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Doorstop - Goulburn

5 January 2021

Subject: Energy Security Board's Post 2025 Market Design Directions Paper and the Health of the NEM assessment report

E&OE

ANGUS TAYLOR: Today we've seen two important reports coming out - the Health of the NEM and the Directions Paper for Market Design from the ESB. And in summary, good news that we're seeing significant reductions in electricity prices as we see significant reductions in emissions - 25 per cent, since our baseline year of 2005. But there's more work to be done if we're going to continue to see that, and in particular, we need balance between the record levels of investments we're seeing in solar and wind, alongside dispatchable, flexible generation, changes to the rules and to the grid that ensure we have the power when we need it. We have reliable, affordable generation. That means balance. It means a balance between the solar and wind, as well as the new projects that the Government is investing in, like Snowy, Battery of the Nation, Marinus Link, as well as the investments coming from the private sector. That balance is what will continue to see the very good outcomes we're seeing in this report. We continue to see improvement, but as the ESB rightly points out, there's much work to be done. Initiatives like the Retailer Reliability Obligation, the Grid Reliability Fund, Underwriting New Generation Investments Program, all of these are directed to making sure we get that balance, but there'll be more work to do during the course of this year to drive down prices, keep the lights on, and keep emissions coming down.

JOURNALIST: Should Australians be worried about their electricity supply?

ANGUS TAYLOR: No they shouldn't be, but it's clear from this report that there's more work to be done, and that if we are to eliminate the risks that we see on the horizon, both this summer and beyond, we continue to need to drive that balance in our grid between the intermittent solar and wind, which is helping to bring down emissions and bring down prices alongside an appropriate mix of new technologies or emerging technologies - whether it's batteries, pumped hydro of course which is not a new technology, but offers enormous opportunity, gas - it's that balance that will ensure that we continue to see the prices coming down, emissions coming down, and the lights staying on.

JOURNALIST: How has it got to the point where technology has advanced so far ahead of regulation that we're having to have this very critical and rapid redesign of the National Electricity Market? How did regulation fail to keep pace with technological advancement?

ANGUS TAYLOR: Well, I'd point out that we've made many announcements and put in place a range of initiatives in the last two years, three years that are addressing exactly this. Whether it's the Underwriting New Generation Investment Program, Battery of the Nation, Snowy 2.0 is absolutely directed towards this. The changes to the rules around the Retailer Reliability Obligation, putting the onus on retailers to make sure that they deliver affordable, reliable power. So those initiatives are either in place or going into place, but there's more work to be done. The grid is changing dramatically. This is happening all over the world, not just in Australia. We're seeing this throughout Europe, the United States. It's crucial to maintain this balance. We in Australia have seen record levels of investment in renewables, particularly household solar where we lead the world, and balance is the key. Balance will be the answer, and balance will give us that affordable, reliable generation as we ensure that prices and emissions continue to come down.

JOURNALIST: You mentioned the Retailer Reliability Obligation. The ESB has been pretty clear that most of the feedback it has had on that is that it's cumbersome, that it's really just incentivising energy retailers to manage their financial risk rather than actually leading to investment in infrastructure and it's not clear if it is effective yet. Do you think it needs to be fixed so that it works better, or do you think to rethink whether it's a good policy?

ANGUS TAYLOR: Well, it's only just gone into place, so it's important we continue to assess its effectiveness over the coming months and years. But it's also clear that it will may need some refinement, and that's something that we are absolutely looking at through this Directions Paper, the ESB is looking at. We've made refinements to it already and will continue to as necessary. But the objective is clear - and this is the important thing - we have to have that reliability, that affordability, as we bring down emissions. We've seen good results. The Health of the NEM report today tells us we've seen significant improvement over the last 12 months, but there's further to go, and the Government, Federal Government, working with state governments, is absolutely focussed on ensuring we continue to see that improvement.

JOURNALIST: And just one last one there. As you mentioned state governments, the ESB pointed out that different policies at state government level is a problem; that it's causing investor uncertainty. Do you think the state governments are moving too far ahead and not having enough patience?

ANGUS TAYLOR: Well, I'd encourage all state governments to work closely with the ESB and the Federal Government on this market design. I mean, these changes that the ESB is looking towards, the areas that it's focusing on, are the areas that will deliver that affordable, reliable, sustainable energy that we want as a country, that we need as a country, that's crucial for manufacturing jobs, that's crucial for helping people to make ends meet, and that is going to continue to be our focus. We'll work closely with state governments through the National Cabinet process, which is, of course, applying to these changes as to so many other across this nation at this time. We want to see them working with us to get those outcomes. I think we can. We're making good progress. It's clear there's further to go. I'm confident we can get there.

JOURNALIST: Just on the reliability aspect, how can you guarantee reliability for consumers? As you said, there was more work to be done with this issue that's likely to take years.

ANGUS TAYLOR: Well, there's a lot of work still to be done. We've put in place the Retailer Reliability Obligation. We are committing to new firm, reliable generation like Snowy 2.0, like gas generators, as necessary to replace any major generators leaving the market. I mean, these are commitments we've made, but there need to be further changes as the ESB points out. Our commitment to the Australian people is we'll work with state governments, we'll work with the private sector to ensure that we continue to see those good developments we see in this report today. But we know there's work to be done. We've rolled up our sleeves up. We're doing that work and we will continue to. This is important for all Australians. It's important for manufacturers, it's important for consumers, and that's why it's a focus for the Federal Government.

JOURNALIST: Just on another issue, what's the Government's view on the impending release of Abu Bakar Ba’asyir in Indonesia on Friday?

ANGUS TAYLOR: This is distressing for many of those families that, of course, have been affected by those tragic events some years ago. It is completely understandable that they would feel quite distressed by this situation. This is a matter for the Indonesian Government. We have expressed our concerns about the situation and will continue to. But I do feel for those families because it does bring back those extraordinary events that we all remember so well and the tragedies that unfolded.

JOURNALIST: You say, you have expressed your concerns, can you outline what communication you have had with Indonesia about-

ANGUS TAYLOR: No, the Government has expressed its concerns to the Indonesian Government on this issue, and I'll leave any further comments on that to the relevant ministers.

JOURNALIST: Will Australians be safe in Bali after his release?

ANGUS TAYLOR: Yeah, we're assured that they will. There's been no change on that issue, and it's important we continue to obviously monitor the situation. But I think the main issue here is concern for those who were affected and the distress that this causes, and that's completely understandable.

JOURNALIST: Regional tourism operators who were hoping to make the most out of this summer have been pretty frustrated at the reintroduction of hard borders. Are you and the Government satisfied with the approaches being taken by the different states at the moment?

ANGUS TAYLOR: Well, that's an understandable concern, and we share concerns about the closure of borders. And, of course, these are matters for state governments, and ultimately they make these decisions. But we'll continue to express our objective, which is to keep Australia as open as we possibly can to ensure that that flow of business to those small businesses, for instance, down on the south coast near to where I am now, the New South Wales south coast, that they continue to see that improvement in business conditions that I know they have been seeing. It is important state governments keep this in mind as they make decisions about borders. Decisions about borders, importantly, should focus on health issues, but they also need to focus on livelihoods and making sure that those who have been affected – you know, we've seen on the south coast not far from here, just a year ago, of course, the extraordinary impact of the bushfires, and now, of course, we're seeing the extraordinary impact of the pandemic. I know that down there they were seeing vast improvement in conditions prior to these border closures. It has had an impact. I've spoken to a number of operators and am very conscious of that. And it's important state and territory governments take that into account in the decisions they make.

JOURNALIST: But there's not much you can do at a Federal Government level?

ANGUS TAYLOR: We continue to provide the enormous support, unprecedented support we're providing to businesses and households across Australia, of course. That's an important part of the role of the Federal Government. State borders are a matter for states, but we'll continue to express our concern that the livelihoods, of particularly small businesses in those states and tourism operators in those states, be considered in the decisions being made by state and territory governments.

JOURNALIST: Is there any further progress on the Government's deliberations around the gas power plant at Kurri Kurri?

ANGUS TAYLOR: Yeah. Gas is one of the technologies that can help to balance our grid as we continue to see in the future, in the coming years and decades, closure of our older thermal generators. And we do see that getting that balance right is important, whether it's through Snowy 2.0 or Battery of the Nation in Tasmania, or gas generation in the Hunter Valley. Now, we will build a gas generator in the Hunter Valley if we don't get enough capacity coming from the private sector. I know that they are progressing their proposals on this front. They're working closely with the New South Wales Government. They have received an accelerated approval in one case for development of a generator. We'll continue to work closely with New South Wales Government and the private sector operators to ensure that we get that balance in the system, but if we have to we will build a generator in the Hunter Valley to ensure we have that balance in the system because the people of New South Wales and right across the east coast deserve affordable, reliable power.

JOURNALIST: But the Kurri Kurri one in particular, is that still an April timeline for making a decision?

ANGUS TAYLOR: Yes. Absolutely. The target date and the target quantity we have set, April of this year, and we want to see those plans from the private sector proceeding by then. If not, we've said we'll step in, and we will.

JOURNALIST: And just finally, when are you going to release the Future Fuel Strategy?

ANGUS TAYLOR:    That will be released in the near future. It's an important piece of work that we've been doing throughout COVID. Obviously, we are going to see changes in vehicle technologies in the coming years and it is important that the government do everything it can to facilitate people to make choices that are right for them about the type of car they drive. Whether it's a hybrid or an electric vehicle or a traditional internal combustion engine, there will be a change in those technologies over time, and it's important that government plays its role in facilitating that through the investment in infrastructure we announced in the budget, the Future Fuels Fund, over $70 million dedicated to beginning to establish that facilitation, that support, that infrastructure that's necessary to get that mix of technologies that will change in the marketplace in the coming years, and most importantly, so we can facilitate those choices for consumers.

JOURNALIST: Can we get a firmer timeframe given that you did say we’d have it by the end of the year, the new year now, when exactly can we expect it?

ANGUS TAYLOR: It'll be out in the near future.

JOURNALIST: Back to energy, I'm wondering if you can see the future in about 5 years. I see suburbs in Canberra now sort of ditching gas and they’ve all got solar panels on their roof. Do you see a move away from gas in the future or?

ANGUS TAYLOR: Gas plays an incredibly important role in our grid, as does hydro, as does coal, as does solar, as does wind. And we'll see a balance in our grid. I mean, the important point is what delivers affordable, reliable energy is balance. And we need to continue to see a balance. Some would like to see a loss of balance. Well, that won't work. We need affordability, reliability, and we need balance to deliver that as emissions continue to come down. We've seen record levels of investment in household solar in this country in recent years. Highest level in the world - one in four houses now with solar on their rooves and that needs to be balanced with dispatchable generation, whether it's hydro, whether it's gas, whether indeed it's batteries, particularly for short durations. That balance is necessary. It will continue and it will continue for many years to come. 

JOURNALIST: Do you see, like, solar as the number one though in the future? 

ANGUS TAYLOR: Solar is gaining ground rapidly, but balance is necessary. You can't have solar without power generation that is available at night because solar only works during the day by definition. So it's that balance that will deliver us the outcomes we need. That's what the Government is focused on. That's what we'll continue to be focused on.

ENDS

Media contact:

Minister Taylor's office: 02 6277 7120