What does Labor's election loss mean for the future of renewable energy in Australia?

The recent Federal election was labelled in some quarters as a referendum on Australia’s clean energy future. Most argued that the Labor Party provided a much bolder view of how that future would look versus the LNP. However, Labor’s failure to win the election has created feelings of ’what happens now?’ in the energy sector. This is exacerbated in my Linked In circle, with many connections working in the electricity generation or networks space.

We are starting to see posts appear with catchy headlines such as “will the transition away from fossil fuels continue?” and “what are the Federal LNP government actually doing about climate change?”

I found the election campaigns from both sides of politics frustrating at times. In many instances, slogans got in the way of proper debate of renewable policy, and in the case of the LNP, their story was almost unobservable.

But that doesn’t mean that they don’t have a story. They just failed to, or chose not to adequately explain it. And while they can ultimately point to an election win driven by an aggregation of all their policies, it is this lack of education and information that I believe has many concerned about what comes next when it comes to energy. Because, when you look at the LNP’s actual actions in this space to date, it is hard to suggest that they aren’t making headway.

For example, the LNP Federal Government bought out the NSW and Victorian shares of Snowy Hydro. On the back of that acquisition, they have established the successful business case for the creation a pumped hydro facility that will be able to offset a large amount of coal generation, both through direct substitution and its ability to firm supply from other renewable sources. This investment is currently reported to be over $5 billion.

They have also funded over $55m to allow Project Marinus, a 1200MW cable connecting Tasmania and Victoria, to complete its feasibility studies. When built, this new cable will facilitate the “Battery of the Nation”, allowing pumped hydro storage from Tasmania to support mainland load.

However, to look at supporting new renewables through generation project funding is only one part of the solution. We also need a transmission network that can move the electrons from where they are created to where they are consumed.

This is a story that those within the industry are now well across. In short, the transmission grid is being required to act in a way that it was never designed to do. The movement of generation from weak areas of the grid where much of the newer renewable generation is connected is negatively affecting network strength, generator revenues through constraints and network losses, as well as creating headaches for regulators as they try to respond to the required pace of change.

Again, the LNP haven’t been totally asleep at the wheel here. The Federal Government commissioned the Finkel Review and implemented 49 of the 50 recommendations quite quickly. That the 50th recommendation, the NEG, wasn’t able to find its way through parliament is disappointing. However, the other 49 implementations have created strong momentum and positives.

Two of these implemented recommendations worth highlighting are the establishment of the Integrated System Plan (ISP) and the Energy Security Board (ESB).

The ISP is an attempt to identify transmission augmentation projects that will connect Renewable Energy Zones (REZ) to the grid. REZ’s are areas where a high concentration of renewable energy projects are likely to be built based on viable wind or solar resources.

That body of work has now identified transmission augmentation projects nationally that are going through the required regulatory processes for approval such as the SA – NSW interconnector, the Western Victoria Transmission Project, upgrades to the QLD – NSW interconnector and also the VIC – NSW interconnector.

All of these projects, plus Project Marinus and others, are required to ensure that new wind and solar can connect in places that are currently not designed for this purpose. In simple terms, they provide the pathway to move the energy from where it is generated to where it needs to be consumed. Those pathways are currently constrained or even non-existent.

The ESB’s role has also been important. They have been charged by the Council of Australian Governments (COAG) to find ways to fast track many projects identified in the ISP. The process of transmission augmentation is a slow one and requires the passing of economic assessments to ensure that energy consumers aren’t paying for something that isn’t necessary.

One needs to remember that although we have one of the largest interconnected transmission grids in the world, and that the market is operated by a national regulator in AEMO, the planning and augmentation of that network happens on a state by state basis. Furthermore, the costs of augmentation are typically passed through to the bills of the electricity consumers in each of those states. Politically, increasing power bills for network augmentation when energy prices are currently rising can be a hard message to sell, regardless of the economic reality that drives the cost to the end consumer.

This image below, presented by Fiona Orton, Future Grid Manager at Transgrid, at the recent Clean Energy Council’s Large Scale Solar Forum in Brisbane highlights why new transmission is urgently required. As you will notice, many areas of the NSW grid have no spare capacity for new generation. Unfortunately, these are the same areas where developers want to connect as the renewable resources are strong and the land is cheaper and accessible as compared to that closer to major cities. Every state has their own version of this scenario that is playing out in NSW.

In short, even if we wanted to, we couldn't just connect every planned renewable generation source to the grid tomorrow irrespective of any election promises. This is because the transmission system as it is currently designed physically cannot handle it. Therefore, the work of the ESB in hastening the identified ISP projects is extremely crucial to our clean energy future.

In addition to funding the country’s largest renewable project and supporting changes in process to speed up transmission capacity increases, the LNP has also maintained funding for the Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency (ARENA). Both of these entities, via differing mechanisms, have funded a large number of renewable projects across the land. In ARENA’s case, many of the projects we now see, including grid scale batteries, would never have gotten off the ground given they were commercially unviable without subsidies or grants.

The added kicker to all of this federal government support is that the States have now taken matters into their own hands.

The South Australian Government have helped fund the Hornsdale Battery and underwritten three synchronous condensers at circa $80m to ensure their grid remains strong. The Victorian government have awarded contracts to 6 new renewable projects via its VRET auction and have legislated their renewable energy target into law. The ACT have run two separate auctions to buy in renewable power. The NSW government are currently running a process to procure energy storage services. QLD are establishing “CleanCo” to build a suite of state owned renewable assets. On top of all this, things like solar panel and battery rebates are available in various forms depending on the State to home owners.

Industry is also active. Initiatives such as smart lighting, apps that allow you to track you power usage and other technology that allows the home owner to make changes are plentiful and being widely adopted.

So is the sky falling down?

Far from it.

While many on this forum may be disappointed in the election result, that should not translate into the view that the LNP are inactive in the renewable space. Their investments and support policies are real and are having a positive impact on the transition to a cleaner energy future.

The lingering question is "can they do more?" and "can it happen faster?"