Our land of sweeping plains is lucky enough to have some of the best energy resources in the entire world. We’ve got everything: Wind blowing a gale along the Roaring Forties of the southern coastline, sun and surf that make our beaches a tourist draw card. We have so much gas that we’re about to become the world’s biggest exporter, and more coal than we knew what to do with.
But despite these natural advantages power prices have more than doubled in a decade. As old generators have steadily closed over the past decade, we haven’t invested in enough new generation to replace it. High school economics tells us that when supply falls, prices go up. Ultimately the highest price rises occurred in the states that saw very little new renewable investment – the coal and gas-rich eastern states.
We can absolutely have it all. Instead, successive Australian Governments have abandoned considered energy policy, opting for aggressive and bruising short-term politics. Instead, we have sold so much of our bountiful gas offshore that there’s not enough for businesses to use back home. And the gas that is available will cost you an arm, a leg and probably a kidney. It’s starting to feel like you would be mad to use it to generate electricity.
We have energy resources in abundance, but are we actually smart enough to be the lucky country?
In June the Chief Scientist Dr Alan Finkel released his final energy security blueprint. It contains 50 recommendations to modernise our energy system. If our politicians follow Dr Finkel’s pathway to prosperity, it ultimately means cheaper, cleaner and more reliable electricity for everyone. Business can invest with certainty in new power assets, bringing in the new supply which will help rein in the spiralling power prices which are now well beyond a joke.
With the majority of Australians backing renewable energy, Malcolm Turnbull and Bill Shorten don’t need a weathervane to know which way the wind is blowing. At the moment it is at our backs.
Investment confidence has finally returned to the Renewable Energy Target (RET) and it is doing what it is supposed to do – delivering new renewables at the lowest possible cost. More than three dozen large-scale wind, solar and bioenergy projects are now committed and under construction this year. Thousands of jobs are being created, and close to $8 billion of investment is in the works. Dozens more projects are going through planning and financial approvals.
More importantly, the deals that have been done in the last 12 months and the analysis for Dr Finkel’s energy security blueprint have made it clear that electricity generated by wind and solar is now the lowest-cost power that can be built today. Even paired with energy storage, these newer technologies cost less than new gas and well below what is possible from the cheapest possible new coal plants. The smart money is now in clean energy.
But what comes next after a decade of the climate wars? The business community and the energy sector are hanging their collective hopes on the possibility that our federal politicians can find some common ground in Dr Finkel’s proposed Clean Energy Target (CET). It is nobody’s favourite solution. But the chronic uncertainty caused by our inability to deal with climate change is driving power prices out of control.
Many captains of industry are talking about the importance of certainty to rein them in again. We are lucky that the Finkel review has given us another chance at lasting bipartisanship and enduring energy policy.
The Coalition party room has had the smarts to give in-principle support to 49 of the 50 energy market reforms proposed by Dr Alan Finkel. Some of these are technical, but all are increasingly urgent to make our power grid more reliable and secure. The CET is the last recommendation left, but it also happens to be the most important. If the Coalition refuses to back it, more price rises are inevitable.
It’s time to be practical, not political. Back the Finkel recommendations in full, and give us the green light to solve this problem and take Australia into the future. We are ready to go. And perhaps, just perhaps – luck is finally on our side. Whether we are smart enough to take advantage of it remains to be seen.
This opinion piece was originally published by RenewEconomy. Thanks very much to its Editor Giles Parkinson.