22 August 2019
STEVE PRICE: As I mentioned at the beginning of the program, we are being warned in pretty dire fashion today about a risk of blackouts this summer. The Australian Energy Market Operator has laid the blame firmly at the feet of ageing coal and gas generators. We even have an operator of Victoria who has suggested - this is Energy Australia's Chief Executive Catherine Tanna - that because the Victorian Government is obsessed with renewable energy, turning and off the brown coal-fired stations that she runs risks their longevity because they're not designed to do that. The Minister responsible for energy, the Federal Minister for Energy, Angus Taylor is up north today. He's in Queensland at Gladstone. He's on the line. Minister, thanks for your time.
ANGUS TAYLOR: Thanks for having me, Steve.
STEVE PRICE: You inspected there the aluminium smelter as I understand it. That's a very high user of electricity. Are they concerned about the reliability of power?
ANGUS TAYLOR: Yeah, they're concerned about reliability, and of course affordability as well. I mean aluminium smelters are the biggest users of electricity in Australia, so they understand the market well. And of course, they're always concerned about affordability and reliability, but we should be concerned about this summer, particularly in Victoria where we've seen a Victorian Government that is determined to put unprecedented amounts of wind and solar into the system without a solution for what happens when the wind doesn't blow and the sun doesn't shine, Steve. Now, if you want to people to put solar cells on the roofs, that's fine - but you've got to have a solution for what happens when the sun goes down. And the Victorian Government doesn't. In fact, it's so bad down there that they're prematurely shutting down their coal-fired power stations, as we saw with Hazelwood, and we've heard similar concerns about other coal-fired power stations down there, and they've banned onshore exploration and development of gas. I don't know how the Victorian Minister thinks she's going to keep the lights on when the sun is shining and the wind isn't blowing. I have no idea. This is a very serious situation. Now, look we stand ready to back in new generation, and to work with the private sector to hold onto our existing dispatchable generators - that's coal, gas, and hydro - that can be there when you flip the switch. And we want to see more of that in the system and we want to see the existing generators in the system not shut down prematurely, running flat out. But that's not the plan of the Queensland Government - oh sorry, the Victorian Government - or the Queensland Government for that matter. The result is we face serious risk this summer.
STEVE PRICE: You must have read with interest Catherine Tanna's remarks. I mean, her company, Energy Australia, does run some of the older coal-fired power stations in the country, and they are powered by Victorian brown coal, which is not as good as Queensland and New South Wales black coal. But she said, look, these things were not designed to turn on and off, and if you're going to rush headlong down this route toward renewables and you keep pushing solar and wind into the system and telling us you don't want as much from us, it is not going to work like that. These things are not designed to do that.
ANGUS TAYLOR: Exactly right Steve. So two things happen to them. The first is you've got to turn them up and down, and that is a real problem. They don't do that well and you wear them out when you do it. The second is, they're running less of their time and the economics stop working, so you force them out of the market. The Victorian Government has been very clear that's what they want to see happen. Well, this is a disaster for Victoria, and sadly, it's also contagious. We saw the previous Labor government in South Australia go down the same track - that had impacts on Victoria and New South Wales. The Victorian plan is going to have impacts on surrounding states. So we're calling them out. This is unacceptable, and as I say, we stand ready to work with any state government that wants to sort these things out. The New South Wales Government has been working with us very closely over his recent months. We're seeing life extensions of existing coal and gas generators in South Australia and New South Wales now, and we're working closely in New South Wales to make sure we've got a clear plan to either extend the life of Liddell further or to replace it with like-for-like capacity. But we can only do that if the state government wants to do that with us, and that's not been the case in Victoria.
STEVE PRICE: We'll talk about Liddell in a moment. So if we have blackouts this summer, I mean forgive me if I've got this wrong, we now operate off a national grid. So if Victoria is at risk of being without power, that means we're all at risk with having reduced power, isn't it?
ANGUS TAYLOR: It adds to the risk. Look, each grid still has its own- a good proportion of its own generators, obviously, as part of the grid, each state. But if you've got one state that's gone rogue, is doing the wrong thing-
STEVE PRICE: [Talks over] Well look at what happened in South Australia with that blackout. I mean that's exactly what's happened.
ANGUS TAYLOR: Exactly. If one state goes rogue, as I say, it's contagious. Now, you know, if you look at what happened in Victoria, the shutdown of Hazelwood was the pivotal moment. It was like getting rid of the spare tyre on your car. And then when you get a flat, you got nothing left to go with.
STEVE PRICE: Yep.
ANGUS TAYLOR: That's what happened with Hazelwood. The Victorian Government ordered it shut, the prices went up, the reliability's gone down, we're facing it this summer and the Victorian Government continues to go down this same track. You've got 5,000 megawatts of solar and wind they're planning on, they're going to force into the system. You know, that is replacement of a very large proportion of their existing generation but without any backup. So this is, its insanity, and, you know, the people of Victoria will pay the price unless the Victorian Government comes to its senses.
STEVE PRICE: Listening to Alan Jones this morning, one of his listeners looked up what was being generated in New South Wales today. I don't know if you flew this morning or yesterday, but there's very strong winds up and down the New South Wales coast, all the way from north to south. And there was only at the peak - and so the wind's really going flat chat - 11 per cent of our power was being generated by wind when we're on one of the windiest days we've had for a year.
ANGUS TAYLOR: Yeah, look, and this is the challenge. I've got no problem with people putting solar cells on their roofs and we can handle a certain amount of renewables, but once you start forcing it in at the rate that we saw under the South Australian Labor government, the previous one, and under the current Victorian Labor Government and we're starting to see now in Queensland, it stops working, it stops working. You push your coal fired generators out, you push your gas out, and on top of that you've got a ban on gas exploration and development which we've seen in Victoria, you're heading for trouble. You're going to get yourself to the point where prices will go up and the lights will go out. We saw it in South Australia. It's an experiment that Bill Shorten wanted to take across Australia, but it's not an experiment we will ever endorse or support.
STEVE PRICE: You, just finally, you are in Gladstone. You did announce in the budget, or the Government announced in the budget that there was $10 million to develop this detailed plan to identify locations. Is that why you're in Gladstone and would Gladstone be a good location for perhaps a new HELE-coal project or a new coal fired power station or a new gas fired power station?
ANGUS TAYLOR: Yes, Steve, we committed $10 million in the Budget to making sure we've got that affordable, reliable power for this region, central and northern Queensland. And Gladstone, of course, has right now a number of power stations and we need to see them continuing on well into the future. There's a good argument to say we're going to need new generation as well. We're looking at a plan for a coal fired generator in Collinsville which we announced before the election, not a long way from here, given the scale of north and central Queensland. There's no doubt in time we're going to need to see more baseload power, dispatchable power, power that's there when you flick the switch. And, you know, nowhere is that more important in central and northern Queensland because energy's such a big part of the economy up.
STEVE PRICE: This discussion's all been about reliability. You are also the man who said you'd bring down prices. I ask you this every time I speak to you: are you still determined to do that and are you getting any traction on bringing down energy prices?
ANGUS TAYLOR: We are absolutely determined to do that and obviously the initial focus is on electricity. Gas is now where we're moving our attention to. We have seen CPI reductions in electricity in the last couple of quarters. There's further to go. Future, forward prices for wholesale electricity prices are well down over the coming years but we've got to make that happen. We've got to ensure that flows through to consumers. That means we've got to have sensible policies first coming from state governments, we've got to get more supply into the market and we've got to retain that supply – that’s so crucial to putting downward pressure on prices. That's the key. We're completely committed to doing that, Steve.
STEVE PRICE: I'm sure you won't be surprised if I ask you each time I speak to you about that.
ANGUS TAYLOR: You're more than welcome to.
STEVE PRICE: Good on you. Thank you for joining us from Gladstone this afternoon. Good on you.
ANGUS TAYLOR: Cheers.