Coalition gives $1bn to CEFC for 24/7 reliable renewable power | RenewEconomy

Coalition gives $1bn to CEFC for 24/7 reliable renewable power

Federal Coalition makes first capital injection into CEFC, to underwrite investment in supporting a renewables grid. Greens suspect a Trojan Horse for coal.

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The federal Coalition government has injected another $1 billion into the $10 billion Clean Energy Finance Corporation – the same Labor-established green bank his party tried for years to abolish and hamstring – to underwrite renewables integration and grid stabilisation technologies.

The Liberal National government said on Wednesday that it would establish a $1 billion Grid Reliability Fund to support investment in new energy generation, storage and transmission infrastructure, including projects shortlisted for its Underwriting New Generation Investments (UNGI) program.

The joint statement from Prime Minister Scott Morrison, energy minister Angus Taylor and minister for finance Mathias Cormann said eligible investments for the new fund would include energy storage projects like pumped hydro and batteries, transmission and distribution infrastructure, and grid stabilising technologies.

The fund will be administered by the CEFC, drawing on what the PM described as its “energy and financial markets expertise” – a welcome upgrade from previous LNP assessments of the Fund as a “honeypot” for “wild and wacky proposals… banks would not touch in a fit.”

But it’s taken a while for this shift in thinking to take place – the PM also noted that the $1 billion fund represents the first new capital provided to the CEFC since it began.

The CEFC said in a statement that it welcomed the “significant initiative” to create the new fund, and was pleased the federal government had expressed confidence in it to help build a stronger energy grid.

“We recognise that investment in new generation, storage, transmission and infrastructure is critical to support the security and reliability of Australia’s energy grid. We look forward to working with governments and potential investors in accelerating the development of these opportunities.”

The Coalition said it hoped the fund would be used to help unlock private sector investment for projects that boost security of supply for the grid and, in doing so, put downward pressure on prices.

But Morrison also conceded it would be used to keep “an eye to the future,” which could be a politically tactful way of saying it will not be used for new coal plants or upgrades to old ones – a fact that’s bound to outrage some in the far right of his party.

“The government will only refer UNGI projects that reflect the CEFC’s legislative mandate for consideration under the Fund,” the statement stressed. Which presumably means that Trevor St Baker’s proposal to upgrade the Vales point coal plant, and the handful of gas generators, would not be part of its remit.

“The Grid Reliability Fund builds on our strong action to stabilise the grid and get the energy generation balance right, to deliver affordable, 24/7 reliable power,” said Taylor, carefully sticking to his favourite energy tropes.

“It is no secret that the National Electricity Market is under pressure – this fund is designed to tackle that and is part of a suite of initiatives that the government is delivering to ensure when people flick the switch, the lights come on and stay on.”

Worryingly, however, Cormann also said the government would also update the CEFC enabling legislation to ensure the Grid Reliability Fund could support suitable projects, which the Greens and others have taken to mean it will stretch the CEFC’s mandate to include gas – and maybe even coal – projects.

As RenewEconomy understands it, current CEFC legislation already allows for investment in low emissions technologies, which could also include gas, particularly where gas generation enables additional deployment of low or zero emissions generation.

But it cannot invest in coal, and the Grid Reliability Fund should not be able to change that.

“The burning of coal and gas is biggest cause of the climate crisis. We will not support any moves to subsidise ageing dirty power stations,” said acting Greens leader Adam Bandt.

“It’s an absolute outrage to see this conservative government again try and sabotage the clean energy revolution by wrecking the CEFC’s mandate.

“The Greens took a plan for a $6 billion Grid Transformation fund to the election, so of course we support new funding for the grid and storage, but we not allow it be used as a Trojan Horse for coal,” Bandt said.

“The Underwriting New Generation Program is is a rogue market intervention, that goes beyond the ACCC recommendation, has no transparency, and is still missing the promised program guidelines on how it will actually operate,” said The Australia Institute’s Richie Merzian.

“It is unbelievable and certainly legally questionable that the Clean Energy Finance Corporation could be forced by Minister Taylor to fund gas projects, when gas is a fossil fuel and major contributor to the climate crisis.”

Energy Networks Australia also welcomed news of the new fund, as recognition of the key role networks would play in enabling a sustainable energy future.

“The challenge we face is not just how much electricity is being produced, but how to efficiently get it to our customers,” said ENA chief Andrew Dillon.

“Transmission networks are the electricity super-highways, already transporting record levels of solar and wind while connecting firming technologies such as pumped hydro and batteries.

“More transmission infrastructure and interconnection between states are essential to support renewable power generation, keep electricity reliable and link markets to keep customer costs down.”

Dillon also said the fund was key to addressing challenges to the grid from Australia’s booming rooftop solar uptake.

“Our grid is increasingly becoming a two-way flow of electricity, with millions of households becoming small generators feeding back into a network that was never designed to operate that way,” he said.

“This fund may create opportunities for further investment in digital technologies that will make our distribution grids the platforms of a smarter energy future.”

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8 Comments
  1. Jon 11 months ago

    Great to see, the CEFC has a proven history of helping good projects get up.
    It also takes the decision making away from Taylor.

    • Sunnyside Up 11 months ago

      If you think the Fed Gov will hand over the money and step back, leaving the CEFC to make all the decisions, you are fooling yourself.

  2. Craig Fryer 11 months ago

    It would appear that pressure from State LNP energy minister and major commercial consumers of electricity have been pouring on the pressure to the Federal Government to act. Industry knows that RE is now cheap and the whole FF act isn’t working in marginal seats in Victoria.

  3. John Saint-Smith 11 months ago

    After having complained long and loud about the ‘over-loading’ of the existing grid infrastructure with ‘excessive’ renewables, Taylor now throws a peanut at the elephant in the hope that this will be enough to ease the problem with the private sector, which desperately needs to cut its costs with renewable generation, without upsetting the coal eating base. Fence sitting is a foolish compromise at any time, but when the fence is electric…

  4. The Duke 11 months ago

    Taking the advice from Labour, although they will claim it’s their idea.! Oh! The hypocrisy.!
    Tony Abbot tried to dismantle the CEFC back in 2012,along with Morrison and the Muppets. They howled down Turnbull for going along with Labours ideas.
    When we see the money.? ……probably on the never never, like their other failures.
    The Snowy Hydro 11 , is blowing out in costs already. $1,000,000,000 is nowhere enough, but it’s a start.
    They don’t own a constructive policy , they have to borrow them from Labour.
    What a joke they are, grasping at straws.

    • Chris Drongers 11 months ago

      $1,000,000,000 as seed money could leverage another 5 – 10 times that amount into the market. If that is 5 GW of generation or extra transmission to make potential renewable projects financable this is good news.
      I am just so disappointed, nay disgusted, that Morrison can’t admit to his rump that coal is doomed sooner than later, that oil/gas are about to start an irreversible decline and that his party is a laughing stock internationally.

  5. Ian 11 months ago

    Is this Pre-COAG posturing by the Federal government. Their boy Taylor is going to be in the do-do and they need to soften the blow. So many agencies and state governments to appease, this CEFC seems a good one, chuck a billion dollars at it , that seen get the green hounds off their back. The other day it was the minuscule NSW/QLD mini-upgrade and that got Jack-sh-t positive response, maybe this will do the job. At least it’s for the 24/7 thingy that every body loves.

  6. Seriously...? 11 months ago

    I’m inclined to be suspicious (because I’m not a moron). But perhaps the truth is that, after all the huffing and puffing and posturing for so long about network stability, they are now realizing that, as a result, they are going to ‘own’ any problems this summer. After all, they’ve been in government six years or so now. And perhaps the only federal government agency with a direct mandate to intervene in the market is the CEFC. If they had the energy (unlikely) to try and set up their own agency, they would struggle to get it through the senate. So…they’re getting nervous, and they’ve gone for the only realistic channel open to them for a quick intervention.

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