David Gillespie (Lyne, National Party) Share this | Hansard source

I rise to talk in support of the Clean Energy Finance Corporation Amendment (Grid Reliability Fund) Bill 2020. This bill amends the Clean Energy Finance Corporation Act 2012 to establish the Grid Reliability Fund, which will be a $1 billion fund to expand the role of the Clean Energy Finance Corporation and adjust its investment mandate to include, most importantly, the ability to make investments in loss-making infrastructure. It will focus on investing in new electricity storage vehicles, reliable new generation of electricity—including gas and hydro projects—new transmission and distribution systems, and also grid stabilisation infrastructure. It expands the 'low-emission technology' definition, which means that things have to be 50 per cent more efficient than existing energy generation. It will also deliver a fund that will be able to be deployed to deliver the Underwriting New Generation Investments program, or UNGI, that was announced before the last election.

So far, the Clean Energy Finance Corporation has $8.2 billion invested in projects totalling $27.8 billion, and these investments have delivered an abatement of 220 metric tonnes of CO2 equivalent gases. So that listeners can understand what I'm talking about, I just want to mention a few definitions. First of all, the 'energy grid' is the term which makes up the transmission and distribution networks; they are the poles and wires, from the giant-looking massive transmission grids that you see in paddocks, which look like huge robots out in the middle of a paddock, through to the distribution networks, which are the poles and wires going down your street. The transmission networks send things at an incredibly high voltage, above 300,000 volts of alternating current. There are 13 distribution networks fed by five transmission networks in Australia; most of them are in Queensland, New South Wales, ACT, Victoria, South Australia and Tasmania. That cluster of networks is the National Electricity Market. There are cross-border interconnectors like giant extension cords. In the Northern Territory they have three separate grids that are not connected: the Darwin to Katherine, the Alice Springs and Tennant Creek. Western Australia has two grids, the South West Interconnected System and the North West Interconnected System.

There has been huge investment in renewable energy generators. It's mind boggling, in fact. Last year, 6.3 gigawatts of renewable energy capacity was added to the grid, and in 2018 it was 5.1 gigawatts of energy—$30 billion in all since 2017. This is 10 times faster than Europe, China, Japan or the US, yet we get criticised because we're not investing enough. It is an absolute fallacy that is repeated ad nauseam by the members on the other side. We are doing more than Europe, China, or the US, at a 10-times-faster rate. It sounds great, I agree. People want us to invest in renewable energy, but it's installed capacity that you are quoting when you mention these figures. The grid and the electricity system that comes out of your power points isn't necessarily the installed capacity. What is available for the grid is the installed capacity multiplied by what is called the capacity factor—that is, what the actual generator, on average, can supply over a year.

In Australia we have some of the best renewable assets, namely wind and plenty of sun. We have hot, long summers. But, even allowing for that, renewable generators are still limited by nature: by night and day, twilight, dusk, overcast days and rainy days. Between December and January, in my neck of the woods, on the North Coast of New South Wales, we had about 500 millimetres of rain. It rained day after day after day. There's the wet season in the tropics. There are months of the year when the wind doesn't blow nearly as much. Often during hot summer periods there is very little wind. So the wind energy generators might have installed capacities that sound absolutely massive, but it's the capacity factor that defines what is available. As a rough measure, the capacity factor for wind is 30 per cent. For solar it is 20 to 22 per cent because we have such good sunny periods. When you have a power station—whether it is nuclear, gas or coal fired—you get 95 per cent capacity. So when you say that we have 5.1 or 6.3 gigawatts of renewable capacity, we don't necessarily get that day in, day out. Renewables investment, by its very nature, is variable and intermittent. It requires expensive investments to integrate with the existing system the variable surges of electricity that are generated.

Any electricity system, including Australia's, has to run at a very finely tuned voltage and frequency. And because that's coming from synchronous generators in the power stations, that establishes what's called inertia. When you have power running in on a sunny day or a windy day, and all the turbines fire up, the voltage in the frequency can break the system; you can blow a fuse. Take what happened in the South Australian blackout. The electricity generated in that storm was so great that basically the fuse blew and they had a blackout. And they had no black-start capability or any underlying baseload energy generator. The interconnector was down. Other areas of the distribution network also blew down, it was such a big storm. That is something we need to remind ourselves of with all these investments.

The Grid Reliability Fund will allow us to invest in grid-scale batteries and other expensive bits of equipment called synchronous condensers, which try to mimic that inertia and that synchronous signal that is coming through when you have electricity coming out from the central generating source. It also looks to support investment in new transmission grids. There is one between New South Wales and South Australia, the Hume link. There is the Queensland-New South Wales interconnector. It also looks to invest in new pumped hydro facilities, at Baroota in South Australia, at Armidale in New South Wales and at similar sites in Queensland.

Where the Underwriting New Generation Investments program identified baseload generators, it recommended a couple of gas-fired power stations because the benefit of gas-fired power stations is that they can be ramped up quickly. There was also underwriting of the Vales Point upgrade, which is an old generator that was getting additional efficiencies added. But unfortunately, due to announcements from the New South Wales government, that's no longer feasible. I would just like to explain in a bit more detail the issue of installed capacity versus what actually becomes available to consumers, whether it is industry or individuals. In the last couple of years four gigawatts of baseload power, or power coming from power stations, has been retired from the grid. We've heard of those massive new installations—5.1 and 6.3 gigawatts—but that doesn't mean we're in net positive territory; if you multiply those capacity factors, you come up way short. One has to understand that, in periods when the weather is not favourable, the renewable generators might only produce four per cent or even less.

So there is a glaring deficiency in the way people are thinking about this transition. I have great concerns that people think that an investment in a wind farm or a massive solar farm is going to be exactly the same; it's just that it's coming from a clean source. Unless we have a replacement for our retiring baseload power stations, it won't just be when there's not enough at the peak that we get the shortages and the blackouts or brownouts that we've had over hot summers; we'll be getting them every day, because there won't be the stuff at the bottom. That's the really important take-home message. Even our Snowy 2.0, which will deliver 2,000 megawatt hours of dispatchable electricity, will only do so for 175 hours. It can store the equivalent of 3½ gigawatt hours of storage, but, given the capacity factor is only 17 per cent, it isn't going to deliver everything that we think it will. In fact, the gas power plants that are mooted to be built would be peaking power plants that come on when there's a shortage at the end. But we need to have the baseload. If you make the cake analogy, in New South Wales we have a cake of energy that is never less than about 7,000 megawatts of power pumping through the wires. We have peaks above that that go up to 12,000 or maybe 13,000 megawatt hours when demand is high. But, if you don't have that baseload energy available and ready to fire, you will have a major deficiency.

We have had great trouble building dams in Australia. A lot of these plans revolve around building new dams and using pumped hydro. But, when you look at the physics of it, the amount of energy generated from the water running down is less than the amount of energy required to pump the water back up so it can run down. With gas peaking plants and Snowy Hydro, there is an arbitrage in their economic model. They can turn a profit because they provide energy when there's a shortage. They play in that market when they might be getting $216 for their unit of energy, as opposed to the $30, $40 or $50 that is frequently the case.

Because we're in the situation we are in, where we've had these energy market rules, there has been a transition happening and we do need to put new things in place; otherwise we will have shortages more quickly than expected. But I just caution everyone: do not think that the transition is going to be an equivalent transition. It will be much more expensive and much more unreliable—hence the need to invest in all these extra grid integration technologies. I might add that the big inverters that convert the direct current electricity that comes out of a solar generator, either on your house or on a mega solar farm, consume energy, and then inverting it at the other end also consumes energy.

We have this fund to invest in batteries. There are massive grid-size batteries which are essentially like the Hornsdale one in South Australia. I have looked on the net, and it's the biggest grid style battery that I can find in the world. It's been upgraded above its initial 200 megawatts to something like 240 megawatts, and it has a critical role to play when you're switching from a solar farm or a wind farm to a gas- or coal-fired power station to keep that frequency and voltage at a very fine level so that the fuses don't blow and the whole system doesn't black out. But people shouldn't think that it will be able to supply energy overnight when there is no solar power and wind blowing, because in South Australia, if they had another blackout, the new Hornsdale bank of batteries could run the grid in South Australia for only four minutes. In my electorate, I have hundreds of people who work at the Tomago aluminium smelter. If that same battery at Hornsdale were hooked up to Tomago, it would run it for 12 minutes. So we need to keep it in perspective. (Time expired)

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