Press conference - Sydney, NSW
CHRIS BOWEN: I'm delighted to be here today to announce a very substantial investment in renewable energy storage on behalf of the Albanese Government and ARENA.
We know that part of a renewable economy is being able to store renewable energy. Some people say the sun doesn't always shine and the wind doesn't always blow and that's true. But we can store renewable energy for when we need it, and to do so we need investment.
Today we're announcing $176 million of investment which will in turn unleash and open up almost $3 billion of investment across the country with seven new large-scale batteries, which will represent two gigawatts of storage capacity.
We know in the last decade Australia lost four gigawatts of dispatchable electricity capacity and only one gigawatt came on. This will represent two gigawatts of dispatchable electricity, dispatchable renewable electricity. This is a major step forward for Australia's energy grid.
Seven new batteries spread across New South Wales, Queensland, Victoria and South Australia and the major upgrade of an existing battery. This will be grid forming, which will mean that our grid is more stable and secure as well.
We welcome the investment of so many companies in Australia's renewable future. We recognise the role for government to assist in that investment, to make these investments certain and secure. So this is a big step forward which will see the capacity of Australia's renewable energy grid receive a major upgrade in the next few years. And it will mean we can store much, much more energy for when we need it.
So I'm absolutely delighted to make this very substantial announcement today. These eight batteries will be between 200 and 300 megawatts each. These are some of the biggest batteries in Australia that we'll see rolled out in the coming period.
I'm going to ask Darren Miller, the Chief Executive of ARENA, to briefly add to my remarks; Brett Redman of Transgrid also has something to say in a separate announcement; and then I'll take your questions on this and other issues of the day. Darren.
DARREN MILLER: Thank you, Minister. Thank you everybody. I won't repeat the Minister's comments, I might just make two extra comments. Which is when we announced the launch of this program over a year ago we had committed around $100 million of funding to this initiative. Given the strength of the applications received, we received 54 applications in the expression of interest phase, we took 12 of those through to full application and ultimately are looking to fund eight of those projects. We were so encouraged by the response we had from industry we increased the commitment to the round.
As the Minister said, we're committing $176 million of Federal Government money to this initiative, which speaks to the desire for the industry to come forward with innovative projects to help support the grid as we head towards that 100 per cent renewable target.
The second thing I'd like to say is when ARENA first started supporting batteries like this about five years ago, we had to provide up to 60 per cent of the capital value in grant, and what we can see today is the industry maturing as ARENA's grant is below 10 per cent of the value of these projects, and as I've said, we've had much more come forward than we even imagined.
It's the ability of this advanced inverter technology to support the grid without coal or gas that's fundamental to the innovation here today. We know we need the energy, but we also need those crucial system security services, frequency support voltage and the like that these new batteries can provide. Like the ones that you can see behind me, the Wallgrove battery.
So without further ado I'll hand to Brett Redman who'll talk about the battery here that you can see behind us. Thank you.
BRETT REDMAN: Thanks Darren, thank you Minister. The battery behind me is a 50-megawatt battery that was built by Transgrid with the help of ARENA. It was the first big battery in New South Wales and the first battery in New South Wales to get up with the support of ARENA funding.
It's a proof of concept that the grid forming technology, the inverter technology, the inertia support works, and now we're able to say that it's fully operational and a great proof point of the program to come that is being announced separately today. Thank you.
CHRIS BOWEN: Okay, guys. Questions on the telephone. We might just start with on today's announcement, if that's all right, and then move to questions on other issues. Any questions on today's announcement?
JOURNALIST: Ashley from Nine. Can you just run me through when it's fully batched [indistinct] what's the timeline?
CHRIS BOWEN: Okay, you broke up a little bit, but I think I got the question. We're expecting these batteries to reach financial close next year. Of course it's well past halfway through December so nobody would expect it to happen this year, but it will certainly happen over the course of next year is our expectations, and the batteries will then be physically rolled over the course of that period right up until 2025.
JOURNALIST: And what does it mean for household bills in the long term?
CHRIS BOWEN: Well I mean no particular battery is going to have a particular impact on a particular bill, but what I do know is this, renewable energy is the cheapest form of energy. The more renewable energy we have in the system, the cheaper bills will be. The more storage you have in the system, the more big batteries we have in the system, the more renewable energy we can get into the system.
We need household batteries, we need community batteries, and I should say I'm also today releasing the guidelines for bids for community batteries in the 60 locations the Labor party announced pre- election. So those guidelines will be up and available from today for communities to bid and for network providers to bid to host those community batteries.
So we need household batteries, we need community batteries, and we need grid scale batteries. We need it all. Because I am very excited about the opportunities for renewable energy in Australia, but we've always been very clear about some of the implementation challenges as well. And those two implementation challenges are mainly transmission, which we're getting on with the job of Rewiring the Nation, I'll have more to say about soon. And storage, on which we're making a big step forward on today.
Any other questions on today's announcement?
JOURNALIST: I've got something on gas.
CHRIS BOWEN: Yeah, no, I was going to move to other issues including gas now. So, questions on gas or any other issue.
JOURNALIST: Okay, I have a question on gas. Jen from Seven News. What's going to stop the big gas giants saying, "Stuff the domestic market, we're just going to sell all the gas overseas because we're going to get more money for it"?
CHRIS BOWEN: Well, firstly, Jen, I would expect gas companies which have said that they care about energy prices in the last few days to do the right thing by the Australian people and not to play those sorts of games.
Secondly, we have the trigger, the ADGSM trigger which was actually designed not for prices but for supply. So if there are supply shortages that trigger can and will be pulled.
Thirdly, there are anti avoidance provisions in the act that the Parliament passed on Thursday across the Government and the crossbench with no helpful support from the opposition.
So, there are multiple levers available to the government to ensure adequate gas supply. But I would hope and expect that gas companies who say they care about the national interest would do the right thing.
JOURNALIST: Do you think they will though? I mean if you're going to get more money from a different market.
CHRIS BOWEN: I make this point. Gas profits from exports of LNG have risen from 30 billion to 70 billion over the last couple of years. I mean the point we make is that's fine with us. What's not fine with us is wartime profits being generated off the backs of Australian consumers, households and businesses. That is not okay, and it will not be tolerated under an Albanese Government.
So we have responded carefully but clearly and powerfully to ensure that Australians are protected from the impacts of the war in Ukraine on their energy prices.
Now gas companies can export. We are not seeking to disrupt that. But we are requiring them to provide Australian gas which lies under Australian soil and Australian seas to Australians at fair price. Nothing more, nothing less.
JOURNALIST: Anthony Galloway from the SMH. If there is an ongoing shortage how do you actually pick which manufacturers get the gas?
CHRIS BOWEN: Well what we're doing is providing a cap on pricing and then manufacturers and gas companies, and many of them have, you know, existing commercial relationships which I'm sure they say are valued and I'm sure are valued, and they will be able to work that through.
In addition, as I've previously said, 96 per cent of gas was sold in Australia in 2021 for under $12, at an average price of $9.20. We are just simply requiring gas companies to sell in 2023 for what they sold 96 per cent of their gas for in 2021. That is not actually a major intervention or, you know, the sort of remarkable rhetoric we've seen from some over recent days, shrill and unhelpful and laughable rhetoric that we've seen from some. It's a pretty sensible intervention to ensure Australian's get a fair go.
JOURNALIST: And sorry, can I just ask about potential compensation for coal producers and generators in New South Wales and Queensland. Are you any closer with the states to working out what that total dollar amount would be for compensation and do you commit to that total amount being transparently declared at some stage soon?
CHRIS BOWEN: Well, Anthony, as you know there's two elements at play here. There's the compensation in relation to the very rare circumstances where cost of production would be over $125 a tonne, which was a suggestion of New South Wales to ensure ongoing supply, which we were happy to accommodate in a spirit of good faith with New South Wales.
And then separately there's the processes in place to ensure that where a generator has already contracted coal that we are able to get to that contract to ensure reduced prices. The conversations between New South Wales, Queensland and the Commonwealth are at an advanced stage in terms of how both of those get implemented. Of course respective governments will have more to say about that, but the conversations have been in very good faith and are at an advanced stage.
JOURNALIST: Do you have a ballpark figure?
CHRIS BOWEN: I'm not going to provide running commentary. Further updates will be given by the States and the Commonwealth.
JOURNALIST: Just back on the gas industry. So if they do neglect the domestic market and continue to sell internationally, I mean what exactly can you do as a government to stop that from happening? Can you impose fines? I mean are you just going to rely on the ACCC? I mean the ACCC doesn't really have a good track record.
CHRIS BOWEN: No, Jen, we'll pull the gas trigger if necessary, which has requirements under the [indistinct] gas companies to supply. I mean I've pointed out before that the gas trigger is a blunt instrument when it comes to prices, which it is. But it's not a blunt instrument when it comes to supply.
It's a useful tool for a government to have when it comes to supply and Minister King, Minister Madeleine King has made it crystal clear she will pull it if necessary, she'll pull that trigger. We hope it doesn't come to that but if necessary, it was put in place by a previous government, it will be used if necessary and appropriate.
JOURNALIST: Great. And what will stop energy retailers, not just the producers, from increasing prices?
CHRIS BOWEN: Well energy retailers will be, one, trying to seek market share so will be pricing as competitively as they prudently can. Secondly, we've increased resources of the ACCC to ensure that the very significant response of the Federal, New South Wales and Queensland Governments, together with the rebates being pulled through by the Treasurer with all States and Territories, are passed on to consumers.
JOURNALIST: Are you confident that power bills will go down or at least won't go up at high as were first predicted?
CHRIS BOWEN: I'm absolutely confident in the advice of the Australian Energy Regulator who has pointed out that this is already having an impact on future prices. Already having an impact. It was having an impact before it even passed the Parliament. You can see the graph of the futures market on energy prices showing that the response of the Government is working.
You can imagine what those future prices would have done if the Parliament hadn't passed our package, if Peter Dutton had had his way. I mean Peter Dutton always wants to sit on the sideline and hope nothing good happens. He doesn't wish the country success. He's sitting by hoping things fail. That is not the role of a constructive opposition leader. It's not the role Anthony Albanese took in the pandemic. But that's a matter for Mr Dutton. He has to justify that to the Australian people. The Government has responded. Of course not everyone's happy with that.
As I've said, it's the role of gas companies to maximise their profits. It's the role of the Australian Government to maximise the best interests of the Australian people. They're different jobs. We're not going to be distracted by the sort of silly and shrill scare campaigns you're seeing run by some. We have made sure that the gas caps are the law of the land, they're being implemented and they're already having an impact.
Do we have any other questions? All in, all done. Calling it there. That's a wrap, thanks very much. Cheers.