Federal Energy Minister Angus Taylor is assessing 66 energy underwriting project applications submitted under the Federal Government’s new power plant underwriting program.
The Underwriting New Generation Investment Program will provide government support for the building of “technology neutral” new electricity generation.
The Minister is assessing coal-fired projects, among others, SBS News reports. However, there were no wind or solar applications in the first round. There is controversy in that the Government may end up subsidising fossil fuels with its guarantee on future energy purchases.
The coal question: will Coalition underwrite fossil fuels?
The April 2 Budget will include funds for projects chosen under the new program.
The program may increase the reliability of the national electricity grid. It follows recommendations by the Australian Competition and Consumer Commission (ACCC) to increase competition in the electricity market.
The ACCC identified a major problem to new generator construction as the tendency for large industrial electricity customers to contract only five years ahead.
Under the program, the government will promise to buy power at a pre-determined price from new generators after five years (say years 6-15). This means investors have more certainty about long-term returns from their investment.
The Federal Government’s underwriting of new energy plants will reassure investors that tax-payers will cover any shortfall in the event of under-production or cost blow-out.
However, the Australian Industry Group disagrees. It says tax-payers will be exposed to billions of dollars in potential liabilities.
The underwriting scheme also means expensive and polluting coal-fired power plants may get funded over cheaper, cleaner renewables like solar panels and battery storage.
Energy underwriting project applications make electoral angst
According to news.com.au, the current round of submissions to the scheme includes around 10 coal-based projects.
Queensland National MPs are also pushing for a new coal-fired power station in the state. Yet the Liberals are wary of backing controversial coal ahead of the May election.
Back in 2017, then-Treasurer Scott Morrison brandished a lump of coal in Parliament saying: “This is coal, don’t be afraid!”
The Liberals are now trying to distance themselves from coal and embrace renewables. That’s because their urban electorates are installing solar power and embracing home batteries like the Tesla Powerwall 2 in ever-increasing numbers.
How energy will fare in the April 2019 budget
Despite industry concerns, the Coalition has not yet decided on new energy underwriting projects. However, April’s budget statement will include:
- $2 billion for a 10-year climate solutions fund
- $1.38 billion for Snowy Hydro 2.0 pumped hydro-electric scheme.
- $56 million for a second electricity interconnector between Tasmania and Victoria.
Federal cabinet is due to meet today to discuss underwriting options and broader energy policy.
