"The 2024 Integrated System Plan is the best roadmap we have to meet our energy needs, but delivering it will take action, courage and compromise across politics and the community," Innes Willox, Chief Executive of national employer association Ai Group, said today.
"Those actions include clearing the way for the transmission and other energy projects we need; ensuring we have enough gas supply to meet demand, and that backup gas peakers are investable; coordinating consumer energy resources so they cut costs for everyone rather than increasing them; and squeezing out every cost efficiency we can in the delivery of new energy projects.
"A mountain of evidence, consultation and transparent analysis has gone into the ISP. The result is not holy writ handed down from the mountain, and it will have to keep evolving in light of experience and policy.
"It is however the most comprehensive and credible working plan we have to guide governments, energy agencies, investors and businesses as we try to build a competitive and clean energy future – and avert the medium-term risk of blackouts and economic disruption if we don't replace coal generators before they close or fill the gap between gas supply and gas demand.
"This plan can be implemented, but success depends on major new actions to build on the steps the Federal and State governments have already taken.
"We need to cut the costs of delivering new energy projects in Australia. Global technology cost declines are positive, but achieving a competitive advantage for Australian industry requires a relentless focus on lifting productivity in energy construction; cutting regulatory delays like approval times; standardising infrastructure; and minimising the finance risk premium through stability and continuity of energy and climate policy.
"Faster approvals for projects, especially transmission, are essential to control costs and ensure we can keep the lights on. Governments can't deliver this alone; all of us have a part in restoring Australia as a place that builds. We have seen in the long fight over coal seam gas how effectively campaigners can undermine social license, and the cost of that in undermining gas security. Campaigning against transmission has the potential to be even more destructive. Communities, landholders and traditional owners need fair treatment and compensation where appropriate, but they will pay the same price as all of us if Australia can't build.
"The ISP requires lots of wind and solar, transmission to connect it and energy storage to firm it. Alongside all that will sit a critical fleet of gas peakers to back it all up. These won't supply a high share of annual energy, nor should they given the long term rise in the cost of gas. The ISP makes clear that these peakers are essential to keep the lights on and ensure business stays business.
"That underlines the urgency of ensuring that there will be enough gas and liquid fuels available to run those peakers when they are needed. The NEM needs more gas supply, quicker transition of those forms of gas demand that have better solutions, and more capacity to store fuels. That will take tireless pragmatism, not ideology, from governments and stakeholders.
"The electricity market and supporting policies also need to provide an investable business model for those gas peakers. They are excluded from the national Capacity Investment Scheme, which is focussing on bulk energy and storage. Fair enough; as long as other tools are put in place, and soon, to deal with backup peakers. That could be further underwriting; capacity reserves; capacity markets; or other options still.
"Finally, the uptake of consumer energy resources like rooftop solar, home batteries, electric vehicles and electrified homes needs more coordination. Done well, these assets will cut costs not just for their owners but for the whole energy system. Done poorly – with low efficiency appliances used at the wrong times – they will add costs for everyone. The ISP modelling suggests more than $4 billion in large-scale grid costs can be avoided with smarter use of small-scale assets. Better standards, sharper financial incentives, and more coordination between energy users, energy businesses, regulators and governments are essential.
“Nuclear energy doesn’t figure in the ISP, most directly because it is currently illegal in Australia. If it was allowed, at current costs it looks unlikely to be economically attractive. However we should never be closed off to future innovation. Removing the ban on nuclear and being open to the potential for future improvements would make sense. Halting the deployment of the best solutions available today would not make sense.
"Delivering the energy Australia needs will not be easy. It will, however, be a lot easier than the alternative: explaining to citizens, businesses and investors that the lights have gone out because we preferred arguing to building. Age, market forces and emissions goals are pushing our long-serving coal plants into retirement. We have a limited window to replace them and a solid roadmap for doing so. The need to build is becoming urgent," Mr Willox said.
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