By Dan Hunter CEO Business NSW
When Environment Minister Penny Sharpe came to office, the last thing she probably felt like doing was extending the life of a coal-fired power station.
But the release of the investigation into the Eraring power station today has laid bare an ugly truth: NSW needs this ageing facility to stay open. For now.
There are inescapable facts which the government is rightly focused on.
The Lake Macquarie station supplies up to 25 per cent of the state’s electricity needs. Without it, the risk of blackouts becomes an unwelcome reality – especially with a hot summer on the horizon.
The delivery of new energy infrastructure to date has been too slow.
Despite Renewable Energy Zones and the massive Snowy Hydro 2.0 investment, it is hard for the business community have any confidence that ‘she’ll be right’ if Eraring is closed before those alternatives are built and commissioned.
The imperative to deliver new infrastructure quickly is now at its highest, right at a point when an array of constraints - from community consent to supply chains and labour markets to NSW’s sluggish planning system - are all slowing new infrastructure build.
Unless and until those constraints can be overcome, keeping Eraring operational, in tandem with improved domestic gas security, is a prudent policy until more new, clean energy infrastructure has been brought online.
The NSW Electricity Supply and Reliability Check Up, published this morning, highlights the delivery challenges that NSW has encountered across its energy infrastructure portfolio. The report proposes shaking up the structures of several key bodies tasked with developing the electricity system, to focus them on more effective rapid delivery of projects.
The report flags that there is a genuine risk that progress made to date on energy transition could be jeopardised if bills continue to rise and reliability of the electricity system deteriorates. Public opinion in Australia has always been divided, and while recent national and NSW elections have indicated a shift towards greater approval for firmer action to reduce emissions, that approval may well remain dependent on policies being both effective and affordable.
In our most recent survey, NSW’s businesses told us that cost was their highest priority, supply security next, emissions reduction third. In previous surveys the majority of businesses have told us they want net zero plans to be achieved. We don’t think that sentiment has gone away. But businesses are worried about the resilience of the energy system, both to natural disasters and more broadly to disruptions.
What we have also seen since is an increase in cost pressures across the board, and slower than promised delivery of new energy infrastructure. Against that backdrop, businesses and other energy consumers are resistant to being asked to carry even more of the cost burden of paying for the energy transition. They want to know that where they are being made to pay, they are getting something of value in exchange.
That is why Business NSW is looking to government to smooth the path to net zero for businesses and energy consumers more broadly. The government has already made the right call, in its decision to keep the energy transmission corridors delivered, above ground, affordable and safe.
Government could also fund the necessary infrastructure itself to avoid loading ever-increasing costs onto energy consumers. It must improve the regulatory, planning and approvals processes for new infrastructure to speed up delivery, as the Check Up report highlights. Until we make better progress on new infrastructure it will remain difficult for the government to allow the old plants to shut. And it should establish a program to provide better advice and support for small businesses to help manage energy costs and the transition to net zero.
The only way governments in NSW and beyond will be confident to move past coal is when they have the alternatives in place to replace them. Not assumptions in a spreadsheet or proposals on a register, but projects in construction and commissioned on the ground. Delivery of new infrastructure is crucial.
We will not be able to move on from the state’s coal legacy until it is achieved.