Interview with Paul Culliver, ABC North West South Australia


14 August 2019


PAUL CULLIVER: Angus Taylor, the Federal Energy Minister is in Port Augusta this morning to announce funding for pumped hydro. This is when you run water up a hill when electricity is cheap and you run it back down again to generate more electricity when there's less power in the system, usually when power's more expensive too. So it evens out the supply and in theory makes cheaper electricity for you. I spoke to Angus Taylor a short time ago and I asked him what he was announcing.

ANGUS TAYLOR: We're announcing $40 million of funding, which is part of our underwriting program for dispatchable projects - that's reliable projects to put into the South Australian grid. We've got four candidate projects and this $40 million will accelerate the process for the first of those projects. The fundamental problem we're trying to solve here is we have an enormous amount of what's known as ‘unfirmed’ renewable energy - that's renewable energy that arrives when the wind blows or the sun shines. We need to make sure that's reliable energy and there's a couple of ways to do that. One is that we're backing it up by gas, and the other is storing via pumped hydro. You can also use batteries but they're still very expensive to use en masse, so the focus here is on reliable projects that are going to be economic. We've got four projects we're working our way through in South Australia, including a number here in the region around the Spencer Gulf, where I am today.

PAUL CULLIVER: Okay, which ones are they?

ANGUS TAYLOR:       There's one at Lincoln Gap, at Baroota, and the Middleback Ranges. They're all pumped hydro projects. They're all projects whereby we can store energy when the wind is blowing and the sun is shining, and we can use that energy when the sun goes down and or the wind isn't blowing. All of them would add significant capacity to the grid in South Australia, and most importantly, they will help to bring down prices - they're too high in South Australia - and to ensure the reliability of the grid on those days where there is a shortage of energy. We know those very tough days in summer are getting tougher, which is why we need projects like this.

PAUL CULLIVER: Alright. The media release here says that these projects have been shortlisted, so does that mean they might not necessarily get any funding?

ANGUS TAYLOR: Well, the $40 million is committed. That is committed, and that will go to the first of the projects selected. So, there is funding for these projects-

PAUL CULLIVER: But not all of them.

ANGUS TAYLOR: Well, no, not necessarily - we're not necessarily limiting ourselves to one. We're doing whatever the market needs. That's the focus in each state. We'll put in as much capacity in as the market needs, taking into account what the private sector is committing independent of us, and the important thing about the South Australian market is with what's the highest level of renewables in Australia by a long margin. We need to make sure we've got this firm, reliable power complementing the solar and wind that's gone into this system.

PAUL CULLIVER: Does that mean these South Australian projects are effectively competing against other projects in other states?

ANGUS TAYLOR: Well, they're all competing. There is 12 projects overall across Australia. However, we'll put into each market what's needed in that market. It's clear that there's a need for more reliable power in the South Australian grid. It's completely unambiguous. We've seen the outcomes of that. We saw at the end of 2016, with challenges we faced in the grid in South Australia and we've seen it in the prices, which are simply too high. So, there is a very strong commitment and a priority from the Government for South Australia. That's why this $40 million that we've announced today is committed to the South Australian projects.

PAUL CULLIVER: As with any kind of energy storage, it's not renewable unless the power being fed into it is renewable. Is there some kind of requirement that all of this pumped hydro is powered by renewable energy?

ANGUS TAYLOR: No, and I mean, we've got to be pragmatic about this. We're not talking about you're going to go 100 per cent renewable tomorrow - we just don't have the ability to do that. What we are talking about, though, is making sure that the renewables that are in the system are turned from what can be unreliable power to reliable power, and that's what storage does. It's what pumped hydro does. It's a big battery - think of it as a big battery where the power prices are low, which is typically when the wind is blowing and the sun is shining, we store the energy and when the power prices are higher we use that energy. That brings the prices down. It stops those price peaks, which we're all having to pay for. But it also improves the reliability. It's done independent of the source of the energy.

PAUL CULLIVER: Sure, but what's the point of powering up a pumped hydro project with coal or gas?

ANGUS TAYLOR: Well, the point is to keep the lights on and bring prices down.

PAUL CULLIVER: Coal or gas power is already base-load, isn't it?

ANGUS TAYLOR: Gas is not necessarily and coal can be producing electricity at times when the price is already very low - particularly when we've got wind and solar blowing. The fact of the matter is, pumped hydro complements the renewables. There's no question about that. That's the purpose of the exercise, to sure up what has been a record level of investment in renewables in the grid in South Australia, and across Australia. In 2018, we had the highest level of investment in solar and wind in the world - twice the next country, which was Japan. So we are seeing extraordinary levels of investment in renewables. We need to make sure that it's reliable, and that we're putting downward pressure on prices, and projects like these are exactly the projects that can ensure that we do that.

PAUL CULLIVER: Alright. How far are any of these projects off coming online?

ANGUS TAYLOR: Well, they're all at different stages of development. We want them to progress as quickly as possible, and of course, you know, the dates are being worked through as we pick the preferred projects across the 12 right across the country. The purpose of the exercise is to get these done as quickly as possible. No project can happen overnight, so this is why in parallel we want to make sure that our existing coal and gas fired power stations stay in the market for as long as we need them. A premature closure has caused problems in South Australia and in Victoria and that's something we absolutely want to avoid. We're very pleased that AGL has announced that it is keeping its Torrens A generator open for an extra couple of years, which is very good news for South Australia. It gives us time to get these sorts of project into the market, and to ensure that we can drive prices down and the keep the lights on. When Australians flick the switch, they expect their power to go on, and we need to make sure that we have the right mix in the system, which is changing over time, there's no doubt about that, to make sure we can keep the lights on.

PAUL CULLIVER: Federal Energy Minister Angus Taylor is my guest this morning on ABC North and West, and ABC Eyre Peninsula. My name is Paul Culliver. In 2017, ARENA funded a feasibility study for EnergyAustralia's looking at a Cultana pumped hydro project, which is between Port Augusta and Whyalla. Where's that at?

ANGUS TAYLOR: Well, again, I mean with a number of these projects progressing and all the projects that were shortlisted, with smaller companies, and that's very deliberate, we are very focussed on getting new-

PAUL CULLIVER: But where's the 2017 one at?

ANGUS TAYLOR: That's a question for EnergyAustralia, and I'll let them answer that question. It's a private project.

PAUL CULLIVER: Okay, but if ARENA, if government funding is attached to projects, such as it was in 2017, shouldn't you look at how the pumped hydro projects are progressing before putting more money in as you are here to other projects?

ANGUS TAYLOR: I said that when I answered the earlier question. The decisions we are making will complement other investments that are happening, but look, the urgency here to get projects into the South Australian market is extremely high, and we want to see new players coming into the market. That is a priority for us. It was recommended by the ACCC quite rightly - we want to see new competitors coming in. We're delighted if existing players like EnergyAustralia or Origin or AGL are to bring new capacity into the market as well. That's ultimately a decision they have to make. But we are underwriting new players into the market. We're making these very, very important commitments - the $40 million today is a very serious commitment to making sure that we've got not just more supply coming into the market, which ensure that our grid works the way it's supposed to, but also that we have new players coming into the market.

PAUL CULLIVER: Alright, yesterday The Guardian reported that as a result of freedom of information requests they've found evidence that your department ignored advice warning not to run $2.43 million in taxpayer funded ads, spruiking the Government's energy policies in the lead-up to Christmas - why was that?

ANGUS TAYLOR: We have continued as of the first part of last year to advertise to Australians that they have the ability to get their electricity prices down by making a call to their energy providers. This is an extremely important message for Australians, that there are significant savings to be made. The ‘Make the Call’ campaign that was run earlier in the year has been one of the more successful campaigns that I have seen run by a government.

PAUL CULLIVER: But the advice here was that in the lead-up to Christmas, viewers and people seeing the ads weren't going to be that interested, so the ads wouldn't be very effective. Why did you push ahead regardless?

ANGUS TAYLOR: Our ads have been extremely effective. We've seen more switching between energy providers over the last six months than we've seen before. This has been an extraordinary outcome. And at the end of the day, look, my focus as a Minister is on outcome, and I will do what is necessary to get the outcomes. We have seen the highest level of switching we've seen for a long while, between competitors right across the electricity market, because people are starting to understand now, they can get their deals down by making the call, and making the call is what we're asking them to do. We need to find ways of making sure that people understand that if they just pick up the phone and ask for a better price, then they can get a better price. Now, from the beginning of July, we've made significant changes to the way electricity companies have to market their products. They all have to reference back to a single price. It's easier than ever now to pick up the phone, to say to your energy provider: ‘I want a better price’, and to measure them against each other, because they're all giving their prices now, like for like, apples with apples. If one company gives a 15 per cent discount, and another 10 per cent discount, you know the 15 per cent discount is better. We have to get those messages out there, and we use advertising campaigns to do it.

PAUL CULLIVER: Alright Minister. Thanks for your time today.

ANGUS TAYLOR: Thank you.

Minister for Energy and Emissions Reduction