Unlike the federal technology road map released by Energy Minister Angus Taylor in September, NSW Energy Minister Matt Kean’s plan includes concrete policies and a clear timetable. It will commission 2.3 GW of energy storage with four to 12 hours of duration in addition to the new 2 GW from the Snowy 2.0 plant.
The detail of the plan is complicated and it is worth asking what the cost will be to NSW tax payers and electricity consumers.
While renewables are the cheapest form of new electricity, Mr Kean says that the guarantees are needed because financial markets are not yet ready to take on the risks. By smoothing the transition, he claims the average household will save $130 a year on its power bill. He’s not the first Liberal to promise big savings. When he was energy minister in the Turnbull government, Josh Frydenberg claimed the National Energy Guarantee would save households $550 a year on electricity bills. The NEG became another casualty of the climate wars and people should be wary about forecasts promising they will be better off.
There is always a risk in long-term financing in a complex industry such as electricity. NSW says, if from time to time the guaranteed prices are too high and it cannot sell the contracted electricity profitably, it could recover some of the loss by imposing network charges on consumers. The state must be transparent in disclosing how the system works and how costs are borne.
Road maps such as this one are not worth the paper they’re written on if they are bogged down in endless debate and fail to provide forward momentum on solutions to complex problems. Mr Kean deserves credit for gaining the support of colleagues in the National Party as well as state Labor before unveiling his policy. He has also engaged with the sector, including the unions, so nobody has been blindsided. The arguments over detail seem to have been thrashed out behind closed doors.
As we have noted many times before, the lost decade of climate and energy policy has cost Australia dearly. The community largely wants action but is wary of the cost.
This plan appears to provide the mechanism to build the infrastructure to achieve carbon-neutral energy production in NSW with an end goal of cheaper power bills for all consumers.
If both are achieved, it will provide a powerful blueprint for federal and state governments to problem-solve in the future.
The Herald editor Lisa Davies writes a weekly newsletter exclusively for subscribers. To have it delivered to your inbox, please sign up here.