Finkel to lead NEM review, but states hold to renewable targets

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Alan Finkel to lead a review of Australia’s electricity market, but states hold to individual renewable targets after Coalition failed to offer a post 2020 target. Battery storage a major focus.

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Federal and state governments have agreed to an independent inquiry into the rules governing Australia’s energy markets, but the states have resisted attempts by the Coalition to force them to back away from their individual renewable energy targets.

Powerlines-and-clear-sky

The hastily called meeting, held in Melbourne after the Coalition decided to use the South Australia blackout to attack state-based renewable energy initiatives, broke up with no agreement about individual renewable energy targets.

But they did agree to an independent review that the federal government says will provide a “blueprint” for Australia’s power security to be led by chief scientist Dr Alan Finkel. There will be two other members, although they have not been named.

States expressed hope that the Finkel report would move towards a more integrated response and market framework. Finkel, a keen supporter of nuclear, has also expressed his interest in solar and storage.

Newly appointed Chief Scientist Dr Alan Finkel speaks to the media during a press conference at Parliament House in Canberra, Tuesday, Oct. 27, 2015. Dr Finkel will replace current Chief Scientist Professor Ian Chubb, whose appointment finishes at the end of the year. (AAP Image/Lukas Coch) NO ARCHIVING
Australia’s Chief Scientist Dr Alan Finkel

“My vision is for a country, society, a world where we don’t use any coal, oil, natural gas; because we have zero emissions electricity in huge abundance and we use that for transport, for heating and all the things we ordinarily use electricity for,” he said during a media event relating to his appointment.

“With enough storage, we could do it in this country with solar and wind,” Finkel said at the time.

The appointment of Finkel was pushed by South Australia. It was supported by other states, but they insisted for other members on the panel who had experience of energy transitions.

However, there was no agreement on individual state targets, which the Coalition has been trying to reign in, accusing them of being unrealistic and reckless.

Victoria energy minister Lily D’Ambrosio said the federal government gave no indication of extending the national renewable energy target beyond 2020. ACT energy minister Simon Corbell said the ACT would not resile from its 100 per cent target by 2o20, which is also supported by the local Liberal Party.

On this basis, she said Victoria would go ahead with its reverse auctions next year as planned to help reach the existing renewable energy target, and then their own target of 40 per cent by 2025.

WA energy minister Mike Nahan emerged from the meeting saying that battery storage would have a profound impact on energy markets, and on grid events like that which occurred in South Australia. He said he was looking at market-based mechanisms to incentivise storage and enabling technologies.

South Australia energy minister Tom Koutsantonis re-iterated that AEMO had found renewable generation was not the cause of the outage, but there were software glitches. He is asking the market regulator how these different settings could be allowed to exist, and to be certified.

It is understood that AEMO made a presentation to the ministers about the blackout, in which they said “unequivocally” that the source of generation was not an issue.

Federal energy minister Josh Frydenberg said the Finkel review would build on other reports being conducted by AEMO, the AEMC and the main energy regulator. He said it would make a blueprint for Australia to meet its climate change goals and to meet energy security needs:

He hailed the meeting as a “real breakthrough” and said that energy security was “back to number 1.” He said the meeting discussed battery storage, new inter-connector and new markets for frequency and ancillary services.

The Coalition government, which called for the meeting after using the South Australia blackout to call for Labor states to abandon their individual targets, set the tone earlier in the day by planting details of a “report” in The Australian newspaper that claimed that the “capital cost to consumers” of the Victorian and Queensland targets would be $41 billion.

RenewEconomy asked Frydenberg’s office for the source, explanation and costing of the estimate, but were told we couldn’t have it “until later”. We are still waiting.

Of course, such estimates are nonsense and mean nothing. Queensland is expected to release an estimate next week, but it will be well south of Frydenberg’s $27 billion estimate, and will focus on solar rather than wind.

Bloomberg New Energy Finance, for the record, estimates that Victoria’s renewable energy target of 40 per cent by 2025 would cost between $8 billion and $10 billion of total investment, compared to the federal government’s “scare-stimate” of $14 billion.

But it depends entirely on the mechanism employed and the technology chosen. The reverse auctions have shown a remarkable ability in Australia and around the world to force down prices. And it is not right to say “capital costs forced onto households”.

The developers will pay the capital costs, while the consumers will pay something equivalent to the levellised cost of energy, which with wind and solar will be cheaper than gas and cheaper than new coal.

The Australian also said that the ACT scheme would cost consumers $268 a year. That was an early estimate, since revised by the surprising fall in projects costs.

It will be offset by energy efficiency measures, and in any case the AXCT has been incredibly smart about the way that it has structured the contracts so that it could in fact cost very little if wholesale prices continue to rise across the rest of the country. In effect, they have put a price cap on their electricity for the next 20 years.

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31 Comments
  1. howardpatr 3 years ago

    Alan Finkel has already demonstrated that he will do all he can to dance to the Governments tune, a tune that does not resonate with the urgent move to a renewable energy future.

    • Dennis Kavanagh 3 years ago

      Whatever Alan Finkel and his two assistants come up with won’t matter because his review will only be a recommendation to the Coalition government and we know who pulls the strings in the Coalition, the climate change deniers and sceptics. There is no way they will allow any upward movement in the national RET after 2020.

      • David leitch 3 years ago

        The value of reviews is in the value they produce. A talented review will not be wasted. It may sit on the shelf but the ideas invariably sink in. A bad review disappears. That is what happened to the Warburton review, that will happen to much of the CCA report.

      • Stewart Rogers 3 years ago

        Fantastic, I hope they don’t upgrade the RET. What a stealth tax.

  2. Kenshō 3 years ago

    I’m breathing a sigh of relief that politicians have finally had the integrity to step aside and let our chief scientist conduct a more objective review. My only remaining concern is the two other members yet to be named, need to have a STEM background or something appropriate, not a political background. Unity and cooperation need prevail, not a game of political football. If Finkel is able to form a team with similarly qualified colleagues, it is a great opportunity for him to demonstrate the value of a STEM education.

    • Pete 3 years ago

      Yes, my concern too, Kenshõ. Let’s hope Alan Jones, Andrew Bolt or Chris Uhlmann aren’t being considered.

  3. Rob G 3 years ago

    As we saw with the Bank CEO’s this week, Turnbull armed with his feather sword was absolutely hopeless. And In the case of renewables he is equally weak (that’s a good thing in this instance!) States held their ground and the federal government whimpered away. Unlike the Banks, the States have genuine facts to justify their ambition which benefit the whole community. You cannot argue with that – even though the LNP always try to.

  4. Mags 3 years ago

    Let us hope this is done honestly and without agenda. It would be a first for this government if it was.

    • john 3 years ago

      Mags hmm what other review have they had?
      Other than making comments on some issue i do not believe we have had a review in the last few years.
      Correct me if I am wrong please.

      • Mags 3 years ago

        What about the renewable energy target review?

        • john 3 years ago

          yes of course the Warburton Review.
          What a disaster for the idea that renewable put up the price of power as was found in fact people who put RE on their house the over a million of them have reduced the price of power for everyone.
          Not exactly the expected outcome from that review I must say.

          • Peter Campbell 3 years ago

            While finding that a higher target reduced the price of electricity, they nonetheless recommended slashing the target, presumably because that was what they knew they were expected to produce.

  5. Finn Peacock 3 years ago

    At least Alan Finkel is an Electrical Engineer. Hopefully the remaining 2 people on the review will also be qualified, preferably in power systems engineering. The pollies have no place commenting on engineering problems, as they simply twist what they read in AEMO executive summaries to suit their agenda (on both sides of the debate), as they don’t have the fundamental knowledge to know better.

    • john 3 years ago

      I agree simplicity with your feeling re politicians.
      As to the review i do hope Alan Finkel can do a totally independent inquiry and does it thoroughly so he can spell out the direction we should be headed.

    • David leitch 3 years ago

      I hope there is at least one finance person on board. Power engineering and finance are a good match. Its not only what needs doing, but also the way its done.

      • Kenshō 3 years ago

        also $MWh of the power source and whether it is a distributed or centralised paradigm… concentrating wealth in the few or the many… the realms of big business versus comparatively more accessible energy for all… looking at power in terms of social policy outcomes and environmental considerations… power over versus empowerment… a systems and wholistic approach…

    • Martin Nicholson 3 years ago

      I know Alan Finkel personally. Probably a stretch to say he is an Electrical Engineer. He does have a PhD in Electrical Engineering. I agree with David Leitch, what we need is a Power Engineer who has worked in the industry for several decades. There are too many journalist commenting in areas they don’t really understand. I trust that Alan will get the right team for the job.

  6. Carl Raymond S 3 years ago

    Alarm bells rang in my head when I heard that the Feds wanted the abandonment of State targets in favour of a National Target.
    The way I see it, some states will lead the charge and show the others up. Once one state proves it’s possible, the others can be shamed into following suit.
    A National Target adopts the role of a maximum pace of change rather than the minimum they pretend it to be. Let the shining lights shine.

    • hydrophilia 3 years ago

      Has anyone noticed that “target” seems to be shorthand for “maximum allowable” rather than the normal definition of a “target”? Most folks are delighted to exceed a goal… and I have seldom seen anyone fret about a member of a group pulling more than their weight… unless fearing that it will make the rest look bad.

  7. Peter Campbell 3 years ago

    “ACT energy minister Simon Corbell said the ACT would not resile from its 100 per cent target by 2o20, which is also supported by the local Liberal Party.”
    I must say I am very sceptical on that last point. I would not be surprised, if the local ACT Libs got in, if they suddenly changed tune. Look at the company these people choose to keep!
    Look at the Libs federally: Promised to keep the RET unchanged, promised they did mean the numerical GWh target, but then weaselled out of it. Promised a ‘unity ticket’ on Gonski, but not the 5th and 6th year where most happened.
    I don’t trust them, least of all on this.
    At best, you can be sure the local Lib’s heart will not be in it and they will be under federal pressure to not go through with the ACT’s 100% target!

    • Miles Harding 3 years ago

      Not all liberals are evil, I have found a counter-example:

      Over here in WA, some interesting things are happening under the stewardship of the energy minister, Mike Nahan. Today’s West featured a story with Dr Nahan championing batteries and solar as essential elements of WA’s electricity mix. This comes on the back of a statement he made around a year ago, where he expected that 100% of WA’s daytime energy needs would be met by rooftop solar within a few years. I’d still be impressed if we even got close.

      Another news story dealt with a trial of a peer to peer solar trading scheme where neighbors can trade electrcity with minimal charges from the electricity network. The story mentioned a retail price of 20 cents (buyer gets a discount), a network charge of 5 cents and income to the seller of 15 cents, twice the normal FIT.

      This should have the effect of redeeming the network, while ensuring it stays relevant by not fighting with it’s customers.

      All this with a neolithic premier.

  8. Kenshō 3 years ago

    After looking at Alan and his wife Elizabeth’s orientation to science from their research interests and publications, I’m hoping there is a whole systems approach to the review rather than a reductionistic approach.
    https://en.wikipedia.org/wiki/Reductionism
    https://en.wikipedia.org/wiki/Systems_theory

    In terms of Alan’s interests in neuroscience and his wife’s interest in stem cell research, I’d like to flag most of psychology has moved on from reductionism to look at the nature of developmental and cognitive awareness itself – rather than using scientific tools to penetrate further into matter to find what is most fundamental about casualty and life. It is this chief methodological contrast, which most defines contemporary scientists and a schism in their ranks.

  9. Tommyk82 . 3 years ago

    Can Dick Warburton be one of the other 2 people? Also will the libs read the review once complete or will they continue to ignore experts?

  10. trackdaze 3 years ago

    Here is my report.

    Replace transmission towers with ones certified for higher wind speeds. Like wind turbines are.

    A redundant transmission line or two.

    Batteries to replace the black start gas generators that failed to bring network it back on line.

    Batteries or pumped hydro storage within the state interconnector to make it more resistent and resilient to tripping out.

    & replace the federal government. They are getting in the way.

    • Kenshō 3 years ago

      Fantastic trackdaze, the first person to have a go. Well I’m just an electronics technician retrained as a welfare worker though:
      point 1) agreed,
      point 2) disagree, big centralised infrastructure too expensive, better to divide grid into regions with more distributed generation/storage I reckon,
      point 3) agreed big time, think there was $24 million pa paid for reserve services that failed to come online,
      point 4) agreed,
      point 5) agreed, although some commenter highlighted Turnbull and crew appear to be endeavouring to be more solution focused.

  11. Chris Fraser 3 years ago

    The mention of storage appears to make the supply of energy to and frequency control of the grid … technology and carbon neutral.What a wonderful irony it would be if the recent hoo-hah about grid stability given out by the coal and gas generators resulted in a grid redesign around storage. Roll on …..

    • Kenshō 3 years ago

      As Hermann a pro fossil fuel commenter said:
      “To fire up and restart a gas power station takes hours due to technical issues, such as synchronization with the rest of the grid, as every electrical engineer would know. Coal fired power station could take days.”
      https://reneweconomy.com.au/2016/south-australia-gas-generation-needed-68026

      RE/storage will have far far far superior ability to remain synchronous with changes in demand/supply. Once fossil fuel generators are removed completely from the transmission network, frequency stability and inertia problems will cease.

  12. Kenshō 3 years ago

    Grids of the future won’t have a need for DRM strategies or FCAS. Large fossil fuel generators with inertia are being gradually retired anyway. Batteries feeding inverters ramp up and down in milliseconds and hydro 60-90 seconds. Supply and demand will already be matched within milliseconds to seconds. Contrary to the misinformation produced by Uhlmann and others, it is only fossil fuel generators that take a long time to power up and synchronise with a grid. Even when fossil fuel generators come online, they still struggle to remain synchronous with 50Hz due to their slow response to match supply with demand in direct proportion to their size. All renewable energy technologies are smaller and stay perfectly synchronised with the grid. There is no evidence contrary to this fact.

  13. Kenshō 3 years ago

    The current Australian wind turbines are defined as asynchronous because they keep their power output synchronous with 50Hz even though the blade speed is asynchronous with 50Hz. Asynchronous blade speed is more efficient and makes blades last longer.

  14. Miles Harding 3 years ago

    I was surpsised by the appointment of Alan FInkel to head this review, Bjorn Lomborg must have been unavailable. ;o)

    I am looking formward to reccomendations that are based on facts and best evidence.

    On the WA front, Mike Nahan is an intesesting condtradiction of today’s liberal values:

    Today’s West featured a story with Dr Nahan championing batteries and solar as essential elements of WA’s electricity mix. This comes on the back of a statement
    he made around a year ago, where he expected that 100% of Perth’s daytime energy needs would be met by rooftop solar within a few years. I’d still be impressed if we even get close.

    Another WA news story dealt with a trial in Busselton of a peer to peer solar trading scheme where neighbors can trade electrcity with minimal charges from the electricity network. The story mentioned a retail price of 20 cents (buyer gets a discount), a network charge of 5 cents and income to the seller of 15 cents, twice the normal FIT.

    It’s a ray of light in an otherwise dark ages political environment.

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