7 August 2019
CHRIS KENNY: The Federal Energy Minister now, Angus Taylor, who joins us from the Sydney CBD. Angus Taylor, thanks for joining us. Just on that issue first up, you won't have been able to get a briefing or not but it's very embarrassing if New Zealand is out there informally announcing very sensitive decisions Australia needs to make about Iraq deployments. Are you aware of any forthcoming announcements about Australia's troop deployment to Iraq?
ANGUS TAYLOR: Chris, I'll leave this one to the Defence Minister. I think she's the right one to respond to that question.
CHRIS KENNY: Fair call, I suppose, but I have to ask. You never know. Look, let's get on to energy. You've been supportive of this move by the National Electricity Market regulator to take four wind farm owners to court over that disastrous state-wide blackout back on September 28th, 2016. Now, why do you support this action?
ANGUS TAYLOR: Well look, I'm supportive of the regulator doing its job, being a tough cop on the beat. We have important rules in our system about the performance of generators and it's the job of the regulator to enforce those rules. That's exactly what it's doing, that’s its job and I applaud that. More broadly, Chris, there's no doubt that with the record levels of investment from solar and wind in the system in recent years, new investment, which is very different in nature to the tradition coal and gas generation, that the rules need to be abided by. Of course, we've needed new rules too, I mean, the Retailer Reliability Obligation, we've agreed on in December last year, went into place from 2 July. It means energy companies have to have the capacity, the firm, 24/7 power necessary to meet their customers' needs on the worst possible day, years ahead of time. These are important rules, they need to be enforced and it's good to see the regulator doing its job.
CHRIS KENNY: You know, the trouble is those rules weren't enforced, weren't in place early in the push for renewables, were they? We had the Renewable Energy Target. People were able to put up intermittent power supply and they had no obligation to supply any backup energy for when they fell down or when the wind or solar conditions weren't there.
ANGUS TAYLOR: I think it's fair to say that some of the policies that were put in place by past governments - and sadly some current state governments - to force intermittent generation, solar and wind, into the system without appropriate policies to ensure that we've got the reliability and affordability we need. Those policies have created real challenges, Chris, and that's why-
CHRIS KENNY: Yeah, Labor and Liberal governments, both sides of politics have been negligent in this regard. In hindsight, it's pretty simple, isn't it? If you're an electricity retailer, there should be an obligation for you to be able to supply - or generator - you need to be able to supply the energy that you're generating. And so, the onus should be on them to have backup gas supplies or contracts with coal generators or whatever it is, so that they actually are guaranteed to deliver the generation that they promise.
ANGUS TAYLOR: Exactly right. I mean, you know, the Retailer Reliability Obligation is very simple at its heart. It says: the retailer needs to have enough reliable capacity to meet its customers' needs on the worst day imaginable. That's their job and it does mean you've got to anticipate a day when the wind isn't blowing, and that's the job of the retailer. That's now a very clear rule. Now, the AER has to enforce a whole series of rules around the reliability and performance of generators. That's what they're doing and it's right that they do that. What we don't need now, Chris, is states running off though and ramping up very high renewable energy targets without thinking about the implications for the reliability and the affordability of the grid. We've seen this in Victoria - they've got a 50 per cent renewable energy target, they're prematurely closing down their coal fired power stations as we saw with Hazelwood, they've got a ban on gas exploration and development so they haven't got access to the affordable gas Victoria traditionally had - and they're wondering why they've got a problem. I mean, this is a dangerous cocktail of policies and we need to see state governments doing the right thing.
CHRIS KENNY: Yes, very worrying, because it's as if Victoria hasn't even looked across the border into South Australia and seen what could happen. So look, this court case, you know, re-energises the debate about what went on in South Australia. Now, my view of that - and I've looked at this over many, many years - is South Australia obviously left itself hopelessly exposed on that interconnector to Victoria because it got rid of so much dispatchable power in South Australia. So at any time when it was going to be reliant on all of its wind energy or there was no wind and that interconnector was out, it was going to be stranded since that blackout. The state Labor government had to spend millions getting in diesel generators and gas generators and the like so they've got some more backup. So these wind farms, the court case we're looking at now - is the suggestion that them falling over actually helped trip out the interconnector? Or is it the case that because they were tripped out, they were unable to supply some energy to help get the system up again? Or is it both?
ANGUS TAYLOR: Look, Chris, I don't want to go into the details of the litigation and I don't think it's appropriate as a Minister to do that. That'll be up to the regulator and the court case to get into that detail. But it is clearly true that there are rules requiring all generators to reach performance standards and if they don't reach those performance standards, they can expect enforcement from the regulator. I mean, that is clearly true. Now, we've had very real challenges in South Australia, the previous South Australian Labor government ran an extraordinary experiment of this 50 per cent renewable energy target without regard for reliability and affordability. They've now got amongst the highest energy- electricity prices in the world. They've got great challenges with reliability. My very strong focus, both there and in other states, is to keep our existing generators in the market running flat out. I was delighted to see that AGL just in the last week or so announced that they were going to extend the life of the Torrens A generator in South Australia for another three years. That's a good move - we strongly welcome that - but we do need to make sure-
CHRIS KENNY: Liddell in New South Wales extended.
ANGUS TAYLOR: Liddell in New South Wales, exactly right. I was talking about South Australia with respect to this particular incident in 2016. But in New South Wales, of course, they've agreed to extend the life of Liddell. We've got to keep those baseload, those firm generators that can provide 24/7 reliable power in the system for as long as we possibly can. That is absolutely crucial.
CHRIS KENNY: When you talk about baseload power that disappeared in South Australia, you talk about the two coal fired power stations that were shut down and blown up at Port Augusta. Now, Port Augusta is on the coast, it's just down the road from Roxby Downs, it has all that transmission infrastructure in place linking it into the populated areas of South Australia and into the national electricity grid. It would be a bloody good place to put a nuclear generator, wouldn't it?
ANGUS TAYLOR: What is true is premature closure of those coal fired power stations - whether it was the Northern Power Station in South Australia or the Hazelwood Power Station in Victoria - we see now what happens when they're prematurely closed. We also see that when you force these renewable energy targets too aggressively into the market the way those governments did, how they do prematurely close their coal fired power stations. That's a disaster. It was a disaster in both cases.
CHRIS KENNY: Given the need to reduce carbon emissions, do you think we'll see nuclear energy in this country during your lifetime?
ANGUS TAYLOR: Chris, we've got a moratorium and there's no plan to change that. But I have referred to the relevant committee an inquiry to look at nuclear in the future and see whether it can play a role over the long term. You know, the truth is, Chris, we need to consider a range of different technologies over the long term and the role that they can play in the system. In the short term, the job is very simple - we've got to keep our existing generators in, running flat out, and we've got to make sure we bring new firm generation - that's reliable baseload 24/7 generation - into the market to meet customers' needs, and we've got to put the obligation on retailers to do that. We're doing these things. We're seeing some real success in recent times. AGL’s announcement is a good outcome. We've got further to go, but that's got to be the focus. That's what will really have an impact on electricity bills over the next couple of years and, of course, Australians have a reasonable expectation - when they flick the switch, lights go on. Unless we keep that generation in the market and we have sensible policies from state governments to support what we're doing, Australians can't be confident that that expectation will be met.
CHRIS KENNY: Thanks for joining us, Angus.
ANGUS TAYLOR: Thanks, Chris.