Speech to Energy Users Association of Australia

We meet on the lands of the Wurundjeri people of the Kulin nation, whose elders I acknowledge and celebrate.

While acknowledgement and celebration are right and proper, they’re not sufficient.

First Nations people, particularly in remote Australia, suffer energy poverty and crippling disconnection rates.

More positively, the energy transition provides an opportunity for First Nations people to share in ownership and dividends from renewable energy in their communities and on their lands.

In coming weeks, we’ll release a consultation draft of the First Nations Clean Energy Strategy.

I encourage everyone here to engage in that consultation, and to recommit to changes in our energy system which can help to Close the Gap in Indigenous disadvantage in our country.

Thanks Brian [Morris – Chair] for that introduction, and to you, Andrew [Richards – CEO] and the Energy Users Association for hosting me again.

I’m pleased to join you, because your members are living and breathing the energy transition that is underway around Australia and around the world.

And while we have very different roles in that transition, I think we share a fundamental view:

That the transition is unprecedented – but unavoidable.

A challenge – but an opportunity.

Difficult – but necessary.

Necessary for the climate, which is already warming towards unsafe levels.

And necessary because of the simple fact that coal is closing.

Australia’s energy transition isn’t driven by an ideology, but by a reality:

That the coal-fired power stations on which we’ve built our energy system and our industrial base are ageing and exiting.

The average age of the coal fleet in the National Electricity Market is 34 years.

Even Australia’s newest coal power plant is now 15 years old.

Unsurprisingly, the Market Operator tells us that “unplanned coal generator outages are becoming more common as the fleet ages”.

These outages cause major price spikes and market volatility more generally.

In the year to September 2023, the fleet suffered thousands of hours of forced outages, leaving the grid short of forecast coal generation capacity for nearly one-quarter of the year.

And in November 2023, AEMO was forced to intervene to ensure system security, requiring a coal unit to remain online due to outages at 5 others.    

In that context, governments – including here in Victoria and in New South Wales – are rightly acting to ensure that coal exits are as orderly as possible.

But within a few short years they will be unavoidable.

Twenty-four coal plants with a total capacity of 26.7 gigawatts announced their closures under the former Government.

Now, in fairness to them, those closures were decided in board rooms, not the Cabinet room.

But faced with that reality, the former Government chose denial.

The Albanese Government makes a different choice.

We choose to join you in facing up to the challenge, and in seeking to seize the opportunities.

That’s why we’ve spent the last two years implementing our plan for reliable renewables.

It has three parts.

First, to generate more of the cheapest, cleanest energy that’s ever existed.

Second, to support renewables with storage and transmission, and recognise the important role of gas in underpinning the renewable transition.

And third, to ensure that the benefits of reliable renewables are shared with households and businesses, and used to unlock a Future Made in Australia.

Let me touch on some features of that roadmap today.

As I say, the first part of our plan is to generate much more power in coming years and decades.

Not just to replace retiring coal – but to meet demand as other sectors of our economy electrify.

That’s why last week, I announced the largest ever single tender for renewable energy in Australia.

The first auction under the national Capacity Investment Scheme will target 6 gigawatts of new renewable energy projects for the NEM.

That’s the first instalment of the 32 gigawatts that the Scheme will support between now and 2030.

Importantly, 9 gigawatts of that will be dispatchable – meaning available when and where we need it.

I appreciated the Association’s support for my announcement last week, in which you highlighted the importance of cooperation between the Commonwealth and the states.

That’s why we’re pairing the Capacity Investment Scheme with Renewable Energy Transformation Agreements.

We’re negotiating these agreements with the states to ensure we are working together on two things: improved delivery of new renewables projects, and ensuring reliability throughout the transition.

And based on our early progress with the states, last week’s announcement on the first national tender included specific allocations for three states:

At least 2.2 gigawatts in New South Wales and 300 megawatts in South Australia, both through the May auction for the NEM.

And 500 megawatts in Western Australia, which is on top of the 6 gigawatts available on the East Coast.

And of course constructive discussions will continue with the other states and territories as well.

Our productive partnership with the states is already bearing fruit in the pilot auctions that preceded the national Scheme.

Today, I can confirm that successful applicants have been shortlisted for the Victorian-South Australian tender process.

The market response for this was huge. Massively oversubscribed.

We wanted 600 megawatts of new dispatchable capacity.

We received bids for 19,000 megawatts – 32 times more than what we asked for.

So AEMO Services has shortlisted projects in what is clearly a very competitive environment.

And importantly, both the pilot and national processes are designed to support projects that will be delivered and will provide significant system benefits.

Under the ‘merit criteria’ we’ve designed, auctions will be won by projects that build reliability in our grid and strengthen local supply chains, promoting an efficient energy system.

We expect that projects will demonstrate benefits for local industry, communities, jobs and First Nations, as well as for the broader energy system and users.

As well as delivering these benefits, it is worth noting the Capacity Investment Scheme is specifically designed to provide enough support to allow projects to operate sustainably in an environment of low energy prices.

You’ll see more detail in a tender market brief that my Department will release in the coming week.

The Government’s reliable renewables plan is also unlocking offshore wind in Australia.

Offshore wind isn’t about our 2030 targets: it is on a different trajectory.

But it is very much about planning for a reliable energy system years into the future.

The IEA puts offshore wind in a category of its own, as “variable baseload power” – with similar capacity factors as gas and coal-fired power plants.

As well as jobs rich, offshore wind is energy rich.

That’s why major Australian energy users – from Alcoa in Portland, to Bluescope in the Illawarra, to Tomago in the Hunter – say that offshore wind is vital to their energy future.

Today, I’m pleased to announce the significant next step in developing Australia’s offshore wind sector.

I’m announcing this morning that six potential projects have been granted or offered feasibility licences in the Gippsland offshore wind zone:

High Sea Wind, Gippsland Skies, Blue Mackerel North, Kut-Wut Brataualung Project, Ørsted’s Gippsland 1, and Star of the South.

The Government also intends to grant another six licences, subject to First Nations consultation:

Iberdrola’s Aurora Green, Greater Gippsland’s Gippsland Dawn, Navigator North, Ørsted’s Gippsland 2, Kent Offshore Wind, and the Great Eastern Offshore Wind Farm Project.

These feasibility licences will allow developers to undertake detailed environmental assessments, geotechnical surveys, obtain approvals and undertake further consultation on their proposed projects.

Crucially, the Gippsland community will have several further opportunities to have their say before any construction commences.

That includes when proponents develop management plans, seek approvals, and apply for commercial licences.

And we’ll listen to that feedback - just as we listened to community views on the zone itself.

I reduced the draft zone substantially following consultation, such as not declaring the area west of Wilsons Promontory.

So it will rightly be some time before the projects I’m announcing today receive the final tick.

But taken together, they have a potential capacity of up to 25 gigawatts.

That’s enough to power the Gippsland region’s annual industrial consumption 100 times over, or more electricity than the entire state of Victoria generated last year.

Even just some of that potential will make a substantial contribution to filling the gap left by coal in Victoria and across the NEM. It of course is the essential next step to support the Victorian Government’s target of at least two gigawatts of offshore wind by 2032.

And it’s the first of six zones around Australia, so there’s more to come.

Even with the world’s best renewable resources, it’s a tired truism that the sun doesn’t always shine and the wind doesn’t always blow.

That’s why the second part of the Government’s roadmap is to support renewables with storage and transmission, and recognise the important role of gas in underpinning the renewable transition.

Today I want to comment on gas in particular.

Frankly there are exaggerated claims on all sides of the gas debate.

Slogans like “gas-led recovery” and “no new gas” are equally catchy – and equally unhelpful to explaining the proper role of gas in our net zero energy mix.

That’s why my colleague Madeleine King is developing the Future Gas Strategy – so that our national discussion on gas can be guided more by the evidence and less by the culture wars.

Minister King will release the Strategy in the coming weeks.

But three facts should already be clear.

First, gas will play an important role in electricity by firming and peaking renewables.

Unlike coal and nuclear, gas generation is flexible. The ability to turn gas peaking power stations on and off at very short notice is sensible support for renewables.

Second, while technologies like green hydrogen will be vital – and I am very optimistic about Australia’s role in the global hydrogen supply chain – there are not yet substitutes for gas in many industrial settings.

And third, with current supplies of gas dwindling, new supply will be needed – even as we electrify at pace.

That’s why the Government has implemented the Gas Market Code.

The Code offers gas producers a simple choice:

Comply with a price cap of $12 a gigajoule in wholesale contract negotiations.

Or seek an exemption by committing to additional supply in the short term and new investment in the medium term, to support reasonable prices and on reasonable terms.

So far, producers have committed a total of 564 petajoules in supply and investment to support the east coast gas market.

That’s a huge improvement from the gas supply crisis that the Government inherited –

And from the global gas price spike caused by Vladimir Putin’s illegal and immoral invasion of Ukraine.

But there is more work to do.

I’ve heard from the Energy Users Association and its members on the possibility of extending the Code to retail markets.

The ACCC is currently reviewing retailer behaviour and pricing practices, with a focus on gas supply to commercial and industrial users.

I look forward to receiving the ACCC’s advice in coming months and discussing the issue further with you, alongside my colleagues the Treasurer and the Ministers for Industry and Resources.

The third part of the Government’s plan is to ensure that the benefits of reliable renewables are shared with households and businesses.

For industry, that means working with you to unlock a Future Made in Australia.

The global economy is now changing in a way that’s never been more advantageous to Australia.

Decarbonisation is central to every economy's objectives and there is an opportunity to make Australia an indispensable nation in the global energy supply chain.

Our potential comparative advantage is huge. More sunlight hits our country than any other country on the planet. Our wind is above average. We have abundant critical minerals.  

And we have a remarkable innovation ecosystem to call upon.

But it’s not inevitable that Australia will capitalise on these advantages.

As one example, we have half the world's lithium reserves, but capture just 0.53 per cent of the lithium battery supply chain. We should be doing more to add value to our resources, by refining and processing them and moving up the value chain.

Our Government is already working across the economy to seize these opportunities.

Partly that means helping existing industry to remain competitive in a decarbonising global economy.

Last week I announced $330 million from our Powering the Regions Fund for nine clean energy and emissions reduction projects at heavy industrial sites around the country.

I made the announcement at Cement Australia’s Railton facility in Tasmania.

It’s over a century old, but will now receive $53 million to upgrade its kiln and increase the use of alternative fuels such as waste to reduce emissions.

And partly our plans for a Future Made in Australia will involve policies to support new low emissions industries where Australia has natural advantages, and to support diversification of critical renewable energy supply chains.

Hydrogen Headstart was announced last year to huge private sector interest.

It's progressing rapidly, with six applications shortlisted to kick start a boom in Australia’s green hydrogen industry, supporting future manufacturing and export opportunities.

It will also help to unlock our comparative advantage in renewable energy-intensive goods, such as green metals.

Similarly, we announced Solar Sunshot in March.

Like Hydrogen Headstart, funding will be allocated by ARENA through a competitive process.

But the signal of Government support for the sector has already encouraged Aussie startup SunDrive to move forward with AGL on plans to develop a large-scale advanced manufacturing factory on the site of the former Liddell Power Station.

This would mean manufacturing their world-leading solar cells locally, employing more people in the jobs of the future than the power station did.

The Prime Minister has also announced that we will be introducing the Future Made in Australia Act later this year, which will establish a clear national interest framework that guides these decisions, and others which will be announced in the Budget.

And later today, my colleague the Treasurer will give an important speech on strengthening our foreign investment framework, including to support this agenda.

Now, much of what I’ve outlined today could and should have been bipartisan.

To take just one example, the consultation process we’re following in Gippsland and other offshore wind zones was legislated in 2021 – by the former Government.

They had our support in the Parliament, because it was important if overdue legislation.

But under Peter Dutton, the Coalition is so negative that they’re not just opposing our policies – they’re opposing their own.

They’ve turned their own offshore wind legislation into yet another front in the climate wars.

And of course, instead of reliable renewables, they are promising a plan for risky reactors.

Risky because no one credible thinks they can be built before coal exits.

Risky because the policy is designed, and Mr Littleproud has admitted this, to delay renewables and “sweat the coal assets” –

Meaning keeping old and increasingly unreliable coal fired power in the system for longer: a clear and present danger to energy reliability for your members.

Risky because everyone credible knows reactors are the most expensive form of new energy.

And risky because not even Peter Dutton’s colleagues want them – let alone the communities that would have to host them.

We were promised the details of this policy prior to the Budget.

In April 2021, at the corresponding point in the cycle, the then Labor Opposition had announced its costed plans for Rewiring the Nation, the Electric Car Discount, a National Electric Vehicle Strategy, 400 community batteries across the country, and the National Reconstruction Fund.

But we shouldn’t hold our breath for nuclear details from the Opposition.

Because the Coalition is hopelessly divided about their own policy and because, as more and more of them are briefed on the details, they know it won’t survive contact with reality,

After a decade of denial and delay, now is not the time for a risky bet designed only to disguise the Coalition’s division.

Now is the time to stay the course.

To generate more renewables; to support them with storage, transmission and gas; and to unlock a Future Made in Australia.

Because while the transition is hard work – it’s working.

In just two years since 2022, renewable generation in the NEM has gone up by over 15,000 gigawatt hours – an increase of around 25 per cent.

That’s decreasing prices for everyone, as AEMO and the AER are telling us.

Thousands of people are on their way to work this morning in good jobs in renewable energy and new industries.

And of course, emissions in this country from the electricity sector are at the lowest level in over 20 years, with NEM emissions at the lowest levels on record.

But delivering on this plan must continue.

In 2022 we faced the biggest global energy crisis since the 1970s.

And continuing with our roadmap will make us less vulnerable to any further shocks in an increasingly challenging geopolitical environment.

It will ensure that the needs of energy users are met, and that Australia reaches its highest ever levels of energy independence.

I look forward to continuing to work with you on that journey.