Kean seizes special powers over coal supplies for old, unreliable “bits of machinery”

NSW Treasurer and energy minister Matt Kean speaks to the media during a press conference in Sydney. (AAP Image/Bianca De Marchi)
NSW Treasurer and energy minister Matt Kean. (AAP Image/Bianca De Marchi)

Less than 48 hours after the the Australian Energy Market Operator took the unprecedented step of suspending the National Electricity Market, declaring it “impossible to operate,” signs are emerging that at least some level or order is being restored.

As AEMO put it on Thursday afternoon, the “forecast for reserve conditions have improved across all NEM regions. Following close coordination with the NSW government and generators, reserve levels have improved markedly in NSW.”

NSW energy minister Matt Kean – who late on Thursday sought out and was granted “special powers” to commandeer coal supplies in the state – has also remarked on the improved situation for the state that has been the focus of AEMO’s operational concerns over the past couple of days.

Kean told reporters on Friday morning that the turn for the better was essentially due to generators that had been offline, coming back online – including a full 660MW unit of AGL Energy’s Bayswater coal plant in the NSW Hunter Valley. More is expected to follow from other generators in coming days.

But far from being a case of “coal power to the rescue” – as Nationals Senator Matt Canavan is predictably claiming – Kean paints a much more realistic picture of what governments, industry and AEMO are dealing with at this point in Australia’s energy market transition.

“These are old bits of machinery. They’re not as reliable as we’d like them to be, particularly when we need them during this time,” Kean said.

“We’re not just seeing it in New South Wales. We’ve seen generators in Victoria also go offline when we least need them [to] and also generators in Queensland.

“So this is a challenge being faced by all the states and territories in the national energy market. We’re working together with the industry bodies, with the energy companies to make sure that we manage our way through this process.”

Meanwhile, those coal and gas plants that did happen to be in working order when called upon had been holding out on the energy market operator in the name of getting higher prices for their supply; the final straw that led to AEMO’s decision to suspend the NEM.

Kean – alongside other energy ministers from NEM states – welcomed that decision, on Thursday describing it as a way to prevent energy companies from “putting energy reliability at risk by unnecessarily withdrawing supply.”

Today, he elaborated.

“Energy prices are going through the roof at the moment and that’s changing the market signals that direct generation coming to grids.

“And that’s why we’re modernising our electricity system. We’ve put a proactive plan in place and that is about ensuring that we insulate ourselves from future global price shocks and that’s what we’re doing here in New South Wales.”

In addition to driving one of the NEM’s fastest and most well-planned shifts to firmed renewables, Kean says NSW will – in the short term – help consumers to weather the storm with a boost to bill relief payments.

“We’ve just increased the energy accounts payment assistance scheme from $1,200 to $1,600. … The state government will continue to do everything in our power to make sure we keep the system going and put as much downward pressure on bills at this time,” he said.

Outside of NSW, the view is much the same. Prime minister Anthony Albanese went as far as to say there had been “a bit of gaming going on of the system, which is why AEMO used its tools at its disposal to intervene, so we do have these short-term issues.”

Refreshingly, the federal government’s plan to improve things in the longer-term has now also come into line with that of NSW and all of the other states and territories – a big and vital change since the Coalition government was turfed out in the May federal election.

 “What we needed to do was to have a short-term measure in place, but also to make sure that we get that [renewables] investment, so that in the future we don’t have these problems,” the PM said.

To this end, the Albanese government has locked in its boosted climate target to cut emissions by 43 per cent by 2030, a goal it says will be achieved through growing Australia’s renewable energy market share to 82 per cent and cutting industrial emissions.

And in an address to the IGCC Climate Change Investment and Finance Summit in Sydney, federal energy minister Chris Bowen spoke of the new government’s desire to “unleash private investment” in new clean energy projects.

“Australia is open for business,” he said. A simple message, but a crucial one.

“This is the clarion call to action we have all been waiting for,” said David Scaysbrook, co-founder and managing director of Quinbrook Infrastructure Partners, in comments emailed to RenewEconomy.

“Rather than being held hostage by the industry of yesterday, we must urgently move to create the industry of tomorrow and that’s where this government wants to take us.

“Lead on and all that new investment, jobs creation and decarbonisation we hope for will come speeding towards us.

“This is what climate leadership looks like to investors like us that have been waiting to make it happen.”

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