The Labor government intends to make up for a decade of wasted energy policy under the last federal government by investing $4.7 billion over the forward estimates in new electricity transmission lines. According to the budget papers, these investments will earn $241 million by 2026.
It has long been clear that electricity bills will rise over these early years of the energy transition, as new generation and storage is built to replace uneconomic and unreliable coal. The last federal government delayed making necessary investments and Australia must rush to catch up.
In response, Labor’s $20 billion Rewiring the Nation policy is supposed to reduce electricity bills, by $275 per household per year by 2025, all other things being equal. It does this by lending money at low interest rates to private investors so they can start to build the 10,000 kilometres of new transmission lines required to power the National Electricity Market on clean energy.
Over the forward estimates, the Clean Energy Finance Corporation will receive $50 million to help deliver the Rewiring the Nation loans. The Department of Climate Change, Energy, the Environment and Water will receive $18.1 million to create a Rewiring the Nation Office (RTNO) to manage crucial local community engagement and intergovernmental negotiations, $9.4 million to smooth out approvals, using ministerial power to circumvent regulatory processes designating interconnectors as ‘Nationally Significant Transmission Projects’, and $5.8 million to review Integrated System Plan and compare to overseas jurisdictions to accelerate transition.
These measures are necessary and welcome. Unfortunately, there is little chance that this vital reform and investment will reduce electricity bills for households before the next election.
However, there will be some targeted bill relief for some households who get access to cheaper electricity from solar and batteries, through other budget measures. This includes $101 million over 2024 – 2026 for Solar Banks which means systems shared across a community so households can go virtually solar if they can’t physically do so because they don’t own their home or live in apartments.
There is also $224.3 million over 4 years to deploy 400 community batteries which will allow households to effectively store and use solar energy in their community, thereby reducing their bills.
Labor is trying to deliver on its Rewiring the Nation investments, but its problems are great. Gas and coal prices are through the roof, coal power stations are breaking down and retiring early, and the grid is not fit-for-purpose to connect new, cheap renewables and smart storage. While this is the Treasurer’s problems to deal with, the fault more appropriately lies with the Shadow Treasurer Angus Taylor, who for the last four years was the Federal Energy Minister.
Just look at Angus Taylor’s flagship Underwriting New Generation Investment (UNGI) program, which was finally, formally canned in the Budget, having delivered not a single cent.
In 2018, the Australian Competition & Consumer Commission (ACCC) recommended increasing competition in the grid by investing in new generation from smaller market players. The catch was projects should only get funding from year 6 to 15 with no projects getting funding in the first five years.
Under Minister Taylor, the ACCC recommendation was adulterated to allow even the largest market players to apply, including for upgrades (not just new projects) and to get support straight away. Expressions of interest were sought from companies even before the program had any formal guidelines (see Institute’s 2018 submission). Shortly after, only 12 projects were shortlisted – half of them fossil fuels – with no criteria for selection and no clear procurement process. On a number of occasions, the officials and agencies charged with delivering UNGI were unclear on what was happening (see Institute’s 2020 UNGI report).
To make matters worse, the program was unconstitutional and lacked any legislative basis to proceed. Minister Taylor needed new legislation according to legal advice commissioned by The Australia Institute. Minister Taylor tried to amend the Clean Energy Finance Corporation (CEFC) to force it to fund UNGI, yet he couldn’t even get this Bill through the Nationals Party, who tried to further adulterate the CEFC by adding coal to the mix, forcing the whole Bill to be shelved.
Things got so desperate that Minister Taylor tried to fund his UNGI proposals directly through the October 2020 Budget, starting with a coal power station upgrade at Delta Energy’s Vales Point. A generous $8.7 million was allocated to Delta, owned by former Liberal and Nationals donor Trevor St Baker. But upon being told to apply for the funding after it was allocated… Delta Energy turned it down! This is for the same power station that was bought from the NSW government for $1 million and revalued up to $730 million.
What little money was left in the UNGI bucket ($63.9 million) was clawed back in the recent Budget by Minister for Climate Change and Energy Chris Bowen and redirected to storage technologies. Four years of pushing to support more gas and coal power, and the only thing the UNGI program ever earned is the interest of the Auditor General for a possible investigation.