Interview with Nadia Mitsopoulos, ABC Perth

NADIA MITSOPOULOS: Well, when coal fired power is phased out in 2030 here in WA, renewable electricity generation and storage will fill the gap. And with that in mind, the Federal and State Governments have signed off on a new scheme to encourage investment in this space by underwriting developers to build new wind and solar projects. Chris Bowen is the Federal Minister for Climate Change and Energy, and I had a chat to him a little earlier this morning to better understand what this scheme involves.

CHRIS BOWEN: Good morning, Nadia.

NADIA MITSOPOULOS: How does this scheme actually work?

CHRIS BOWEN: Well, what we've got is really two things here. We've got the Capacity Investment Scheme, which underpins new renewable energy. So, I'll come back to that. And we've also got a Renewable Energy Transformation Agreement between the Cook Government and the Albanese Government, just to make sure that everything we're doing is complementary. Which it is, but just formalising that in an agreement. Now, the Capacity Investment Scheme is an auction where we invite renewable energy developers around the country to put in their best bids for two things, renewable energy and dispatchable energy. So, storage. Now, we have one option in the East Coast, which is separate, and we have a separate option for Western Australia, because it's a separate grid and a different market. And what we've agreed with the Cook government and with my Ministerial counterpart, Reece Whitby, is the auction for Western Australia, which is now well underway.

NADIA MITSOPOULOS: So, does this include batteries as well as wind and solar?

CHRIS BOWEN: It does, yes. And not just batteries, any form of storage. So, technically, pumped hydro, although, as my friend Bill Johnston, the former Minister in Western Australia, used to say, we have everything you need for pumped hydro in Western Australia, except for water and mountains.

NADIA MITSOPOULOS: Unlikely to happen here.

CHRIS BOWEN: So, not so much an issue for Western Australia, but technically. But yes. So, the auction we have at the moment. So, basically, when I say auction, what we're doing is saying to developers, you tell us what your minimum return is, what's the minimum you need, and over what level of profits will you share with the Commonwealth. So, it basically gives them a window where they have more certainty about how much money they're going to make. So, they won't go below a certain level, and they won't go above a certain level. And what we're calling for in this auction, this particular tender, is 2000 megawatt hours of dispatchable capacity. So, that includes batteries. So, that's basically renewable energy, which is dispatchable. And by dispatchable, we mean we can call on it when we need it. And to give you an idea of how big that is, that's enough to power 450,000 homes. So, this is not a small thing we're doing. This is a big deal.

NADIA MITSOPOULOS: So, you're effectively then underwriting private companies who want to develop renewable energy projects.

CHRIS BOWEN: What we're doing is reducing the risk. Yes, that's right. But if everything goes well, then of course there's no financial impact. If prices fall, then we take some of that risk. And if prices rise and profits rise, then we ensure that taxpayers benefit from some of those profits.

NADIA MITSOPOULOS: So, Minister, does it mean that you are then guaranteeing in a way that a private company won't lose money on its investment?

CHRIS BOWEN: We're certainly guaranteeing through the auction, and again, they have to have very good bids to win the auction. It's highly competitive. So, to give you an example, in the East Coast, where we've called for six gigawatts at an auction, we had 40 gigawatts worth of projects express interest. So, people really need to keep their pencils sharp. And, yes, what we're doing is basically guaranteeing a minimum return and those who give us the best bids get their return. And also telling the taxpayer that if the profits are higher, then they will benefit and share in those profits.

NADIA MITSOPOULOS: So, you could make money. But at the same time, there is also an element of risk here. Is that fair?

CHRIS BOWEN: Yeah. Well, there's always an element of risk in everything, in any development, and what we're doing is sharing the risk in a way which is maximising the national interest. This is pretty consistent with approaches overseas. This is pretty standard in capacity investment schemes around the world. It has not been done in Australia in the past. The previous government, the Morrison government, said they would do this and they didn't do it. We've gotten on with the job and done it.

NADIA MITSOPOULOS: My guest this morning on 720ABC radio, Perth in WA is Chris Bowen, the Federal Minister for Climate Change and Energy, explaining this new Capacity Investment Scheme that has kicked off here in WA and the rest of the country. If the developers of these projects think they're going to make a profit, wouldn't they just go ahead and build them anyway? Can you help us understand why the government needs to get involved?

CHRIS BOWEN: Well, they might, and they can do that. They don't need to have Capacity Investment Scheme support to proceed and some will do that. But really, when we look at what we need to do to get to the level of renewable energy we need in Australia, not just for emissions reduction, by the way, but for reliability as coal fired power stations get older and less and less reliable, which is a real issue, it's the biggest threat to reliability in our system at the moment, is not renewable energy by far. It's coal fired power, which is getting old and, you know, having and going wrong, being turned off unexpectedly more and more. So, we need to deal with that. But look, this is really ensuring that we have the right mechanisms in place. The economics of renewable energy are different because it's so cheap. It is so cheap to operate, therefore it is not necessarily as profitable. People say to me, oh, well, if it's so cheap, why does the market get onto it? Actually, it's because it's so cheap, as opposed to, say, a gas fired peaker, which is very profitable when it's turned on, companies make a lot of money out of it. Renewable energy is a bit different. So, this is an appropriate policy, as I said, in keeping with approaches right around the world.

NADIA MITSOPOULOS: How many gigawatts are you hoping to get here in WA?

CHRIS BOWEN: Well, in WA, what we're looking at is 1.1 gigawatts of new storage and 6.5 terawatt hours of new wind and solar. That's a lot of terawatt hours. I know these are sort of big numbers, but look, it is basically a huge chunk for Western Australia of new renewable energy, enough to basically deal with the growth in electricity demand. We're going to see a big increase in electricity demand in Western Australia as places like the renewable, sorry, the biggest minerals exercises in the Pilbara electrify and use less and less diesel, and use more and more electricity. So, it's really us helping the Cook Government get on with the job to make sure that that renewable energy is available.

NADIA MITSOPOULOS: And you wanting to reach that target by 2030 when we phase out coal power?

CHRIS BOWEN: Yeah, that's right. Our target is, across the country, 82 per cent renewable energy by 2030.

NADIA MITSOPOULOS: Is that achievable?

CHRIS BOWEN: It is. It's ambitious, it's a big lift. It was 30 per cent when we came to office, so it's a big lift in activity, but it is achievable and we will achieve it, and our Capacity Investment Scheme is a big part of getting us there.

NADIA MITSOPOULOS: Minister Chris Bowen, the Minister for Climate and Energy, is my guest this morning. The WA tender has been open for a week. Have you had any applications?

CHRIS BOWEN: Oh look, I don't get sort of daily updates as the auction is proceeding. I'll get an update at the end. But look, I have no doubt there will be a very big demand for this tender. As I said in the national energy market tender, the East Coast one, we called for six gigawatts. We had 40 gigawatts express interest and we've had 24 gigawatts be serious enough to go through the next stage. So, there is absolutely no doubt in my mind we're going to get strong demand in Western Australia.

NADIA MITSOPOULOS: You've said before that Peter Dutton's plans for nuclear power would cause a complete breakdown of investment in renewable energy. But the demand that you've seen already for this scheme, doesn't that prove the opposite? That investment in this space is very strong.

CHRIS BOWEN: It is very strong at the moment. But if you're a renewable energy investor and you've got a Federal Government which says, we're not going to invest in renewable energy and what we're going to do is have a wholly government owned and operated and subsidised nuclear facility, well, why would you compete with that? And the big danger here, Nadia, is that this, this nuclear plan, I'll be generous and call it a plan, wouldn't come into force until the late 2030s at best. They say the late 2030s, in reality, it's going to be the 2040s. So, there's no jobs created, no electricity created before the 2040s. And in the meantime, all this pipeline of great job creating energy, creating investment we've got, will be really threatened because these developers and investors will say, well, hang on, I can't compete against government who are going to spend $600 billion on new nuclear plants around the country, that are going to be government owned in a massive distortion of the market. Government owned, government operated, and the most expensive form of energy available in the world at the moment is nuclear energy. So, only the government can do it. So, it would be a massive threat to this renewable energy investment that we're seeing.

NADIA MITSOPOULOS: OK, so you don't see any place for nuclear power in Australia, but there is an argument that we should at least allow the mining of uranium so we can sell it to other countries who want to use nuclear power to decarbonise. Now, we have here in WA, a lot of uranium that could be exported. Why shouldn't we be allowed to do that?

CHRIS BOWEN: Well, I mean, we've always mined uranium in Australia, and we've always exported it. Now, there are processes that everyone has to go through, approval processes, but I've always said my opposition to nuclear power is not ideological, it's based on the facts and the evidence for Australia. If other countries weigh up their options and say, well, look, we don't have great renewable energy options here, we're going to have to get our nuclear, the nuclear road, I respect that. But in Australia, we are in a very different position. We have the best renewable resources in the world and to –

NADIA MITSOPOULOS: But why can't another country use our uranium?

CHRIS BOWEN: Well, they can. We export uranium now. That's the case today.

NADIA MITSOPOULOS: Not in WA, though.

CHRIS BOWEN: Well, but our national rules allow the export of uranium and –

NADIA MITSOPOULOS: So, should the State Government change that rule?

CHRIS BOWEN: No. I mean, no, there's different, every state will make their own decisions and we respect the rule. I don't see states as somebody to be overruled. I see such states as people to be worked with. And I've got an excellent working relationship with Reece Whitby, my Ministerial counterpart. We do a lot of things together and I don't tell him how to do his job and he doesn't tell me how to do mine. We get on with our respective jobs. But my point is, Nadia, on nuclear, Australia saying to other countries, you can buy our uranium is one thing. Saying that other countries are developing nuclear power and so Australia should, is like going to Switzerland and saying, listen, I know you've got good snow, but you should try surfing. You know we have the best renewable energy resources in the world. We don't need nuclear power in Australia.

NADIA MITSOPOULOS: That was Chris Bowen, the Federal Minister for Climate Change and Energy.