Imagine driving a Porsche down a road with no traffic lights or roundabouts, stuck behind a whole lot of Model T Fords — and then complaining that the Porsche doesn’t go as fast as the car dealer promised. That pretty much sums up the state of Australia’s energy system today.
A decade of energy policy failure has led to the creation of a chaotic and inefficient energy system that is increasing system unreliability and costs, while not delivering the scale of renewables investment that we need to deal with the challenge of climate change.
Critics are right about the chaotic nature of the energy system and the integration of renewables into it — last week’s announcement that the regulator is taking legal action against wind generators over the 2016 South Australian blackout is evidence of this. But the problem has little to do with the types of generation being introduced.
The fundamental problem is not a technological one: we already have the technology to get to a 100% zero-carbon electricity system within 10 to 15 years. The problem is the system’s reliance on an outdated and complex market mechanism and an almost complete absence of sensible planning for energy transition.
The old coal-fired system was built by government agencies using centralised planning to meet consumer and economic development needs. Ensuring profit-making opportunities for companies wanting to make a buck out of the energy system was not something they had to consider. This focus on broad public interest is why the development of the electricity system in the first place was much smoother than its now-necessary transformation.
The complex National Electricity Market (NEM) and other market rules are necessary not for any technological reason, but to make the transition to a new energy system profitable for private capital. This is because of the ideological commitment to market and private capital-driven transition, the result of a belief that public investment can’t do these sorts of things, despite the historical evidence that it can — it did — and would do it better now.
Electricity generation and distribution make great sense as a public monopoly. It makes it much easier to plan, coordinate, deliver and keep costs down. The small-government ideologues should remember that privatisation hasn’t meant the exclusion of government involvement in electricity supply. Rather than building, owning and operating the infrastructure in the broad public interest, governments now play the role of market creator, manager and enforcer in the interests of the private (largely; some public generators remain in Queensland) owners of generation, distribution and retail assets.
What governments don’t do any more — especially Coalition ones — is plan the system. A misplaced faith in the capacity of markets to deliver optimum investment and resource distribution outcomes is now obscuring the reality that those markets are not delivering what they are supposed to — reliable, low-cost, low emissions electricity.
Uncertainty around the timing of coal plant closures, grid upgrade requirements, renewable energy developments and location, storage integration and so many other elements of the power system are not only causing systemic reliability risks, they are driving up costs that are flowing through to consumer power bills, and causing broad community anxiety. This is the fault of the Commonwealth government and its refusal to develop meaningful, intelligent and clear climate and energy policies.
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Despite all the hand-wringing about the difficulties of moving to a zero-carbon electricity system, what we need to do is actually quite clear: by 2035, every coal-fired power station should be closed.
We should have a staggered timetable for the closure of each one, and for the construction of the replacement renewable generation capacity, and a plan for where it will be located. We should have a plan for the upgrade of grid infrastructure to manage closure and new generation capacity and storage coming online. We should have a plan to ensure that no worker or community is left behind during the transition, and that new jobs are secure and well paid.
We should have a long-term budget allocation for all of this. These plans should be subject to regular review to make sure they keep up with changing circumstances. Similar plans should be implemented for other areas of the economy that need to be decarbonised. All plans should involve local communities, workers and their unions, and businesses — anyone who wants to get involved.
The transition to a zero-carbon energy system is not simple, but what we need to do is very clear: we need to replace coal-fired electricity with renewables and storage. Let’s concentrate on doing that; not on designing complex and ineffective market mechanisms designed to make private profits at the expense of a clean energy system for all of us.
Colin Long is the Just Transitions organiser at the Victorian Trades Hall Council.