Origin Energy has paused its large-scale renewable investment strategy, citing threatened energy market interventions by the Morrison Government.
As reported by the Australian Financial Review, Origin is reacting to a lack of coherent energy policy and threats to control the energy market by divesting energy assets. Origin says this makes it hard for the retailer to continue investing in wind farms, solar energy and pumped hydro.
Origin is also critical of the government’s plans to introduce a default electricity price. This will be a maximum price for standing offers for residential and small business customers where there is currently no price regulation.
Government plans to pull electricity retailers into line
Various groups and MPs have criticised the Coalition’s plans. The Business Council of Australia says the laws would set a “dangerous precedent” for other sectors.
Government proposals to reduce rising energy costs include new powers to:
- Force divestment of energy assets.
- Set a ‘default’ price for retail electricity starting mid-2019.
- Underwrite fossil fuel power plants.
However, the forced divestment proposal now seems dead in the water after the Senate voted to send it to an inquiry. There is no time to consider the inquiry’s report before the federal election next year.
Energy retailers to tow government line under draft law
Under the proposed laws, the federal government would have unprecedented power to control Australia’s electricity market.
Under them, the Treasurer could apply to the courts to force an energy company to divest interest in generating assets to prevent ‘prohibited conduct’.
Treasury would also be able to set the terms of electricity contracts for periods up to three years. Energy companies would then have to supply electricity at a price, quantity and duration chosen by the Government.
Renewable investment essential says ACCC
The government’s ‘big stick’ approach to energy policy also flies in the face of recommendations by the Australian Competition and Consumer Commission (ACCC).
According to the ACCC, wholesale electricity prices have caused more than a quarter of the increase in electricity prices. Increasing market supply through renewable investment in wind and solar panels can bring the wholesale price down.
However, companies will only invest in wind and solar installations if the government provides the right environment.
Origin Energy is also thinking of shutting down its Eraring coal-fired power plant in NSW during the day. This is because of booming solar generation during daylight hours.