Energy market stakeholders have backed a plan by Labor, Greens and Liberal energy ministers to ramp up renewables, battery storage and hydrogen power to prevent another power crisis.
Australia’s energy ministers met on Wednesday with their federal counterpart Chris Bowen and agreed to work together in what they say is a “new era of cooperation and collaboration”.
The peak body for Australian solar, storage and smart energy welcomed the ministers’ post-meeting communique, particularly the new energy transition plan.
“Governments should make it easier for families, business and grid to access renewables,” the Smart Energy Council tweeted.
“All new generation must be zero emissions.”
The ministers also have the support of the oil and gas industry, which wants the gas sector recognised as a vital fuel as governments seek to overhaul the coal-dependent electricity grid.
Australian Petroleum Production and Exploration Association acting CEO Damian Dwyer said gas would play a critical role in decades to come by replacing higher emissions coal and acting as a stabiliser for renewable energy sources.
“Gas companies have already acted to ensure gas flows to where it is needed, using the mechanisms put in place to help us do so – mechanisms which provide the market with transparency, affordability and supply,” he said.
But wholesale power prices have risen five-fold in the eastern states, potentially crippling industry and threatening jobs, with Australia’s fossil fuel-powered power plants absorbing soaring global prices.
Oil prices are far from peaking with demand from China yet to pick up, while Germany and other nations are pushing on with weaning themselves off Russian gas, NAB strategist Rodrigo Catril said in a note to clients.
Andrew Stock, a former Origin Energy executive and ex- director of the Clean Energy Finance Corporation, said Australia must “free itself from expensive, polluting and unreliable fossil fuels – and fast”.
The nation’s energy ministers will meet face-to-face next month, the first for time since 2019, to consider a national plan to rapidly decarbonise the electricity grid.
They have already agreed Australia will need large amounts of generation, storage and transmission, and a quicker build-out of solar, wind and battery storage.
A secure energy sector, including hydrogen, will underpin a modern and low-carbon economy, they say.
In the short-term, a new gas procurement and storage plan will be run by the Australian Energy Market Operator to keep industry running.
“While the focus of the meeting was on the current pricing challenges, energy ministers reinforced the critical importance of a sensible, considered reform agenda for the medium to longer term,” the post-meeting communique said.
This will position the sector to be more resilient and able to navigate future global or domestic challenges, the ministers agreed.
A “capacity mechanism” will be advanced as a priority to bring on renewables and storage to support stability in the national energy market.
“It’s about time,” Greg Bourne, former president of BP Australasia said.
“After Australia’s lost decade on climate action, it finally feels like we are catching up with much of the rest of the world and embracing the future, rather than clinging to the past.”
Energy market analyst Tim Buckley said Labor was elected with a clear climate and energy mandate, including 82 per cent renewables by 2030 and a $20 billion Rewiring the Nation roadmap already fully costed.
“Rather than more plans, coordinated actions are required urgently now, too many years have been lost already under the previous government,” he said.
The oil and gas sector says it is important the whole energy system is considered.
“We are doing everything we can to look after customers and fill the energy void left by coal-fired power generators in particular,” Mr Dwyer said.
But years of needless state moratoriums, bans and delays on new gas supply, have contributed to the current situation in the east coast energy market.
“Natural gas gives the energy system stability. But the industry needs an investment environment that supports stability,” Mr Dwyer said.