Morrison’s energy mess detonates

It’s funny watching the AFR do conferences. Why? Because it puts all of the rent-seekers in one room where they yell views at one another to no purpose. Yesterday it was energy and what a mess!

First, Turnbull:

Former Liberal prime minister Malcolm Turnbull says he is confident Scott Morrison will bow to global pressure and commit Australia to achieve zero net emissions by 2050.

Mr Turnbull also poured cold water on Mr Morrison’s plans for a gas-led recovery, saying the proposal was unrealistic and driven by gas industry rent-seekers looking for subsidies.

Precisely. But, of course, the AFR tosses one straight up:

So Origin Energy chief executive Frank Calabria cited Finkel’s view to back his argument that gas remains a “crucial piece of the puzzle” for now.

“Batteries are growing at a rapid pace. However, the technology cannot support the market on its own,” Calabria told the Energy and Climate Summit. “Gas will have detractors, but let’s not allow the loudest voices dominate the discussion and ignore the solution that can help us add more renewables to the system faster today.”

No doubt Calabria doesn’t see himself as a rent-seeker. Turnbull is definitely determined to be a loud voice in how that translates.

The problem is the AFR doesn’t see gas cartel member, ORG, as a rent-seeker. It is. Yes, gas will have a role to play but it will diminish swiftly if we let it. Renewables plus partial storage is already cheaper for power than today’s prices for coal and gas:

Australian energy costs compared

In five years it will be much cheaper:

Price of solar and batteries over next 5 years

If it goes the way we think it will, renewables plus full storage will be more than 60% cheaper than coal and gas:

Price of solar and batteries over next 5 years

The gas cartel has already priced itself out. Hence this, also at AFR:

…the consternation voiced by both federal Energy Minister Angus Taylor and his NSW counterpart Matt Kean at the Summit over the investment drought of 10 years or more in new “on-demand” generation in NSW. The capacity is increasingly needed as variable renewable energy grows and as the closure of the Liddell coal generator looms in 2023. But the commercial incentives and certainty haven’t been there for AGL and EnergyAustralia to commit gas power projects that have been on the drawing board for years.

The answer to that is easy. The gas cartel killed it while power storage caught down in price. Now it has! Kerry Schott, chair of the Energy Security Board has the right idea:

It’s going to happen. It’s not going to be stopped and can’t be stopped.

Retailers are going to face new ways in which their markets work and what their customers expect.

Distribution companies are going to see power going in both directions from businesses and households.

Transmission companies are going to see increased builds of transmission to connect all the renewables going in.

There’ll be more renewable energy zones developed, as we’re seeing through all the states, and the share of wind and sun in our generation fuel mix will increase remarkably.

Quite right, which is why this now looks like dead man walking, also at AFR:

The controversial coal-seam gas project at Narrabri in NSW has cleared its last major political hurdle with the federal government granting it environmental approval for the next 25 years.

Federal Environment Minister Sussan Ley said the gas field, which would be developed by Santos, could go ahead subject to conditions she said would protect groundwater, regional biodiversity and local communities.

Environmental approval. Don’t make me laugh. The NSW chief scientist produced a list of 16 conditions for safe gas extraction years and Narrabri will be exempt from the lot. It might be safe, it might be a giant cancer pit for a thousand years. Who can tell?

Anyway, I doubt it will ever go ahead now. It doesn’t lower prices. It does enrage the public. And the NSW Government has all-but killed it with its renewables transition plan.

The fact is, the transition plan for gas was fifteen years ago, which is a pretty good estimate for how far behind energy policy the Coalition has been for the past twenty-five years. It was pre-GFC when the US adopted its gas transition which is why its emissions have been crashing more than ours despite them doing nothing at all at the policy level.

Now it is too late for gas here. Renewables are cheaper and will keep getting more so and, with the gas cartel in the cockpit, doubly so.

David Llewellyn-Smith
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Comments

  1. yawn.

    Reservation on the East coast is what will deliver the greatest benefit to all Australians for the next 20 to 30 years as renewables’ share in the mix grows…

      • happy valleyMEMBER

        Malcolm criticising a gas-led recovery and fair enough, but hasn’t he signed us up to the already doubled project cost pumped hydro white elephant?

        • white elephants they are (BOTN & Snowy 2.0) no one is building these ever without massive govt largesse. even if they get built, which they wont, they will never get used as batteries will displace any demand/duck curve creations that arise from increased RE in the grid.

          • Display NameMEMBER

            You dont think localised pumped hydro can deliver good value?

            At peak solar generation times there is likely to be a tonne of excess capacity that could with the right grid infrastructure find a useful home. I am guessing that batteries will not scale anywhere near even small pumped hydro in the next 5 years.

      • its not too late… ironically also, as the renewables’ share of the mix grows prematurely ahead of the economic viability of base-load scale storage, the need for gas could very well surge, and calls for affordable reliable supply grow louder with it… ET is a multi-decade game, not a multi-year game… there’s always time for the government to fix their failures (which is frankly, an international embarrassment within the energy industry)

          • we have a comprehensive reservation policy. our gas is reserved almost exclusively for export. . in about 4 years this country is going to be awash with gas and trevor st baker will be picking up peakers for $1 dollar and running them into the ground buffett cigar butt style. i might be there with him. gas is toast. thankyou john howard for the RET. ironic really.

        • hey bendy as AGLs recent announcement shows gas is dead and batteries with 4 hour durations will replace the peakers they had planned originally. i would also add that baseload is marketing spin. we call it minimum demand in the industry, once you understand this its a very different perspective. finally i would add the need for long duration is also a myth. the average outage/constraint/market gaming/MPC is less than 30 minutes. this is easily dealt with current battery tech. easily.

        • TheLambKingMEMBER

          the need for gas could very well surge, and calls for affordable reliable supply grow louder with it

          No chance.

          What is happening is that solar and wind are providing the peaking power – they are turning off when there is too much supply and putting power back into the system when there is not enough (watch a wind farm – they remotely turn on and off the rotation based on demand.) Coal is doing a bit of the scaling of power but it cannot do much. Coal plants will slowly drop off the system as they become uneconomical. This will happen for a few years – and by then the batteries (and better use of our hydro system with interconnects) will be providing the 3-4 hour peak coverage.

          • this is not entirely true. most rooftop solar is depressing prices through the day and resulting in negative prices in the NEM. this is accelerating the rise of the duck curve and the need for peakers which wind can augment to a point as PV and wind tend to be negatively correlated. bendy is instinctively correct, just with the wrong tech.i agree that utility wind and PV can be ramped up and down and often is and i also agree with you that better connected existing hydro maybe more useful than pumped hydro scams but i suspect it will get its lunch eaten by batteries that can respond in 144ms not 5-7 mins under current NEM rules. this is why the 5 minute rule needs to be put in place ASAP to accelerate the role out of batteries. i also think people are underestimating VPPs. i continue to be impressed by AGLs transition. shelving gas, VPP trials, EV VPP trials etc. they maybe one of the few incumbents that survive this. and i also disagree about solar ramping down. one of hte most effective way to remove junk chinese inverters from the market is make DRM compulsory. most of the best inverters from Fronius, SolarEdge and SMA already have this. i think we are broadly on the same page though

      • i thnk its pretty clear that pumped hydro is 100 year old tech that is somewhere between $3-7M/MW. that means that current 4 hour battery tech easily displaces it for most MPC events in the NEM. when you say small, what size do you mean?

        • David WilsonMEMBER

          If we think batteries can back up solar and wind we had better get on with building huge batteries that give 2-3 days backup not 2-3 hours. Unless this is done and is viable the whole bloody renewables argument is just government backed green huge subsidies that are paid for by all tax payers and energy users.
          Further if anyone thinks closing down our 15-20 efficient coal fired power stations is going to save the plant and stop natural climate change they have rocks in their heads.
          Perhaps it’s time to get fair dinkum about nuclear energy and stop despoiling out landscape with dreadful heat production by solar panels and massive dreadful wind farms that are also incredibly inefficient.

          • there is so much wrong here it boggles mind. see above comments. most MPC events in NEM last less than 30 minutes. not days. the long duration storage argument is incumbent hydro operators talking their soon to be stranded book. if you think old clunkers like loy yang with less than 30% efficiency are good i suggest you get some basic power engineering understanding. good wind sites are up to 50% cap factor. solar efficiency is irrelevent when the price is now pushing $,40/MWh. finally, nuclear is 10x the price of renewables today. please google hinkley reactor, VC Sumner and toshiba and westinghouse nuclear bankruptcy. its 2020 mate. get with the times. this stuff is pretty easy to google. and yeh im sure we would all rather have loy yang spewing particulates and cancer causing agents into our backyard than “heat” producing solar panels and clean wind. you do realise that most electronics have an optimum operating temperature of between 10-25 degrees right? probably not. im done here.

  2. happy valleyMEMBER

    Any view on Finkel’s independence? In any event, isn’t he retiring as Chief Scientist soon?

    • bought and paid for by gas industry. already replaced by cathy foley. i estimate it will take about 17 seconds before she becomes morrisons mouthpiece and ruins her reputation built up over decades.

    • He’s always been a very political operator, trying to influence the direction of policy without pissing off the crazy’s in parliament. He probably has no compunction with saying gas is the future because he knows it has no chance.

  3. We can trust EU and US (now that Biden won) to force our Sensible Patriot to do the right thing for Australia.

  4. I was randomly invited to a telephone town hall with my local member in which #ScottyFromMarketing graced us with his presence. He made a big deal about wanting to make manufacturing (and by necessity gas/electricity) cheaper/more competitive. You got invited to leave a question at the end. So for shits and giggles I left a question about why wont Scotty pull the domestic gas reservation lever. To her credit my local member did call me back (albeit a couple of weeks later), and I think I melted her brain. She trotted out the same BS talking points which I swiftly debunked. I honestly think her cognitive dissonance got in the way because she couldn’t reconcile that the facts show that Scotty’s plan is full of lies and spin with her belief that Scotty knows what he’s doing. It was a very interesting conversation.

    I seriously wonder if Scotty’s wife or kids ask him a simple question if they get a full 10 minute spiel of spin because the man seems capable of nothing else.

  5. Diogenes the CynicMEMBER

    It is not just batteries replacing gas speakers, gas demand in households should fall as electric appliances supplant gas ones. Induction cooktops, heat pumps and A/C and you can cut off you gas connection saving on yet another utility bill. I’m waiting until my gas hot water system blows and then it will be supplanted by a heat pump, with my gas cooktop waiting for the next kitchen overhaul probably 3-5 years away.

    • agree! i thnk i may have asked youy this before but you know that jim chanos handle on twitter is diogenes the cynic right?

    • TheLambKingMEMBER

      A ‘cash for clunkers’ scheme to replace old gas heaters with electric heat exchangers would have been a perfect thing to spend money on post Covid. It would create a huge amount of jobs with a side benefit of reducing emissions!