Federal energy minister Angus Taylor has again suggested that Australia has built too much renewable energy generation, claiming that the only way to address high electricity prices and secure reliable supply is to build dispatchable generation capacity and keep coal generators on line.
In duelling speeches to the AFR Energy Summit in Sydney, Federal energy minister Angus Taylor, and chair of the Energy Security Board, Kerry Schott, have outlined their different views on the challenges faced by the National Energy Market.
While Schott provided the summit with an expansive breakdown of the range of challenges facing the energy market, and hailed new technology while labelling ageing coal plants as “dinosaurs”, Taylor narrowed down on his mantra that the only solution to high energy prices and perceived reliability challenges was to keep baseload power stations open.
“We also need to strengthen the process for retaining dispatchable generation – mostly baseload coal and gas – in the absence of a compelling replacement plan. This will have more impact on pricing and reliability than anything else we do,” Taylor said.
Taylor reiterated his long-held position that Australia has reached the point where too much investment in renewable energy has created a challenge to the energy system’s ability to maintain reliable supply.
“When we had a system which could absorb a certain amount of intermittency, maybe up to 10 or 20 per cent [renewables], it didn’t matter and we could get away with it because the energy system could absorb the intermittency,” Taylor told the summit.
“The challenge we have now is that we have crossed the threshold. If you look at the last month we have consistently been above 25 per cent intermittent renewables, and that is a big number to be absorbing in the system and it is much higher in some States. This is a real challenge.
“What I’d say to those states is that we’re the ones, at a Federal level, who commit to international obligations around emissions. We made our commitment to a Paris agreement of 26 per cent… our challenge now is reliability and affordability,” he said.
Taylor appeared to push responsibility for managing the reliability of the National Electricity Market on to state governments, particularly those pursuing ambitious renewable energy targets. Ironically, the Victorian government on Wednesday said it was “going it alone” on reliability measures because it was frustrated by the lack of action at a federal level.
Taylor again flagged his desire for policies supporting the uptake of renewable energy to be “scaled down and phased out”, and said that energy sector investment must focus on securing greater reliability of supply, adding that “the extraordinary distortions we have seen need to be addressed.”
Taylor singled out the looming closure of the Liddell power station as a cause for concern on reliability in the energy market, saying that the coal-fired power station must be replaced with a ‘like-for-like’ equivalent, providing the same level of reliability and affordability.
Stopping short of saying that he would like Liddell to remain open, or be replaced with a new coal-fired generator, Taylor said that he was “focused on outcomes, not individual technologies.”
“The point of my speech is that you won’t get the outcomes without dispatchable generation. You’ve got to have that balance between intermittency and dispatchable generation. Like-for-like means it needs to be a similar level of affordability as well.
“In the past, we have too often seen the triumph of hope over reality. We are not going to see the triumph of hope over reality with Liddell. We’re going to make sure the reality is a good one,” he said.
Taylor indicated is support for new pumped hydro projects, increasing the local supply of natural gas, and maximising the life Australia’s coal generators, which aligns with the types of projects the federal government has shortlisted for its Underwriting New Generation Investment scheme.
To bring down wholesale electricity prices, Taylor called for a rapid increase in natural gas production and for the lifting of gas exploration moratoria that several states have introduced, related to environmental and health concerns around fracking.
“My number one message to gas producers is to deliver more supply now,” Taylor said.
However, Taylor did not recognise the emerging role that battery storage is playing in providing both stored supplies of electricity as well as crucial frequency management services, saying that the only options available were coal, gas and hydro.
Battery storage is frequently being co-located with wind and solar projects, and the falling costs of battery storage are a clear threat to the ongoing business model of fossil fuel generators.
As RenewEconomy reported elsewhere today, the biggest utility in the US, NextEra, says the combination of either wind or solar and battery storage beats out existing coal, gas and nuclear on costs, and can deliver reliability. It says the system can happily accommodate a 75 per cent renewable share.
Since being appointed federal energy minister, Taylor has not actively pursued the development of integrated energy and climate policy, despite also having the added portfolio of “emission reductions”. Former leader Malcolm Turnbull said in an interview with The Australian that the Liberal party had proven itself “incapable of dealing with the reduction of greenhouse gases in any sort of systemic way.”
Responding to this, Taylor denied that there was a rift in within the Liberal party over energy and climate policy, saying that the Morrison government went to the last election with “absolute unanimity” on energy policy, and that it had in fact been the Labor party that had been uncertain over its policy position.
Taylor pointed to this week’s calls from Labor’s shadow agriculture and resources spokesperson Joel Fitzgibbon for the ALP to adopt the Morrison Government’s emission reduction target.
Taylor does, however, appear set for a battle with the COAG Energy Council and the Energy Security Board, which both see a greater need to invest in flexible sources of electricity generation and for policies that will continue to drive down emissions.
Taylor will likely receive a frosty reception from sztate and territory energy minister who have been left out of the loop since the last meeting of the COAG energy council in December last year.
“The only person who thinks Angus Taylor is doing a good job is Angus Taylor,” Victorian energy minister Lily D’Ambrosio later told the summit.
In an address immediately following Taylor, ESB chair Kerry Schott told the AFR Energy Summit that it was crucial that new generation was both flexible as well as firm. Schott specifically singled out the ageing Liddell and Bayswater coal-fired power stations as being “dinosaurs” in their ability to provide a flexible supply of electricity.