Clean Energy Fact Checker | clean energy council

Will Labour’s Rewiring the Nation policy raise electricity bills by $560?

Requirement

Minister of Energy and Emissions Reduction Angus Taylor issued a press release on April 19, 2022 stating that:

“Energy consumers would lose $560 a year by 2032-33, on average nationwide, under the Labor Party’s plan to increase the size of the transmission grid to nearly $100 billion. “

The claim refers to the Australian Labor Party (ALP) Nation Rewiring Policy, which was first announced in October 2020. The claim is based on modeling from an unspecified source who did not not yet made public.

Background

The ALP’s Rewiring the Nation policy involves the creation of a new body, the Rewiring the Nation Corporation (RNC), which will invest $20 billion to modernize the electricity grid. The policy is designed to advance the construction of high-voltage infrastructure by lowering financial and planning barriers to unlock the commercial development of large-scale renewable energy resources.

Rewiring the Nation is the main initiative of the ALP’s Powering Australia plan, which also includes $200 million to install 400 community batteries, $100 million for the development of shared “solar banks” and a commitment to reduce carbon emissions. Australian civil service to net zero by 2030.

Modeling conducted by RepuTex Energy on behalf of the ALP revealed that the Powering Australia plan would reduce average residential electricity bills by $275 in 2025 and $378 in 2030. Modeling also revealed that the plan would reduce emissions of 440 million tonnes between 2023 and 2030, increase renewable energy penetration to 82% by 2030, create $76 billion in total investment and create 604,000 direct and indirect jobs.

What the experts say

The Australian Energy Market Operator’s (AEMO) Integrated System Plan (ISP) provides a comprehensive blueprint for the effective development of the national electricity market through 2050.

In the 2022 draft ISP, the AEMO found that for Australia to meet its goal of net zero emissions by 2050, to which the Morrison government committed in October 2021, it will need to:

  • doubling the electricity it provides, including a nine-fold increase in large-scale renewable energy and a five-fold increase in rooftop solar
  • triple current firming capacity in the form of large-scale batteries, hydroelectric storage, virtual power plants and gas production.

To connect all of this new generation to consumers, AEMO found that more than 10,000 km of new transmission infrastructure will be needed across the country.

Although this will require significant investment, several factors will translate into net benefits for consumers. First, the vast majority of this new transmission will be used to connect new renewable energy projects to the grid. Since renewable energy is now the cheapest form of generation in Australia, even taking into account additional integration costs such as storage and transmission, this will provide much cheaper electricity to Australian consumers than current alternatives.

Second, much of the new renewable energy capacity will be concentrated in renewable energy areas. This will significantly reduce the cost of transmission by enabling optimal development planning from the outset, reducing the amount of infrastructure required and reducing risk premiums for those building the new transmission and for those connecting to the grid.

Third, investment in transport makes it possible to share power more effectively between states. This unlocks the best renewable resources to provide the cheapest energy nationwide while maintaining supply reliability. It also supports greater competition between producers in different states. All of these factors will contribute to lower energy prices for consumers in the long term.

Another AEMO analysis found that even if we ignore these stark consumer benefits, we’ll just need additional driveline investment to keep the lights on.

For example, as noted recently in its Energy Statement of Opportunities update, the AEMO found that investment in transmission supported by the NSW Energy Roadmap, in conjunction with the huge influx of private capital from the sector renewable energy, will be essential to maintaining NSW medium-term reliability, once the coal-fired generator at Eraring is retired in 2025.

More generally, the AEMO found that these types of thermal coal withdrawals could occur sooner than currently expected. Under the central “Step Change” scenario that informs the ISP 2022 project, for example, the AEMO finds that around 14 GW of thermal coal could come out by 2030. Simply put, we need to invest more in transmission to bring in renewable energy that will replace coal generators that are rapidly coming out.

As a result of these factors, the AEMO projects that the transmission projects outlined in the ISP 2022 project will deliver net market benefits of $29 billion – equivalent to 2.5 times its investment – ​​for all who generate. , consume and transport electricity to the market.

The verdict

Implausible

While some questions remain regarding the energy price reductions and jobs created by the ALP’s Powering Australia plan, the fact that the policy is accompanied by extensive publicly available modeling conducted by an analyst from the highly reputable industry gives it a high level of credibility.

By comparison, the figures released by Minister Taylor are unsourced and provide no methodology as to how they were calculated or the assumptions on which they were based.

In addition, the AEMO findings in the 2022 Draft PSI show that the significant transport investments needed for Australia to meet its international emission reduction commitments will bring significant net benefits to consumers.

Accordingly, the Clean Energy Council finds Minister Taylor’s assertion that additional investment in the transmission system by ALP will result in significantly higher prices for energy consumers to be implausible.

Virginia C. Taylor