Q&A with Qld energy minister Mark Bailey: The 50% renewable target

This article was originally published by RenewEconomy and is reproduced with permission. Read full article

by Giles Parkinson, Editor of RenewEconomy

The Labor Party led by Annastacia Palaszczuk was the surprise winner of the Queensland state election earlier this year, and one of its boldest policies was a 50 per cent renewable energy target by 2030.

That will require one of the biggest transformations of a state’s energy industry ever seen. In an interview with RenewEconomy, energy minister Mark Bailey says the government intends to deliver on the promise, although it is not yet making any rash promises about how it will do that.

The first steps, however, are in train, with a tender for solar energy from the government, a review of the “fair price” for rooftop solar, and a focus on battery storage technology.

Bailey agreed to answer 10 questions from RenewEconomy as part of its Queensland energy special. Here are his answers.

RenewEconomy: What do you see as the biggest challenge in your job right now? Is it integrating new technologies, achieving emissions reductions, or transitioning an energy system that is little changed in decades?

Mark Bailey: I think the challenge across the economy in general is disruption from technology and the challenge of climate change – and that is no different in the energy sector. The price rises that consumers have borne in the past five years means they are looking for alternatives that they can control and technology is offering them that. As government, we need to make sure the change is productive for the broader economy and, of course, appropriate safety standards are in place – but the change in transport, retail or music industry are being driven by the market not the government.

Energy supply is undergoing a transformational change. The way it is generated, transported and used is changing.  Customers are leading much of these changes – they are wanting new services, clean energy and greater choice.

RenewEconomy: The Queensland government has pledged a target of 50 per cent renewable energy by 2030. How does it propose to go about that?

Bailey: The Palaszczuk Government has set a priority of unlocking the state’s renewable energy resource potential and establishing Queensland as a renewable energy leader.

We are currently finalising the membership and scope of the public inquiry into the pathway to a 50 per cent renewable energy target by 2030.

The inquiry will investigate the cost and benefits of adopting a 50 per cent renewable energy target in Queensland by 2030; and determine how the adoption of a renewable energy generation target and other complementary policies can drive the development of a renewable energy economy for Queensland.

The inquiry will be undertaken by a panel of experts and involve a comprehensive stakeholder and community engagement program.

RenewEconomy: The Queensland Labor government has also proposed an “auction” of 60MW of large-scale solar? Are auctions likely to be a model, going forward, to reach that 50 per cent target, which is likely to be greater than the national target?

Bailey: We have certainly seen the successes of the ACT auctions and are keen to replicate that and go further.   Queensland is a big state with some of the best solar resources in the world, and is ideally placed to benefit as solar generation becomes an increasingly important part of Australia’s electricity generation. We have been out of the picture for large-scale solar under the previous government and we have been rectifying that.

The Queensland government is committed to supporting up to 60MW of local large-scale solar power generation in Queensland to drive significant growth in renewable energy investment.

We will do this by providing long-term revenue contracts to successful Queensland bidders for large-scale solar photovoltaic funding being made available by the Australian Renewable Energy Agency (ARENA).

State government support will provide successful Queensland project proponents with long-term income certainty which will help them to access favorable financing arrangements and develop lower-cost projects.

We have had 33 projects come forward with bids so this is going to be a strong competitive process.

RenewEconomy: You have commissioned the new Queensland Production Commission to look into a “fair price” for solar. What do you imagine a fair price of solar to be? Is it one that recognises the network, price and environmental benefits of the technology?

Bailey: The Queensland Productivity Commission public inquiry will determine a fair price for solar power based on a number of factors, including an assessment of the public and consumer benefits of exported solar energy.

The Queensland Productivity Commission review terms of reference is available at http://www.qpc.qld.gov.au/inquiries/public-inquiry-into-solar-feed-in-pricing/

This is a topic that has been examined many times – but not with an effort to explicitly include those broader benefits.

RenewEconomy: The nature of the premium feed-in tariffs means there is no signal for solar households to moderate consumption or gear their usage to reduce peak demand. Is there any consideration of a buy-out of tariffs, that has been contemplated by Ergon energy, to try to change that behaviour?

Bailey: There is no doubt that feed-in tariffs have to become more sophisticated and take into account peak demand – but you do need digital or smarter meters to do that. Buyouts would, of course, be an expensive up front cost – and you would have to make sure that you could model some real network benefits to ensure you are getting taxpayer value for that. It’s an interesting idea, but we have a strong agenda going forward and this idea is not part of it at this point.

RenewEconomy: Many experts forecast that up to half of all demand will be met by on-site generation within the next few decades. Is the rise of the “pro-sumer” a good thing?

Bailey: If it can help us save on network costs – it is an excellent thing. As most readers will know that is 50 per cent of the costs. That’s the billion dollar question: does the rise of the pro-sumer reduce overall costs of the network or just the costs of the pro-sumer? We all need to work together to make sure that happens.

RenewEconomy: Queensland has been cited as one of the most attractive places to build large-scale solar in Australia. What is making it so, and what are you doing to ensure that it happens?

Bailey: The first thing was just opening the doors again and indicating that we are open for business on renewable energy.  The previous government was so negative, yet Queensland has some of the best solar resources in the world and is ideally placed to benefit as solar generation becomes an increasingly important part of Australia’s electricity generation mix.

The Palaszczuk government is supporting the development of local, large-scale solar projects by providing long-term revenue contracts to successful Queensland bidders for solar funding through the ARENA competitive round.

The government-owned Ergon Energy is also supporting Queensland’s renewables sector by entering the market to buy 150MW of renewable energy – including solar, wind and hydro – from renewable energy suppliers in regional Queensland.

RenewEconomy: What are some of the other technologies that get you excited?

Bailey: I am also main roads minister, and I think electric cars, self-driving cars, trucks, and drones are going to transform our road system.

RenewEconomy: Have you driven an electric car? Should Queensland government agencies encourage the take-up of EVs?

Bailey: Recently I announced that the state government has partnered with Mitsubishi Motors and Ergon Energy to bring eight electric vehicles into Ergon’s passenger fleet this year.

We have also taken the initiative to establish Australia’s first ‘electric super highway’ service station in Townsville where drivers can fast-charge their electric vehicles using solar energy.

RenewEconomy: Energy storage is seen as the most disruptive technology, but to what extent is it an ally of your network, or a challenge?

Bailey: It is still unclear who will get the benefit of the savings at this stage. Energy storage has the potential to provide an advanced, cost-effective technology solution that will improve the quality and reliability of electricity supply to rural customers in areas of limited or no communications, very high system impedance, harsh environmental conditions, line protection issues, and stability issues.

Ergon Energy is exploring applications such as the Grid Utility Storage System (GUSS) where battery storage can benefit the network.

GUSS is designed to defer network augmentations, with Ergon modelling showing that average network upgrade costs could be reduced by 35 per cent while improving the quality of electricity supply to rural customers in remote areas.

GUSS works by charging batteries overnight when electricity use is at its lowest and discharging them during the day, if required, when energy use peaks.

GUSS units have been installed at 17 sites across the state, including two units between Rockhampton and Bundaberg, five between Burketown and Doomadgee, three each for Mount Isa and Mirani and two near Cunnamulla.

But of course we are about to see batteries and storage deployed in homes as costs fall – mainly not by networks but by consumers. Whether that ends up in network savings – it is too early to tell, but there is a lot of research going into that question at the moment.