Originally published on RenewEconomy.
When new Australian prime minister Malcolm Turnbull promises a government that will embrace and even pursue new disruptive technologies, one senses that the principal roadblock will be those vested interests about to be disrupted, and their supporters in the conservative right.
Conservatives, by their nature, do not easily accept change. But as Turnbull notes, change is happening, and Australia has got to get in board. This is particularly so in the energy sector, where rooftop solar and battery storage and other smart technologies are promising a revolution that will sweep aside the business models of incumbent networks, generators and electricity retailers.
The pace of that revolution could be accelerated by Turnbull, or it could be slowed. Much will depend on the attitude his government adopts to regulatory reform, and whether his Coalition government continues to try and dismantle institutions like the Clean Energy Finance Corporation and the Australian Renewable Energy Agency.
Both these bodies are playing key roles in developing new business models that could make solar and storage more accessible to lower income families, apartment dwellers and community groups. It includes such concepts as power purchase agreements and “virtual power plants” (where the output of many households are pooled and traded).
Conservatives are dismissive of such ideas, as they have been of much of what the CEFC and ARENA have tried to do. But even if they don’t get inspired by the actions of the so-called Green Tea Party in the US, which has taken up rooftop solar and the power it gives the individual consumer as a conservative cause, they might like to heed the words of one of their own, the current energy minister and treasurer of Western Australia, Mike Nahan.
When Dr Nahan was elected to the WA parliament in 2008, his views seemed pretty much unchanged from the days he headed the ultra conservative think tank, the Institute of Public Affairs, and many others in the hard right of the Abbott government, and who still sit in the Coalition ranks.
Those views included skepticism about climate science, a disregard for renewables, and a contempt for the workings of environmental groups, unless they happened to be the IPA-sponsored Australian Environmental Foundation group which campaigned against concepts like Earth Hour and Environment Day whaling and forestry bans.
But since Nahan became the state’s energy minister, in 2013, and then the state’s treasurer as well, he’s had to change his tune.
The WA energy market, he has discovered, is anathema to everything that Nahan has ever stood for. Actually, it is a basket case, created by an ideological blindspot towards renewables, and an equally blind attachment to fossil fuel solutions.
It is a market that is heavily subsidised by the government – which pays more than $600 million a year, or more than $500 a households – to keep electricity prices at an artificially low level. Without them, electricity bills would be 30 per cent higher. As recently as 2008, the government subsidised 72 per cent of the cost of electricity.
The WA energy market also has lousy regulation that are gamed by participants. A so called “capacity market” has resulted in taxpayer’s money being used to build fossil fuel peaking plants that have not, and will not, ever been switched on.
And the state policy making has been built around an attachment to base load fossil fuels, even blowing $300 million on trying to extend the life of a 45-year old coal generator, and it has a complete blind spot on renewables. Unlike the main market in Australia, the WA market operator has no effective wind forecasting mechanism.
When the first utility-scale solar farm in Australia was opened in Geraldton north of Perth in 2012, the then energy minister Peter Collier gave the impression he hoped it would be the last. Even Nahan said the following year that the hoped no more wind and solar projects would be built in the state. Solar was not even mentioned in a government-mandated review of the state’s energy choices, which came up with the bizarre proposal of importing coal from Indonesia to keep its ageing coal plants running.
Now, Nahan concedes, solar will dominate the future of the grid. Within a decade, he said earlier this month, the bulk of the state’s daytime demand could be met by solar, most of it generated on the rooftops of the state’s households and businesses.
The energy of the future was not just cheap, it was democratic too. And it was likely to force out coal-fired generation. “It’s low priced, it’s democratically determined, and it’s something we are committed to facilitating,” Nahan declared at a conference in Perth.
His former colleagues at the IPA might have thought so, but Nahan wasn’t hallucinating when he made those predictions. The state’s Independent Market Operator, which manages the main grid in the south-west corner of the state, predicts by 2035, 90 per cent of homes and three quarters of all businesses could be producing their own electricity.
Within a decade, there could be 2371MW of rooftop solar capacity in the local grid, more than average demand. The peak would shift from mid to late afternoon until after 7.30pm.
WA – with its ageing infrastructure, dependence on expensive fossil fuels and lop-sided subsidies, is emerging as ground zero for the energy revolution that everyone is predicting. Like Hawaii, which has a huge fuel import bill, the authorities are realising that cheap energy can only be provided by renewable energy, solar and storage in particular. Already they are talking about cutting off regional towns from the grid and powering them with renewables and storage to save costs. Some businesses are already doing it.
Everyone is watching with interest with how Nahan goes about his reforms. The man who would have been in the back row of the push to renewables, is now at the cutting edge of adopting it.
Already, Nahan’s has been damming when presented with evidence that the state-owned electricity retailer, Synergy, had effectively banned solar households from adding battery storage and electric vehicles. What was really banned was the ability to export electricity back into the grid if those technologies were installed, but the standard contract was worded so badly it gave the impression they were not allowed.
Nahan called it “red tape gone mad”, and promised a review. He said regulators were being too slow to adapt to the “revolution” in the energy market, which includes not just rooftop solar, but also battery storage and EVs.
The next moves are going to be just as intriguing. In broad terms, Nahan wants to remove the government subsidy on electricity bills and throw open competition to the monopoly-government owned utilities.
The removal of the government subsidy – and the resulting surge in electricity bills – will likely accelerate the uptake of solar and storage even more attractive. Synergy rival Alinta Energy has already forecast that it will offer solar and storage to customers.
It could be a test case for what happens in the rest of Australia. Already, networks and retailers are starting to look at battery storage, but only on their own terms, and they want competition to be kept out of the market.
The national regulators are also slow moving, postponing reforms that could have saved customers billions in avoided network costs. They are all likely to get a big shock as solar costs continue to fall and battery storage enters the market. A decade ago, consumers had no choice. Now they do. That should fit into the conservative narrative.
Reprinted with permission.
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