Energy security a focus in 2017 Budget — but is it enough?

By Lauren Davis
Thursday, 11 May, 2017

Australia’s energy sector has been left somewhat underwhelmed following Tuesday night’s Budget announcement, with industry representatives claiming the government’s focus on energy security was not adequately backed up by the promise of more renewable energy and storage.

Funding measures announced on the night included $90 million to expand gas supplies, partly through increased unconventional gas exploration. But according to Emlyn Keane, the CEO of renewable energy company Evergen, “There have been tens of billions of dollars invested over the last 10 years to develop Australia’s gas resources for export. Unfortunately, $90 million in response is not going to move the needle and will take years to come to fruition.”

The government also floated to the idea of a potential Commonwealth buyout of an expanded Snowy Hydro scheme, which is intended to free up funds for states like NSW to invest in infrastructure. But according to Keane, this will have no direct impact on energy markets as it “relates to an existing asset simply changing hands”.

“On this note, there should also be a focus on small-scale solar and battery systems, which can improve the reliability of power supply,” said Keane. “Some systems currently on the market can actually provide backup power to the house if there is a blackout. Concepts like microgrids and virtual power stations, that coordinate lots of individual solar and battery installations, can provide support to the broader grid, improving reliability in extreme weather events.”

Responding to plans for a $110 million solar thermal plant at Port Augusta, Keane said he was surprised that the government would select “any particular energy technology ahead of another — particularly solar thermal, which hasn’t necessarily proven itself to be cost-effective in comparison to alternative technologies”. Indeed, he noted that market forces have determined that large-scale wind and solar have been the most cost-effective solutions to date.

Finally, Keane was particularly sceptical of moves to increase monitoring of gas and electricity prices by the Australian Competition and Consumer Commission, stating, “Australians don’t need more monitoring to tell them that their energy bills are too high.” Rather, he said, the government should focus on investment in new technology such as solar and batteries, in order to give consumers more opportunities to lower their bills.

Energy Networks Australia took a more positive approach, welcoming the focus on energy security and saying the Budget included positive measures to improve energy customer confidence in electricity retail markets, wholesale gas markets and the feasibility of new energy sources and pipeline infrastructure.

“The federal Budget seeks to restore public confidence that our energy markets are sufficiently secure and competitive to deliver reliable, affordable energy for our customers,” said Energy Networks Australia CEO John Bradley.

“Energy Networks welcome government support for increased market scrutiny and measures to progress new sources of unconventional gas, pumped hydro and concentrated solar thermal energy which can help to keep the lights on as we decarbonise.

“It is great to see the federal government’s commitment of about $60 million for scientific assessments and to accelerate development of onshore gas, along with $7.6 million to assess gas infrastructure and trading opportunities.

“However, to solve our gas market challenges, we need a number of state governments to remove blanket prohibitions on gas exploration and development to secure reliable supply for manufacturers, power stations and residential customers.”

Bradley stated that funding is “not the biggest challenge facing the energy system” — rather, it is the lack of agreement between state and federal governments on a national energy transition plan.

“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,” he said.

Whether you agree with Keane or Bradley, the end result is the same — Australia’s so-called ‘energy crisis’ cannot be solved without a clear plan that covers a range of innovative energy technologies.

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