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Frydenberg speech: “Powering forward”

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This is a speech made by energy minister Josh Frydenberg to the National Press Club in Canberra on April 11th, 2018

A day doesn’t pass without a story on energy bills. Indeed, it gets raised with me in all sorts of places, at the football, at a family BBQ and even the other day at my local place of worship, when an elderly man turned to me and said, “Joshua, can’t you do something about my power bill?”

The answer is yes and we are, and I fully appreciate how important this issue is in peoples’ lives.

Today, I want to make three points.

First, to reflect on the enormous change underway in the energy system which has turned accepted wisdoms on their head, disrupted traditional business models and exposed a failure of policy which is reflected in poor market outcomes.

Second, to provide a frank assessment of the polarised political debate on energy and climate and the high price we are paying for it. It’s time to tell some home truths. This is a practical problem not one which extreme ideologies can solve. We need to find sensible, workable, affordable market based solutions that meet the requirements of the Australian people. The alternative is policy paralysis, more expensive short term government interventions and higher prices that will be paid by the public either as a consumer or taxpayer.

Third, to make the case for the National Energy Guarantee as the most practical means of delivering a more affordable and reliable energy system while meeting our international commitments. The Guarantee has the fundamental virtue of using the effectiveness of the market and freeing up the policy debate. It addresses the policy and market failure and cuts through the polarisation to integrate energy and climate policy.

  1. Change underway

In the year 2000, the National Electricity Market had just three wind farms and two tiny solar farms generating less than 0.1 per cent of supply and more than 90 per cent of power came from fossil fuels.

Less than 1 per cent of households had solar panels, with the rest drawing energy from the centralised grid and its large spinning turbines.

Smart meters, peer-to-peer energy trading and home batteries were still a fledgling idea.

Today the shape of the market could not be more different.

Over the last five years, more than 90 per cent of new generation has been wind and solar. Over the last ten years, a third of our coal fired power stations have now closed and gas prices on the east coast have nearly tripled as parity pricing with the international market takes hold.

Consumers, who once sat passively at the end of the supply chain, receiving a homogenous product from state owned utilities, are now empowered through technology to choose how and when power is generated, stored and used.

In fact, with nearly 20 per cent of homes now having solar panels – the highest on a per capita basis in the world – the generating capacity sitting on Australian rooftops is twice that of Australia’s biggest power plant.

The issue of emissions reduction has moved from the pages of scientific journals to the agenda papers of boardrooms.

Treaties have been signed, commitments made and governments around the world are taking action.

And with firms responsible for $80 trillion in assets supporting climate related financial disclosure, a new variable has been added to the commercial equation. No longer do energy companies and their financiers simply invest based on the dynamics of supply and demand and the basic rate of return on their capital. Questions of climate are now a consideration.

When the National Electricity Market was simply concerned with the delivery of energy which predominately came from coal and gas, the established market signals worked and low wholesale prices followed. But now the new requirement of emissions reduction has been added to the mix and the penetration of renewables has increased. The NEM is no longer delivering the consistently low wholesale prices and the effective signal for new investment which were its hallmarks. It is within this new paradigm that policy must be reframed.

  1. The polarised debate and home truths

While change will always create political debate, after more than a decade of national conversation on energy and climate, we have more conflict than consensus. Unresolved, this is harming all Australians and we must come to a landing and a practical solution.

As John Howard said in a headland speech before winning Government, “The Liberal tradition has always held that ideas are not political ends in themselves, but the basis for developing practical policies that work for the common good.” Energy is no different.

Sadly, positions today are being based on ideology, not engineering.

Ideas are being judged on their provenance, not their merits.

Energy policy in Australia is no longer simply an economic issue. It has also become a cultural one.

As politicians set their battlelines, it is consumers who are the casualties.

This is the hard truth. The future of energy policy must be determined by the proper consideration of the public’s best interest not ideologically driven predisposition. The answer lies neither in a war on coal nor the nationalisation of our energy assets.

You can excuse the public’s confusion when they hear both ends of the political spectrum sing from the same hymn sheet calling for government intervention in the energy market but to achieve diametrically opposite outcomes.

To end this polarisation of views, proliferation of policies and uncertainty in the market, it is high time for a balanced, enduring, market based and broadly accepted course of action.

Home truths

Rational policy must start with rational debate.

And so to cut through the myths, we need to tell some home truths.

#1: fossil fuels

Fossil fuels have been the bedrock of Australia’s energy system, a ticket to our prosperity.

Those who would close coal with haste – as Labor and the Greens are on the record for – would see power bills up and our lights go out. For this reason, you won’t hear the Coalition demonise coal.

The closures of the Northern and Hazelwood coal stations in South Australia and Victoria are illustrative. After their closure, the spot price increased by more than 80 per cent within a year, with a consequential knock on effect well beyond each state’s borders.

In fact, across the summer just gone, coal and gas produced 82 per cent of the NEM’s power. At 7.30pm on 18 January, when South Australia’s demand peaked and they most needed power, their wind farms operated at less than 10 per cent of their capacity. South Australia’s lights were kept on thanks to gas and mainly brown coal over the Victorian interconnector.

Indeed, last year, 17 of the top 20 generators by output were coal fired.

While fossil fuels will be critical long into the future, we should recognise that our national fleet of 20 coal fired powered stations have an average age of 27 years.

While they may well not live forever, there is plenty of life left in them.

And for that reason, the market has signalled it is more willing to upgrade existing plants where the upfront capital investment has already been made than build new ones. This is because constructing a new coal fired power station would take more than five years and have an uncertain utilisation rate and return on capital.

The importance of gas as a transition fuel must also not be forgotten.

As the energy mix changes, and more gas peakers are required to smooth out renewables, gas is increasingly setting the price of electricity. In 2014, it set the price 13 per cent of the time, compared to over 20 per cent today. But with higher gas demand comes higher electricity prices which are 40 per cent more when gas is setting the price compared to coal.

The answer is more gas.

Victoria, the Northern Territory and New South Wales have a responsibility to do more to develop their resources, not simply import it from elsewhere. With Victoria’s Gippsland Basin in significant decline, AEMO is predicting a gas shortfall in Victoria in 2022. The question for Australia’s most gas dependent state is: why would you force households and businesses to pay up to 30 per cent more to import gas from interstate or overseas when there is 40 years’ worth of supply underground?

The current impasse is an illustration of the pyrrhic victory of ideology over science and economics.

# 2: renewables

Another home truth is that renewables have developed faster and further than originally thought but these technologies, pulled through with tax payer support, can now stand on their own.

The cost of wind and solar has halved in the last five years.

The head of the International Energy Agency, Fatih Birol, said to me on his recent visit to Australia, that what is driving the rapid uptake of renewables is not so much emission reductions but the declining cost curve.

It has always struck me as paradoxical that the first to say renewables are cost competitive are often the loudest to call for another round of subsidies.

But as we make clear in the National Energy Guarantee, the time for new subsidies is over.

For those who suggest the government is “anti-renewables” for calling out this economic reality, the evidence to the contrary is an inconvenient truth.

Last year under the Turnbull Government was Australia’s biggest year ever for large and small scale renewables and more than $12 billion and 7,000 megawatts of investment is now underway. This increased supply has seen the forward curve for renewable certificates at $34 in 2020 compared to $80 today.

According to Bloomberg New Energy Finance, in 2017, Australia was the world’s seventh largest clean energy investor and on a per capita basis, the third highest of the top 20 investors. Twice the investment per capita of Germany, four times China and five times that of France.

While this wave of investment, supported by the Renewable Energy Target will lower wholesale prices, it is only one side of the story. This investment has come with a consequence and a cost.

The consequence is that as we’ve seen with South Australia, the intermittency of wind and solar has created real challenges in the reliability of supply. The cost is that according to the Australian Energy Market Commission the combination of the Large Scale Renewable Energy Target and Small Scale Renewable Energy Scheme adds around $60 to the annual average household electricity bill.

These are the basic truths which make it clear that Government should be providing no new subsidies, be they to renewables or coal. Let them battle it out in a properly regulated, technology neutral market.

#3: climate change

A third home truth is, whether people like it or not, we are moving towards a carbon constrained future.

This reality is shaping our energy system and is part of the decision-making matrix for generators, networks, retailers and consumers.

With the weight of global politics, technology and capital markets all pointing in one direction, former US Energy Secretary Ernest Moniz has said, “You can’t stop the waves crashing on the beach.”

This means dealing with climate change responsibly. Australia beat its first Kyoto target and, since coming to office, the Government repealed Labor’s damaging carbon tax as its first order of business and put Australia on track to easily over achieve its 2020 target.

We did this without risking the economy. Since coming to office in 2013, GDP is up more than $200 billion, our population is around 1.5 million larger and nearly one million jobs have been created. The Government is proud of this record and confident of meeting the challenge of 2030.

But with just 1.3 per cent of the world’s emissions, we must recognise Australia can’t solve climate change alone. Calls to decarbonise the economy overnight are as irresponsible as they are futile. Only international action can make a difference, which is why we join 175 nations in ratifying the Paris Agreement.

But what we will not do is engage in virtue signalling and gesture politics at the expense of our blue collar workers and their industries and our international competitiveness. At a time when power bills are straining household budgets, particularly for low income earners, it is not a time for ideological ‘big experiments’ and recklessly high emission reduction targets.

  1. Our plan

Since the Prime Minister put energy policy on the top of the agenda at this very lectern last year, the Government is effectively tackling all parts of the energy bill through our power plan.

The wholesale price of electricity traded on the ASX futures has fallen around 20 per cent since its peaks last year. I would expect retailers to pass on every dollar of lower costs to their customers. Customers are entitled to insist on this.

Our intervention in the gas market has secured more gas for Australians that was otherwise destined for overseas, ensured three mothballed gas generators came back online and led to contract prices falling, according to the Australian Competition and Consumer Commission, by up to 50 per cent from their highs last year.

We have taken action on networks by abolishing the Limited Merits Review. The inaction by the previous Federal Labor Government on this issue cost consumers up to $6.5 billion.

Since meeting with the Prime Minister last year, retailers have simplified their offerings and written to around 1.6 million households to tell them better deals are available. Nearly one million people have visited the Government’s website to compare offers – something everyone should do.

Our investments in Snowy 2.0, other pumped hydro projects and utility scale batteries are laying the foundation for the power system of the future. Energy storage is critical because the stability of our grid cannot be left to the whim of the weather.

While there is always more to do, these actions are bearing fruit.

Integrating climate and energy

But the hardest nut to crack is integrating energy and climate policy.

But crack it we must as, in the words of the Energy Security Board, “Fifteen years of climate policy instability has complicated long term investment decisions” and left our energy system “vulnerable to escalating prices, while being both less reliable and secure.”

As Chief Scientist Alan Finkel simply puts it, “Business as usual is not an option.”

As a Liberal, I consider the answer lies in a strong private sector and a well-functioning market.

While improvements are needed, to paraphrase Mark Twain, reports of the demise of the NEM have been greatly exaggerated. The NEM, the world’s longest interconnected system, emerged from Australia’s golden era of competition reforms and has served Australia well.

But if we expect the private sector to invest in the $200 billion of energy infrastructure Australia needs to 2050, it needs to know the rules of the game.

And with the average power station lasting more than 10 elections – Hazelwood itself saw 14 Prime Ministers in its lifetime – investors need confidence that the goal posts won’t be continually moved.

So unless people are proposing the government re-nationalise the system and foot the $200 billion bill, the question is this: how do we establish a policy framework that manages the transition; achieves the objectives of lower prices, higher reliability and lower emissions; and provides constancy and consistency through political cycles?

This cannot be achieved through the lens of ideology but rather through markets operating effectively.

The National Energy Guarantee

The National Energy Guarantee is the first and best opportunity for Australia to do this.

Recommended by the independent Energy Security Board, it has galvanised unprecedented support from energy users and producers alike.

According to independent modelling, wholesale prices will fall on average by 23 per cent over the decade 2020 to 2030. Households will be $300 a year better off compared to Labor’s policy.

A vote against the Guarantee is a vote for higher prices, higher emissions and less reliability.

What the NEG is and isn’t

Let’s be clear what the NEG is and what it isn’t.

It is a mechanism which uses the existing electricity market, both spot and contract, where energy is already being traded between buyers and sellers.

It places an obligation on retailers to provide sufficient dispatchability to ensure reliability – this is power on demand regardless of the weather – while also requiring retailers to reduce the emissions intensity of their portfolio over time.

This is fundamental to restoring faith in the NEM by driving long term investment in the right technologies at the right place at the right time – an outcome that has to date escaped policymakers both here and abroad.

It is not a new tax, subsidy or emissions trading scheme. It does not collect revenue for government.

It is technology neutral and does not pick winners.

It is not pro-coal or anti-coal; not pro-renewables or anti-renewables.

All technologies will compete on their merits.

It simply provides, according to the ESB, “A clear investment signal so the cleanest, cheapest and most reliable generation gets built”.

The Guarantee also provides an in-built check and balance. If a state has a separate scheme to incentivise intermittent renewables, the reliability component will ensure stability is not compromised.

While in my view it would be preferable not to have a proliferation of state schemes, I recognise that states may pursue them regardless.

The Guarantee therefore will not preclude state renewable schemes, but rather will include their contribution to reducing emissions within the overall target.

This approach preserves the Commonwealth’s responsibility, as the signatory to the Paris Agreement, to set the emissions target at a pro rata contribution from the electricity sector of 26 per cent.

A criticism I’ve heard is the Guarantee might limit growth in renewables.

Nothing could be further from the truth. The modelling of the ESB shows renewables under the Guarantee will nearly double from 17 per cent today to between 32 and 36 per cent by 2030.

Market concentration

The Commonwealth, states and the ESB are all focused on the issue of market concentration.

Since 2009, the share of capacity held by AGL, Origin and Energy Australia has gone from 15 to 48 per cent. Across the NEM jurisdictions, the top three players have on average 70 per cent retail market share.

The risks to consumer outcomes is why we’ve tasked the ACCC to examine the competitiveness of retail electricity supply.

Market concentration is a problem. But just as it wasn’t created by the Guarantee, it can’t be fixed in itself by the Guarantee.

We are of course vigilant to ensure the Guarantee does not make the situation worse and are thinking about how do we best ensure a deep, liquid and transparent contract market.

It’s worth noting that retailers across the spectrum support the Guarantee, including medium-sized players like Powershop who see opportunities to expand market share through innovation.

Conclusion

Let me end where I began, with the concerns of my friend from the Synagogue. The answer is yes we can do something about your power bill. And we are.

The Turnbull Government is putting a comprehensive plan in place which at its very heart has the National Energy Guarantee. This framework is practical and market based and will get the National Electricity Market delivering for consumers.

At next week’s COAG Energy Council meeting, the ESB will present a high level model, developed in close consultation with stakeholders and will be seeking the Council’s agreement to move to the next phase of detailed design.

The goal is for ministers to agree to the final Guarantee design in August, with legislation passed before the end of the year – federal legislation to set the emissions target, state legislation to enact the mechanism.

To make the National Energy Guarantee a reality, all NEM jurisdictions – Coalition and Labor – need to agree.

And so governments at all levels and parties of all persuasions must put ideology aside and work together to put the national interest first.

The National Energy Guarantee is our chance to secure a lasting consensus.

We must not miss this opportunity to deliver a more affordable, more reliable and lower emission energy system for Australia.  

Pocket
  • Joe

    I watched the Joshie on my TV giving his speech. Wonderful that Renew Economy has provided the transcript…everyone get ready to scribble away and pile in on the Joshie.

    • Rod

      I couldn’t bear to watch. Did any of the gathered MSM sycophants ask any pertinent questions?

      • Joe

        I could direct you to the ABC Iview…. to just watch the Q&A section of affairs after Joshie gave his withering take on Energy policy. Pertinent questions may well you ask because a day later the only question that still sticks in my mind was one about emissions. The elderly gentleman’s name escapes me ( my bad because I have seen him at The Press Club Q&A business once or twice before ) and Joshie did a fine ‘escaping’ of addressing the question!

  • George Darroch

    “Calls to decarbonise the economy overnight are as irresponsible as they are futile.”

    This man is an insult to our future. Technology neutral, as he calls it, sounds good and fair. But it means that Australia continues to be the fourth highest emitting nation on earth.

    Frydenberg’s speech clearly states that he intends to have our coal power plants run until at least the 2040s, and for more and more gas generation.

    He thinks that he’s the sensible man in the room, but he’s stepping on the gas and plunging us off the cliff.

    • Joe

      Its Coal4ever…the Joshie wants our existing fleet of 20 Coalers to keep on boiling away. Its ‘Refurbs’ NOT ‘Retires’ ….the Joshie ‘Coaler Way’. ‘The Moan Ash Forum’ groupies will be loving it all and Abbott’s ‘COALie’ pedal can power on to the next Coal-fired power station spruiking the joys of that ‘Little Black Wonder Rock’.

    • Matt

      What’s your solution George? What would you do – right now to improve energy affordability AND reliability?

      • George Darroch

        What would I do? I’d let the clean energy experts (of which I am not) do their job and set policy for us.

        But if all of them were at a conference in Canberra tomorrow and North Korea decided to make an example of us, then it might be left to me. I’d see make sure that the current large increase in solar and wind continues, through a price on emissions. Then I’d see that there was sufficent transmission capacity to allow the hundreds of TWh represented by our hydro to act as the battery for the nation. Then I’d set about an orderly closure of all remaining coal over the next decade, followed by the gas fleet after that (with sufficient emergency reserve until technical issues are comprehensively answered).

        • Ian

          Unfortunately it isn’t as simple as that. It can be done, but not brazenly. We can have a much greater penetration without issue though.

      • RobertO

        Hi Matt There no way that the price of electricity for consumers is going to drop any time soon (I forecast 10% year on year roses in May 2017 to the Board I work for).
        So here a silly idea. I call it a Value Add Service Fee $10 on every mineral exported by Australia. It to be applied to every mineral product sold to overseas markets where the product is not fully “value add” by Australians. Coal no value add, applies. Copper ore made into ingots, applies. Copper ore made into building wire, exempt. Iron Ore no value add, applies. Iron ore made into steel railway lines, exempt but just steel ingots, applies. All monies raised paid to CEFC with ARENA to receive 10%.
        Here another silly idea.
        Remove Wind Farm Commissioner.
        Here another silly idea.
        New Rules for Wind Farms. Visual objections can stop Wind farms. Some of the building in Sydney are massive eye sores so why allow them when other think they are beautiful. Visual Views are a massive con-job.

        And these are all without starting on coal.

      • Rod

        This might be an over simplistic solution but a bipartisan price on carbon would be the best way.
        Second best would be an emission intensity scheme.
        Third best would be a Clean Energy Target.
        Fourth best would be business as usual.
        Next we have the rolling disaster that is the NEG
        This isn’t a technology or even financial problem. It is a political wedge.
        Oh, and to get prices down quickly, trigger the gas reserve mechanism.

        • RobertO

          Hi Rod What about a NEG applied to Coal on reliability factor. get them to buy RE support at the capacity factor rate.
          Mind you the NEG is still a stupid idea no matter which way you look at it.

          • Rod

            Yes, Finkel said storage for every generator. FF generators tripping is the biggest risk to the grid. Have them provide their own reliability plant or storage.

    • Peter G

      It is all strawman and puff, nothing is done overnight and no-one is ‘calling’ for overnight implementation – it certainly would be futile given the long life of energy assets. This speech is such and insult – there is no vision, only rhetoric. The Federal Liberal party is a dogs breakfast.

      • Kate

        Hear freakin’ bloody hear.

      • My_Oath

        Rather than a strawman per se, its a false dichotomy fallacy. He is pretending it is a clear either/or case when the reality is not that at all.

  • BeanBoy

    Mr. Frydenberg: “At 7.30pm on 18 January, when South Australia’s demand peaked and they most needed power, their wind farms operated at less than 10 per cent of
    their capacity.”

    Yep, the past and current intermittency is evident to all. The Rann and Weatherill governments didn’t get the mix right.

    However, the irony for me is that, at the time of Frydenberg’s speech, wind farm capacity was 60% – 70% (http://anero.id/energy/wind-energy) and (curtailed) wind generation was contributing around 50% of total, and rooftop solar around 20% (http://opennem.org.au/#/regions/sa).

  • Chris Fraser

    Joshua, can’t you do something about those coal and diesel subsidies ? We’re getting sick from the emissions.

  • John Saint-Smith

    If you read this as young Josh’s application for the job of Energy and Environment Minister, would you employ him?
    My impression: He can’t hold two ideas in his mind at the same time. He criticises the intermittent nature of wind, without mentioning PV, or batteries which everyone else understands are meant to complement wihd. His grasp of the economics, let alone the engineering of renewables energy networks is abysmal.

    As minister for the Environment, I note that he hasn’t caught up with the Inconvenient Truth yet.
    For some reason he’s proud of his government’s achievement in ‘achieving’ the non-reduction in emissions of the Kyoto agreement that the LNP under Howard, refused to sign up to. He attempts to suggest that we are on track to meet our weak-as-piss Paris goals – which will see us in 2030, with higher per-capita emissions than virtually every comparable OECD country, none of which have our extraordinary renewable resource potential.

    He’s confused the achievements in emissions reduction in electricity generation with the task of reducing all of Australia’s GHG emissions by 26% across the board! Is he hoping that no-one in the international community will notice?.
    Where his government could have been proud of leading the way by facilitating the balance of wind, solar and batteries, he has preferred to throw rocks from the sideline.

    No, Mr Frydenberg, I’m afraid you’re not up to the job, indeed, I very much doubt you know what the job is.

    • Paul Surguy

      Great comment I do not think Josh would know the difference between AC power and DC power

      • Ian

        When confronted by industry regarding the price gouging of the gas market and the impact to their profitability, Joshie’s response was “But you’ll still be making money!”. “No Mr Frydenberg, we will not be profitable and will most likely shut the doors.” was the stern reply. So much for our governing elite having an ounce of intelligence on any issue. And that actually goes for both major parties right now.

  • Roscoe794

    Ole Josh ‘Sorry to hear that your wife and family were killed yesterday, but look on the bright side. Your food bills will be down.’.

  • Rob Farago

    For electricity to only carry its pro-rata 26% of emission reductions, we need a credible plan for the other sectors of the economy like natural gas, transport, industrial processes, land use etc. to reduce by 26% also. I don’t seen anything credible for these other sectors to reduce emissions by 26%. Why not get electricity to carry more of the weight where its relatively easy and cheap to do so?

    “set the emissions target at a pro rata contribution from the electricity sector of 26 per cent”

    • palmz

      simple we electrify other parts of the economy 🙂 if we electrify most small engines and most of our heating requirements and some transport we should be able get some good reductions if we are talking about electricity decreasing its actual emissions.

      • George Darroch

        Because reducing transport and industrial emissions is so heavily tied into greater electricity production, in many ways this is mostly an electricity generation problem.

        We could do a lot by improving penetration of public transport and by actually making walking and cycling safe and comfortable for most of the population. Smarter decisions about waste and agriculture would reduce methane, and shutting down the coal and gas industries would be very helpful. Similarly, reforesting would start to rectify all of our land-clearing emissions.

        But these are all *hard*. There are losers, and those losers are people who gain from or simply like doing things the present way. Our political-media system does not reward doing hard things, until it’s too hard not to. Just look at how Australia deals with drought cycles and water policy, for example.

  • Ren Stimpy

    It’s a reckless junk speech.

    Integrating climate and energy policy should be the easiest thing in the world.

    There WILL NEVER be another new coal fired power station built in Australia because it would cost too much and the power from it would then be TOO EXPENSIVE. There. Does that make it any easier for you matey?

  • Farmer Dave

    Two questions, Minister: (1) who has called for “overnight decarbonisation of the economy”? I can’t recall anyone asking for that, so please provide a specific quotation. (2) please release the detailed advice from climate scientists on which your emissions reduction targets are based. In particular, evidence that your reduction targets, if reproduced across the world, will protect Australia from dangerous climate change. Please include the names, qualifications and affiliations of all the climate scientists you consulted to arrive at your emissions reduction targets. If you don’t release all this information, how can we be assured that your targets are not ideological?

  • Kate

    A speech that sounds like someone caught between a rock and a hard place with his party’s past ideological stance and poor policy judgement, and subsequently trying to frame his current position as the pillow top in the middle.

    Got to give it to him though. At least he is attempting to acknowledge the new reality of renewables and work it into his party’s platform. I think we all know basically most, if not all, of the rest of his party would be unwilling to do even that. A weasel words masterwork.

    • Agree, Kate. We all know that an orderly transition from fossil fuels to renewables is necessary and inevitable. What we need is sensible policies that enable that to happen as quickly as possible and that any effected workers are retrained and found jobs. It’s not rocket surgery!!!

    • PLDD

      He is an interesting character, and I suspect he really does get energy policy. IIRC he has made a few gaffs that indicate this like supporting the emmisions trading part of the Finkel review before he was to,d to pull his head in.

      I thought the speech was interesting because it was reasonably well balanced and a lot of what he said had merit.

      But, and it’s a really big but, he then ruins it all by making it party political. The dig at SA, the idea the ALP want to close all coal plants tomorrow, not recognizing wholesale power costs are falling due to renewables etc etc. If he put balance into these comments by outlining the negatives but then balancing them with the positives what he says would be much more acceptable.

      Now is the political bit something he has to say – all part of placating the coal lovers in the LNP, positioning himself with rusted in LNP voters. Or is it an insight into what he really thinks…?

      • Kate

        While I might ponder now and then whether it’s possible he might actually ‘get it’ behind a coalition politically correct facade – because, as you say, every now and then he says something that suggests he does – we have to put that aside.

        This is the reality, either:
        i) He doesn’t get it, ie he’s unable to recognise the climate change/renewables future. In which case he’s a nitwit and f*ck him; or
        ii) he does get it, ie he places a higher priority on placating the ideological viewpoints of what he sees as his core constituency and/or his party’s climate skeptic herd mentality than he does on speaking the truth about the reality of situation and thus he is formulating policy for his support base over his country. In which case he’s a lying scumbag of a weasel who’s hogging a political position that someone else – someone who might actually formulate policy that puts country before party – could occupy, so f*ck him.

        So, f*ck him either way. He’s an utter waste of space.

  • The funny thing is that I actually agree with some of Josh’s “state of the energy nation” assessments. However, I disagree with all of his responses and solutions. The one that really stands out to me is, “The answer is more gas”, after he stated that, “But with higher gas demand comes higher electricity prices which are 40 per cent more when gas is setting the price compared to coal.”

    He’s completely wrong when he said, “As the energy mix changes, and more gas peakers are required to smooth out renewables.” On the contrary, it’s rooftop PV that lowered costs to consumers by $3,3 million in the year by April 2017 and big battery storage, like the Tesla one in SA and others being built and planned right now, that’ll “smooth out” our electricity supply, not gas!!

    Josh’s statement, “(The NEG) places an obligation on retailers to provide sufficient dispatchability to ensure reliability – this is power on demand regardless of the weather – while also requiring retailers to reduce the emissions intensity of their portfolio over time” actually points to the kind of renewables with battery storage investment going on now. Coal fired power stations are too slow in responding to demand shifts or network failures and gas ones are too expensive to do so.

    The answer is more renewables and battery storage, a smart, 21st century capable grid and the staged retirement of fossil fueled power stations with an imbedded retraining scheme for all the workers effected by their closer.

    • Kate

      Yeah. Kind of a ‘d’oh’ speech. He’s come so far to even outwardly acknowledge that the future is renewables (well, kinda, nearly, just about, even if he won’t ever say anything good about labor’s hand in it). Yet he then falls back on the NEG and ‘no more renewables subsidies!’ conservative polispeak. Really makes me want to slap him upside his head.

      • Yes, indeed, Kate. He seems like a nice guy, on one level, but when he trots out his, so called, “ideology free” statements clearly supporting fossil fuels, I can only shake me head in disbelief and wonder on whom he is relying for policy direction. 🙁

      • PLDD

        Although on the point about renewables subsidies. I wonder how close we are getting to the cross over point where their real cost is still an economic winner and subsidies should go.

        Logically mainstream renewables like wind and solar should be nearly there. So why not recognize that and move subsidies to the next phase – batteries, PHS and EV’s.

        If the government applied this to all industry and didn’t subsidies any mature technology* like coal it becomes far easier to swop things in and out.

        It does get a bit tricky when you have to include regional development and protection of jobs. But a smart policy would only subsidies new technology development in areas with these needs.

        • RobertO

          Hi PLDD, RE is about regional jobs, yes the major metro area are installinmg solar but so are regional areas. Wind Farms are only regional and so are PHES and mods to Hydro.

          • PLDD

            Good point. I suppose I was thinking of the subside to innovation and manufacturing. Building EV’s in Elizabeth to replace Holden for example, or building and marketing Australian batteries (much prefer to buy local rather than Korean or US), even mandating that new energy projects need X% of local technical content.

        • Mike Westerman

          I would say for rooftop solar we are well past a cross-over point, to the extent that imposing a levy on exports during daylight hours and providing this as an incentive for storage (all of which could be calculated upfront in the same way as the STCs are), could move us into the next phase. It would kill the stupid arguments about sun/wind dead. Storage should include thermal storage as well ie ice/chilled water or flash steam accumulators, not just batteries.

  • Phil NSW

    Mr Frydenberg, your statement “The NEM is no longer delivering the consistently low wholesale prices and the effective signal for new investment which were its hallmarks. It is within this new paradigm that policy must be reframed.” is correct. Did you for one minute ask yourself why?
    Given there has been only one coal fired power station built in Australia in the last 15 years versus how many Gigawatts of renewable energy there has been an effective signal for new investment. As governments over the past decade have only used the issue as a political football poor investment certainty in energy resourcing brought about our current dilemma. Could you please allow the market to do the job it is meant to do and stop your constant interference.

  • hans

    Double talk aside –
    What is so dificult about suspending ALL SUBSIDIES for fossil fuels and use the savings to finance what is really called for.
    *Subsidise power bills of the disadvantaged.
    *Finance a truely independent and coherent enquiry into environmental risks of present unrestrained fracking for gas .
    *assess the health and economic consequenes of a delayed transition to clean energy in all sectors of industry, transport domestic affairs.
    It’s pretty obvious that slow or no action on global warming is the biggest economic faiure of all times.