4 November 2019
BRETT REDMAN: Well, good afternoon everybody. It's a great day to be here today. I'd like to welcome you all to the opening of the first new major power plant in the market since 2012. We're here today at AGL's Barker Inlet Power Station. My name is Brett Redman, I'm the CEO for AGL.
Before we get going, I'd like to acknowledge the traditional owners of the land on which we meet here today, the Kaurna people, and pay my respects to their elders past, present, and emerging.
There's a lot of talk about what the market needs. A lot of people make announcements, a lot of people suggest things, a lot of people say the market should be out doing things. AGL is a company that prides itself on getting stuff done. We don't just talk about building new generation, we do it. So today, what we're here is doing the celebration for the first energy coming out of the first major dispatchable power plant in the market since 2012. The Barker Inlet Power Station is made up of 12 individual gas-fired generators. Together, they're a combined 210 megawatts and what they provide is the reliable, safe and clean generation this market needs to firm it up going forward. As a result, what AGL is going to be able to do is to continue to provide its customers and the market steady, reliable, cost-effective energy. I'm pleased to also introduce two very special guests that we have here with us today - the Honourable Minister Angus Taylor, the Federal Minister for Energy, and the local State Minister here, the Honourable Dan van Holst Pellekaan, who's the Energy Minister for the South Australian Government here as well. It's with a great deal of pleasure that they join us here today to celebrate first energy as we get this plant up and running. So let me now introduce Minister Taylor to make a couple of remarks.
ANGUS TAYLOR: Thanks, Brett. Well, it's absolutely fantastic to be here with Brett and with Dan. This is a great day for South Australia, but it is also a great day for all electricity consumers across the east coast of Australia. We're seeing record, world-leading levels of investment in renewables in Australia right now. But to complement that, we need supply that is reliable and affordable from generators like the one we're standing in front of today. That is absolutely essential to ensure that we've got that affordable, reliable power on the worst days, and that there's downward pressure on prices when there are shortages of supply. This is over 200 megawatts of capacity, a $295 million investment - can I congratulate AGL for doing what they're doing here. This is essential investment - an investment we want to see more of, and we will always doff our cap to the good work of energy companies that make investments that are needed in the market. That's exactly what we're seeing here. We want to see more collaboration between the industry, state government and federal government to get supply into the market that's needed in order to deliver to Australian consumers exactly what they need which is a reliable, affordable supply of electricity.
DAN VAN HOLST PELLEKAAN: More affordable, more reliable and cleaner electricity is one of the hallmarks of the Marshall Liberal Government, and we are very pleased to partner with industry and with our Federal Government colleagues. Today is a very special day to be here for the opening of the Barker Inlet Power Station. Approximately, 10 per cent increase in the electricity generation for South Australia compared to a typical day’s peak consumption. Very importantly, this power station will be far more efficient than most gas power stations. It will be 28 per cent more efficient, so 28 per cent less emissions. And it will work in harmony with renewable energy - so wind energy, sun energy, and gas to fill the gaps, and in a way that many people don't understand, new modern gas generation, which can enter and leave the market within minutes, complements renewable energy. More renewable energy will be able to be used in South Australia when we have this type of fantastic new technology, new modern generation, for gas to fill the gaps within minutes. This will contribute to lower electricity prices, more reliable electricity, and of course, lower emissions in South Australia as well.
JOURNALIST: Brett, can you tell us at what price point this becomes economic in terms of getting into the market?
BRETT REDMAN: It depends upon on the price of gas and where our market position is set. What you'll find is we'll blend it with renewable energy. And typically, we've talked about firm renewable energy ending up at an average price of around $75. The gas component itself will be more than that depending on the price of gas at the time.
JOURNALIST: Does this mean that prices, if there is a downward pressure with more supply in the market, consumers will say well, it looks nice, but when are their power bills coming down?
BRETT REDMAN: So, as with any new supply, new supply should ultimately put more downward pressure on price. This is about getting the supply into the market that the market needs. As we build more, as we increase supply that will continue to put downward pressure on prices.
JOURNALIST: So when would you expect to see a tangible downward movement because of this coming online? This summer? Next winter?
BRETT REDMAN: We'll be operating for this summer. So, the plant is already producing some energy as it goes through its initial test runs. We expect it to be fully up and running this summer. So when this new supply is up and running, it will immediately be putting downward pressure on prices.
JOURNALIST: Would that be a significant downward pressure? Are we talking 5 per cent, 10 per cent?
BRETT REDMAN: What I'm expecting to see as we get this plant up and running, it's going to continue to put downward pressure on price, and that ultimately will translate through the better prices for our customers.
JOURNALIST: How often will you be operating? Is this every day, eight times of the day, or just peak days of the month?
BRETT REDMAN: I think given the nature of the South Australian market, it's going to operate most days. The reason for that is it complements really well all the wind power in this market. The older plant that we see here next door to us which was built 50 years ago, it needs about 12 hours to get up and running. This plant needs five minutes to get going. So it's a perfect complement to renewable energy like wind power. I think you'll see this plant running pretty much every day of the year.
JOURNALIST: Would you see Victoria's plight at the moment - is it just right on the edge, or are they in trouble in terms of supply for summer?
BRETT REDMAN: The Victorian market, let me say first and foremost that we're confident that our unit, that Loy Yang will be back up and running as scheduled on the 16th of December. That plus the Origin unit that they're also working on - if that's back in the market Victoria will have the supply that it needs. I believe therefore that Victoria will be well supplied over summer.
JOURNALIST: But that's also partially what's driven the decision to keep Torrens A open, isn't it? To give that flexibility should there be some issues and supply issues over the summer months.
BRETT REDMAN: We had originally scheduled Torrens A to start closing some units at this time. With the support of the South Australian Government, we've kept those units open through summer as a backup plan, if you like. So again, more supply is a good thing. It's certainly not new term. It's expensive for us to do that, but we'd rather make sure that our customers are supplied and not to take or to reduce the risk of any problems happening in the wider market.
JOURNALIST: Can we ask Minister Taylor, does this or should this be another nail in the coffin of coal-fired power?
ANGUS TAYLOR: Well it's not about that, I mean, it's about making sure we've got enough supply in the market to put downward pressure on prices and to ensure that we keep the lights on. As Brett has explained, this is the perfect unit to do that in the South Australian market, which is an unusual market by global standards. It has a very, very high level of solar and wind, and it needs flexible generation that can ramp up quickly and can ensure that there is that reliable affordable supply on the peak days, on the days where there's the greatest demand. We know 10 per cent in the market is a lot of extra supply and that's why we're so pleased with what AGL has done with this investment.
JOURNALIST: Minister just while I’ve got you, what are your reservations about supply this summer across the southern states in particular?
ANGUS TAYLOR: Well there's always risk. I mean, you know, we have to accept that there's always risk, and I think everyone is concerned to try and do everything they can to reduce those risks. But we've seen in the Victorian market in particular, we've got a situation where major baseload generator has been taken out of the market in Hazelwood, we've got a ban on gas and we've got a very aggressive renewable energy target. So that's a precarious grid that faces serious risks, both this summer and incoming summers.
QUESTION: Are you concerned therefore if the Victorian market sneezes, South Australia might catch a cold?
ANGUS TAYLOR: I think that the trouble for the rest of the states is this can be contagious when you've got one state that has problems. What we've got in South Australia is a State Government that has been doing the right thing, and you see this today. This is a fantastic outcome. I know there's been a lot of hard work from the South Australian Government to get to this point and to ensure that we're getting enough supply in the market, and of course, all of that requires a nearly $300 million investment from AGL. So this is a State Government working with the industry, working with the Federal Government to do the right thing. We'd like to see the same thing in Victoria.
JOURNALIST: You said that we're in a precarious position, what is the answer to that?
ANGUS TAYLOR: The answer is more supply that is dispatchable, that's reliable and that's affordable. It's always the answer in any market when you're in a precarious situation. We want to see that in Victoria. And look, central to that has to be raising the ban on all gas, conventional and unconventional. We've got Joel Fitzgibbon today saying that it's time for that to change. We're seeing sensible things coming from Joel Fitzgibbon at the moment and that was certainly a sensible comment to make.
JOURNALIST: So you think fracking in South Australia and the South East - that should be allowed to go ahead?
ANGUS TAYLOR: You know, there's lots of gas from conventional sources available, both in South Australia and in Victoria. We just want to see more gas. As a Federal Government, we leave it to state governments to work out how to get the gas into the market, but we want to see more gas.
JOURNALIST: For Minister van Holst Pellekaan. If this is solving so many problems, which presumably it is, why do we need an interconnector to New South Wales?
DAN VAN HOLST PELLEKAAN: We need to access electricity from as many sources as possible. We welcome AGL's investment here in the Barker Inlet power station, but certainly having one interconnector only to Victoria, or two interconnectors only to one state in Victoria puts us at the end of the line of the national electricity market. We want interconnection with New South Wales as well so we become part of the loop. At times we have surplus electricity, which we can share with other states that need it. Let's share with two instead of one. And at times we'll be glad to access electricity from interstate, and let's access it from two instead of one. Interconnection, storage, small-scale household storage, plus grid-scale storage, plus new supply as we're seeing here today at Barker Inlet, are all the sorts of things that we need to do. There's no one answer to improve the mess we were left by the previous State government with regard to electricity here in South Australia. We have very deliberately a multi-pronged policy approach. We are working on all of these things at once, and today is a celebration of AGL's new investment in greater supply.
JOURNALIST: Minister, you touched on grid-scale storage just then - how much longer are we going to have to wait until we see the State Government's plans? And have you had a conversation with your Federal counterpart behind you about maybe getting some federal support for this grid-scale storage as well?
DAN VAN HOLST PELLEKAAN: Certainly I talk with Minister Taylor very regularly. We have a very, very good working relationship, as does my office with his office. We put forward a $50 million grid-scale storage fund. It stands on its own two feet. We certainly welcome the possibility of Federal Government support, but we don't need it. We put a very good policy to the election. We're delivering on that policy. We received, I think, just in excess of 50 applications to our grid scale storage fund. We've shortlisted, and in fact I can tell you that we are in the final stage negotiations with a very, very short list of proponents, and I'd love to be able to share with you the successful results of that policy, very quickly.
JOURNALIST: Your Federal counterpart seems to be saying we need to be doing more gas exploration and extractions, does that mean that your Government and you have made the wrong decision about the moratorium on fracking in the South East?
DAN VAN HOLST PELLEKAAN: What Minister Taylor said is that we want to get as much gas out of the ground as we possibly can. We're doing exactly that in South Australia. Before the last election we made a commitment to the people of the South East that we would prohibit fracking for gas in the South East. Fracking only, and the South East only. We've delivered on that commitment, but happily, there is actually no gas exploration or production company that wants to use fracking or hydraulic fracture stimulation in the South East. They all want to pursue conventional gas, and we are up for that. That's exactly what's happening. In fact we've made announcements recently about very, very positive exploration results. We will soon, in fact before the end of this calendar year, have greater gas processing capacity in the South East. So our policies with regard to state and federal and the desire to get more gas out of the ground are in sync, and we are doing everything we can in South Australia to get more gas out of the ground both in the South East and in the Cooper Basin.
JOURNALIST: But Beach Energy was at one point looking at unconventional gas down there. Wouldn't the State Government's stance just be turning companies off and that's why there's none of that activity down there?
DAN VAN HOLST PELLEKAAN: No, Beach Energy perhaps five years ago looked in to whether unconventional gas was an option for them in the South East, and they decided independently that it was not an option. All of the key players in South Australia have said well before the last election and well before we delivered on our commitment to the people of the South East, that they had no intention of using unconventional means or fracking to extract gas out of the South East anyway. So this policy has fulfilled an election commitment, but it has done absolutely nothing to dampen the supply out of South Australia. In fact, we are in the midst of more gas through conventional means coming out of the South East as we speak.
JOURNALIST: With this announcement today, can you guarantee that we won't have blackouts in South Australia over summer?
DAN VAN HOLST PELLEKAAN: Look, the Australian Energy Market Operator has done its summer readiness analysis. We've brought together all of the information that we possibly can from other sources as well. The advice given to me is that while every summer is tight, we should be okay this summer. But you know what, I'm an incredibly cautious person. For the first time in many years, this past summer we did not have forced load-shedding. I, my department, my colleagues, industry - we will do everything we possibly can to make sure that happens again this summer that we get through another summer, the second in the row since the election, without forced load-shedding. But you know what, every summer is tight, every summer is tight, and will remain so for a few years to come until all of our energy policies are put into place and up and running, and we're working on that as quickly as we possibly can.
JOURNALIST: Brett, thanks Minister, can I just ask a quick question? With, I suppose, what would be the explosion and the expansion of rooftop solar, especially in South Australia over the last couple of years, can you see a time where import tariffs are either going to drop or be non-existent because of the oversupply?
BRETT REDMAN: I think the market's going to continue to evolve. The most interesting thing going on right now is what's happening with batteries, including in this market. Batteries today are a bit like what solar panels were 10 years ago. They're only just starting to come into the system. Within another 10 years, I think just as many homes will have solar panels, they'll also have batteries. At that point what's going to be happening is the import tariff is becoming less important, and the homes themselves are time shifting energy around for their own needs, and then they're selling energy at different rates and different times of the day depending on when the market most needs it.
JOURNALIST: Putting it another way - if you don't invest in battery because you can't afford it or you don't want to, could you see a time when the import tariff will drop away to almost nothing?
BRETT REDMAN: What I think that I see is over the next few years, battery costs will keep coming down. They will start to become a real economic proposition for an average household. I recognise today they're still a little expensive, but as we go forward what we'll see - just as solar panels 10 years ago were quite expensive - they'll become a lot more economic as economies of scale drives those costs down. And then the household conversation about what you're doing with energy changes. It starts to become: I've got a solar panel, I've got a battery, I've probably got an electric car starting to pull out up the front, and I'm starting to use my energy in different ways within my home, and the surplus I'm exporting at different prices at different times of the day.
JOURNALIST: Brett, Torrens A that you're beginning to phase out, you talk about it as mothballing rather than decommissioning and phasing down. Do you envisage any scenario where it might be pulled into service again?
BRETT REDMAN: What we've seen is we have extended Torrens A for an extra number of months, and in some cases a year or two, to help us get through a little bit of a tight time and to provide extra insurance as we're doing repairs at the Loy Yang Power Station in Victoria. I do think what we are seeing is the glide path out of the Torrens A Power Station. This is a power station which was built more than 50 years ago, so it's had a great run, but we are seeing it coming to an end. And it's being replaced by the really fast start modern stuff that we see out behind us now.
JOURNALIST: And are you confident of gas supply, because gas supply is very tight?
BRETT REDMAN: AGL is confident in its ability to find gas for its customer needs, and to run its power plants. We are supplementing that though - the Crib Point import jetty that we're looking to build in Victoria - and to get more gas into the market. And similar to what we've talked about with electricity, the answer to price for gas in this market is finding more supply. Something AGL can do is find a way of importing cheaper gas when we find it from outside of Australia, into the market here.
JOURNALIST: Would you support the proposal of an import terminal?
BRETT REDMAN: I wouldn't mind if an import terminal was built here in Adelaide. What we've seen are project economics is it is better suited to be built in Victoria. But there's no reason why it couldn't be done here. What you'll find though is the greater gas demand starts in Victoria, so that tends to be where you're most likely to build. And that will take pressure off demand in this state.