Australia’s power struggle: Old politics vs new energy

Australia is embroiled in an intense policy debate about the introduction of renewable energy technologies onto the national grid.

But the real issue, says ACT energy minister Simon Corbell, is not the fact that wind, solar and other technologies are added to the grid, it’s the fact that old and inefficient generators are refusing to leave.

“We have to recognise that the introduction of new renewables into the energy market is not the problem,” Corbell says.

“It is the old generation assets that have enormous environmental impact, that are hindering the capacity to transition to a cleaner and more efficient energy future, and should be retired. They are at the end of their life politically and economically.”

It is, though, not the only problem. At a Community Energy Congress held in Canberra this week, some 350 attendees were given a fascinating insight into the old and new of energy politics in the country, as Corbell, Greens leader Christine Milne, and former Labor energy minister Gary Gray shared their views on the challenge at hand.

Besides the issue of ageing and dirty generation, there was the problem of over-investment in the nation’s network – the poles and wires – and how that investment would be resolved. Keep up prices, or force a write down?

Then there was the pushback against clean energy policy, and the burden of regulation that prevented new models of energy generation (and financing) to be delivered. Would consumers be prevented, and charged, for leaving the grid, for instance – as many people expect them to do? And, of course, there was the issue of managing costs to consumers.

Corbell, who is overseeing the ACT government’s 90 per cent renewable energy target, and who is introducing innovative policies to encourage the development of wind farms, solar arrays, new solar and storage technologies, and community energy developments, says another big impediment is the attachment to the centralized model of delivery with a single flow of energy.

“There are new technologies that will reduce the reliance on grid and which will reduce fuel costs in terms of generation,” Corbell says.

“But how do we get out of death spiral? How will governments deal with issue of monopoly infrastructure – poles and wires – and the cost of that and how will we as a community pay for that in a way that is equitable?”

Milne took up those issues and said that the current attack on the renewable energy target – and every other program that supports renewables – were the acts of vested interests in the “old order” of the established energy markets.

“The change is on … and they (the incumbent generators) know that,” Milne said.

“The result of that is that we’re seeing fightback, from generators who see their business model is completely destroyed, so they need to destroy the RET, and from network operators and state government owners who over-invested and are wondering how the hell they will get their money back. They want to privatise and they want to protect that business by locking in NEM rules. We are seeing a fight-back from the old order.”

Milne questioned why consumers should have to pay for bad decision making that has sent the network component of retail bills soaring in recent years. This, she said, would cause individuals and communities to generate, supply and, ultimately, store their own energy. But even those who find it cheaper to leave the grid will be forced to pay a penalty for doing so, just as occurs with sewage and with water infrastructure.

The observations from Milne and Corbell contrasted those of Gary Gray, the current Labor energy spokesman and former energy minister. If Corbell (hopefully, along with NSW Liberal environment minister Rob Stokes) represents the future of mainstream party thinking on energy, Gray represents the past.

Gray was only in the office for a short time before the September 2013 election that Labor lost. His most notable intervention was to say that he was no longer a climate sceptic, and that he saw little difference between himself and his predecessor Martin Ferguson, or indeed Ian Macfarlane, who preceded Ferguson and who has emerged again with the energy portfolio in the Abbott government.

“I fit comfortably in that vein,” Gray said at the time of his appointment. “It will be business as usual.” And his comments on Monday suggest that it still would be the case. Gray effectively channeled the views of leading industry groups who say they fear energy costs, and by implication green energy schemes and the RET, were impeding business growth, and potentially that of the economy as a whole.

He was particularly concerned about the aluminium industry, even though this has been largely exempt from the costs of the RET (although it should have benefited from the fall in wholesale prices).

Gray did make one crucial point – that the current partisan nature of politics was hindering investment. He may well have been pointing to the RET, which once had support but now did not. Hopefully, he didn’t mean simply being in agreement with others over the attachment to old paradigms.

However, Gray’s claim that electricity prices were inevitably heading higher – no matter the technology – was contradicted by Corbell, who said new technologies would offer cheaper options for individual and communities, and the economy at large. This is an observation shared by most independent analysis, and even official forecasts such as those of the International Energy Agency.

“Energy markets have operated on the premise that demand will continue to increase,” Corbell said. “But what we seeing is demand decreasing, not increasing.

“I don’t assume that energy will continue to become more expensive. The evidence seems to suggest that it will come less expensive, through energy efficiency and through technologies where the input costs are zero because they are renewable.”

Gray didn’t buy it. Still, even though he may have appeared like someone who had turned up at the wrong meeting, at last he attended. The Coalition, in government, couldn’t be bothered. Too many policies to unwind.