Matter of Public Importance - Energy Security

ENERGY SECURITY

Wednesday, 27 November 2019

Mr NEWBURY (Brighton) (15:32):

Under Labor, Victoria’s energy system is on life support.

And this summer the danger is that our lack of preparedness will see systemic collapse. One point three million homes—3 million Victorians—are at risk of blackout.

The way we produce energy is changing, which requires infrastructure that can generate, manage and move energy differently. That means our state should have led on making structural change. Yet this government has failed to prepare and failed to show leadership in this policy area, and that lack of leadership is a key reason this state lacks a secure energy supply.

With every summer Victoria’s energy system is proving less able to cope with demand. But this government has failed to develop a substantive policy response. Instead we have seen this government blame infrastructure, we have seen this government blame other levels of government. The Minister for Energy, Environment and Climate Change has proven that she lacks policy depth, and the Premier has proven unwilling to correct that in his ministry when it is his responsibility as state leader to stop this spiralling failure.

If the projections of systemic collapse are realised, this summer may prove a tipping point for the people of our state. In January this year a reported 375,000 homes were left without power. Shortly before the blackouts the Minister for Energy, Environment and Climate Change said, and I quote:

Blackouts are something that absolutely will not be a feature of today…

And further that the government was ‘absolutely confident’ there would be no outages. The Minister gave an absolute commitment. By the end of the day hundreds of thousands of Victorians were left without power, including many in my electorate.

One constituent rang me in tears because he was so worried about his elderly parents. They were frail, without power and desperately unable to cope with the heat. He and many constituents were incensed on hearing the government’s response. Not only did the government fail to offer a fix but the Minister flippantly noted that blackouts are, quote:

…something that we would all rather avoid…

Last year the Premier dealt with blackouts in a similarly poor way, though in that case, in typical fashion, the Premier politically deflected and blamed his government’s failures on a government of the last century.

This summer we will again see the government has no grip on energy security and will expose its lack of preparedness. In August the Australian Energy Market Operator made it clear that Victoria should brace for wholesale blackouts this summer, and I quote:

…all regions other than Victoria expected to meet the current reliability standard…

and that:

…involuntary load shedding may be experienced in Victoria…equivalent to between 260,000 and 1.3 million households being without power…

That is 1.3 million households without power. This summer up to 3 million Victorians could suffer from a blackout. The figures are staggering and represent wholesale government failure. Rather than acknowledge the structural collapse of energy provision, the Minister for Energy, Environment and Climate Change simply brushed off those projections by saying, and I quote:

We’re in a tricky position.

Well, Minister, we are in more than a tricky position. The energy system is failing and this government has proven unable to offer structural policy reform. Sadly, on a state-by-state comparison the Victorian Government has been shown to have their hands in their pockets.

New South Wales is well advanced and better prepared with their strategic planning on energy transformation. In November 2018 the New South Wales government released their energy sector infrastructure road map, the NSW Transmission Infrastructure Strategy. It is the New South Wales government’s blueprint for the transition of the energy system. The strategy differentiates our two states. The strategy highlights that governments have a responsibility to do more than make a policy decision about the future of energy: any decision must also be strategically planned and involve infrastructure preparedness, regionally targeted opportunities and be in partnership with industry.

Behind closed doors the energy industry often acknowledges the lack of strategic thinking and certainty from the Victorian government. New South Wales has recognised the benefits of a developed plan and identified in their strategy that industry can be confident to invest and be part of energy infrastructure transformation but investment can be regionally targeted to best effect and that investment leads to energy that is more affordable to the end user. This sentiment was reinforced by Energy Networks Australia CEO, Andrew Dillon, who spoke on behalf of industry, saying the strategy was, and I quote:

…a vital step towards a more integrated energy system that would deliver greater benefit to customers through a more resilient grid and more competitive wholesale markets.

Last week energy Ministers met for the Australian Government’s Energy Council. In the lead-up to the meeting the Minister for Energy, Environment and Climate Change, in typical fashion, sought to divert attention away from the government’s own ineptitude on energy security. Instead of using the meeting to brief the national forum on a reform agenda, our Minister called for changes to the standard that is used to measure reliability.

Tony Wood, the Energy Director at the Grattan Institute, is reported as calling out the minister’s agenda as a tactic from politicians in Victoria who are worried about being held accountable from summer blackouts. By contrast the New South Wales Minister for Energy and Environment, Matt Kean, used the council meeting to brief Ministers on the next step for their state and released their electricity strategy. A core part of that strategy is encouraging private investment and acknowledging that existing planning processes mean that only one in 20 of the proposed renewable projects are approved.

As an aside, it is worth noting that in its Victorian Annual Planning Report the Australian Energy Market Operator reported of our state, and I quote:

Some investors in Victoria are already facing economic impacts and technical challenges associated with connection to a weak transmission network …

In short, the New South Wales electricity strategy is expected to reduce energy bills by $40 per year, drive $8 billion in private investment, create 1200 jobs and support the creation of Australia’s first coordinated renewable energy zone. A spokesperson for the Australian Energy Market Operator described the new strategy as:

We expect the NSW proposal…will lower the risk and cost of project development.

I recently met with Matt Kean and talked about his approach to policy and energy security. Make no mistake, he wants to get things done in New South Wales. He is willing to push the envelope and take a different approach. On a state-by-state basis, he is a V8 minister to our Minister for Energy, Environment and Climate Change, who is no more than a vintage Volvo. You can see that in their differing approaches to hydrogen. Minister Kean has set out a goal for acquiring 10 per cent of New South Wales gas from green hydrogen by 2030.

Hydrogen is a significant opportunity for Australia and should be a key opportunity for this state to lead in its investment and production. Australia’s chief scientist, Dr Finkel, has championed that opportunity, finding that Australian hydrogen exports could contribute $1.7 billion and provide 2800 jobs by 2030. In its June paper, the National Hydrogen Roadmap, the CSIRO said:

…the development of a hydrogen export industry represents a significant opportunity for Australia and a potential ‘game changer’ for the local industry…

Last week Ministers attending the Council of Australian Governments Energy Council agreed upon a national hydrogen strategy. The strategy recognises, and I quote:

The potential for a major hydrogen export industry is clear. Markets are growing in Asia and in Europe, and Australia is well-placed to serve this growing demand.

And further:

The Strategy calls on the Commonwealth, States, and Territories to create the necessary social and regulatory framework that allows the hydrogen sector to expand.

We know that New South Wales is hungry to step into the green hydrogen space, as too is Queensland, whose Minister for State Development has said the state, and again I quote:

…views green hydrogen as the long-term future for energy production.

Victoria, on the other hand, has had a bumpier road, and has an Energy Minister who has chosen not to be our state’s hydrogen champion, which has been noted with concern by industry.

Last week the Energy Ministers spoke about the benefits of a nationally agreed strategy. However, the Minister for Energy in Victoria limp-wristedly noted that hydrogen is ‘just one example’ of energy that ‘could play a role’. Like the increasing beat of a drum, industry continues to question whether the Energy Minister’s heart is in backing the future of hydrogen. It is worth noting that the Treasurer, in his capacity as Minister for Economic Development, is trying to fill the void by telling industry that he will be the lead proponent for hydrogen in this government.

I recently met with representatives of the Hydrogen Energy Supply Chain Pilot Project, who are seeking to turn brown coal from the Latrobe Valley into hydrogen, which will then be liquefied at the port of Hastings. This is a significant opportunity for our state. With our neighbouring states strategically hungry to become national leaders, we do not have time or space to forgive a disinterested minister for energy.

Again I say, under Labor, Victoria’s energy system is on life support.