The energy industry has welcomed the announcement of a $1 billion Grid Reliability Fund by the Federal Government.
The fund will support government investment in new energy generation, storage and transmission infrastructure, including eligible projects shortlisted under the Underwriting New Generation Investments (UNGI) program.
The new fund will be administered by the Clean Energy Finance Corporation (CEFC), drawing on the energy and financial markets expertise that has seen the CEFC invest more than $7 billion in clean energy since its establishment in 2012. The fund represents the first new capital provided to the CEFC since it began.
The Prime Minister said the fund would help unlock private sector investment for projects that would secure the grid and put downward pressure on prices.
“This is yet another initiative by our government taking more action to bring power prices down and keep the lights on,” Prime Minister, Scott Morrison, said.
“We’re delivering immediate relief through our new price safety net and banning sneaky late payment fees, but we’ve also got our eye to the future with the projects this new fund will back.
“Our work to date and this new initiative will help deliver an energy system that isn’t a roadblock to businesses growing and employing more people, and that isn’t stinging family hip-pockets.”
Minister for Energy and Emissions Reduction, Angus Taylor, said the fund would ensure sufficient reliable generation capacity is available to meet periods of high demand.
“The Grid Reliability Fund builds on our strong action to stabilise the grid and get the energy generation balance right to deliver affordable, 24/7 reliable power,” Mr Taylor said.
“It is no secret that the National Electricity Market is under pressure – this fund is designed to tackle that and is part of a suite of initiatives that the government is delivering to ensure when people flick the switch, the lights come on and stay on.”
Finance Minister Mathias Cormann said the government would update the CEFC-enabling legislation to ensure the Grid Reliability Fund could support suitable projects.
“The Grid Reliability Fund will provide the Clean Energy Finance Corporation with additional capacity to support affordability, reliability and security of supply, which ultimately puts downward pressure on energy prices,” Mr Cormann said.
The fund will prioritise investments in jurisdictions where state and territory governments are working with the Commonwealth towards an agreed reliability goal and to ensure sufficient reliable generation capacity is available to meet periods of high demand.
Energy Networks Australia Chief Executive Officer, Andrew Dillon, said the announcement is further recognition that energy networks will play a key role in enabling a sustainable energy future.
“The challenge we face is not just how much electricity is being produced, but how to efficiently get it to our customers,” Mr Dillon said.
“Electricity networks are the enablers of a reliable and sustainable future.
“Transmission networks are the electricity superhighways, already transporting record levels of solar and wind, while connecting firming technologies such as pumped hydro and batteries.
“More transmission infrastructure and interconnection between states are essential to support renewable power generation, keep electricity reliable and link markets to keep customer costs down.”
Mr Dillon also said the rapid rise in distributed energy resources, particularly household solar, was putting the lower voltage distribution network under unprecedented pressure.
“Our grid is increasingly becoming a two-way flow of electricity, with millions of households becoming small generators feeding back into a network that was never designed to operate that way,” Mr Dillon said.
“This fund may create opportunities for further investment in digital technologies that will make our distribution grids the platforms of a smarter energy future.”
Energy Networks Australia and the Australian Energy Market Operator are working on the Open Energy Networks Project to plan for a future grid with more distributed energy resources.
The Clean Energy Council also welcomed the funding injection, commenting that it could accelerate investment in the electricity transmission network and prepare the energy system for the shift from coal to renewable energy.
Clean Energy Chief Executive, Kane Thornton, said Australia’s power grid was designed for the last century and it is becoming increasingly obvious that major investment and reform are needed.
“We know that new poles and wires are essential to the development of a modern electricity system. The Grid Reliability Fund is the first increase in capital since the CEFC was established and can leverage significant private investment into one of the areas of greatest need,” Mr Thornton said.
“It is reassuring to see both the Federal Government and the opposition recognising the importance of investment in network infrastructure and grid stabilising technologies to unlock new generation investment and bring down power prices. Targeted government funding has a role to play in kick-starting urgent investment in a future-ready network.”
Mr Thornton said there is a huge pipeline of new clean energy projects in the system that can help bring prices down, but many investors are holding off due to grid constraints and a lack of certainty on energy and climate policy.
“It is important that there is significant transparency and objectivity in how the fund will support new generation projects short-listed under the Underwriting New Generation Investment program,” he said.
“It is important that the new fund is objective, transparent and does not become politicised. It also needs to be operated in a way that leverages the strong interest from the private sector in Australia’s clean energy future rather than acting to ‘crowd out’ investment.”
Transmission and grid connection were the highest priorities for executives in the clean energy industry in the last two Clean Energy Outlook surveys, which are conducted every six months.