NSW torches Morrison Gas Unplan

For those in the know, it has been clear for a long time that the Coalition Government in NSW despises the Coalition Government in Canberra when it comes to energy and climate.

That has never been more clear than today with the launch of the NSW renewable energy plan, at the ABC:

Households and industry are being promised cheaper and cleaner power, with the State Government announcing the start of a massive funding package ahead of next week’s Budget.

NSW Energy Minister Matt Kean said the plan would drive investment in private infrastructure worth $32 billion in renewable energy over the next decade.

It will generate 6,300 construction jobs and 2,800 ongoing jobs, along with $1.5 billion in lease payments for landowners, especially in regional NSW for wind and solar farms.

…Mr Kean said the transition away from coal-fired power will start with a series of grants worth $50 million dollars in the Budget on November 17.

Pumped hydro projects are set to take over the state’s baseload power capacity as four out of NSW’s five coal-fired power plants are phased out over the next 15 years.

More at the AFR:

The 20-year plan, which includes on-demand gas power generation, comes as NSW faces a dramatic drop in baseload coal generation capacity as ageing plants come to the end of their life, with 75 per cent of capacity set to close down in the next 15 years.

AGL Energy’s Liddell plant in NSW is the first to close, in 2022-23, followed by Delta’s Vales Point plant which is scheduled to close in 2029, then Origin Energy’s Eraring in 2032 and AGL’s Bayswater two years later.

Modelling in the road map points to average wholesale power prices of $50 a megawatt-hour, compared with $73/MWh under the “business as usual” scenario, which includes a spike to about $125/MWh in 2036. It envisages industrial electricity prices, including grid costs, to fall to $US84/MWh, which it said would place NSW within the cheapest 10 per cent of OECD jurisdictions.

So, as the federal government does everything it can to subsidise gas to replace coal as the key baseload power generator of the future, using both the Gas Unplan and Gas Unreservation, the NSW Government is going entirely the other way and essentially co-investing in massive energy storage as the next generation of dispatchable electricity to complement the renewables build-out.

The overall NSW plan will install 12GW of power to replace 10Gw of coal capacity. And, hilariously, 2Gw of storage which just happens to be NSW current gas capacity. Gas won’t disappear because we’ll still need back up but it will certainly get shoved unceremoniously to the sidelines.

Thus, the price falls are more than achievable as gas delivers ever less of the marginal electricity MW. Renewable prices are already cheaper than gas and coal:

Australian energy costs compared

And will soon be much cheaper:

Price of solar and batteries over next 5 years
Price of solar and batteries over next 5 years

The Virgin Government has not only declared war on the preposterous Morrison Government Gas Unplan it has already won it.

David Llewellyn-Smith
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Comments

  1. I'll Stir Fry You in My WokeMEMBER

    Liking Matt Kean

    With their interest free loans for resi PV, PV+battery, battery backfill, they’re making a statement <= can't wait to take up the PV+battery for new house

    • Matt is actually a really nice guy too boot. My local member. I have a lot of respect of him.
      He’s carving out a brand for himself on this topic. In a political landscape crowded with ministers and junior ministers all hoping for their chance to get to the top, Matt is making a name for himself in the community on a topic which gathers many LNP and Labour voters and a theme which will persist for decades.
      Very savvy. I hope he goes a looooong way.

    • which ones? I only know RFX but how do we know their batteries will be used. Even though I think Zinc batteries are better for such applications everyone wants to be fancy will probably go with Tesla.

      • Port Philip Publishing just did a really good free internet seminar called Beyond Oil. I’ve deleted all my emails unfortunately as I decided I wasn’t going to subscribe to their new expensive investment advisory service. However they had some excellent speakers. Main takeaway was that the renewable enery revolution is already here and much further progressed than many understand or can possibly believe. The young Holmes a Court was a really knowledgeable speaker about the Australian situation. Other takeaway was that the best investment opportunities are probably still os (many Aus clean tech companies commercialise os). I decided that my way to play it would be through the resources, specifically the miners. Maybe you can find a way to listen to the interviews?

  2. This is good news. I really enjoy when Scumo is dragged kicking and screeming to do something he hates to do – something good for the nation.

    • kierans777MEMBER

      The reason you know it’s good for the nation is by asking on a scale of “My donors will love me” to “I’m completely betraying every Liberal principle in order to be electable” Scotty the bullshite artist is being dragged to do something

  3. What if these subsidies which take money from taxpayers and gives it to benefit the few do not have any effect on greenhouse gas production. One has to look at cradle to grave production ie silica to silicon to wafers to solar cells and transport from say China to installation and lifetime of arrays and grid disruption to disposal of waste. Also what if decarbonisation does not result in reduction in global warming as it was due to water vapour or clouds as well as carbon dioxide? And I say this not talking my book as I hold one of the 6 ? world solar wafer manufacturing companies.

  4. Just for my information, Is this the same NSW that currently has 6 large commercial Solar plants currently operating a significantly reduced capacity?
    https://reneweconomy.com.au/biggest-solar-farms-in-nsw-face-major-output-cuts-in-latest-network-shock-76674/
    Or maybe it’s the Vic/Nsw solar farms that had their output cut in half until they passed some arbitrary new conditions imposed to ensure “Grid stability” whatever that happens to be defined as this week.
    https://reneweconomy.com.au/relief-for-five-constrained-solar-farms-as-new-inverter-firmware-passes-test-95704/

    • Yes…but it’s AEMO, the national electicity market operator, that imposed those restrictions after allowing all those projects to connect to weak parts of the grid. NSW Gov plays no part in day-to-day system operation and curtailment. NSW Gov also announced last week they are also looking to reinforce their part of the grid to the Renewable Energy Zones where they see the 12 GW of investment happening. Hard to fault NSW Gov on this, although there is some pretty spectacular risk in underwriting floor prices for 12 GW of capacity for 20 years (part of the announcement) when the underlying technology is getting stupendously cheaper and cheaper. At least they are going with auctions for the underwriting which should help them get value for money. Again, hard to fault.

      Unless Santos can get an export contract, this stalls Narribri gas development. No one is running baseload gas against 12 GW of new green plant in NSW. The offtake volumes won’t be there.

      • By “weak parts of the grid” I’m assuming you mean practically any place that one would want to put a solar farm.
        also what good does it do to have one government cheering one more “renewables” while another pseudo government body (AEMO) invents new and somewhat arbitrary hurdles that all these Renewables ventures need to be able to jump over.
        Not that this really matters because a combination of Residential and distributed Grid batteries will make much of this new Grid infrastructure unprofitable long before it can be installed.
        Who is going to pay for this additional Infrastructure when the majority of Residential customers basically cut their power cords.

        • Who is going to pay for this additional Infrastructure when the majority of Residential customers basically cut their power cords.

          These days a majority of residential customers would probably struggle to be in a position where they can do this (ie: renters or apartment dwellers), even outside the issues with maintaining a connection for the times the on-premise battery is exhausted.

          • Full blown grid defection (cord cutting) is very unlikely as there simply isn’t enough roof space relative to demand (many live in apartments, south facing houses, etc) and the costs of ensuring reliability (the one week every 3 years where there is no sun) on a site by site basis are prohibitive.

            The answer on who bears the cost of transmission is … electricity users! There’s also a contribution from NSW and Commonwealth coffers … so tax payers. And the NSW Gov is underwriting power purchase agreements … so NSW tax payers.

            The govs prefer to bleed us through a slow tax than face a price spike / blackout crisis when the next major coal plant exits.

          • I agree with Stormy but the way that we currently pay for electricity infrastructure is through electricity costs per kwh more so then through connection charges.
            If everyone that can drops their electricity usage to practically zero except on the bleak mid winter stretch and that hotter than week in summer we’ll lose the revenue to support these infra=structure upgrades the more costs go up the more people that can go Solar + battery and suddenly you find yourself with the bottom quartile of the economy funding our residential electricity infrastructure.

  5. So I have actually learnt a lot about this energy market in the recent days.
    Apparently only 30% of Gas production is for electricity generation, rest is for thermal purposes in manufacturing brick kilning etc. Still NSW Govt skipping over the need for that 30% will hurt.

  6. I’m not waving a flag for the gas lobby as they have equally bad practices, but someone really needs to take the renewable developers to task about their corporate minimization tax practices. You have all sorts of speculative shonks and crooks local https://www.dailymail.co.uk/news/article-8036277/Atlassian-paid-no-income-tax-despite-making-1billion-one-year.html and internationals (from Spain, India and France etc) entering the market here. Zero local content in them except for someone digging a ditch or pouring concrete and it’s likely the labourer doing the work is working here on a ‘skilled visa’. Is this what we really want? or are such entrants ‘excused’ by their cheer squad such as Matt Kean just because its hipster renewable technology?

    • The Victoria Big Battery just announced by the French company Neoen is using Australian made transformers from Wilsons. The transformers would be close to 10% of total project CAPEX.

      I’m sure there’s so counter exmaples, but Big Tech is another level of tax avoidance in my experience.

      • I’m sorry, all I’m reading is another corporate tax avoider here, that goes for the rest of them, there needs to be a Royal Commission into the whole energy sector to determine if the current status quo is in the national interest – for consumers and manufacturing and a good clean out.
        https://www.neoen.com/var/fichiers/pr-h1-2020-neoen-results.pdf
        If foreign or domestic operators want to invest in power infrastructure the golden rule for Government approval is that cannot offshore the profits while on shoring the debt.
        Will consumer power prices drop with this battery? ……..hardly.
        And get a load of this, what government in the world aside from a banana republic uses their trade ministry to facilitate foreign investment ahead of any potential local startups?
        “Since 2013, Austrade has helped Neoen to enter the Australian market and become one of the country’s leading renewable energy developers, and to expand its portfolio into hydrogen. ”
        Would the French trade authorities assist an Australian company to build a renewable power plant in France ahead of nurturing their own local startups? – NON-NON!!!
        https://www.austrade.gov.au/international/invest/investor-updates/2020/france-s-neoen-to-build-a-500-million-solar-farm-in-queensland-and-world-s-biggest-battery-in-victoria

    • TheLambKingMEMBER

      So you know Atlassian make software and don’t actually play a part in the renewable energy industry?

    • Your point about paying taxes is valid in every part of corporate Australia.

      However you have chosen to pick on the pimple not the dog or its bum on which said pimple is located.

      If a reason to stop renewables isnvestment is because corporate Australia and global companies dodge tax then you should stop eating because, ya know, food and stuff can make people fat.