Today Abigail contributed to debate on a bill which sets a new objective for long duration storage energy infrastructure in NSW, while urging the NSW Labor Government to start taking bolder action to invest in publicly owned renewables. 

Abigail said:

As The Greens spokesperson on energy, I contribute to debate on the Energy Amendment (Long Duration Storage and Investment) Bill 2024. The bill provides a process to amend the Renewable Energy Sector Board's Plan. Currently it is not possible to amend the plan, only for it to be remade and replaced. The proposed amendments to permit changes and tweaks to the plan are therefore desirable to maintain certainty and continuity of the plan while permitting improvements. The amended plan would still have to be approved by the regulator, who would have to include a new consideration of whether the plan promotes social and economic benefits for the New South Wales community and economy. The Greens, alongside the union movement, have been pushing for these social and community benefits to be embedded in energy investment legislation, and we are glad to see those clauses included.

We hold concerns that the definition of "economic and community benefits" remains quite broad. I encourage the Government to assist the regulator in its interpretation by accepting a definition of "economic benefits" as being something along the lines of delivering broad economic benefits by supporting social licence, maximising the use of locally produced and supplied goods and services and providing secure employment as well as training and apprenticeship opportunities. That would go a long way towards reassuring some of our concerns, particularly while, in New South Wales, we are still immature in our approach to the expenditure of public money for public purpose. We do not have robust procurement requirements like those in the Australian Capital Territory Secure Local Jobs Code or in the labour standards enshrined in Queensland.

Further provisions of the bill relate to the maximum capital cost for projects and how it is costed and works in conjunction with revenue determinations for projects. Under the Electricity Infrastructure Investment Act, or EII Act, the Consumer Trustee must set a maximum amount for the prudent, efficient and reasonable capital costs for the development and construction of a renewable energy zone network infrastructure project. The purpose of the maximum amount is to act as a consumer protection, as under the legislation the capital costs for network infrastructure are passed through to consumers.

Currently, the EII Act can be interpreted as requiring the regulator to apply the maximum amount to the initial revenue determination as well as all future revenue determinations and remakes of revenue determinations. This has caused issues due to the way that maximum capital cost is calculated. It could potentially result in a circumstance where, due to what could be justifiable cost changes to develop a project, a project is unable to be completed or is completed inappropriately in order to remain under that capital cost. Currently, the Government may be required to step in to finish the project. The bill seeks to amend the calculation so that the initially determined maximum capital cost only applies to the initial revenue determination.

The bill also permits the Minister to be notified of the maximum capital cost amount, and to make a ministerial direction such that other senior Ministers can also be notified of the amount, in order to have greater oversight and manage contracts with network operators. The bill responds to a public consultation on long duration storage by establishing a new minimum objective of 28 gigawatt hours for long duration storage by 2034. This would entail the construction of at least a further 12 gigawatt hours of storage above what is currently legislated. There is currently an objective for 2030. This means projects that could not be completed by 2030 are now able to compete and be granted tenders.

The new minimum objective is expressed in gigawatt hours of electricity stored, rather than gigawatts of capacity, so the Consumer Trustee has flexibility to choose the projects it deems most appropriate. For example, 12 gigawatt hours could be delivered by a 1.5-gigawatt project, which can dispatch for a minimum of eight hours, or it could be met by a 500-megawatt project which can be dispatched for 24 hours. Also included in the review into the long duration storage needs for New South Wales was a discussion of whether the definition of long duration storage should be amended from eight hours to four hours. Australian Energy Market Operator [AEMO] services initially recommended it be amended to four hours, as those projects would be cheaper and faster to develop.

Following consultation with the industry, in which opinions varied as to the desirability of this proposal, the Government decided to maintain the definition as capacity that can be dispatched for at least eight hours. The Greens hold concerns that this approach could potentially delay the rapid rollout of energy storage and preference the interests of big business with access to the capital required to deliver eight-hour dispatchable energy. The decision to prefer eight-hour projects over four-hour projects expresses an implicit preference for hydroelectric projects over battery storage. That is a decision the Government has evidently decided to take. I understand the Government's position is that other support is available, through mechanisms like the Energy Security Corporation, for potentially supporting battery projects.

I am left wondering if there could have been scope to make both options available to make sure we have all options on the table to be responsive and fast in the most urgent work our society faces, which is the decarbonisation of our energy network. The bill also seeks to amend the Energy and Utilities Administration Act 1987 to enable the Treasurer to direct payments from the Energy Administration Account into the Consolidated Fund to repay amounts that originated from the Consolidated Fund. The Energy Administration Account is managed by EnergyCo and is used to fund early works on renewable energy zones and other critical transmission projects before costs can be recovered from consumers.

The Greens have concerns that this amendment introduces risk that premature payments back into the Consolidated Fund could put the delivery of the Electricity Infrastructure Roadmap at risk. There are other administrative amendments that are pretty commonsense, and we are happy to support them. However, it is worthwhile to zoom out on this bill and consider the broader context in which it exists. Long duration storage is needed. It will play an increasing role as coal-fired generation retires and is replaced with renewables backed up with additional dispatchable capacity. Long duration storage is best placed to meet the reliability and security needs of the energy system while keeping prices down, in comparison to alternatives proposed by the fossil fuel industry, including gas peaking plants.

Storage is the secret ingredient to our decarbonisation efforts. It will help meet peak demand periods, supply daily ramping needs, provide sustained energy during seasonal shortfalls and have a powerful effect on overall emissions reduction. Longer duration storage projects have longer lead times in terms of their construction timelines, and they tend to be more capital intensive than shorter duration projects. There is no doubt that we will benefit from longer duration storage projects coming online as more coal exits the grid. They seem to align quite nicely with currently planned coal plant closures, which are planned to really hit in the 2030s. However, you have to wonder, when so much of our energy transition is built around this idea of investor certainty, whether we are really considering all of our options in this regard.

Without investor certainty, so the story goes, prices go up because these projects need to price in the so‑called riskiness of their projects when they seek private funding. What would give real certainty to investors? Legislated coal closure dates. You can take that to the bank any day of the week and say exactly how much potential unmet need your project would serve. It is, in effect, a guaranteed market at a guaranteed time. That would immediately drive down the cost of borrowing for these projects and in turn reduce energy bills. It is the Government's failure to truly take the wheel in this regard that unfortunately is seeing us baking higher costs of investment and prices to consumers downstream.

The real kicker, of course, is that this risk is often not realised. These projects will enter into a market that has seen coal exit but, because of political fear and an unwillingness to actually take the lead, the prices are baked in for 10 to 15 years under our scheme for Long-Term Energy Service Agreements. Do members know what would be even cheaper? Who has access to the cheapest lines of credit and is able to provide the highest levels of certainty of the policy context in the future and truly de-risk investment? That is right—it is the Government. Unfortunately, under a Labor government, this bill makes no attempt to generate public investment and public ownership of our energy network.

It is not enough to say privatisation is bad and promise not to privatise anything more. If the Government truly thought privatisation of our energy system was a bad idea and is creating bad outcomes for consumers, then it should be doing something to reverse it. Otherwise, it is just more rhetoric. It is often The Greens who are accused by certain members of the establishment political parties of being "all care and no responsibility". Well, it is time for this Government to take responsibility for guiding this transition. Let us talk about the debate over four-hour and eight-hour duration projects. The Government has made the decision to not support the rapidly deployable four-hour projects. It is preferencing eight-hour duration projects instead.

The proposition to change the definition of long duration storage is based around the main reliability risks identified in the Electricity Statement of Opportunities in the near term. The other context is the Electricity Supply and Reliability Check Up, which was commissioned by the Government and delivered by a hand-picked, pro‑privatisation fossil fuel industry consultant. It is the findings and recommendations of this report that the Government tends to refer to and rely upon for its direction in this space. In the report, there is a paragraph that is particularly damning:

NSW therefore has an electricity sector that is almost totally controlled by the private sector… Privatisation of generation and transmission means a managed transition in NSW is more complex to achieve than, for example, in Queensland, where the state government owns most of the generation, and all network assets.

The report also says:

The Roadmap itself is predicated on private investment in new generation and network assets. Any potential return of government ownership or direct intervention could have implications for private sector confidence, and therefore Roadmap outcomes. It would be desirable if it could be avoided.

That recommendation has been thoroughly followed. There is no apparent desire from this Government to do anything to reverse the disaster that is the privatisation of our energy system. The sad thing is that this report is often cited as justification for the disastrous decision to extend the life of Eraring, but when read properly this is not quite true.

What this report, and the subsequent AEMO reports and the Electricity Statement of Opportunity, actually said is that there could be potential reliability gaps if there is not a step change in ambitions, in investment and in the pace of transmission, generation and storage rollout.

The Government decided not to take that path, and instead has entered into a financial agreement with Origin Energy to keep Eraring open beyond its natural life. Everything flows from there. In the Government's imagination now, it has solved the supposed reliability gap up to 2030. It is going to be served by coal. So why would the Government want to choose technology types that can be deployed before 2030, particularly now that it has made a rod for its own back with the absurd deal with Origin Energy to underwrite the coal profits, because we know that energy storage would deliver cheaper energy than Eraring power station ever could?

Thanks to the masterful negotiating skills of the Labor Government, we would find ourselves in the unenviable position of paying for our power twice. We have two paths ahead of us. Either we choose to keep pandering to the fossil fuel industry by keeping coal-fired power stations open longer than they need to be, or we urgently invest in publicly owned renewables. With those comments, I indicate we will support the bill.

Read the debate in Hansard here.

12 November 2024