Josh Frydenberg, Australia’s Minister for Environment and Energy, tells GovInsider his priorities for the energy sector and his favourite lunch spot.
How is technology changing the energy industry?
Australia’s energy market is undergoing structural change. In 2004, coal represented more than 75 per cent of national electricity generation, and in 2014-15 it was about 60 per cent.
In 2004, renewables were just over 8 per cent of electricity generation; today they are about 15 per cent, and expected to reach 23 per cent by 2020. And remarkably in 2004, Australia was looking to import gas from Papua New Guinea, but by the end of this decade we will be the world’s largest LNG exporter.
When one adds to the mix the opportunities presented from new technologies such as battery storage, smart meters and electric vehicles, it’s no overstatement to say the electricity market a decade from now will be fundamentally different to the one we have today. That said it is important the transition enables the delivery of affordable, reliable energy as we move to a lower emissions future.
Recent events in South Australia and a greater use of intermittent energy across the grid has raised the importance of maintaining a stable energy supply with a consistent frequency and the necessary ancillary services.
What is the greatest challenge that the energy industry overcame in 2016?
Last year was an important year for the energy sector in Australia as there was widespread acknowledgement of the challenges facing Australia’s electricity system as more intermittent sources of generation enter the grid.
Following a series of blackouts in South Australia the Federal Government was clear that when it comes to energy policy our first and foremost responsibility is energy security. While the proportion of renewables is steadily increasing, driven by both federal and state based targets, great care must be taken to ensure that the pace and nature of this change does not compromise the stability of the system.
Intermittent generation poses two significant challenges for energy security. First, it doesn’t generate a consistent quantity of power, when the wind is not blowing and sun is not shining. Second, it doesn’t generate a consistent quality of generation, as with hydro, gas and coal. These later sources of energy can help stabilise the system because they can readily respond to rapid changes in demand and supply to ensure that frequency is maintained at the necessary 50 hertz, while also producing sufficient inertia.
That is why the Coalition of Australian Governments (COAG) Energy Council process is so important, for it is here the Commonwealth and the states and territories must find common ground and do all that we can to guarantee energy security and affordability and not to recklessly pursue high renewable energy targets in the name of ideology.
What is your top priority for 2017?
The total loss South Australia’s electricity supply in September last year was a seismic event. This is unacceptable in modern Australia and there must be a better way. Energy security is non-negotiable and we are unapologetic in making it our foremost priority.
For too long much of the debate in this country regarding energy policy has focused on emissions reduction, namely how to reduce our carbon footprint to meet our climate change goals, as well as an ideological debate about increasing renewables, whatever the cost. While a lower emissions future is undoubtedly important, it counts for little to the public if they are sitting in the dark. We cannot trade away the reliability of the system as we transition to a low-carbon future because to do so would be far costlier in the long run.
Australia is transitioning to a lower emissions future, and this is a good thing. But the method for getting there is vitally important. It is here that the federal and state governments must act more in concert, and the states take more responsibility for the impact of their renewable energy targets. At all times a premium must be placed on the reliability and affordability of the supply of energy because, after the recent events in South Australia, the Australian people expect nothing less.
Which tool, technology or technique do you think will make the most difference to the energy industry this year?
While battery storage is still not quite ready to be deployed on a commercial scale in an affordable manner, I am confident further inroads will be made in terms of development which will allow for greater scale and a decreased costs. It is why the Australian Government is prioritising funding in this area as well as for pumped hydro.
What has been the best advice that you received in your career?
Always do what you love and the rest will follow.
And finally, which restaurant should we visit for lunch when we are in your home town?
Meat and Wine Co in Burke St Camberwell in the electorate of Kooyong.
This series is run in partnership with our colleagues at Asian Utility Week – the expo for digital innovation in the energy sector.