Chronically stupid ACCC pushes wrong energy intervention

Here it is:

The Australian Government should operate a program under which it will enter into low fixedprice (for example, $45–$50/MWh) energy offtake agreements for the later years (say 6–15) of appropriate new generation projects which meet certain criteria. In doing so, project developers will be able to secure debt finance for projects where they do not have sufficient offtake commitments from C&I customers for later years of projects. This will encourage new entry, promote competition and enable commercial and industrial customers to access low-cost new generation.

And the scab grab begins, at The Australian:

A proposal for the federal government to financially guarantee the construction and operation of new dispatchable power generation, which could include clean coal-fired plants, is expected to be taken to cabinet with the backing of the Prime Minister.

Malcolm Turnbull yesterday confirmed he would seriously consider the key recommendation of a report by the competition watchdog to underwrite and potentially subsidise new “firm” and cheap power generation for industrial and commercial users.

Signalling a possible end to the energy wars within the Coalition partyroom, the recommendation was immediately endorsed by ­Nationals MPs, who have interpreted it as a green light for government to intervene in supporting the future of coal generation.

And the AFR:

Currently there are two integrated energy projects that would obviously meet the trigger criteria the ACCC has proposed. Both involve importing liquid natural gas to resolve the quite particular gas and electricity supply problems of two states, South Australia and NSW.

And both would raise power costs relative to business as usual.

The one policy reform so far that has worked to lower power prices is gas reservation. It has halved gas prices and dropped power prices by one third. This was in defiance of the ACCC’s wishes and was only necessary in the first place because it allowed the consolidation of east coast gas reserves under the export cartel.

Reservation works in WA. It works in every other energy exporter. This is the energy intervention needed. Just force 10% of east coast exports into the domestic market. Use quotas if needs be.

Instant cheap energy and carbon transformation back on track for the long term.

Still, if the ACCC wants to impose a government guaranteed private carbon tax then why not? The higher power prices will only accelerate the unstoppable, via Reneweconomy:

The biggest threat to Australia’s legacy coal fired generators is not the explosion of wind and solar farms, or even the settings of the country’s emissions policy: Right now, it’s the continued boom in rooftop solar.

That’s the assessment of Bloomberg New Energy Finance, which is expecting a massive surge of “behind the meter” solar PV capacity, referring to the solar that is installed by homes and businesses mostly to supply their own electricity needs.

And the big driver of this over the next decade will not just be the household sector that will continue to grow from its current 7GW of capacity across more than 2 million homes, or the “commercial” sector, the smaller business sector that is currently booming and will install nearly as much.

It will also come from big industrial users, who are expected to account for nearly half of the 58GW that will be installed in Australia by 2050, and will be installing more than 2GW a year by the late 2020s (That’s the green shades and lines in the graph above).

“Consumers are going to be the most influential generator in terms of volume”, says Kobad Bhavnagri, the lead analyst from BloombergNEF Australia.

“There will be more capacity behind the meter than the total current capacity in the National Electricity Market (NEM),” he tells RenewEconomy after the presentation of the company’s New Energy Outlook in Sydney on Tuesday.

“It is a massive slab of capacity … and it will be the biggest single contributor to generation.”

“You can forget about the carbon price, you can forget about the NEG (National Energy Guarantee), what will push coal out of system is rooftop solar PV.”

That’s because the “duck curve” created by solar PV will change the dynamic of the system, putting the emphasis on flexible and dispatch able power.

Coal generators simply don’t have that flexibility, and if the solar boom continues as planned, Australia will reach 40 per cent penetration of rooftop solar (as a percentage of total installed capacity) by 2030.

Bhavnagri expects rooftop solar owners will install battery storage, adding to the benefits of the system. BloombergNEF expects that rooftop solar capacity to be paired with 58GWh of behind the meter battery storage.

That’s because the falling cost of battery storage means the combination will soon be economic, with the pink lines indicating the spread between different states. In South Australia, for instance, it is already “economic”, which BloombergNEF says is less than a 10 year payback.

Bring it!