of which 4,236 MW is of the “quick start” mode).

To which must be added supply vulnerable to the weather and time of day: some 1,200 MW of household rooftop solar power, 155 MW of utility-scale PV at Broken Hill and 660 MW of wind farm capacity.

And, not to be overlooked, NSW relies also on what capacity is available over the NEM interconnectors (critically from Queensland during a south-east heatwave, that is from more black coal and gas plants).

One of the core facts to be found in AEMO’s modeling is that it expects a small decline in NSW overall power needs between now and 2022 – reaching just under 66,000 gigawatt hours that year (2,000 GWh less than the power industry was forecasting in 2015) – but it can’t see a fall in peak requirements and perhaps there will be a rise.

As Tim Nelson, AGL’s chief economist, puts it, “the (NSW) market will require less energy but the same or more capacity.”

Explaining the thinking behind the company’s life-after-Liddell approach, Nelson says: “The combination of stable or rising peak demand, declining underlying energy demand and increased output from variable renewable generators has distinct implications for the type of investment required to replace Liddell. The amount of energy served by ‘dispatchable’ generation is decreasing as a result of falling energy demand and increased output from variable renewable resources. Given the same (or even an increase in) capacity is required but the amount of energy needed from ‘dispatchable’ generation is lower, the type of complementary plant is likely to shift from inflexible coal plant to more flexible gas-fired plant, better suited to operating at a lower capacity factor. This is reinforced by the increasing need for plant to complement variable renewable resources when they are not producing due to a temporary lack of wind or solar resources.”

On balance, the company’s case is that optimal investment now needs to be in peaking generation and it sees about 1,000 MW of new fast-start capacity being required – while still sending out some 15,000 GWh a year from Bayswater power station.

Nelson adds this: “While climate change and the need to reduce greenhouse gas emissions has been one major issue being discussed within the context of Liddell, it is clear that changing technology costs and the nature of electricity demand have also been key factors. Longer term, it may be that energy storage (through batteries, pumped hydro or production of hydrogen utilising renewable energy) is a better option than new gas-fired generation. But given renewable penetration in the NSW market is not sufficient to meet minimum demand, there is little benefit to deploying energy storage. This may change as greater levels of investment in renewable energy may see renewable production capacity exceed minimum demand at some point in the future. At that time, storage would be a direct substitute for gas-fired generation.”

Whatever the longer term may hold – and let’s not forget that nuclear advocates strongly believe a genuine technology-neutral approach would open the door to small modular reactors in the NEM in the next decade or that there are a number of other players whose plans could impact on AGL’s aims – it ought to be obvious to all but the blinkered that the backbone of NSW supply is going to continue to be fossil fuels for years to come, subject, of course, to what policy machinations come from the body politic, bearing in mind there will be three State elections and probably three federal polls between now and the mid-Twenties.

What seems unarguable is that one of the keys to avoiding landing eastern Australia (and not least NSW) still further in the energy mire is an adequate and workable plan to ensure there is sufficient gas supply to support “flexible” power generation.

Self interest for AGL, having been frustrated in pursuing gas development in NSW, dictates the LNG importing scheme it now has under consideration. The broader consumer interest should require a major shift in jurisdictional attitudes, in NSW, Victoria and the Northern Territory in particular, towards encouraging unconventional gas development to serve south-east Australia.

The Australian Petroleum Production & Exploration Association points to the Narrabri project being capable of supplying 50 per cent of New South Wales needs, to “significant” resources in Victoria’s onshore Gippsland and Otway basins and to “promising” resources in South Australia – apart from what the Northern Territory onshore prospects could deliver.

Whether what has gone on at official levels in 2017, via the CoAG Energy Council and so on, is a harbinger for progress in this regard in 2018 is an open question.

A pessimist would say not but the Turnbull government can’t afford to be pessimistic.

Speaking to journalists late last month, the Prime Minister declared that, by the time the Energy Council meets in April, we can expect to see the “national energy guarantee” fully fleshed out and in a position where it can take the energy market “into a new world where we have reliable, affordable energy and meet our emissions reduction targets.”

I’m tempted to say “Yes, Prime Minister” but that would be naughty and I don’t want Santa to just give me a lump of coal — and I’d like Turnbull to be right.