NSW goes its own way on energy security
The NSW government has broken away from other states and will set its own Energy Security Target to ensure there is enough reliable generation to avoid blackouts over summer.
As federal, state and territory ministers met at the Council of Australian Governments energy council meeting in Perth, NSW Energy Minister Matt Kean flagged a new electricity strategy to ensure the state is protected from the closure of older coal-fired power stations over the next decade.
Mr Kean, who already confirmed NSW had cut several state deals with federal Energy Minister Angus Taylor, said the new energy strategy would reduce household electricity bills by $40 a year and help leverage $8 billion of private investment.
After reports warning of potential power shortfalls in NSW by early next decade, Mr Kean said the state will set an Energy Security Target to ensure there is a buffer of capacity to cope with the loss of the two largest generating units in NSW during a one-in-10-year heatwave.
While critics said NSW strategy gave the impression it was “going it alone” on national electricity rules and bypassing the Australian Energy Market Operator, Mr Kean said it would complement existing national reliability measures.
The NSW strategy will also include a plan to deliver Australia’s first co-ordinated 3000 megawatt Renewable Energy Zone in the state’s central-west to support new generation.
“As our existing power generators approach the end of their lives, we need to ensure low-cost alternatives are coming online,” Mr Kean said.
“By focusing on reliability, we can ensure that we can get the benefits of renewables without the reliability problems we have seen in other states.”The COAG energy council meeting – the first since last December and the first since the May election – debated system security and reliability as well as summer readiness.
The communique released late on Friday afternoon said energy ministers had agreed to ask the Energy Security Board to assess the reliability standards of the grid by March next year.
The changes to the integrated systems plan will also be decided by the March meeting.
Victorian Energy Minister Lily D’Ambrosio said states and territories had made some good progress at the COAG meeting.
“But a lot more work needs to be done,” she said.
Ms D’Ambrosio said she understood NSW’s decision to have their own energy strategy, but said it needed to comply with national energy rules.
“[NSW] are frustrated like the rest of us. There has been too long a period of time between [COAG energy council] meetings,” she said.
“Ultimately, it is the energy council that needs to make the decisions that the rulemakers provide to us. If we are not meeting, those decisions cannot be made.”
After a briefing from Chief Scientist Alan Finkel, Mr Taylor used the meeting to announce $370 million of re-directed funds for an Advancing Hydrogen Fund.
The $370 million will come from existing funds from the Clean Energy Finance Corporation and the Australian Renewable Energy Agency to back new hydrogen projects.
The federal government has already allocated $146 million towards hydrogen research and development, feasibility and pilot projects since 2015.
“The National Hydrogen Strategy maps out the steps we can take to develop a sustainable and commercial hydrogen industry,” Mr Taylor said.
“The government is backing that through projected investment to promote our outstanding potential as a hydrogen supplier to the world.
“Importantly, hydrogen can play a role in the future energy mix to bring down energy prices, keep the lights on and reduce emissions.”
Sources inside the COAG meeting said ACT Energy Minister Shane Rattenbury made a robust argument for green hydrogen development only, but got no support from other state and territory leaders.
One state minister said the turnaround in NSW from the last meeting, when then energy minister Don Harwin clashed with Mr Taylor on emissions reduction, was “jaw-dropping”.
NSW has argued it still supported a National Energy Guarantee, but when Mr Taylor made it clear that wasn’t happening they moved on and started talking about the best bilateral deal for their state.
The Australian Financial Review revealed on Friday that NSW was close to announcing a new state deal with the Commonwealth, with Mr Kean saying he was now fully behind Mr Taylor and the federal government’s energy policy.
Mr Taylor had been going into Friday’s meeting wanting a review of reliability standards to help deal with potential energy shortfalls in the grid.
But critics, including big energy users, warned it could push up power prices.