Andrew Broad (Mallee, National Party) Share this | Hansard source

Thank you, Mr Deputy Speaker, and I note your strong interest in the area of energy. It is quite fitting that you are sitting here today, as is the member for Melbourne, who is also in the committee that I chair, the House of Representatives Standing Committee on the Environment and Energy. I'm pleased he had time to FaceTime his children.

It is good to talk about this Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017, because this is really about one part of the energy power bill that people get that, that we don't often focus on. We talk a lot about generation, but we don't always talk a lot about distribution. Of course, up to nearly half of your power bill is the distribution. This bill seeks to limit the appeal process for those energy grid constructors and operators, who want to try to extract more money from what is a reasonably safe investment—building grid—and ensuring we try to keep the price down for consumers.

It pleases me that there's bipartisan support, and I guess that does show the Australian people that there is a level of bipartisanship about the key focus, which is about ensuring that Australians do have access to electricity. In the committee I have been fortunate enough to chair, we've been able to ascertain that there are some things that need to be done. Certainly, you do need a reliable electricity grid; you do need to ensure that things can be done. I do note that after the Black Saturday bushfires there was a royal commission held into the cause of those. The result of that has required some significant upgrading of the safety standards in the Victorian electricity grid, and that of course has added some cost onto household electricity bills.

I want to touch on electricity generally, because this is a great opportunity to broaden the discussion. I note the previous speaker did as well, so I think I can take a little bit of liberty from that. There are three forms of generation within our grid. There is the baseload, thermal generation, which has traditionally been coal—a large, spinning piece of metal, essentially, that creates electricity. There's the intermittent generation, which is predominantly wind and photovoltaic solar. That has been very welcome in my patch. We've had some of the best sun in Victoria. In the area where I live many people now have solar on their roof and there has recently been the installation of large-scale solar in paddocks. Then of course there is the peaking requirement of electricity, which is gas, pumped hydro and, to a lesser extent, batteries—I think batteries will come into the mix.

I think something has been lost in this debate. Shutting down coal-fired power stations without having built capacity to take up the slack from those coal-fired power stations has meant that we've had to have a greater reliance upon peaking generation, which has been gas. This has also coincided with the opening up of gas exports from the east coast of Australia. That has been a driving factor in why electricity generation has gone up substantially. The necessity to have some level of affordable gas in the mix is certainly something that needs to be worked on when thinking these things through. (Quorum formed)

I'm sure that was brought on by the Labor Party because they wanted everyone to hear the great speech I was giving about energy. It shows that we are the party that is actually trying to tackle this. My sense of bipartisanship has now gone slightly out of the window because of my colleagues being disturbed from their evening dinner. The concentration of power generation companies, the profit taking as a result of that and some gaming of the grid, particularly by the Queensland government, have also been contributing factors to the increase in our power prices. My committee certainly intends to hand down a report at the end of the year that will give some future direction for ensuring that our grid remains viable and flexible and is set up for the future.

But there is one thing that's been very interesting: globally, we have seen an increase in the R&D that's gone into wind and solar, and, as a result, the cost of building wind and solar has become cheaper and the power generated from those technologies has increased. I think the member for Melbourne would agree with that. Of course, that then asks the question: do we still need to subsidise those technologies? When I was over in Berlin recently, I learnt that they've just commissioned a large wind power station that has zero subsidy. I think the next challenge for us is to move our focus away from necessarily subsidising the generation source and over to building the grid for the generation source to plug into.

If you think about it, we don't fund businesses but we do fund highways. We let a business grow a product, and then they put the product on a road and transport it to the market. When we construct our grid, we have to start thinking about moving away from subsidising our renewable generation sources and allowing that subsidy to be moved across to building the grid infrastructure that we should have for the future. Currently, we are subsidising renewable energy to the tune of $2.6 billion a year. I believe that we could pretty much get rid of that and put it into grid infrastructure. We could use it for greenfield sites where grids can be constructed that would allow us to take the wind resources off the west coast of Tasmania and the sun resources off Central Australia. This would give us an opportunity to have a more diversified grid.

We also have to look at how we can reduce the price of gas, and I believe the government's been taking steps in the right direction on that. I've always advocated for more of a reserve policy, and I still think there's merit in that, but taking steps in the right direction to make more gas available for Australian households and businesses, thereby reducing power costs, is very relevant. I also think we have the opportunity to improve the efficiency of some of our gas fired power stations. It was pointed out in the Finkel review that some of our gas fired power stations are reasonably inefficient at creating electricity.

The challenge we've got is that the next political debate going on in this place is around a clean energy target, and the fear I have is that it still does not create certainty for investment. I think there will be opportunity for what I would call a 'set and lock' mechanism. Essentially, what has been working overseas is having eight-year policy settings around energy, rather than three-year policy settings. Any time you build something that requires large capital investment, to attract investment you have to have certainty—political certainty and market certainty. If you had a set and lock mechanism, where you set a level of emissions and then lock that supply contract for an eight-year period, that would be a pathway forward to creating certainty. That's something that hasn't been discussed in the parliament as yet.

I also think the Finkel review's recommendation around requiring solar and wind generation to have auxiliary services such as inertia and reliability is essential. You need to understand that there are three components to electricity generation: electrical energy, inertia and reliability. You have to have all three if you're going to have a functioning grid, and I commend the Prime Minister for announcing Snowy 2.0, which will work very effectively, as a large battery, in conjunction with renewable energy resources such as wind and solar.

There also needs to be a discussion about how we run the national electricity market. I don't believe the peaking price of $14,000 a megawatt hour is working. It's not attracting people to build peaking generation. You can't expect someone to build something on the off-chance that it's going to be high occasionally. That would be a speculative investment. We've seen that, in countries and areas that have taken up a capacity market, the capacity market has facilitated greater investment in more intermittent power station. So a capacity market would help facilitate the uptake of more renewables into the mix.

I think this legislation is a very welcome step. This shows the government is prepared to take the first steps. There is more work to be done. I'm actually excited about the future. I think coal will have a future. If you stand behind a 1964 Holden you will see the emissions that come out of the back, and if you stand behind a 2016 Holden—I won't say 'a 2017 Holden', because we don't make them here—the emissions that come out of that are substantially less, yet the power that you get out of that car is substantially more, and it's still burning petrol. I think that's a lesson for us. Let's not denigrate the resource; let's look at the technology we can put around the resource to ensure that we can be responsible.

The solar resources of Australia are immense. The wind resources of Australia are immense. The pumped hydro and hydro resources of Australia are immense. I think we can do it. Ultimately, the government will get there and restore some confidence back into the Australian people that there is a level of maturity in this place, that we're not going to play politics with energy, that our focus should always be on ensuring that the people who want to conduct business and rely on electricity can afford to do so, that the poorest in our society can afford to turn the heater on and that we can ensure that we have the electricity to give us the standard of living that we deserve as Australians. We will get there.

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