Dear Dr Finkel,
Independent Review into the Future Security of the National Electricity Market
Thank you for the opportunity to make a submission to the Independent Review into the Future Security of the National Electricity Market (the Review).
The AMWU represents workers in the energy sector, as well as manufacturing workers whose jobs rely on the sustainable provision of secure, reliable and affordable energy.
The AMWU supports the submission made by the ACTU, particularly the emphasis on ensuring that workers and communities affected as our economy adapts to climate change over the coming decades receive a just transition into “decent work and quality jobs” as required under the Paris Agreement.
The AMWU also recommends that the Review consider the recent paper from the Australian Industrial Transformation Institute. The paper considers the potential benefits to the public good from the renationalisation of energy assets in Australia. Public ownership of important utilities served Australia well for decades prior to the sweeping privatisation. If the NEM is unable to deliver the secure, reliable and affordable low-emission energy that Australia needs, then renationalization of these vital assets should be seriously considered.
Comments on the interim report
The AMWU believes that the objective of the National Electricity Market (NEM) should be updated to reflect the need to deliver power to homes and businesses at the lowest cost and with the fewest greenhouse gas emissions.
Energy is a key utility that allows business and households to function. The NEM should be managed in a way to deliver that utility to the homes and businesses that need it in an efficient and cost effective manner and not be seen an opportunity to extract monopoly rents. The privatisation of energy generation and distribution in Australia in recent years should not cloud this approach.
Updating the National Energy Objective to reflect the need to balance costs and emissions will send an important signal to the market – asset owners, potential investors and managers – about the need to establish and preference the use of low-emission energy generation.
Recommendation 1: That the Review recommends that the National Energy Objective be updated to include the requirement that secure, reliable and affordable energy be delivered with the lowest possible emissions.
Gas-fired power stations are likely to play an important role as Australia transitions to a low-carbon future. Australia must make the most of its supply of Liquefied Natural Gas (LNG) to enable these power stations to provide a low-cost, flexible source of energy.
Requiring a certain amount of the LNG that Australia produces to be kept for domestic use and not sold on the global market would help to keep energy prices low for households and industry.
Given the role of the Review in ensuring that the NEM can deliver secure, reliable and affordable energy, it should consider the impact that input prices on gas are likely to have on the market’s ability to deliver on its objectives.
Recommendation 2: That the Review recommend that the government reserve a portion of LNG for use in the NEM.
The NEM should encourage diversity in the types of renewable energy available in Australia. An increase in diversity of renewable power generation will assist in delivering secure, reliable and affordable energy with lower emissions.
The Australian Solar Institute projected that that solar thermal energy generation could make up between 30% and 50% of Australia’s power by 2050 and the CSIRO believes it could halve in cost by 2020. The Review should ensure that a diverse range of renewable energy generation options are actively encouraged by its policy settings. A heterogeneous mix of energy generation will help the NEM manage fluctuations in supply and demand, while keeping prices and emissions low.
Where possible, investment in these new renewable technologies should be undertaken in the regions where existing power plants are located. This allows new power generators to tap into existing energy infrastructure and reduce start up costs. In addition, new renewable technologies – like solar thermal – require many of the same skills that energy workers in these regions already possess.
The NEM can facilitate this outcome by creating demand particular types of energy generation in particular parts of the network. For example, it could require an increase in low-emissions dispatchable power generation, like solar thermal, to be connected to the existing infrastructure in the La Trobe Valley to replace the Hazelwood plant following its closure.
These signals – together with a concerted and coordinated effort across government – can help to foster innovation and provide the certainty that investors are looking for.
Recommendation 3: The NEM should encourage a growing and diverse range of renewable energy generation options to be added to the network to further foster a secure, reliable and affordable energy network with lower emissions.
For the NEM to function properly, its physical assets need to be maintained, upgraded and managed. This can only be achieved through the hard work and expertise of properly trained and equipped workers.
The interim report makes no mention of the role that these workers currently play, nor the role that they will continue to play to ensure the future security of the NEM. This is a significant oversight.
As the mix of energy generation in Australia changes, so will the skills that are required to keep it running. Without proper workforce planning, Australia may find itself without enough skilled workers to build, maintain, repair and upgrade our critical energy assets.
Given the key role that the NEM plays in directing the future growth of the energy market in Australia, it can provide vital information to the industry about the work that is going to be needed over the medium to long term.
Recommendation 4: That the Review recommend that the COAG Energy Council develop and implement a tripartite Energy Workforce Transformation Plan to ensure that the energy industry maintains a skilled and experienced workforce.
Kind regards,
Paul Bastian
National Secretary
Australian Manufacturing Workers’ Union