Hey Reader, welcome to The Energy. In today's edition:

An historic opportunity for change
Making the NEM fit for purpose
Delta Electricity CEO bullish on solar

Making history

Economist and Zen Energy Director Ross Garnaut used a speech at the Australian Energy Users Association annual conference to rap Australian energy companies on the knuckles for their role in Australia’s energy policy mess, and gee up Prime Minister Anthony Albanese to use his historic election victory to fix it.

Expert view

"Few companies now would prefer the instability and dysfunction of the past dozen years to the carbon pricing that was working effectively from mid-2012 to mid-2014. But major energy companies contributed to the destruction of a sound, market-friendly approach to removing emissions.

With all energy users pushing for something that suited ourselves a bit better, we ended up with an approach to reducing emissions that relies on myriad government decisions, none of them easily predictable in advance by market participants.

The decisive Albanese victory last Saturday creates an historic opportunity to change — for the government, and for business relations with the policy process. It is redolent of the opportunity created by the 1943 election.

The renewed Albanese Government has an opportunity to deliver a twenty first century version of the Curtin-Chifley success. On election night three years ago, the newly elected Prime Minister, Anthony Albanese, expressed his commitment to building Australia as a renewable energy superpower.

On last Saturday’s election night, he restated his commitments to using Australia’s clean energy advantages to build a Future Made in Australia. Success requires development of policies relying on general incentives for the investments we need to encourage, and policy stability over the long periods required for investments with returns necessary to sustain continuing investment.”

Ross Garnaut
Professor Emeritus of Economics, Director Zen Energy, Director The Superpower Institute

By their powers combined: the NEM must evolve

Months of careful consultation are represented in a slew of NEM Review submissions published this week after the expert panel tasked with future-proofing the NEM dodged a nuclear winter and a DOGE-style decimation of regulators.

The NEM is “no longer fit for purpose” according to AEMO, which has itself been criticised for repeatedly over-egging the need for gas and therefore skewing the numbers for the future technology mix.

A combination of mechanisms is needed to address the different challenges faced by renewable generation, energy storage, gas and long-duration storage, with long-duration storage likely requiring targeted underwriting, AEMO says.

A key debate since NEM start has been energy-only markets (EOM) versus capacity markets (CM), as explained by Greg Williams for The Energy.

The Climate Change Authority says the continuation of a capacity investment scheme or mechanism is required, perhaps enhanced by prioritising development such as combined solar and battery projects that don’t require extensions of the shared transmission network.

And some of the country’s largest energy users want the value of managing large loads – missing from the current Capacity Investment Scheme and the NEM Review – to get a look in.

Read Marion Rae's full take on the NEM Review submissions

Just how broken

Sending home the point on the challenges facing the NEM, Richard Wrightson, CEO of Delta Electricity, which owns the 1320 megawatt Vales Point Power Station in NSW, said the black coal plant makes more money on big solar generation days than on any other day, by substituting solar power — which it is paid to take — for costly coal.

"The biggest money days for me this year when I made the most profit have been the high solar days when we got negative prices. Why? Because I've sold firm contracts, and I could not burn my coal and rely on solar to [fulfil] my contracts.

I make more money on negative days than any other days. And that's a weird concept for anyone to get your head around, but that's because I sold reliability.

"One of the things I do -- I'm affordable and I'm reliable, and it's sustainable. So if you want to get rid of me, we actually need something that provides that same level of reliability. And batteries are not there yet." — Delta Electricity CEO Richard Wrightson

Catch up

Projects

NSW Energy Minister Penny Sharpe gave grid access rights to 10 renewable energy projects in the Central-West Orana Renewable Energy Zone. The 7.15 GW batch of energy and storage projects includes:

ACEN's Valley of the Winds (919 MW), Birriwa Solar (600 MW) and battery (600 MW)
Lightsource bp's Sandy Creek Solar (700 MW) and battery (700 MW)
Pacific Partnerships' Cobbora Sola (700 MW) and battery (400 MW)
Potentia Energy's Tallawang Solar Hybrid solar and battery (500 MW)
Squadron Energy's Spicers Creek Wind Farm (700 MW)
Tilt Renewables' Liverpool Range Wind Farm (stages 1 and 2) (1,332 MW)

Liverpool Range Wind Farm, Birriwa Solar and Battery Energy Storage System and Spicers Creek Wind Farm have secured planning approvals and are moving through the next phases of development, while the remainder are still subject to approval.

South Australia’s plan to switch to green steel production at the Whyalla steelworks, as well as green iron exports from a new direct reduced iron (DRI) plant in the state are at risk of losing out to overseas competitors, according to the Institute for Energy Economics and Financial Analysis. Swedish company Stegra is expecting commercial-scale production of green iron and steel next year, and any attempt to produce DRI using gas in Australia would not be able to compete on price with the Middle East, which is already moving ahead with plans to produce gas-based DRI for export to Asia, IEEFA said.

Policy

Liberal candidate for Goldstein Tim Wilson declared victory at a press conference where he also got behind nuclear energy.

“I, in my core sense of belief, believe in the role of nuclear power, not as an end but as a beginning,” Wilson, who once served as an assistant energy minister, said. "If we don't do that then we are saying either: one, we are going back to coal, or we as a nation are going to de-industrialise." (ABC)

However Liberal Senator Maria Kovacic said the party’s nuclear policy “has to go”. Kovacic, who was once president of the NSW Liberal Party, told ABC Radio National the Coalition’s nuclear policy was at odds with Liberal Party values of free markets and small government.

“The notion of the party that is meant to do that, that is the cornerstone of its values, would then nationalise a major portion of our energy system is completely at odds with what we stand for. — Liberal Senator Maria Kovacic

The European Commission said it would release legislation next month to ban new gas contracts with Russia by the end of 2027. (Politico)

Capital

Industry giant WestWind Energy is reconsidering allocating capital to wind farms in Queensland as the new Liberal National state government plans to prolong coal power and put wind and solar projects through more planning hoops. (The Energy)

New sources of east coast gas would be just as expensive as imported LNG and would not arrive in time for the expected shortfall in 2029, gas major Jemena argued, with the support of a report it commissioned from research company Rystad Energy. (The Australian)

It is difficult to conclude whether a rise to the NEM Market Price Cap strengthens and clarifies the in-market signal enough to outweigh the additional cost that it inevitably passes on to consumers, Global-Roam market analyst Dan Lee said in an article for Watt Clarity. The Market Price Cap will increase to $20,300/MWh from 1 July 2025.

Google said it would provide early-stage capital for three nuclear power plant projects in the US being developed by Elementl Power.

A group of large shareholders in UK bank Barclays Plc used the bank’s AGM to call on the board to set an explicit funding target for the renewable energy sector. (Bloomberg)

Renewable energy developer ACEN joined a transition credits pilot with Mitsubishi, asset manager Keppel and investment platform company GenZero to support the early retirement of a 246 MW coal-fired power plant in the Philippines. Transition credits are a new category of carbon credits designed to monetise the emissions avoided through the early closure of coal-fired power plants.

People

Clean Energy Council chief Kane Thornton announced he would leave the lobby group in August after more than a decade as leader. The Board of the Council said it had “commenced a national search for a new chief executive to lead the organisation into its next phase.”

AEMO’s Merryn York announced her retirement. Interim EGM Western Australia Nicola Falcon will step into the EGM System Design role from late August. Kirsten Rose, currently Deputy Chief Executive at CSIRO, will join AEMO as EGM Western Australia and Strategy.

Sarah Proudfoot, a former general manager of the retail markets branch at the Australian Energy Regulator, was appointed Chief Executive Officer of the ACCC.

Andy McCarthy joined the team at CEP.Energy as Chief Strategy Officer, where he will work alongside Head of Development Dan Lowenthal and Project Implementation Manager Brendan Laidlaw.

What's on

May 8
Melbourne Energy Institute public lecture

Pennsylvania State University Associate Professor of Energy Economics Chiara Lo Prete will speak at a hybrid event on contracts for gas prioritisation to power plants and grid reliability during winter emergencies.

May 15
How Traditional Owners are powering the clean energy transition

Melbourne Climate Futures Senior Research Fellow Dr Lily O'Neill will speak at this Melbourne event.

May 15
AEMO Quarterly Energy Dynamics

The Melbourne Energy Institute will host Kerry Galloway, Manager - Market Insights from AEMO for this webinar.

May 16
AEMO consultation - cyber security

Submissions on the draft report on whether AEMO’s cyber security roles and responsibilities should be a declared NEM project are due.

May 21-22
Australian Renewable Energy Zones conference

Australian Energy Infrastructure Commissioner Tony Mahar will speak along with EnergyCo CEO Hannah McCaughey and NSW Energy and Water Ombudsman Janine Young at this Sydney event.

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