Federal Energy Minister Angus Taylor deserves credit for formulating a long-term plan for the delivery of a reliable, cheaper gas supply for Australian manufacturers.
This is the sort of plan that should have been endorsed by the Council of Australia Governments about a decade ago when the Australian Energy Market Operator was founded to manage the National Electricity Market.
AEMO has proven its worth through leading the co-ordination of the longer-term planning required to meet the country’s electricity needs and manage the transition to 100 per cent renewables.
Its clarion calls for action have not always been acted upon by federal and state governments. But that is slowly changing.
Of course, a startling feature of the history of AEMO was its failure to anticipate the speed of the uptake of renewable technologies and the dramatic decline in the cost of solar.
It forecast solar energy costs would fall to about 5¢ a kilowatt by 2020. In fact, the cost is about 1¢ per kilowatt.
In any other industry a forecast that was out by five times would be cause for severe embarrassment. But in the Australian energy sector, which leads the world in the transition to renewables, it is not only excusable, it is a reason to celebrate.
It presents an opportunity for Australia to lead the world in shifting to a green economy. But it also presents a challenge to Taylor’s strategy because fossil fuels struggle to be a competitive alternative.
The weakness in AEMO’s forecasts can be attributed to the enthusiasm of Australian consumers for the adoption of low-carbon emission technologies to cut their electricity bills.
Chanticleer’s own electricity expenditure has been slashed thanks to the installation of solar panels about five years ago and, in more recent times, thanks to switching to another electricity provider willing to pay about three times more per kilowatt of solar power generated than a rival company.
The challenge for Taylor and those who get on board with his plan for the construction of a new gas-fired power plant in NSW is that the technology might, once again, overrun the expectations and forecasts baked into investment decisions.
The Australian economy is going through a process of the electrification of everything. Batteries were already slated to play an important role in that move towards an NEM that provides secure, reliable and cost-effective power.
It is distinctly possible, and highly likely, that the cost of battery technology will fall in price much faster than expected and battery uptake by consumers will be much faster than expected.
This would open the way for distributed power stations and the installation of large-scale batteries as part of the move to a dispatchable power alternative to coal-fired and gas-fired plants.
The danger for Taylor is that the investment in gas infrastructure will involve an over-building as plants are made redundant through increased use of batteries in combination with wind and solar.
But Chief Scientist Alan Finkel said in his seminal report on the electricity market that infrastructure put in place for the gas industry would be used for hydrogen, which would require extensive pipes and storage facilities.
Taylor might find his gas-led recovery plan transitions into being a hydrogen-led recovery plan that rides off the back of increasing consumer and business demand for the cheapest possible sources of carbon-efficient energy.
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