One of my favourite places in Australia is the lighthouse at Wilsons Promontory. I try and get there every year to recharge my batteries, look out over Bass Straight and ponder the meaning of life.
It’s a harsh inhospitable place, surrounded by incredible beauty and great wilderness.
Technology is such today that the lighthouse is largely ceremonial.
But when ships first started traversing southern Australia it was critical to give them direction and keep them from smashing against the rocks.
And so it is that the extraordinary achievements over the last year have shone a light on what is possible for the future of Australia’s energy system.
It has been a record breaking two years for renewable energy and energy storage in Australia.
Over $24 billion worth of large scale renewable energy projects, 2 million Australian homes and the worlds biggest battery.
We have built many lighthouse projects that demonstrate what is possible and give direction for the future.
Just like the Wilsons Prom lighthouse, I’m sure in decades to come we will look back at the relative quaintness of these projects and technology. Such is the pace of change and scale.
But today, these projects show us what can be achieved.
They are normalising that which until recently was science fiction.
They are driving down costs, and building customer confidence.
They are hard to deliver, but they are extraordinary powerful.
They are busting through barriers and driving regulatory reform.
Today we release the results of our bi-annual CEO Confidence Index.
We asked over 75 leading CEOs about the current challenges and their future outlook.
Sadly, confidence has fallen since December last year, and it’s not surprising given the level of policy uncertainty, the growing grid constraints and the pace of change occurring in regulations and markets that were designed for last century.
The Index confirmed that the single greatest challenge is of course the grid.
Grid connection is tough, and the network increasingly constrained.
We are working closely with AEMO and many networks to understand and address these grid challenges.
While AEMO’s Integrated System Plan gives us a map of the future grid, it remains unclear exactly how it will be delivered.
The second biggest challenge is the lack of energy and climate policy. The economics of clean energy continues to improve, and we no longer require subsidy. But the wholesale energy market is riddled with uncertainty.
It’s unfortunate that Federal Parliament is sitting this week, as we won’t hear from our federal politicians today.
But to be honest, we have all heard it before anyway. Accusations and excuses.
The evidence is clear – a sensible energy policy could accelerate investment, drive down power prices and deliver sustained economic and jobs boost to rural Australia.
It matters little what form it takes – a NEG, an extended RET, Finkel’s CET or a baseline and credit scheme using the existing safeguards mechanism. Any of them could do the job.
Without some form of policy, the business case for any form of new investment in the energy sector will be all the tougher.
Thankfully, there is a growing number of state governments stepping up. Its imperfect, but now critical.
The third challenge is change. Ironically there is both too much and not enough.
Too much change that spooks investors, makes it even harder to forecast wholesale energy prices or adds unnecessary regulatory burden and cost.
At the same time there isn’t enough change that brings the regulatory and market environment into the 21st century.
MLFs are just the latest example of a market construct no longer fit for purpose. In need of urgent and dramatic change.
But we will overcome these challenges. There is no doubt.
Profound change happens gradually, and then rapidly.
The RET was first introduced in 2001. It had a target to achieve an additional 2 per cent by 2010.
We are currently smashing through 20 per cent and charging toward 30 per cent.
We are on track for 50 per cent before 2030 and a fully renewable energy system is now inevitable and entirely achievable long before 2050.
The success of renewable energy means we can now start to decarbonise other sectors like transport and turn our attention toward an extraordinary opportunity exporting renewable energy – in the form of hydrogen or using HVDC – to Asia and the world.
It’s now time we started debating when Australia should target 200 per cent renewable energy generation.
But major economic transitions – like the one we are embarking on for the Australian energy sector – are difficult and complex. They rarely occur smoothly.
But without a strong plan and active collaboration they will be messier, more expensive and slower than they need to be.
Frankly, we are making it up as we go. Collaboration between our states and Commonwealth is near non-existent. They haven’t met together for 8 months now. And they don’t currently have a meeting scheduled.
Australian customers and voters expect better.
They also want and expect a lot from our industry. We must continue to innovate and improve how we develop our projects, how we engage communities and how we deliver on their lofty expectations of clean energy.
Australia is often celebrated as the lucky country. We got lucky with our natural endowment – like the gold rush and more recently Asia fuelled resources boom.
We have the luck of some of the worlds best renewable resources. But we can’t afford to be dumb.
We now have the potential to become a global renewable energy superpower.
To each of you for showing the way - thankyou. Congratulations on what we have achieved over the past year.
You are the lighthouse keepers – shining the way to a better future for Australia and the world.
Thankyou and good luck.