Beneath fog of energy wars, transition takes shape

“The benefit to taxpayers and energy users of the Commonwealth’s new gas generator at Kurri Kurri depends entirely on the speed of the power sector transition to net zero emissions. Clear thinking and clear messages about that transition would allay many concerns,” Innes Willox, Chief Executive of national employer association Ai Group said today.

“On paper the pace of change is modest, there is no imminent shortage of dispatchable resources and a new gas peaker looks like a license to lose money.

“In reality the rapid growth of renewable generation is transforming the power market, coal fired power stations are likely to retire much faster than once envisaged, and gas peakers have much better prospects.

“Batteries, demand side flexibility and pumped hydro – including Snowy 2.0 – will provide much of the dispatchable resources needed to complement variable renewable generation. But gas peakers, which are cheap to build but expensive to run, look like the best backup solution for rare extended droughts in renewable supply. That insurance role is both limited and vital.

“Despite their own high emissions intensity when actually operating, gas peakers like Kurri Kurri can help dramatically lower electricity sector emissions by easing the faster growth of renewables. Progressively refueling new peakers with hydrogen will both lower plant emissions and provide a fillip to Australian hydrogen production, an essential tool for decarbonising the rest of the economy.

“Some have expressed concern that a new peaker would actually increase both power prices and emissions, and that noncommercial behaviour would frighten off private investment. The Federal Government can easily exorcise those phantoms. Joining the States and our major economy peers in a firm goal of net zero emissions by 2050 will provide a much clearer pathway for planning by investors and the electricity market operator. And clearly articulating the scenarios for coal retirement and renewables growth that underpin the Government’s calculations would confirm that public investment decisions are not arbitrary.

“The energy wars are still with us, and in the fog of war it is easy to become confused about what is happening. A bit of clarity could produce a lot of calm,” Mr Willox said.

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