Good morning Ladies and Gentlemen.
I would like to thank the Australian Academy of Technological Sciences and Engineering (ATSE) for the invitation to be here today to launch their new report, Evaluation of New Energy Technology Choices for Electric Power Generation in Australia.
This report comes at an important time for our energy sector and I welcome this contribution to the current debate.
Historically, low cost and reliable energy supplies have underpinned Australia’s strong economic growth.
But as we look to the future, we must look more closely at the need to diversify our energy mix and ultimately reduce emissions from our energy sector.
At the same time we need to ensure continued reliability of supply.
This brings with it a substantial investment challenge on a number fronts.
Firstly in terms of ongoing maintenance, secondly for new low emissions generation capacity and finally the huge investment required in our networks.
This challenge is captured in the opening statement of ATSE’s report which correctly notes that:
Australia faces a long period of heavy investment in low-carbon energy technologies, especially for generating electricity.
As Minister for Energy, getting the policy settings right to bring about this investment and reduce emissions from the energy sector is core business.
Australia’s prosperity hinges on it.
Australian Electricity Generation Technology Costs – Reference Case 2010 Report
I am pleased to note that ATSE's report is the first independent report to draw from the data provided in the Australian Electricity Generation Costs – Reference Case 2010 report that I released last week.
The Reference Case 2010 was commissioned by my Department as part of the ongoing Energy White Paper process.
It provides a publicly available reference set of Australian electricity generation technology cost curves that can be used to model Australia’s stationary energy sector.
It is the Government's intention that these cost curves will be regularly updated and released to ensure industry and the public remain well informed.
The release of credible data such as this is important for investment decision makers.
ATSE Report
ATSE's report brings an investor's perspective to the analysis of technology choices we will face out to 2040.
The report helps us understand the implications of policy and technology uncertainty on investor choices and the associated risks.
The simple reality is that the market share of clean energy technologies will increase as their costs come down.
We also need the right market frameworks and targeted support from Government to encourage R&D, demonstration and commercial deployment of promising technologies.
Technological development
ATSE's report calls for focussed research, development and demonstration programs to accelerate the commercial deployment of new power generating technologies.
Only a range of technologies will ensure our future energy security, and help us reduce greenhouse gas emissions.
That is why the Government has committed $5.1 billion to the Clean Energy Initiative to develop a broad range of renewable and low-emissions technologies to form part of our future energy mix.
The Clean Energy Initiative includes:
- $1.5 billion Solar Flagships Program which aims to construct and demonstrate large-scale solar PV and thermal power stations
- $1.9 billion for CCS Flagships to demonstrate and deploy carbon capture and storage technologies and
- $150 million to the Australian Solar Institute to support solar R&D in Australia and help reduce the costs of solar technologies
Earlier this week I announced 14 successful solar energy research projects under Round 2 of the Australian Solar Institute grants program.
This brings total ASI investment since its establishment last year to $66 million with a total leveraged project value of $209 million.
The expanded 20 per cent by 2020 Renewable Energy Target is also an important driver.
The RET will ensure that the equivalent of at least 20 per cent of Australia’s electricity is generated by renewable sources by 2020 – an increase of 13 per cent on current levels.
In addition to our Flagships programs and the Australian Solar Institute, the Government established the Australian Centre for Renewable Energy to target renewable energy funding to areas of most potential.
ACRE manages $690 million of funding directed towards demonstrating and commercialising emerging renewable energy technologies that present the greatest potential for commercial deployment.
We cannot pin our hopes on one technology.
We need to test all technologies if we are to achieve the required investment outcomes.
Reform delivers investment
The right regulatory frameworks will also play a key role in bringing about energy technology investment.
Through the Ministerial Council on Energy, which I chair, the Commonwealth continues to work with the states and territories to drive energy market reform that delivers efficient investment in the energy sector.
The key reform we need now to ensure investment continues to be delivered in the energy sector – is a price on carbon.
Until a price is put on carbon Australia's energy sector will continue to face uncertainty – and this uncertainty will hold back key investment decisions.
The Government's Multi-Party Committee on Climate Change, chaired by the Prime Minister, is working to deliver that certainty.
Electricity Prices
We must be mindful that reducing emissions will not come without cost.
And we as a Government are up-front about that.
However, it is also important to note that factors affecting current electricity prices are largely being driven by the need for increased investment in electricity network assets.
Significant capital investment is required to replace ageing network infrastructure to meet rising demand and to ensure a reliable electricity supply for customers.
The challenge for all governments is to get the balance right in reducing emissions in a manner that does not impose an unreasonable burden on the community or industry.
As their costs decrease over time, new energy technologies may hold the key to making both possible.
Conclusion
Ladies and gentlemen, developing a broad suite of technologies is critical to the future of our energy sector.
I thank the Academy for your contribution to the knowledge base, through this new report.
Australia is fortunate to have so many energy options – both fossil and renewable, and some with potential we are only now beginning to realise.
You are part of an exciting future for energy technology in Australia.
Thank you