Businesses, schools among 2018 Qld Budget’s big energy winners

By Associate Professor Tim Nelson, Griffith Business School

The energy ‘trilemma’ continues to be a challenging policy area for governments around the world. Delivering reliable electricity supplies while reducing greenhouse gas emissions in a manner that ensures prices are efficient and affordable underpins the approach of the Queensland Government’s energy policy.

Recent price announcements by energy retailers show that prices are now declining in Queensland after increasing steeply in recent years.Competition continues to be the means of ensuring efficiency and competitive pricing. Given this, it is unsurprising that the centrepiece of the Queensland Government’s policy is the Affordable Energy Plan.

The budget appropriation statements show that funding of this Plan is provided through the Electricity Asset Ownership Dividend. In simple terms, dividends from the Queensland Government’s own electricity corporations are funding this Plan. The Plan is aimed at approving energy affordability and has the following elements:

  • Energy rebates for Queenslanders of $50 per year;
  • $20 million for energy efficient appliance rebates;
  • $21 million over three years for discounted loans for small scale solar PV;
  • $4 million for digital meters for regional Queenslanders to incentivise energy efficiency measures;
  • Specific rebates for regional Queenslanders and the return of the right of customers to select Ergon as their supplier even if they had picked another supplier previously.

Businesses will also benefit through $3.9 million in funding for an EcoBiz program that will incentivise energy efficiency (and water and waste) improvements for small businesses. Schools are also a winner, with $97 million to help schools install solar panels and employ energy-efficient practices.

Innovation in energy technologies is also being supported. The Government is providing increased funding of $5 million in 2018-19 for Waste to Energy projects facilities, which turn urban waste into renewable energy and bioproducts. Such technologies are widely used overseas but not in Australia. There is also $750,000 to support the investigation of producing and supplying hydrogen.

Unsurprisingly, renewables are a key focus of the budget with $4.2 billion in projects identified as a potential pipeline of new initiatives. Queensland has a target of achieving 50% renewables by 2030 and this will require new and innovative ways of unlocking private sector capital to see the goal achieved.

Australian policy makers are still catching up with the news that themost economic new investment option is now renewables forenergy,and gas-fired generation for flexible, dispatchablecapacity.Investing in new coal-fired generation would provide dispatchable but not flexible generation. It would also be inconsistent with Australia’s international obligations to reduce greenhouse gas emissions.Addressing Australia’s significant issues in relation to gas supply on the east-coast is also something that policy makers need to turn their attention to.

In the future, it may be that energy storage (through batteries, pumped hydro or production of hydrogen utilising renewable energy) is a better option than gas-fired generation. Given renewable penetration in Queensland is not sufficient to meet minimum demand, there is little benefit to deploying energy storage. However, this may change as greater levels of investment in renewable energy may see renewable production capacity exceed minimum demand at some point in the future. At this time, storage would be a direct substitute for gas-fired generation.

In this context of energy transformation, a key missing piece in the puzzle that the Budget was never going to be able to address is how Queensland energy policy fits into the broader national climate change and energy policy integration debate. The new Energy Security Board is developing the National Energy Guarantee that is scheduled to be considered by CoAG Energy Ministers for approval in the coming months. This policy is being positioned as the first policy to fullyintegrateclimate change and energy policy by requiring retailers to contract for ‘reliable’ and ‘low-emissions’ energy. How this policy fits into the Queensland Government’s energy policy narrative is still to be seen.