Statutes Amendment (National Energy Laws) (Stand-Alone Power Systems) Bill

Second Reading

Adjourned debate on second reading.

(Continued from 11 November 2020.)

The Hon. A. KOUTSANTONIS (West Torrens) (12:32): I can inform the house that I am the opposition's lead spokesperson on this bill. This is another piece of legislation the government has introduced. Unfortunately, I have not had time to be briefed on the bill, but I have read the government's briefing note, which is a cut-and-paste of the explanatory stakeholder notes from the COAG Energy Council or AEMO.

Mr Knoll: Isn't that the same speech from the last two or three bills?

The Hon. A. KOUTSANTONIS: He says on his way out. I understand that the legislation before the parliament allows the national laws to be amended to allow for standalone power systems to function within the National Electricity Law and the National Energy Retail Law. The consultation introduction talks at length about the need to supply energy to locations that are not physically connected to the national grid and also to include the advent of microgrids, which supply electricity, I am told from this briefing note, to multiple customers in individual power systems.

There are a number of advances in technology that are making these types of standalone power systems (microgrids) more effective without the exorbitant costs, I imagine, of connecting to the national grid or a further rollout of very expensive, gold-plated infrastructure for new developments or upgrades of existing develops. On its reading, it seems to be a very sensible reform. I am not quite sure if this is simply a government bill or if this part of a national energy reform process.

The opposition has not been informed by the government if this is indeed part of state government reform, but I assume it is part of a national reform. I can indicate probably that the opposition will be supportive of this measure, given that this originated from August 2018 out of a COAG Energy Council, which is now under a new format. I understand from this briefing that standalone power systems are not generally 'captured under the national electricity frameworks' and are currently 'subject to jurisdictional legislative frameworks that vary in their comprehensiveness'.

I am assuming that means either that remote regional communities have their own standalone power systems or that there are people who are attempting to install microgrids in their developments in and around existing infrastructure and this is a way of having a comprehensive framework to govern all of them. If it is not, I would like the minister to brief the parliament on exactly what the intent of the COAG Energy Council was when they initiated these reforms.

I also understand that the legislation does not disadvantage any distribution network service providers, but I would be interested to understand in the minister's conclusion if there are any changes to current contractual obligations for microgrids or any other standalone power systems that are in place or whether or not they will have any change to their regulatory function and whether any additional costs are associated with those network costs from this legislation.

From what I can tell in looking at the legislation, there do not seem to be any additional costs. It is simply giving us a framework moving forward and empowers the South Australian minister on behalf of other jurisdictions to make rules and functions of the ER, but I will be seeking a briefing from the government between the houses, probably early next year if possible, to get a more comprehensive understanding of exactly what this bill is intending to do.

The Australian Energy Market Commission Review covered the electricity regulatory frameworks, and I am quoting again, as set out in the National Electricity Law and the National Energy Retail Law and associated rules. The review was structured around two priorities: one covered national requirements for standalone power systems operated by distribution network service providers, and the second covered a national framework for the provision of power systems operated by a third party.

That is the part that I am interested in—the third-party operation of the standalone power systems—because I imagine that the expense of connecting to the grid can be quite attractive for developers to build standalone power systems. I would be very interested to know exactly how the regulatory frameworks will go on for legacy issues.

I could be completely off track here, but my instincts are that a developer buys a large allotment of land in and around metropolitan Adelaide and develops a brand-new development, a lot like Lightsview or some other private development. There are very expensive costs in linking to infrastructure, especially utilities, whether it is water, sewerage or, of course, power. There might be very good incentives, savings and environmental benefits in establishing a standalone power system to service that. It is a microgrid.

The problem is legacy. These people are now all connected through this standalone power system and, unlike the rest of the grid, we could have scenarios where people in metropolitan Adelaide are linked through this service agreement which could have costs that are higher than linking to the grid but which are prohibitive in actually linking it to try to alleviate some of the costs through being a standalone power system.

To play that out, people buy and sell houses all the time. I think that on average in South Australia someone buys and sells a house every 7½ years, so you are likely to move quite regularly, although that is not across the entire system but generally. If you did have a development of 50, 100 or 150 homes and you had a standalone power system or microgrid in place, people move in and out of these places all the time, infrastructure needs upgrading and there are advances in technology.

I would be very interested to know how that is governed because when you have a centralised network, while it is old and sometimes antiquated, it is very easy to know exactly what the rules are, it is very easy to know what the costs are and it is almost a set-and-forget type of system, whereas microgrids are a little bit more complex, a little bit more interesting and a little bit more confronting for some people.

I would be interested to know exactly what the implications of that are for these standalone power systems, but I think they are an important advancement. Without having to pay to connect to a grid, standalone power networks could be very, very interesting advancements, although I note that there are some people who are talking generally that the ultimate battery is the grid and the ultimate backup.

Again, what does that mean for system reliability if you have the standalone networks within metropolitan Adelaide? What does that mean long term for the grid? I suspect that this legislation is attempting to deal with that, and I also think it is attempting to deal with some of our remote communities, but again I would be interested to know what the minister has to say on that in his closing remarks.

Unfortunately, I have not had the opportunity to read his second reading explanation. The person who drafted it and I are probably the only people who are going to read it, other than maybe the minister. That is the nature of second reading explanations, but I do apologise to the house for not having had the chance to do that.

I am interested also in the functions and powers of the AER and how they relate to the standalone power networks, especially if they are privately owned and operated, and why the AER has a need to be involved in these, especially if an individual is running a standalone power network on their own. What does this mean for people who are not part of a community but who are simply off grid? I am assuming that there is no implication for them, but the minister is the one who represents regional communities, not me.

There would be plenty of people who operate in his electorate who are standalone. I do not know what role the AER would play, or the National Energy Retail Law would play, or the National Electricity Law (NEL) would play in regulating those people. I think that is an important question I would not mind getting an answer to, perhaps in committee.

Let us talk more generally about energy. There are a number of concerns the opposition has with the operation of the national electricity grid in South Australia and then more broadly as it pertains to the interconnector proposed by the government—the EnergyConnect interconnector—to be built now sometime into the next term of this parliament. I just point out a few basic points about this. When this policy initiative by the then opposition and current government was announced, the cost of the EnergyConnect option into New South Wales was going to be roughly $500 million.

That cost then grew to $1.5 billion, and the latest iteration of that construction is $2.4 billion. No doubt the minister will argue that most of that blowout, that extra cost, is not on the South Australian side of the border. I would be interested, as that rolls out and as we roll out our energy policy over the next 12 months in the lead-up to the next election (which is getting closer and closer by the day), to have a debate about energy policy again, which is important. It is important because it is probably the most important aspect of government decision-making in terms of the transition to net zero emissions and, of course, meeting those targets as we go forward.

I congratulate the government on their hydrogen strategy. It does, I think, grow from the hydrogen road map that the former government initiated. I am glad that the government has picked up almost every single initiative that we put in place and that the support of that hydrogen plan is bipartisan. We congratulate the government on their endeavours to try to export our renewable energy and incentivise the growth of hydrogen-based industries. It is a very good idea and a lot of the initial works that we did and the investments we made are coming to fruition.

I think what we are seeing is the development of a very new and exciting industry. This new and exciting industry can really help with Australia's transition. Most importantly, it will enable us to export our abundant renewable energy. There are two things that I think are important about this transition. One is the storage question. Once we get the storage question finally answered properly, with efficient ways of storage, we can dramatically change the way we generate energy. The second part of that is can we export our stored renewable energy?

That might have sounded like a fantasy five years ago, but five years from now I think we are going to see Australia become an exporter of energy. I am not talking about coal or gas, I am talking about energy created from the sun, from wind and from other forms of renewable energy. Another aspect of the improvements in renewal energy is, of course, the efficiency of generation. Being efficient in generating energy is one of the big roadblocks to a greater form of energy production and, of course, dispatchability, which links back to storage.

I think there are a number of ways in which the debate has now moved on past the partisan and we are at a point of bipartisanship, where most thinking people accept that we do need to transform the highest polluter of carbon in Australia, our electricity industry, and convert it over time to an efficient, renewable, net zero carbon emitter to ensure that we can effect that transition, save the planet, create jobs and create an abundance of cheap energy to try to stimulate a renaissance of industries that we have lost in Australia, create new industries that we have not had in this country before and, of course, export it and create more jobs here.

Make no mistake, the export of energy and our agricultural sectors have helped Australia's prosperity. Had it not been for the pandemic, Australia's economic growth would have been a miracle compared with the rest of the world. There have been decades of continuous economic growth, uninterrupted, on the basis of a bipartisan economic policy that has set this country in very good stead, and we can grow on that.

I am a big supporter of our gas industry in this state and nationally, as I know you are Mr Acting Deputy Speaker. It has served Australia and especially South Australia well. We have kept the lights on in New South Wales, we have kept them warm and we have grown their industries with our gas. It is good to see them actually start to lift their own weight in some of the projects that need approval in New South Wales, even though it has taken nearly a decade to approve one gas field in New South Wales by a great South Australian company, Santos, operating in Narrabri.

However, there is infrastructure in place, there are export markets where we have existing relationships and there is technology and know-how. There are companies that are prepared look at and invest in this transition. There is no reason to think that companies like Santos, Beach and other energy exporters and pipe infrastructure companies cannot transition to make sure that we create our own export industry out of green hydrogen.

Green hydrogen I think is the hope of the side in terms of the transition. Had the Tokyo Olympics gone ahead, the Japanese government planned to make the Tokyo Olympics the hydrogen games. They wanted it run and powered by hydrogen. They wanted to showcase their hydrogen technologies at those Olympic Games. Australia can play a big role in helping countries like Japan, South Korea and Asia that are struggling under the energy transition but have governments that are committed to it, have road maps that are funded and are government policy, and are looking for sources of this energy.

Australia can rise to that challenge. South Australia was first out of the gate into this new area. I am very proud to say that the South Australian Labor government led that charge, and it was picked up by this current government. Congratulations to them on following our lead and making sure that this is not now a partisan issue but a bipartisan issue. Credit to the minister and the government for doing that.

What we need now, of course, is a real government focus on this industry, a real government focus on how we can integrate renewable energy further and safer into our communities, and standalone grids, microgrids, are a big part of that. I see all the time in my community the number of solar panels going up in and across my electorate, as I am sure all members of this parliament are seeing it. That is step 1.

The subsidies in place to initially stimulate that were not the wish of the former Labor government. They were imposed on us by the Liberals and the Greens through an amendment in both houses of parliament, which we ultimately accepted, for a 20-year subsidy to get it started. I think that decision was the wrong decision. I think that decision was unnecessary and that the take-up of solar panels would have been just as quick and just as profound had that subsidy not been in place.

The next stage is batteries. Batteries are a big part of the step forward in this equation. The next step is microgrids. Then, of course, it gets to the point of what we do with the actual grid that is left in place. Who supports it? Who pays for it? How is it funded? As our economy grows and our footprint grows and our communities grow, the question always comes back to: do we want to spend money on these very large and expensive grids to keep on connecting new houses or are there cheaper, more efficient ways of doing this, more self-sufficient ways, more sustainable ways of connecting communities to power without just rolling out a 20^th century grid?

The days of large generators feeding a distributed grid and having a distribution and transmission network all working together may be coming close to the end of its life. I do not know how long it will last—50 years, 100 years. I do not know what happens next. I think anyone who claims that they know what the transition will be is probably guessing at best. Imagine the advances we have made. When I entered this parliament, Australia in 1997, before the turn of the last century, was overwhelmingly looking at a coal future—coal and gas.

That has dramatically changed in one generation. What happens in another generation from now will be exciting to watch. It will be tricky. It will not be easy and there will be setbacks. There will be costs involved. There will be disputes. What we have lacked is states that are willing to take on this transition and work towards it, and that is both sides of parliament. I think the New South Wales government has been a leader.

I think the South Australian government, the Western Australian government and most states and territories have been leaders. Where we have been let down is by the commonwealth government, and I slate blame equally on both sides. I do not think this is a one or other opportunity. I think former Prime Minister Rudd squibbed it and let the side down, and former Prime Minister Abbott played an appalling role in the way he politicised this industry and this transition, and we have been stuck in those wars ever since.

It is important to exercise common sense and bipartisanship in this transition. Yes, we can argue on the side. Yes, we are going to make our different points. Yes, we are going to attempt to by and large work together. We are going to have disagreements, but ultimately we are all pushing on the same open door, and that is the transition. I hope this legislation is a big part of that transition, not just some measure to clean up some unintended consequences of standalone power networks but an attempt to try to manage them and make sure that they are sustainable long term.

If we can do that, we can ensure that we can bring South Australians and indeed Australians along with us. The worst thing a government can do is to impose on its citizenry a transformation that they do not support and do not understand. I think South Australians have a very high level of education and understanding of what is a renewable transition. I think they overwhelmingly support it. I think most South Australians believe in it; they see its opportunities and they see its advantages.

South Australia has been the victim of a slow genteel decline in manufacturing for the last 30 to 40 years, generally because of tariff policy and commonwealth policy when it comes to imports and exports, and the balance of trade figures. We have seen our manufacturing industry gutted, unable to compete with practices that we are competing with in parts of the undeveloped world, and we are seeing our manufacturing move offshore.

We are seeing a resurgence in smart manufacturing—manufacturing and development of high-end smart products—and that is good, and we are seeing a change in the way manufacturing works. Ultimately, if we are serious about being a country that manufactures and exports, we need cheap power. Cheap power is always the key because this country cannot compete on wages and should not attempt to compete on wages. If we attempt to compete on wages we will lose.

But we can use our smarts to lower our input costs for our businesses. Importantly, we can lower their costs, and we can do that through renewable energy. It is a bipartisan pursuit. I do disagree with the minister on some aspects of government policy, but broadly I think the government have picked up where we left off and are moving in the same direction that we were, which is a great credit to us and a credit to them. I think we do have differences.

I am very concerned about the impacts of the interconnector here in South Australia. I am concerned about the impacts on thermal generation in South Australia if the interconnector goes ahead. I am very concerned about what will happen to our economic sovereignty if we lose Torrens Island, Osborne and Pelican Point, and what that will mean for us. Our future is determined by power supply, whether we become completely reliant on places like Victoria and New South Wales for all our power or whether we can generate our own power here.

We will have disagreements but, as I have said previously on a number of occasions, when it comes to national reforms the view of the opposition is that we should support them, as we are the lead legislator. If this indeed is a national reform, I will look forward to going into the committee stage of this bill later this afternoon to get some answers from the minister. I thank him for the information he has given me, and I seek leave to continue my remarks.

Leave granted; debate adjourned.

Sitting suspended from 12:59 to 14:00.