Backbench blues over Clean Energy Blueprint

The Finkel Review of the energy market has generated a great deal of analysis and debate, interviews and screen time. It has also caused division in the ranks, with a revolt brewing among Coalition backbenchers over the audacity of a Clean Energy Target designed to provide an end to policy uncertainty and reduce emissions. Reactions to the Finkel review are clearly polarised: the Climate Council and the Greens are adamant the measures don’t go far enough to stem emissions and climate change.

The Blueprint for the Future Security of the National Electricity Market led by chief scientist Alan Finkel focusses on four key outcomes for the National Electricity Market: increased security, future reliability, rewarding consumers, and lower emissions.

The report states the reliability of Australia’s future electricity system will be underpinned by an orderly transition that integrates energy and emissions reduction policy and that all governments need to agree to an emissions reduction trajectory
to give the electricity sector clarity about how we will meet our international commitments.

“This requires a credible and durable mechanism for driving clean energy investments to support a reliable electricity supply,“ the report summary states.

“Consumers are at the heart of the transition. More attention should be paid to how we can best reward consumers for demand management and the power they generate through distributed energy resources like rooftop solar photovoltaic. When combined with improved energy efficiency, this will help reduce consumers’ electricity bills. The future grid will be more distributed, but its security and affordability will be strengthened through smarter grids, meter data information and clear data ownership rules to promote new ways of trading, including a demand response mechanism.”

Chief Executive of the Australian Solar Council and Energy Storage Council, John Grimes, says the Finkel Review fell short of expectations.

“We had a once in a generation opportunity to reform the national electricity market, but the Finkel Review tinkers too much on the edges. It underestimates the smart energy revolution that is about to unfold and favours incumbents over new smart energy players.”

“Unfortunately, the Finkel Review places obligations on new renewable energy projects without placing obligations on existing coal-fired power stations.”

The report promotes a greater use of gas, places greater focus on energy storage and as noted recommends a Clean Energy Target as the mechanism for the electricity sector.

Not good enough for the Greens who state “Alan Finkel’s energy report signs Australia up to another fifty years of burning coal and gas … this report is a political fix, not a climate fix. It’s a plan that extends the weak climate targets set by Tony Abbott, and it won’t keep warming within the 1.5 degree Paris Agreement target,” the Greens stated. “We can and must do better. Our plan to create Australia’s new, clean economy will deliver 100 per cent renewables 40 years ahead of Finkel’s schedule.

“We can choose to be chained to coal until 2070, or we can choose 100 per cent renewables by 2030. More than 19 million Australians want governments to favour renewable energy over the dying fossil fuel industry.

(Indeed. Last week the Lowy Poll found that 81 per cent of the community favored clean energy over fossil fuels – see next story. Other new research reveals renewable energy use is at a tipping point, with 62 per cent of Australians using or interested in introducing renewable energy in the home. A series of recent polls present more than enough evidence about the popularity of smart, sustainable and clean technology among the broader community over old polluting fuels.)

For its part the federal Labor Party has offered some highly conditional  support for a Clean Energy Target with Shadow Energy Minister Mark Butler indicating that once in power Labor would boost the clean energy target recommended by chief scientist and “ratchet up the ambition of the emissions cuts”.

 As is necessary, writes the Climate Council, given the 28 per cent proposed reductions in emissions by 2030 is inadequate and that coal-fired power stations should be retired sooner and that renewables need to constitute 50 or more of the energy mix by 2030.

Chief executive Amanda McKenzie declared “Australians across the board are desperate for a policy solution, which can address climate change and tackle emissions from our ageing, inefficient and polluting electricity sector. Ultimately, it was hoped that the Finkel Review would seriously address these issues. But disappointingly – the Finkel plan does not pass the climate test. Ultimately if the scheme goes ahead emission reductions must be much stronger.

“The Review also proposes introducing a Clean Energy Target between 2020 to 2030, to encourage new power plants to be built. The target would be similar to the current Renewable Energy Target, except that it would allow a broader range of power plants to qualify including renewable energy, gas, and coal with carbon capture and storage.

“Additionally, the review confirms that Australia has huge opportunities in renewable power, as renewables are now our cheapest source of new power. It also highlights the importance of coupling solar and wind with battery storage and other storage technologies.”

The Climate Council reiterated much more needs to be done to address the demands of climate science and reduce the emissions of Australia’s biggest polluter – the electricity sector – by ramping up renewables and energy storage uptake, as well as phasing out coal.

Scorecard for the

Finkel review is an orange light, rather than a green light for a renewable powered future.”

BNEF’s Kobad Bhavnagri concurs, commenting that Finkel has focused purely on Australia’s current pledge of a 26-28 per cent cut on 2005 level emissions by 2030, which is not consistent with keeping global temperature rises below 2 degrees.

Energy Networks Australia CEO John Bradley describes the Blueprint as “the last, best hope that Australian energy customers have for a secure, reliable and affordable energy transition,” saying “A well-designed, national Clean Energy Target would meet abatement outcomes without picking technology winners so that would mean lower costs to customers.”

He also welcomed the Report’s emphasis on improved forecasting capabilities, cyber security and millions of small customers with solar, storage and other resources in an integrated grid.

Still on solar and storage, power generation company Genex Power welcomes several report recommendations that are potentially highly significant for Genex, including incentives for, and a bigger focus on energy storage, including pumped hydro which may be mandated. Also for solar farms and the introduction of “despatchable capacity” in the form of baseload power with back up from renewables to tackle reliability and potentially allow Genex to sell storage certificates, and changes to the NEM Rules which include provision for all new large scale renewable projects to have storage capacity to address ongoing reliability issues.

 Managing Director Michael Addison said “Genex believes that the incorporation of the Finkel recommendations into national electricity policy will give Genex a distinct advantage over other renewable energy developers, particularly those with limited capacity to incorporate storage into their renewable schemes.”

Genex is currently developing three innovative clean energy projects located in Northern Queensland: the Kidston Solar Project (Phase One 50 MW. Upcoming: Phase Two 270 MW), and the Kidston Pumped Storage Hydro Project (250 MW).

 Snowy Hydro welcomes the support of the Finkel Review of pumped hydro as a key to energy security as it focuses on recommendations aimed at strengthening reliability in the National Electricity Market. Noting that the report states “Battery and pumped hydro storage will be able to support a reliable and secure NEM, as and when they are deployed at scale.”

Energy giant AGL restated its desire for a market that better supports and integrate renewable energy generation and delivers more reliable and affordable energy for customers. “While we have advocated for an Emissions Intensity Scheme we believe a Clean Energy Target is a viable policy option and will unleash the necessary new investment in the national electricity market.

“We note that the Finkel review has found the resource costs of a CET are relatively similar to both business-as-usual and an EIS,” the media statement read, “… with our extensive renewables and gas generations assets, AGL is well placed to continue to supply our customers while investing in new lower-emissions generation infrastructure.”

The Australian Energy Regulator sees the report’s findings and recommendations as a roadmap to a lower emissions future for Australia’s energy sector and is stands ready to work together with COAG Energy Council to deliver on the key recommendations and reforms that are required.

Reaction from Victoria’s Minister for Energy, Environment and Climate Change Lily D’Ambrosio: “The Finkel Review provides a way forward for climate and energy policy at a national level. The Labor Government calls on Canberra to take this as an opportunity to end a decade of toxic politics that has created uncertainty for industry and slowed investment.

“We’ve said all along that more renewable energy means lower prices and we’re glad that Dr Finkel agrees. Inaction is not an option. It is critical that we have an electricity grid and energy market institutions that are fit for purpose in our modern energy system.

Prior to the Finkel Report the Australian Solar Council and Energy Storage Council called for substantial reform of the electricity market and called on all Governments to implement six key measures. To establish a plan for the orderly closure of coal-fired power stations; make action on climate change a key objective of the National Electricity Market; commit to at least 50 per cent renewables by 2030; introduce a 5-minute settlement rule; enable markets in peer to peer trading and demand response; and replace the Australian Energy Regulator and Australian Energy Market Commission with a new combined energy rule maker and regulator.

The big question right now is whether the Finkel Report will bring Australia closer to ending “a decade of bitterness on climate policy”? And so far the answer is no – the backbench is revolting.

The Electrical Trades Union declared the success of any reform would depend on Prime Minister Malcolm Turnbull “having the spine” to stand up to the extreme right of his party.

“Dr Finkel’s blueprint provides an opportunity to act as a circuit-breaker after years of toxic energy policy. What we need next is for Malcolm Turnbull to have the ticker to stand up to the wreckers in his own party and work cooperatively to deliver outcomes that are in the best interest of consumers, workers, and our planet,” were the timely words of ETU national secretary Allen Hicks.