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Interview with Luke Grant, 2GB

5 January 2021

Interviewer: 
Luke Grant

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

E&OE

LUKE GRANT: Energy officials say the nation's electricity market needs urgent reform to renewables which is set to have a much larger role in keeping our lights on. Renewables are forecast to grow to 63 per cent of the market by 2030 and 94 per cent by 2040. Now, that's all nice but is there any way we're going to collect this power and store it so we can use it when there's no sun or no wind? Just a crazy thought. Now I notice the likeliest of all suspects here, Mark Butler, who comes out each day and I think digs Labor's hole even deeper. He says: “Australia's Energy Security Board has again issued a report today warning that the security of Australia's electricity system remains critical with no improvement for a year, yet another consequence of Scott Morrison's inability to land an energy policy.” I said before, it does seem like, you know, there's lots to talk about energy but at the end of the day, what changes? It appears not much which is why on the line is the Federal Minister for Energy, Angus Taylor, who has joined me for a chat. Happy New Year, Angus. I trust you're well.

ANGUS TAYLOR: Thanks for having me Luke. Happy New Year to you and your listeners too.

LUKE GRANT: What do you say to Mark Butler first off, who says the Government can't land an energy policy?

ANGUS TAYLOR: Well, as Joel Fitzgibbon says, whatever Mark Butler says you should do the opposite. I mean he doesn't understand energy and he showed that at the last election, of course. But look, what this report out today says is that we are actually seeing good progress now. We've seen very sharp reductions in wholesale prices. That is flowing through to consumers gradually, not everybody. We've got to make sure it does in the next little while and we're starting to see this flowing through to manufacturers. Crucially important for jobs across our economy, particularly in suburban and regional areas. But the challenge is this, as you outlined in your opening, that we're seeing a very sharp increase in renewables, particularly household solar. Many of your listeners will have household solar on their roof. You can't just have household solar. It's got to be backed up, it's got to have storage and that's why we've got to have projects like the gas projects that we need in New South Wales, as Liddell closes in 2023. If we don't get those projects in, we will see upward pressure on prices and lights going out and that's why the Government's committed in that particular case, to replacing Liddell with up to 1000 megawatts of capacity. Now, there's a whole range of things we need to do like that to make sure we keep balance in our system between that growing level of renewables that people are putting on their roofs in particular, and the need for dispatchable reliable power that's there when you flick the switch, you know it will always be there. Whether it's gas or hydro or coal or indeed, to some extent, batteries - all of those can play a role. It's balance that will maintain the reliability and affordability of the system. That's where we'll keep pushing in the years to come.

LUKE GRANT: Yeah. So, just on Liddell, can you actually complete, can you actually commission a gas-fired power plant in the time that we've got left before Liddell is finally turned off?

ANGUS TAYLOR: Yes. Yes. 

LUKE GRANT: You can.

ANGUS TAYLOR: So, we've seen just in the last couple of weeks the New South Wales Government has accelerated the approval of the Kurri Kurri generator. That is the one we'll build if we have to. We were waiting to see whether two private sector projects or any other private sector projects get up. They have to happen by April. If not, we'll proceed. April is the last date from which the timing would work. And so, yes, it's an important consideration the one you raise, but that's why we've done this in the way we have. But look, we need a broader solution than this. What the ESB has put out today, the paper that they have put out today is a series of proposals and directions that can provide that longer-term solution as we see this change in our grid that's been happening for many years, and can continue to drive down prices as we've seen over the last 18 months or two years or so.

LUKE GRANT: So when we see the increase, I think 94 per cent in 19 years or something, are people right to think that is solar panels on roofs rather than, you know, acres and acres, or I should say hectares, well hectares of wind farms and solar farms? Are we talking here about what's happening in the streets and suburbs of Australia?

ANGUS TAYLOR: Increasingly, that's been the case, Luke. 

LUKE GRANT: Right. 

ANGUS TAYLOR: More and more of the renewables going in has actually been household solar in recent years. 

LUKE GRANT: Right. 

ANGUS TAYLOR: And we've seen record levels. I mean, we're the highest level of household solar in the world. It's probably not surprising given that we have bigger houses than most countries in the world and bigger roofs, of course. And we have lots of sun, particularly as you head further north, but right throughout the country we've still got pretty good sun. None of that should surprise us-

LUKE GRANT: Yeah, but it never gets mentioned. It's always: ‘Oh Australia, we're climate heathens, we've got no respect for the planet. We just burn coal and to some extent gas.’ And I think Australians need to know that of all the countries on planet Earth, Australia leads the way in solar, is a much more palatable story because the other one suggests that we're doing nothing.

ANGUS TAYLOR: Well Luke, one in four houses now in Australia has solar on their roof. You only have to drive around any Australian city to convince yourself that that's right. 

LUKE GRANT: Yeah. 

ANGUS TAYLOR: But it is right. The challenge with that is it has got to be balanced. That's why, you know, whether it is making sure we don't see the premature closure of our coal-fired power stations, making sure new generators come into the market like the gas generators I was just talking about. Hydro. Look, pumped hydro is a big battery and a very effective battery. We've had pumped hydro in this country since the early 1970s. It's been hugely successful for us down at Talbingo. So all of these things can play a role in making sure we maintain balance in the system. But it's that balance that many are arguing against. You'll hear people say all we need is lots more wind and solar. Others will say, no, we just need pure coal-fired power stations. Look, coal will continue to be important for a long time to come but balance is ultimately the thing that any energy system needs. And that's what we're focussed on in the work that we're doing and in the report that came out today.

LUKE GRANT: So the market operator has had to intervene in 2019-‘20, more than 250 times, giving directions to ensure lights were kept on. Are the energy producers, are those distributing companies, are they fair dinkum? Do they hold back the more expensive production in order to have renewable produced energy which might be intermittent into the system, therefore depriving us, to some extent, of reliability?

ANGUS TAYLOR: What's very clear is in the last few years, there hasn't been enough investment in dispatchable generation, at the same time as we've seen big closures like we saw at Hazelwood in Victoria a couple of years back. So it's that dispatchable generation, making sure there's enough of that in the system is where it's gone awry. Now, you know, we're now saying to the big energy companies, if you don't invest in that dispatchable generation, we will do it ourselves. That's exactly what we've said we'll do in the Hunter Valley at Kurri Kurri. But it is true, there hasn't been enough of that investment. Now, there has been some and it is increasing. I opened a gas generator in South Australia, for instance, around a year ago, which was has made a real difference in the South Australian grid. Helped to drive down prices, increased reliability. But we need to see more of that. And if the private sector doesn't do it, we'll step in. That's exactly what we said we'll do in the Hunter Valley.

LUKE GRANT: Great stuff. Good to talk, Minister. Thank you so much for your time. 

ANGUS TAYLOR: Good on you. Thanks for having me, Luke.

ENDS

Media contact:

Minister Taylor's office: 02 6277 7120