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Finkel’s frustration: Everyone else has a strategy, but not Australia

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One senses that Chief scientist Alan Finkel is just a little frustrated.

The center-piece of his land-mark Finkel Review, the clean energy target, has been left in the gutter by weak-kneed politicians, and his attempts to bring perspective to the issue of storage has been branded as “eco-evangelism” by the same forces that make policy makers tremble in their bed at night.

Little surprise, then, that Finkel chose to focus his last energy speech of the year on the “Myths and Legends of the Australian electricity market”, delivered to the ANU on Wednesday afternoon.

pp slide 7

And in doing so, he delivers some major brick-bats to both the country’s policy makers (politicians) and its regulators.

Finkel argues that Australia has managed a unique trifecta – high prices, high emissions, and high uncertainty – and fallen behind the rest of the world. And he has no doubt who is to blame.

“Everyone else has a strategy,” says one of the key points of his presentation (see above). The next line is equally damming: “Regulatory system suffering 10 years of policy paralysis.”

Energy insiders and observers know exactly what Finkel is referring to: the first is clear, the political impasse caused by the Far Right and its opposition to basic economics and science.

The second offender would be interpreted as the Australian Energy Market Commission – the rule maker that has stood in the way of blindingly obvious reforms such as introducing environmental considerations into the National Electricity Objective, and which has resisted and delayed nearly every proposed change that would nudge Australia’s ageing, creaking energy infrastructure into the 21st Century.

As an example, the switch from 30 minute to 5-minute settlements, a rule change seen as critical to supporting the introduction of battery storage and other fast response technologies, and to end the rampant but apparently legal gaming of the market by the big generators.

The 5-minute rule will come in, but not until 2021. Finkel was asked about this in questions, and was reasonably diplomatic: Timing was an issue, he said, but at least 2021 was better than nothing.

The bitter irony? The AEMC has now swept itself into the void created by the Coalition’s rejection of Finkel’s Clean Energy Target to propose a re-write of the rules and the introduction of a reliability and emissions obligation.

And who would get to write these rules? The AEMC. And again, it seems the underlying principle of the proposed National Energy Guarantee is that something must be better than nothing. Not everyone is sure about that.

Nevertheless, Finkel left the audience in no doubt as to what he saw as the long-term energy future: a cheaper, cleaner (zero emissions) and more reliable grid built around solar, wind, battery storage, pumped hydro and digitalisation.

To get there however, some major road-humps have to be negotiated – mostly in the form of policy-makers and rule-makers. And to do that, clearly some myths have to be dispelled.

These are the six myths that Finkel addressed in his talk, along with some of the key slides that went with them:

Myth One: It’s not too late to go back on energy market reform

 

pp 1

 

 

It is too late, he says. There is rampant disruption from newer, smarter, cheaper technologies. What is needed are policies that provide a trajectory to zero emissions (Australia does not have one, not even a vague target), a mechanism (no again), and a reliability obligation (nope).

Myth Two: Renewable shares and emissions obligations are interchangeable

pp slide 11

This was to underline the point that it is all very well to have high renewable energy targets, but a considered approach that takes in security, reliability and affordability needs to be included. That was what the Finkel Review was about, but the key component – the CET – was rejected.

Myth Three: It’s only about next summer

 

pp slide 16

Nope, it’s about the long-term transition. This was an appeal for Australia to adopt some longer term policies – in electric vehicles, and even hydrogen; something that looks to the emissions challenges of the futures and plays to Australia’s huge advantages in minerals such as lithium, wind and solar, and its engineers and scientists.

Myth Four: The market will work it out

pp slide 20

The table above summarises some of the key interventions Finkel recommended in his review – and most notably the strategic reserve and the day ahead market, that is favoured by the Australian Energy Market Operator, but whose future is clouded under the vague recommendations of the National Energy Guarantee.

Myth Five: Batteries are for toys and iPhones

pp slide 22

Good timing. The Tesla big battery will be formally opened on Friday, and will be just the first of many large-scale battery storage installations, and will be followed closely by pumped hydro projects, be they Snowy Hydro 2, the Kidston solar plant and “water battery”, or the numerous projects being put together in South Australia and NSW. Storage will be the key to fill the gaps between wind and solar.

Myth Six: It’s easy

pp slide 25

It will not be easy. Australia has unique challenges, not least the nature of its grid – the world’s most elongated, from Cape York down to Port Lincoln in South Australia.

It’s one thing to assume that change will happen anyway; Finkel says he would be much more comfortable with “certainty” than “hope.” It will need something that has not been achieved to date – a broad strategy, political strength, and effective market rules.

Here’s hoping.  

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  • Joe

    Who would want to be Australia’s Chief Scientist these days when climate change needs to be addressed so urgently. Under the COALition government Prof. Chubb didn’t exactly feel the love and Dr. Finkel is getting the same ‘non love’. Why even bother having a Chief Scientist when you ( COALition ) ignore the really important stuff.

    • Damien Ashdown

      I’m sure if the right had the option to do away with a chief scientist they would as it really doesn’t suit there desire to create a reality they want you to believe in. Scientific facts keep coming out of the mouth of the CS that contradict what the right want to portray.

      • Joe

        Yep, right wing nutters where politk rules over the science.

        • MrMauricio

          and empower corporations to rule over the people!!!

  • solarguy

    Why wouldn’t he feel frustrated, hell I do. And I’ll take a wild stab in the dark here…. we all bloody do. And for what, greed and stupidity!

  • howardpatr

    John Pierce is the Chairman of AEMC.

    “John Pierce brings extensive energy market, financial market and economic policy experience to the role. He was formerly Secretary of the Federal Department of Resources, Energy and Tourism, following 12 years of service as Secretary of the New South Wales (NSW) Treasury and Chairman of the NSW Treasury Corp. Prior to his time at Treasury his energy business and operational experience was at Pacific Power and the Electricity Commission of NSW. He also has experience in the processes of government at state and federal levels, having worked at the most senior levels in policy development and provision of policy advice to ministers, cabinets, ministerial councils and the Council of Australian Governments. He holds a BCom, Hon. (UNSW).

    Mr Pierce was nominated for appointment by state and territory energy ministers in June 2010.”

    Pierce has been there for seven years – what evidence is there that he has shown himself to be an agent of change rather than a representative of the gentailers?

    • Joe

      Hmm….that’s some ‘job application’ just rolled off for the Pierce, all impressive reading to be sure. The time for impressive change is now…and The NEG is not counted !

      • Scottman

        Thats funny Joe, With all those job titles – he must have got the sack a lot.

    • Ken Dyer

      John Pierce is an economist. Economists are not scientists. Alan Finkel is a scientist.

      https://uploads.disquscdn.com/images/26c328907297624af574f68ba91dd6c66530e56dea0f8f33a6346fa63921f57c.jpg

      Pierce was appointed in 2010, and re-appointed in 2015 by cabal of Liberal State Premiers led by the then PM, Tony Abbott. Before 2010, Pierce wanted to privatise the NSW electricity when Iemma was Premier, so that gives you an idea of his politics.

      Pierce and his fellow commissioners are stale and out of date dinosaurs but have all been re-appointed. Their terms do not expire until 2020. Hopefully the Turnbull COALition will be gone by then, and so will these commissioners, but it may be too late, as Finkel points out. No wonder he is bloody frustrated.

    • Tim Buckley

      Exactly. The ESB seems to have been hobbled from the outset. By John Pierce? Our PM has made his views clear and it certainly seems that the ESB is kow-towing to this, entirely effective at trying to serve global fossil fuel companies and totally ineffective at serving the interests of the people of Australia. Embarrassing. Great to see Finkel airing his frustrations at the lunacy emanating from Canberra. Time for the states to keep going it alone and getting on with the job of transforming our country’s energy system, leveraging the investment opportunities that are clear and present.

    • rob

      OUCH! would love to read that out to his face!

  • Hettie

    Anyone would think that the survival of the planet as a place to live was not at risk.
    Australia’s domestic CO2 emissions may represent only 1.8% of world emissions, but our vast coal exports account for far more. Sorry, I don’t have figures, but we are the 2nd biggest exporter of coal.
    Current government support for the industry would have us believe that our economy would collapse if the coal industry were shut down. What rubbish.
    Most coal mining companies are not Australian owned. They pay very little tax, are not held accountable for the damage they cause to p

    • Joe

      Young Hettie you are nailing it…. again. With regard to emissions we are not accurately accounting for this on a country by country basis. The world is using China / Asia as the world’s factory making all sorts of goods for us to consume for a cheap/er retail price. We are effectively outsourcing a lot of our CO2 emissions to Asian countries where costs of production are lower, lower because environment and labor laws are crap compared to western countries. I always find it a bit rich when everyone jumps on China for being the highest CO2 polluter. Yes in absolute terms China is but not in per capita terms which is the true global benchmark. China has a lower per capita CO2 emission than Australia does with Australia one of the worst CO2 polluters on a per capita basis in the world. And if western countries made their own goods instead of
      outsourcing to overseas countries, then all would have to truly own the CO2 emissions that come with the production and consumption of goods. And Australia with its coal exports again walks away from the responsibility associated with CO2 emissions from someone else burning our coal. Blaming China is a falsity. Australia needs to take responsibility for all of its own actions.

      • Hettie

        Thank you, my friend.
        It will be abundantly clear to the experts that most of my posts are based on very superficial knowledge. But one drives a car adequately without understanding the finer points of the way it works.
        So most of what I vent about is blindingly obvious to most.
        Glad you are prepared to put up with me.

        • mick

          dont sell yourself short

          • Hettie

            Aw, gee…
            First I get to have a rant, then you all give me a pat.
            It’s enough to make a grumpy old woman go all gooey.
            Of course I’ll keep doing it.

          • rob

            A HUG from this old bugger Hettie

          • Hettie

            Back atcha, Rob.

        • Scottman

          We should call you “The straight shootin one”. Love your rants, Makes me feel like I am not alone on the childishness (such a word?) that our elected “Stupid”ones perform on a daily basis.
          Go Hettie!!!

          • Hettie

            Childishness is certainly a word, dear Scottman.
            And very apposite.

        • rob

          reckon you and I should move in together…..lol…… me GAY by the way! ….well actually non sexual! but but but you you would have to move to the dynamic state of S.A.!

          • Hettie

            What a nice idea. But not feasible for me. SA has appeal, and New England a few drawbacks, but Armidale is a lovely place to live, and I find the cold winters much easier to deal with than SA summer heat.
            Too old now, anyway.
            We can always chat .

          • rob

            OMG! You have to vote in the morning……..I’m guessing not BARNYARD?

          • Hettie

            Prepoll 10 days ago.
            Greens 1 Labor 2.
            Barnyard 17.
            My foster son and favourite nephew both gay. Gay women friends.
            Your offer is tempting, but no. And settle down!
            Rarely over 24 in this house too.
            Nearly midnight.
            Zzzzz.

          • rob

            Sleep tight!
            maybe a visit to new england is on the cards!

          • rob

            HEY HETTIE always 24 degrees here in the house and in your potential granny flat…….. all Solar Powered!

        • Ken

          Awwww,,, @joe @hettie,, will you two just get a room 🙂

      • RobertO

        Hi Hettie, we are number 1 on the list and China is number 34 based on per capita, and we do not count what we export, that is counted in the country it is burned. China has stopped so 80,000 factories over their winter because some of our coal is used to produce power (we are part of the polution problem in China). They have currently suspended some 150 coal power stations that they were building, and hopefully they will be canned, RE is making inroads to the overall energy requirements in China.

      • rob

        please read my comment to Hettie directly above or below…depends how you access the setting I guess
        cheers rob

    • rob

      Hey Hettie! (and Joe) Did you listen today by any chance the “Solar Insiders” podcast? I was amazed to find out that we in Australia ACTUALLY have a Solar Producer here in OZ and is only 10km from my home! TINDO SOLAR……. I was so impressed with the podcast with its new owners since 2/17 (the owners of cool and cozy) that I got a quote for an extra 20 Kw of Solar……stay local buy local! Ordered on the spot taking me to the magical mark I want of 30 Kw…….so a bit of an exciting day for old rob!…….Had to share it with someone!

      • Hettie

        Didn’t listen. Racing about like a blue fly much of the day, but delighted for you that you have been able to tick so many boxes with one stone. So to speak.
        Of course you would want to share. So pleased that it was with us. You will keep us informed about installation, performance and so on?
        So there’s another hug back at you before I toddle off to bed.
        Doncha love a warm fuzzy?

        • rob

          will do …..they seem so nice and reckon I’d be close to off grid but I still need storage……..yikes that cost a fortune but I will do it….3 tesla or sonnen batteries in the next 12 months is the goal! NIGHT NIGHT

          • RobertO

            Hi rob, be careful about going off grid, use the solar to do all you can during the day time,export as little as you can. Connection fees to grid only are not that large, and batteries will get cheaper and so will the disruption caused by prosumers. Block chain sellers, micro grids and in general distruption to the current model are all comming, and those that can will have better choices, then the some whom cann’t

          • rob

            Thanks Roberto…..tindo gave me the same advice…….how is that for honesty! they simply said “hey rob your consumption is huge…..but use it all during the day and wait for batteries to reduce in price…..despite being sonnen and tesla providers……. I so like these guys! Today getting quotes for my huge new carport to hold the 72 panels……they gave me a visual….I nearly died! estimated cost 30k (i hope for the structure) and $23k for 19.80 solar array all good as I already have a 7 year contract with the same finance co for my 10 kw system I installed 2 years ago….3 phase ready to rock and roll b4 chrissy………so looking good ATM. Still I can’t believe I am spending so much over 5 years…..but I’m a glass half or 3/4 full sort of guy……so full steam ahead….however council is my biggest block so it seems ,despite me huge land holding!

          • Hettie

            It’s that “OMG I can’t believe I’m finally doing this” feeling, isn’t it. And now you have to wait, and wait, until it all becomes reality.
            Think of all those tonnes of CO2 you won’t be emitting. Local hero, Rob.

          • rob

            hettie it will happen! council 4 weeks to 3 months for approval…..wankers! I want to do it now!

          • Hettie

            Sooooo frustrating. Waiting is very hard. But think of the Manus men, waiting 4 1/2 years, and so dignified, peaceful despite the beatings.
            Your carport and panels will come.
            Good night.

          • rob

            SNAP!

          • Hettie

            The garden is getting beyond me now, not happy on ladders to keep the wisteria and climbing roses under control, so I have a bit of hired help. Also to clean out the chook pen….

          • rob

            for god sake I wouldn’t get you on a ladder……. that’s why I have great neighbours……….as to the chooks i meant feeding and watering not cleaning…… that’s for the young guys next door ….same for car cleaning and all hard work odd jobs!

          • rob

            I pay the youngies $25 per hour but expect them to work like adults………works well! Their dad loves me being “HITLER” lol…… I mean he loves his kids earning good dollars but have to work their guts out for it!

          • Hettie

            This is a public forum, Rob. Enjoying the chat but starting to feel a bit uncomfortable. Do you do Facebook, messenger?

          • rob

            facebook ….rob street

          • Hettie

            Hettie Lynch

          • rob

            can’t find you there

          • Hettie

            Me either.
            Privacy settings?

          • rob

            [email protected] send me anything you want there……I’m no computer whiz kid but that is my companies web email addy

          • Hettie

            Look in facebook group “Stop offshore processing of asylum seekers ”
            You’ll find lots of posts and comments of mine there. Thence to messenger.
            I’m going to delete most of my side of this conversation in a minute.

          • rob

            ok

          • rob

            I vote GREENS FIRST then labor….Liberals make me want to vomit and “one nations” poorlene make me want to die! As I said in an earlier post a few minutes ago…… maybe we should move in together……as long as you do the gardening (not much all natives) and look after the chooks…….I will build you a granny flat …….no bills

      • Jonathan Milford

        We have one in Sydney too: Evergen, an AMP subsidiary. The system I have installed from them includes panels from the USA incorporating UNSW developed cells and an Alpha ESS developed by the CSIRO. I put over a MWh into the grid in the last couple of months and have a growing credit with our electricity retailer Powershop. Cheers!

    • Mike Shackleton

      Even if AGW is completely bogus, (I’m not suggesting it is) the fact is we need to modernise our grid because the new methods of generation that will replace our creaking old coal fired units are only compatible with it to a point.

      The reactionary conservatives can only see how things have always been done, and that is with large centralised generators. It doesn’t have to be this way and isn’t in many countries – have a look at New Zealand’s generation assets on Wikipedia – no single asset with a capacity of more than 1GW, most sites between 10 and 100 MW, dispersed all over the country.

      https://en.wikipedia.org/wiki/List_of_power_stations_in_New_Zealand

      The whole process, which should be a technology driven, engineered solution has been hijacked by people with no technological basis for their positions. It’s complete brain-dead thinking.

      • Hettie

        NZ has always been heavy on renewables, mostly hydro, but a lot of geothermal too. I’m a Kiwi. Came here in 1971. Inspite of its coal, hydro was always the way. The terrain is not compatible with the sort of grid Aus has, and lots of smallish dams make for local supply.
        Haven’t kept up over the years, but those are the basics. My dad was a land purchase officer for the ministry of works, and heavily involved with the Turangi- Tukano hydro project, and the geothermal project north of Lake Taupo. Wish I had paid more attention.

        • RobertO

          Hi Hettie, The best pollies in NZ decided that Meri Meri (MM) Coal was too expensive so they ordered it to 8 hr standby to save money. About 6 months later Waitkato river flows slowed due to drought conditions. Rolling blackout started and boy did it upset the pollies. MM was ordered back into service, but as the 6 of the 8 dams on the Waitako River are pump hydro we had 6 months of rolling blackouts before the river recovered. and about 12 months before everything was back to normal. They did not realsie that under 8hr standby you use about 70% of the coal just to keep the boilers warm, about 80 degrees C. Saved $0.5 million, cost $5.0 million. I am from Paraparaumu, on the Kapiti Coast.

          • Hettie

            When would that have been, Robert? I lived in Chch as a child, in the late 40s, 50s. Power cuts were frequent in the winter, but of course the Waikato is North Island, and I was too young to know anything about the power system then.
            Used to fly from Chch to Paraparam for school holiday visits to my grandmother, aunts and cousins in Levin. DC 8 aircraft. Memories, eh.

          • Hettie

            And I completely missed the point you made of the politicians failure to do an elementary cost benefit analysis.
            Bad Hettie.
            So Australia doesn’t have a monopoly on idiot pollies. Sigh.

          • RobertO

            Hi Hettie, the pollied did the power standby in early 1978 and we had issues in late 1978 and into 1979 (my memory is is hazy on the dates, I just remember being at work and we were asked about keeping the generator in the basement ready to run if we lost power. At the airport DC 3 were very common but I do not remember if DC 8 landed.

          • Hettie

            Ach! Typo. If course DC3.
            I was here in aus from early 1971, so missed the era you talked about.

    • Marg1

      Very well said Hettie. Agree entirely

      • Hettie

        Hello Marg. Thank you. Good to see another woman on these pages.
        We seem to be developing quite a little community here.

        • Marg1

          Hi Hettie, yes let’s hope more and more people read and protest what the backward LNP are doing to this country.

  • rosshas

    Our politicians in Canberra are covering themselves and us in glory(not) in relation to forward thinking, sensible, timely policy decisions – gay marriage, treatment of refugees, indigenous reconciliation, energy policy. Is it any wonder that our budget balloons out of control when it would appear that the dysfunctionality of government extends from apparent no-brainers to economic management.

    • Joe

      …add the Turnbull’s backflip with triple sommersault and pike with The Banking Royal Commission. Should have had this a lot earlier.

      • MrMauricio

        Blindingly obvious we need an Electricity Royal Commission-since electricity companies have 10 times the margins as banks and rampantly game the system.

        • Joe

          …..put Premier Jay in charge of an Electricity Royal Commission

  • Malcolm M

    It would be great if he had done (and publicized) some bench-marking of electricity prices in our trading partners. In his trifecta of high prices, high emissions, and high uncertainty, the high prices aspect would probably carry more weight with the support base of the political right. Perhaps he did present evidence of countries such as Chile where electricity prices are expected to fall as more large-scale solar is commissioned, but it wasn’t reported in this article.

  • trackdaze

    No,no,no,no. Finkel couldn’t be more wrong.

    There is a strategy.

    Deny,delay,denegrate & defend.

    • Mike Shackleton

      Until such a point that their position is untenable – then seek out someone else to blame for the mess.

      • Marg1

        Yes, it’s all Labor’s fault!

  • Michael Gunter

    Re MYTH 6 “IT’S EASY” — well arguably it would be a hell of a lot easier to “pick winners” by choosing the bleedingly obvious: wind, solar PV and cheap bulk energy storage; enacting a #ClimateEmergency plan for zero CO2 emissions from all Australian electric generation by 2030; declare #ForceMajeure and direct industry to build the stuff as quickly as possible, on a war-like footing. This would signal to the world that Australia is grasping the Greenhouse Mafia by the throat and will not let go until they have their necessary death spiral. A stark choice: “it’s them or it’s us” the 7.5 billion (the 99%)*

    As a non-nuclear state we can show the world that not even nuclear power is needed to keep the lights on 24/7/365.

    * the vestiges of any surviving remnants of the once mighty plutocracy — those currently lording it over their underlings from their “COMMANDING HEIGHTS” — will succumb quick enough under the relentless onslaught of a 250,000-year-long SuperGreenhouse, combined with toxic spillage from the world’s unattended nuclear spent fuel pools. So even the 1% are doomed if we don’t fix this mess on a global scale. The signals out of @COP23 in Bonn are that the fossil fuel industry is hard at work gumming up the gears of the UNFCCC processes “real good” *sigh* => https://www.corporateaccountability.org/resources/polluting-paris-big-polluters-undermining-global-climate-policy/

  • RobertO

    Hi All, most people have yet to realise that we will have higher prices for the about the next 5 years (partly to pay for the current mess and partly as we are ripped off). Some prosumers will leave the grid, but that may not be the best outcome for Australia (however some remote places will be better off with micro grids). If we get a plan we may be able to progress to lower price and at the same time lower GHG emissions. Finkle gave many good recommendations and we have ignored them, and we will pay a big the price. Look at No 4 and the last sentence “Three Years Notice of Closure!” The COALition panicked with Liddell at closing in 2022, nearly 3 years and 1 month today if it closes 1 January 2022 (was about 3 years and 4 months (more if they are talking 1 July 2022).

  • Robert Westinghouse

    Well said everyone.

    We have read the research, Finkel has presented a credible road map…. but the fools in Canberra are just that fools. I am still writing to the States to urge them to give the feds the finger and do something for the people. The feds are fools, the states are in the pockets of the feds (since they stupidly) gave away their taxing rights…. I say the states need to grow a back bone, get some balls and at the very least follow the Finkel recommendations. I am lucky I have some space on my mortgage…I am borrowing to the limit to minimise the federal train wreck that is inevitable!!!

  • neroden

    Poor Finkel. He’s right, Australia has no strategy, and a broken market.

    It’s clear what will happen if this continues: individuals and individual businesses will go off-grid, one at a time, and then individual localities and states will set up microgrids.

    Is this the optimal solution? No! It’s wasteful! But it is the solution which will happen with no strategy and a broken market. And it’s *OK*.

  • RobertO

    Hi All. I hope Finkle can stand the stupidity that he has to deal with. Barnabee may not be the shoein they think, and the Nats and Alan Jones do not like each other so we may be seeing the self distruction of the fed gov. I can only hope

  • Robert Comerford

    The stupidity continues.
    The result in New England is as predicted with an increased majority.

    • Mike Westerman

      I think it’s called a donkey vote

  • MaxG

    The issue is not ‘knee’weak politicians’, but way bigger than the partisan system is defunct… democracy is broken!

    There are the four pillars of democracy: 1 = the people, 2= the government, 3 = the corporations, 4 = the free press. The free press (the watchdog monitoring the other three pillars) is long gone, and for decades being corporatised. The government is bought through corrupt politicians by the corporations. Hence, all what is left is the corporations running the people. Why everything the people own or owned is privatised. Why the people have less to share, because corporations do not pay taxes — and our pollies are discussing the next tax cuts for them (further disadvantage for the people/public). The people get the short end of the stick. Why nothing will change until the next revolution, when people can’t take it anymore. Whichever way you see it: a four-legged table on three on two legs is a wobbly affair.