Teaching a teenager to drive a car requires patience and, sometimes, a little bravery.
It’s important to get the fundamentals right from the get go. For instance, the instinct to ride the brakes is rather unhelpful.
When you apply both the accelerator and brake pedals in a car simultaneously, a conflicting dynamic emerges that can lead to inefficiency, instability and strain on the systems.
Opposing forces are set in conflict, counteracting the effects in a wasteful and futile struggle between acceleration and deceleration.
More simply, when driving a car, or when building a new energy system, it’s important to get the objective straight.
Are we trying to go forward, or not?
For much of the prior decade, that has been pretty unclear in Australia. The politicisation of energy and climate policy accompanied by indecision, complication, over-regulation and inexplicable delays are hampering our forward momentum.
That has now changed, and we have strong political leadership and collaboration across the country. But the legacy of the past decade are enormous. A lack of strategic planning and reform for more than a decade have come home to roost at a time we need to be punching the accelerator.
We have a lot to do to meet demand as coal becomes increasingly unreliable and leaves the system.
We need to meet Australia’s ambitious target of 82 per cent renewables by 2030 in order to ensure a reliable and affordable energy supply.
Yesterday’s AEMO Electricity Statement of Opportunities also made clear that there are growing concerns with the failing reliability and availability of coal even prior to closures.
This follows the Clean Energy Council’s analysis revealing that the second quarter of this year delivered a record 1.3 GW of financial commitments in large- scale batteries, but just 348 MW of new large-scale generation projects.
While Australia needs to be building over 5 GW of new generation each year, there has been just 0.4 GW committed in the first half of 2023.
There is clear consensus; our right foot needs to be planted firmly on the accelerator pedal.
Investors are swamped with global opportunity at a time where barriers can make Australia unattractive.
Investors stand ready to meet the challenges, but like any of us they’ll only invest if they have some degree of confidence.
Nowhere is the legacy of the lost decade more obvious than in our grid.
Grid connection process and technical requirements has been a major challenge for new projects. Investors need a transparent and predictable process to connect their assets to the market. Through the Connection Reform Initiative and deep collaboration with AEMO and across the industry, real progress has been made. But more is needed to ensure our connection process is fit-for-purpose and streamlined.
There has been chronic under-investment in network capacity creating congestion and constraints.
The Federal Government came to power with a Rewiring the Nation policy and commitment to accelerating transmission investment. That’s now happening – a decade late in many cases – and projects are moving forward.
These are critical nation-building assets and network operators can’t do this alone.
It will need collaboration from all levels of government, the market operator and regulators and chambers of commerce to build the 10,000km of new transmission required. And this needs to be done sensitive to the communities who are impacted, and in a way that builds rather than undermines the social license for Australia’s energy transition.
Government’s share our growing anxiety about the need for more investment. But there is a risk this results in state governments leaning in in unhelpful ways. Building and owning their own renewable generation is both unnecessary and unhelpful and risks spooking investors who have showed their willingness to invest, if the market settings are right.
State governments can also help give more certainty about the exit dates of coal- fired generation. Locking those dates in is critical for investment in new generation, while any surprise extension to the life of these old power stations will only further aggravate the ultimate problem and risk freezing the new generation that’s critical.
There is a role for state governments to reform planning and approvals processes that are out of date and lacking in transparency and consistency. As a nation we need rigorous planning regulations, but more transparency, consistency and more streamlined processes to give investors confidence that the right projects can getting moving quickly.
Australia is not alone in trying to accelerate the shift to renewable energy. Indeed, almost every country in the world has their foot on the clean energy accelerator.
As global competition rises, we need early mover advantage and scale to attract the best deals for components and the ability to train, attract and retain the people we need. Some of our best minds, those who drive innovation to make countries leaders in renewable energy are being poached by companies in Europe and North America.
As Australia competes in a global clean energy arms race, we face enormous challenges competing for supply chain, the workforce and capital necessary to decarbonise our own energy system. Nothing will undermine Australia’s global competitiveness and economic future, than underinvestment in new electricity generation.
Critical to providing investor certainty and ensuring Australia can continue to compete globally is the right policy to ensure the 82 per cent target becomes reality.
The Renewable Energy Target was introduced in 2001 by the Howard Government to underpin new investment in renewable generation. It worked, and underpinned enormous private investment in low-cost renewable generation. Its never been more important – this time help keep Australia in the global clean energy arms race against enormous scale and subsidy in many countries around the world.
The opportunity for Australia is enormous if we get this right. We can become a global clean energy superpower.
Never before have we had such alignment and collaboration between federal and state governments, industry, regulators and the community to work through the challenges to investment and to hit the accelerator for the future.
However, borrowing another teenage analogy from our Federal Energy Minister, we’re also facing a looming exam without having done the homework.
We’re cramming at the eleventh hour and there are going to be some late nights ahead of us. But have no doubt, we have the capability and Australian can-do attitude to get this done. We must.
Kane Thornton is chief executive of the Clean Energy Council
