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Smart energy – or tilting at windmills

I have been involved in smart energy developments since 2001 (UtiliTel, Digital Economy Working Group, Smart Grid Australia, Global Smart Grid Federation). During this time I have been in contact with all levels of government and all major energy companies as well as with the broader business and R&D eco-systems around them.  See No smart energy policy for Australia

Yet, after more than 15 years of industry initiatives aimed at smart energy, the government has successfully frustrated and/or stopped such initiatives and is actively working against the solutions preferred by the industry (smart grids, gas, renewables, batteries).

The energy crisis in Australia has nothing to do with energy – it has everything to do with politics.

Ever since the previous government abandoned its Emissions Trading System back in 2009 the national energy policy has been in disarray. This is rather amazing as the energy industry itself supported the ETS – the only major group that opposed it was the coal mining lobby.

There was one later positive attempt to address the issue through the Smart Grid Smart City initiative. This looked at using smart technologies that could reduce energy usage by 30%-40%. The winner of the $200 million project was Ausgrid and the government was to develop a national smart grid policy based on the outcomes and knowledge gained from the project. For purely political reasons this project was cancelled by the incoming conservative government in 2013.

The industry has since been in limbo as the government has failed to come up with a national policy, which is essential for the energy companies to make the right investment decisions. Everything that the government has done in relation to energy initiatives (or lack thereof) has made the situation worse rather than better.

  • For more than a decade we have known that coal-fired power stations are no longer economically viable, yet the government is hell-bent on keeping some open
  • The government allowed Australian gas to be exported at low cost and Australian energy companies must pay high prices to buy it back
  • The ETS – a key smart energy policy – has been made politically toxic
  • Regulatory favours allowed electricity companies to gold-plate their networks
  • A politically motivated attempt to fool the people with a plan to upgrade the Snowy Mountains Hydro System without any national strategy or cost benefit analysis
  • Cancelling, downgrading or frustrating clean, smart and renewable energy policies and initiatives

As a result electricity prices have doubled, and even tripled, over the last decade.

As long as a decade ago the investors in fossil fuel power stations – at a conference organised by Delta Energy and the University of Sydney – indicated that most of these generators were losing money and that there was little interest in investment in them, or in any new coal-fired station. This had nothing to do with climate change or renewables, but was simply based on economic reality. High on the agenda of the generators was (and still is) gas-fired power stations.

A few years later, without any government direction, the energy companies started the ill-fated ‘gold-plating’ of their networks as they had received the regulatory opportunity to pass these costs on to consumers.

Again, under the lobbying of the resource companies, the government allowed our natural gas to be exported and forced Australian energy companies to buy this back at an ever-increasing market price. Belatedly they tried to force these companies to sell some gas back at more acceptable prices. Why not think of that in the first place?

The government cancelled or reduced any policies put in place by the previous government in relation to renewable energy, clean energy and energy efficiency. With most Australians in favour of those policies one wonders who is behind the government’s determination to kill these initiatives. The fact that the Treasurer, Scott Morrison, brought a lump of coal into Parliament to promote the use of it against renewables speaks for itself. The clip was broadcast around the world with most people scratching their heads about the direction Australia was taking.

Without any energy policy in place the government is trying to pull all sorts of rabbits out of the hat to show that they are doing something. Out of nothing came the plan to upgrade the Snowy Mountains Hydro System, and more recently it is trying to force AGL to keep one of its power plants open for an extra five years.

This all at the same time as AGL, Energy Australia and many others are indicating that coal is no longer economically viable and that they have plans in place to use better and cleaner technologies to address the issue. They even indicated that the business models that they have ready, and would like to implement, will be cheaper than the coal-fired solutions.  Yet the government is hell-bent on tilting at windmills, and for purely political reasons is forcing Australia to use coal, whatever the economic, social or environmental cost.

Even if the government is able to keep coal-fired plants open the industry has indicated that they will only be pushing the problem further into the future.

The federal government also is moving in a completely different direction to the policies and initiatives of state governments and local governments. Here we see initiative after initiative based on clean, smart and efficient energy. In its ivory tower in Canberra the federal government is clearly totally out of touch with its grassroots.

Paul Budde