Interview with Sabra Lane, ABC AM

SABRA LANE: Electricity produced from renewables such as wind and solar plants remains the lowest cost forms of energy and should stay that way for years. That's according to the latest draft report from the science agency, the CSIRO, and AEMO, the Australian Energy Market Operator. It also finds that small modular nuclear reactors, something the Coalition is keen on, are the most expensive forms of power, and it will take another 15 years before the first one could be built. The Climate Change and Energy Minister is Chris Bowen. Minister, welcome to AM. What's the purpose of this report?

CHRIS BOWEN: So this report is a joint collaboration between the CSIRO and AEMO, our Energy Market Operator. It's happened since 2018. It's done independent and arm's length of government, and it's designed to give guidance to the market, to investors, to governments about what the cheapest forms of energy are, and its conclusions this year are unimpeachable and very, very clear. The cheapest form of energy is renewable energy, even including the costs that go with renewable energy around storage and transmission.

SABRA LANE: Is it politically convenient for you that the report also says that small modular nuclear plants are very expensive, and even if there was political will to make it happen in Australia it wouldn't be powering the first one until 2038.

CHRIS BOWEN: Well, facts are facts, Sabra, and they are the facts, they're the facts, and the Opposition will need to take those facts into account. They are a fact free zone when it comes to their energy policy, they are driven by ideology and a hatred of renewable energy, that is very clear, and they will come up with any excuse to delay renewable energy roll outs, and their latest inactivist excuse has been to embrace small modular reactors, which have always been which are the next big idea, always have been and always will be.

They are the most expensive form of energy available, this report makes it very, very clear. Ted O'Brien, the Shadow Minister, has previously engaged in quite inappropriate attacks on CSIRO and AEMO, independent bodies who prepare this report at arm's length from government, and their findings today are clear, and the Opposition will need to deal with those findings.

SABRA LANE: There's been criticism in the past that these calculations by the Energy Regulator to compare energy sources excludes the full cost transmission and batteries, but you've made it clear that this report also factors that in, is that right?

CHRIS BOWEN: That's correct. And each year CSIRO consults about what factors should go in. These criticisms in the past have been erroneous and ill placed. But nevertheless CSIRO and AEMO have agreed to include those costs between 2024 and 2030 in this report, even including those costs, it's very, very clear renewable energy is the cheapest, and in fact the cost of nuclear energy has blown out substantially based on the best evidence that the CSIRO has amassed from around the world.

SABRA LANE: This is a draft report. What happens now?

CHRIS BOWEN: It goes out for consultation, that's the standard process which has existed since 2018, but the clear direction travel of the analysis and work of CSIRO and AEMO is very clear.

SABRA LANE: On a related subject, the energy companies are unhappy with the way the default prices are set for electricity customers across Australia, and they've written to the Energy Regulator saying that the pendulum has swung well away making their profits too slim because of the caps on prices. What's your response?

CHRIS BOWEN: I don't agree. I think the Australian Energy Regulator does an excellent job. They weigh up a whole range of factors. Energy company profits have been healthy, and I think in this spirit, in this environment of cost of living pressure, it's quite right that the Australian Energy Regulator would prioritise cost of living, and I know my State and Territory ministers agree with me about that, and accordingly that is what I expect the Australian Energy Regulator would do. Of course we want profitable energy companies, but we want families receiving cost-of-living relief as well.

Now next year's Default Market Offer   we'll see a draft in February   will be very different to last year's, we're already seeing wholesale prices way down on last year. That's one of the inputs, not the only input, one of the inputs into the Default Market Offer, but I don't agree with any argument to say energy company profits should be prioritised.

SABRA LANE: Why do you think they're putting pen to paper and saying this, and they're also warning that the market's becoming increasingly unattractive for investment?

CHRIS BOWEN: Companies are entitled to put a view which maximises their profit, and indeed that's their job. It's not my job or the Australian Energy Regulator's job, however. We have a national interest to account for, and we'll continue to account for it.

SABRA LANE: Are they being greedy?

CHRIS BOWEN: Not words I would use. They are entitled to try and maximise their profits. I don't engage in the sort of, you know, attacks on energy companies as previous Energy Ministers have done. What I do is get on with the job, but I also call it as I see it, and in my view energy companies are entitled to a profit, but consumers are entitled to be prioritised in the Australian Energy Regulator’s determinations.

SABRA LANE: The predictions of a prolonged El Nino over summer, just how stable is the national grid in coping with days and days of extra demand as people put on air conditioners with less coal fired power to ensure steady supply?

CHRIS BOWEN: Look, we are in for a long, hot summer, that has been clear, and you can't avoid that, but you can prepare for it, and as we go into that long, hot summer, the biggest risk to reliability is that coal fired power, coal-fired power stations not working at short notice, but to prepare   and we've experienced that already in recent weeks.

SABRA LANE: Does that keep you awake at night?

CHRIS BOWEN: Well, it's a matter that we need to manage, and we do manage, together with our market operators and the States. It's a fact of life that coal fired power is getting older and less reliable, and again we've seen some examples of units going out at very short notice in recent weeks.

Now that doesn't mean that we can't prepare for that, and we have prepared for it. You know, we're going into this summer with 3.4 gigawatts of generation available that wasn't available last summer. We convened a Capacity and Connections Committee, the States and Territories and I and the Federal Government gave AEMO more money to get connections faster for this summer. As a result 23 energy projects have been connected and generating in the lead up to this summer.

So that does give us the maximum rigour and the maximum robustness going into what is a long, hot summer. As I said, there's always risks, and the biggest risk in our energy system now is coal fired power, which through no fault of the workers, who are doing a great job, but just with ageing plants, is increasingly unreliable as it works harder and longer through a long, hot summer.

But what we can do is prepare for it, and we have prepared for it, and every preparation's been put in place, and therefore system's robust.

SABRA LANE: Chris Bowen, thanks for joining AM.

CHRIS BOWEN: Nice to talk to you, Sabra.