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Speaker 1: Let's talk about energy, and there's a fair bit to

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Speaker 1: discuss in this because the Australian Energy Market Operator says

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Speaker 1: our power grid is in fact growing more reliable, but

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Speaker 1: extra investment is needed to avert potential blackouts. It's warning

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Speaker 1: that in South Australia, New South Wales and Victoria are

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Speaker 1: at risk of major blackouts if new energy projects are

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Speaker 1: not completed on time. Now a year ago, AEMO released

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Speaker 1: a dire report warning of potential blackouts unless there was

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Speaker 1: urgent investment, but now says since then the grid has

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Speaker 1: grown more reliable with more solar and wind farms coming online.

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Speaker 1: The Erring erroring culfire power station in New South Wales

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Speaker 1: has had its life extended, but the risk is an

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Speaker 1: over according to AEMO. It's warning we could still run short,

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Speaker 1: particularly this summer, if these projects are delayed or existing

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Speaker 1: generators breakdown. Emails also asked providers to have emergency supplies

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Speaker 1: ready for this coming summer. Now Here in essay, the

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Speaker 1: Shadow Energy Minister, Stephen Patterson says the end result could

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Speaker 1: see consumers having to pay more for their power and

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Speaker 1: this is a little bit of what he had to

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Speaker 1: say earlier this morning on five Double A breakfast.

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Speaker 2: As a result of these blackout risks will seek to

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Speaker 2: procure extra electricity from generators and unfortunately this could then

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Speaker 2: be passed on to consumers in their power bills, which

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Speaker 2: is another artickul of guts to struggle to.

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Speaker 1: Set Australian absolutely that happens now. Sluggish EV sales are

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Speaker 1: putting less pressure on Australia's power grid. The Energy Market

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Speaker 1: Operator EMO harving expectations for the take up of EV's

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Speaker 1: over the next decade. So the big bars of evs

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Speaker 1: a few years ago seems to have slid to a halt.

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Speaker 1: They're still being sold, but not at the numbers that

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Speaker 1: they were initially. AMPOLE has dialed back a plan to

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Speaker 1: triple the number of electric vehicle charging stations around the country,

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Speaker 1: so that's interesting. Meantime, our premiere has put AEMO square

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Speaker 1: in the gun. He says the national electricity market is

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Speaker 1: a policy disaster. Well, how long have you heard me

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Speaker 1: say energy ministers need to come together and put consumers first,

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Speaker 1: because the only people the energy market works for are

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Speaker 1: retailers and generators, not the consumers. Let's put all that

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Speaker 1: to Professor Bruce Mountain, director of Victorian Energy Policy Center,

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Speaker 1: Bruce a lot to unpack in that let's start with blackouts,

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Speaker 1: so we need more supply obviously.

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Speaker 3: Yes, I think EMO is saying that the forecast that

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Speaker 3: they had for increase in the young demand is not

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Speaker 3: allerre than it was previously. And as you pointed out,

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Speaker 3: the life of existing Coull fire generators which were scheduled

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Speaker 3: to close shortly been extended. And so I think for

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Speaker 3: those two main reasons, they think there's a little bit

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Speaker 3: less pressure than they thought last time. I think, however,

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Speaker 3: the fundamental picture of an energy transition that's not happening

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Speaker 3: anywhere near the rate that's both EMO and the government

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Speaker 3: said it would is an underlying challenge in the market.

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Speaker 3: There is a scarcity of supply. In many of our states.

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Speaker 3: Cull five generators are reaching their end of life date,

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Speaker 3: and the existing owners are not keen to keep them going,

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Speaker 3: and the alternative supplies are not scaling up with the

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Speaker 3: rate needed to ensure that there is certain.

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Speaker 1: Supply that has to lead to gas, doesn't it. And

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Speaker 1: I see with some astonishment this week all the teals

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Speaker 1: and all the grain were not surprising with the grains,

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Speaker 1: but most of the tills saying, well, we don't want

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Speaker 1: to see any more gas developments in the country. I mean,

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Speaker 1: I don't know what plan there aren't, but it seems

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Speaker 1: to me that's going to be absolutely crucial if we

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Speaker 1: can't keep up with the renewable projects.

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Speaker 3: Yeah, I mean, gas in a sense is an alternative

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Speaker 3: and it's it's very very well established in the peaking market.

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Speaker 3: Hydro does most of the lifting in the peaking market,

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Speaker 3: which is the short period of operation in the evening

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Speaker 3: when it peaks, and gas comes in when the hydro

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Speaker 3: is basically running full chat. But gas is an energy

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Speaker 3: production fuel. I lost in lots of it for gas. Ye,

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Speaker 3: generation has been dying in Australia everywhere in all the states,

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Speaker 3: and we've got export charity gas prices and I think

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Speaker 3: probably even higher than export charity, and so gas is

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Speaker 3: not a cheap fuel source. So should policymakers seek to

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Speaker 3: transition from coal to gas and then to when and

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Speaker 3: solar and storage, it will come at very substantial additional

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Speaker 3: cost which will need to be borne either by electricity

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Speaker 3: consumers or taxpayers, and the alternative gas sources will need

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Speaker 3: to be expanded and that will probably mean at least

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Speaker 3: on the South and Eastern states withholding gas for export

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Speaker 3: markets at least if we want to substantially expand gas

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Speaker 3: or power generation, so there is not an easy alternative now.

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Speaker 3: I think the kind of sustained failings in the market,

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Speaker 3: although people have very different views on the nature of

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Speaker 3: those failings, has led us to the position where we're

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Speaker 3: not expanding alternative supplies at anything near the red needed.

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Speaker 3: So perhaps perhaps progress will be made if there's at

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Speaker 3: least some accepted understanding of the nature of those failures

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Speaker 3: so that they can be addressed.

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Speaker 1: So what you're talking about is essentially many more wind

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Speaker 1: farms and solar farms and battery projects.

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Speaker 3: I think certainly more wind. I doubt solar farms is

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Speaker 3: a proposition. I think there's enormous potential for rooftop solar expansion,

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Speaker 3: most notably on business premises. There's a vast tracts of

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Speaker 3: warehouse and factory and airport and shopping center and parking

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Speaker 3: lot roof space that we're not using, and I think

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Speaker 3: that's an inexpensive source of production very close to the

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Speaker 3: customer's load. I mean, my diagnosis of the problem, and

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Speaker 3: as I say, people have a range of views on

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Speaker 3: this is we've had an energy transition that's been obsessed

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Speaker 3: with big transmission expansion largely driven out of EMO and

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Speaker 3: I dare say at the bottom of which, certainly the

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Speaker 3: support amongst many state governments has been heavily influenced by

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Speaker 3: the preferences of the labor unions who want the who

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Speaker 3: could have jobs that go with building the enormous lines.

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Speaker 3: And I think it's the failure to build those lines

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Speaker 3: was obvious, and we pointed two years ago it has

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Speaker 3: a very major social impact and so the companies and

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Speaker 3: the governments are facing a lot of you know a

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Speaker 3: lot of pushback from from the various landowners. And this

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Speaker 3: was eminently foreseeable. And I think rather than coming up

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Speaker 3: with a plausible transition plan that was socially one that

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Speaker 3: you know, could could you know, could be done easily,

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Speaker 3: they've they've gone for big tickets items and those are

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Speaker 3: all stuttering along right now, Okay.

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Speaker 1: Can we have a look at what the premier had

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Speaker 1: to say. Premier Peter malanowskis yesterday is called the national

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Speaker 1: electricity market a real public policy disaster, and has also

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Speaker 1: called on his fellow premiers not to shirk responsibility for

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Speaker 1: the prices that are hitting people now, I don't know

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Speaker 1: what influence really a state government can have on prices

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Speaker 1: other than perhaps approving exploration and development of potential gas sites,

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Speaker 1: and beyond that, there's probably not a lot they can do.

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Speaker 3: Yeah, I mean, I guess I would. I would say

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Speaker 3: the finger points somewhat back to the Premiere, who's seeking

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Speaker 3: to point the finger elsewhere.

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Speaker 1: I think.

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Speaker 3: I think it's absolutely in the gift of the South

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Speaker 3: Australian government to do something about the reasons that electricity

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Speaker 3: prices at the retail level in SA are so high,

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Speaker 3: and that's largely as a consequence of very high network charges,

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Speaker 3: which are not only to do with the distributed nature

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Speaker 3: of the network, but also to do with the fact

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Speaker 3: that it's an extraordinarily profitable network. And that's entirely within

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Speaker 3: the gift of the Premiere and the Essay government to

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Speaker 3: do something about. And I'm afraid over the many years

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Speaker 3: they've failed to grapple with that.

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Speaker 1: So state government set network prices.

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Speaker 3: They are entitled too. They have chosen to give it

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Speaker 3: to the AAR agency that they have chosen to actually

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Speaker 3: give it to, but it's entirely within the gift of

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Speaker 3: the state government to set the conditions for the prices,

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Speaker 3: for the access, for the network expansion, and so it's

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Speaker 3: not quite good enough for the premiere to say, well,

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Speaker 3: the finger points elsewhere. It points elsewhere because the government

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Speaker 3: has chosen it to point elsewhere. They could very easily

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Speaker 3: and they have every legal right to do so, to

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Speaker 3: grapple with the challenge that they've chosen not to. So

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Speaker 3: I think that's the one issue, and I'm afraid in

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Speaker 3: South Australia it sticks out like a sore thumb. SA

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Speaker 3: network charges are incredibly high, the network makes fabulous profits,

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Speaker 3: and I'm afraid that's an issue for the government, absolutely

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Speaker 3: full square. I think. In addition, there has long been

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Speaker 3: a South Australian problem of a gap between the wholesale

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Speaker 3: prices that we see, which in South Australia work were

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Speaker 3: long and very high as a consequence of the dominance

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Speaker 3: of both coal and gas. They are now relative to

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Speaker 3: most other states, not high, and yet many customers are

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Speaker 3: not seeing the gains from that, even the retail prices that.

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Speaker 1: They see, and that why aren't we seeing that?

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Speaker 3: It's all about the concentration in the market. There is

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Speaker 3: a very limited retail expansion by other retailers because there's

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Speaker 3: a dominance in the generation. It's a dominant market and

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Speaker 3: there is an underlying policy premise to this, which has

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Speaker 3: been South Australia privatized back in two thousand and one.

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Speaker 3: The quid pro quo for fat proceeds from that was

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Speaker 3: that the government wouldn't go hard on the entity that

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Speaker 3: purchased the assets, and so they've had a soft policy

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Speaker 3: star over the decades. They have done reviews to look

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Speaker 3: at it, but fundamentally the government has screwed it, like

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Speaker 3: in networks, really taking on the challenge themselves and coming

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Speaker 3: up with arrangements that ensure more competition so that wholesale

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Speaker 3: price price changes are actually flowing through to retail customers

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Speaker 3: better than they do. And there too, I'm afraid it's

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Speaker 3: not right for the premiere to say, well, this is

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Speaker 3: a national policy failure. This is in South Australia's gift,

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Speaker 3: and I think the issue is the government finding the

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Speaker 3: courage to grapple with it.

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Speaker 1: That's interesting. The last point is evs the slow take up,

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Speaker 1: which probably points to the fact people bought them either

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Speaker 1: because they were excited about the new technology or they

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Speaker 1: are environmentalists. And it's as far as it's gone. Everyone

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Speaker 1: who's got one has one, mostly so a slow we've

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Speaker 1: stopped buying them essentially at the rate we were a

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Speaker 1: few years go.

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Speaker 3: Yeah, I think the easy market, like most markets, is

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Speaker 3: quite complex. When you come to understand what's really going on,

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Speaker 3: it seems to me that there are two factors. One

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Speaker 3: is there's a price wall. China has got into EV's

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Speaker 3: in a big way, and there's an enormous struggle amongst

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Speaker 3: the various Chinese companies to establish a foothold in the market,

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Speaker 3: and there's an enormous price wall, and customers see a

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Speaker 3: capital price which is going down all the time. Least

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Speaker 3: holder companies are less interested in actually getting into the

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Speaker 3: market because you know, they're now facing the risk that

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Speaker 3: the customer is going to hand the keys back, and

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Speaker 3: customers themselves, I think many are rightfully saying, let's let

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Speaker 3: this price will pay off, and when the market reaches

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Speaker 3: the bottom, they're going to step in. I think in addition,

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Speaker 3: I think some customers are express increpidation about the rate

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Speaker 3: of the Smart or not not the Smart leader, but

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Speaker 3: the actual roll out of the chargers. They're a little

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Speaker 3: bit cautious on that there isn't anything in the Australian market,

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Speaker 3: evolution drastically different from what we're seeing in the US

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Speaker 3: than the EU, or at least most countries in the EU.

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Speaker 3: Some are still going all those that have passed a

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Speaker 3: thresholder are buying evs. In total, it's clear that ev

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Speaker 3: is a fantastic proposition, not for all of the motoring market,

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Speaker 3: but for large chunks of it where people use their cars,

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Speaker 3: mainly for you know, getting around cities. When it comes

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Speaker 3: to turning a heavy trailer. Market's not there yet, so

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Speaker 3: anyway interesting.

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Speaker 1: Always appreciate your insights, Bruce. Thank you for your time

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Speaker 1: this morning, super Bruce Mountain from the Victorian Energy Policy Center.

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Speaker 1: Professor Mountain is a director of that and has a

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Speaker 1: lot to say about electricity. Got great knowledge on where

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Speaker 1: it's all heading. But at the moment EMO saying in

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Speaker 1: the immediate future, blackouts in summer are certainly a possibility

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Speaker 1: and calling on providers to have emergency supplies. It's not

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Speaker 1: that they're stored in a box or anything. It's got

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Speaker 1: to be generators switched on, have emergency supplies ready for

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Speaker 1: summer and the possibility of blackouts are strong