May 03, 2017

ADDRESS TO THE Solar Energy Exhibition & Conference 2017

Melbourne Convention and Exhibition Centre



Thank you Wayne, it is great to be back at another solar expo. These events change every year. The feel has shifted in the years I have been coming, from a solar generation expo to one that is now heavily focused on storage. It gives you a sense of just how fast this industry is changing, innovating and growing in a market like Australia - Notwithstanding all of the policy and political difficulties that Tristan and Adam have talked about, and in their assessments of that I entirely agree.

I want to talk largely about some of the really good things that are happening in the solar area, as well as some of the big challenges we have. As Tristan has outlined in the detail that we are all accustomed to him doing, we are in the midst of a very serious energy crisis. Five years ago, when we were having a very big blue in the national parliament about climate and energy policy, it was a bit of a luxury because the underlying health of the energy sector was very strong. We had a substantial oversupply of generation which was depressing wholesale power prices to the $30 or $40 dollar range. We had lots of gas available to power generators, to manufacturers and to households at about $3 or $4 a gigajoule; before the ramp up of the Gladstone operation.

The position now could not be more different. With the closure of Hazelwood, the supply overhang is essentially gone and we have utter turmoil in the Eastern Australia gas market. We are no longer in a position where the energy sector and energy users can keep trucking along, while we indulge in the sort of debate that was happening in 2012 in the national parliament, and is still happening today.

We have a debate going on about new generation investment, which is so mid-20th century it would be funny if it were not serious. We have a government at the moment that is genuinely arguing for the construction of an unabated coal-fired power station in North Queensland - an ultra-supercritical power station, which the IEA says will still churn out about 740-800 kilograms of carbon per megawatt hour. This is nowhere near the sort of standards that you see in places like the UK and Canada, for new power stations of any type.  

As we know, the IEA has a report for almost everyone. If you are happy to see a 4-degree warming world there is an IEA report for you - and often we will see Coalition Ministers relying upon the 4-degree scenario reports in terms of coal export projections. But if you look at the report that I tend to rely upon from the IEA, which is the climate and energy report published last year based on the Paris Agreement, it says very clearly that OECD countries are not going to be in a position to have unabated coal much beyond the mid 2030’s. The idea that you would build a coal-fired power station with an intensity of 740-800 kilograms of carbon per megawatt hour , that probably wouldn’t start til the mid 2020’s anyway, and then be at very serious risk of being regulated out of existence by 2035 is beyond understanding.

The sort of de-risking that the Commonwealth government is going to have to do for a project like that, to get any sort of investment, must run to the billions of dollars. But still we are having a debate about this.

Solar really is the one shining light in a picture that is otherwise pretty depressing. My opposite number wrote an op-ed in the Fin Review this morning. He wrote that there is an investment boom going on in the energy sector, and criticising me for saying there is an investment strike. In a way he is right, there is a boom going on in the renewable energy sector at the moment because of the impending close date of the RET in 2020.

That is a good thing. We are very happy about it. But it will finish within a couple of years. And there is no investment framework for Australia beyond 2020. That is a very serious concern given the graph that showed examples of closure dates for the likes of Liddell which might be 2022, but conceivably could be even earlier than that, depending on how things turn out.

PV solar though, in spite of all that, is going from strength to strength. We’ve just hit 1.67 million households with PV solar panels on their roofs. 10 years ago when we came into government, it was maybe 7,400 across the whole country that had PV solar. It is now 1.67 million, running to almost  6GW. That is cause for celebration but we also need to put it in context.

In 2015, England, where the sun shines 3 days a years, put on 4GW in one year. In 2014 and 2015, Japan put on 20GW of solar. Most of it was largescale but it is still 20GW of solar in a much smaller country, with nowhere near the solar resource that this vast continent has. So we are doing well but there is so much more we could be doing.

We have been reminded of that only this week. ARENA has said that there is no reason why solar can’t make up 30 per cent of Australia’s electricity by 2030. I’m still getting through the CSIRO/ENA report but I found the figures jaw-dropping. The CSIRO and ENA say that rooftop solar, not utility scale, could be at somewhere between 35 and 40GW by 2030. That’s an extraordinary statement of the possibilities of this industry.

To a degree, those who work in the sector will just keep on trucking. But we need some sensible policy. We share your ambition to see an energy transition in this country that not only deals with the international commitments we have around climate change, but I think even more importantly the commitments and the responsibilities we have to the next generation and the generations after that of Australians to deal with this seriously. Happily, dealing with that responsibility also has the potential for an extraordinary investment and jobs boom in this country.

There is no country that has better renewable resources than Australia. None with better solar resources, wind resources across the south of the continent, better scientists at our universities, and businesses that are willing to put money on the table to invest in this area. We just need sensible policy.

I welcome the sort of debate we have seen from Tristan and Adam this morning about how an EIS might work. I want to be clear that it is not just an EIS in our policy toolkit.

We had a very comprehensive policy at our last election that talked about a framework for the inevitable closure of old coal-fired power stations. We can’t be in the position again where the community and the broader electricity system, gets 3 or 4 months’ notice of the closure of an asset as big and important as Hazelwood. It is just a hopeless position for a country to be in.

There needs to be a framework for the orderly phase out of the old coal-fired power stations to give you the space to do the sort of investment that is envisaged by ARENA and in the report the CSIRO and ENA.

We also want to be clear, that there is a hard target of 50 per cent renewables by 2030 at the centre of our policy. It is not a renewable energy target in the sense we currently understand the term. I am not committed to the idea of a retailer obligation model beyond 2020. But it is a firm commitment that at least 50 per cent of our electricity by 2030 will be delivered by renewable energy. That will be a central design feature of the emissions intensity scheme.

Adam and I respectfully disagree about the modelling that he has referred to. I think the modelling that refers to an EIS drawing down only 22 per cent of renewables was hopelessly optimistic about gas prices and terribly conservative about renewable energy prices over the coming years. I understand and welcome the challenge for us to do more work on modelling this and also seeing how an EIS would work with the ambitious state policies we are seeing in Victoria, in Queensland and a range of other areas as well.

I’ll close by saying this. The work the Solar Council, and the Storage Council more recently, has been extraordinary. It has been a tough slog over the last several years. But the officers and the members of the Solar and Storage Council have been unstinting, often with some blow-back from some of our friends in Canberra and the Murdoch press, but unstinting in its advocacy of this energy transition. I congratulate you for that and I really look forward to the opportunity to continue engaging with you in the coming years.    

Thank you very much.