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| Sun, 19th Feb 2023 14:07:00 |
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How does the NSW government’s renewable energy plan stack up against Labor’s? We asked the experts |
The New South Wales Coalition and Labor each presented plans for clean energy investment over the weekend. Here’s a breakdown of the differences between the two promises.
What has the Coalition announced?
On Saturday, the incumbents promised a $1.5bn clean energy superpower fund, which includes $1.2bn already announced to upgrade transmission networks in the transmission acceleration fund.
The additional $300m is marked to pay for grants to storage and grid security projects, including pumped hydro and batteries. A further $23m was promised to expand the electricity infrastructure roadmap to include rooftop solar and smaller batteries.
What is Labor offering?
On Sunday, Labor pledged to create a $1bn state-owned energy security corporation to drive investment in renewable energy projects.
Under this plan, the government would partner with companies working on medium- to long-term renewable storage solutions and technologies that provide grid stability and community batteries, funding it with cash from the existing Restart NSW fund.
The NSW Labor leader, Chris Minns, said the plan would enable the government to fund projects that “ensure reliability in the system and keeps the lights on and creates new jobs”.
If Labor forms government after 25 March, it would maintain the Coalition’s $1.2bn transmission acceleration fund.
How do these promises differ?
Both of these plans are focused on dealing with gaps in the market where private investment is more challenging, but they are attacking the problems in slightly different ways and with different amounts of funding.
Labor has put more money on the table while seeking to partner with private companies developing renewable energy projects rather than offering grants from a fund like the Coalition is planning.
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The policy director of the Nature Conservation Council, Brad Smith, said the main difference between the two is the scale of investment. “Labor’s is larger,” he said.
“Both of them are looking at using public funds to invest but also leverage private funding. There’s more similarities than either party wants to admit.”
The acting chief executive of the Smart Energy Council, Wayne Smith, said both parties were offering “pretty comprehensive plans”.
“The NSW government’s been particularly focusing on specific renewable energy zones and getting investment in those areas,” he said.
“What Labor’s announcement does is to specifically focus on renewable energy storage and that’s still the missing piece of the puzzle. That’s an area where probably the NSW government hasn’t had as strong a position so far.”
Why are these investments needed?
According to the experts, some renewable projects can be risky and incredibly costly, which makes them less attractive investment projects.
Wayne Smith describes renewable energy storage as “not quite bankable yet”, which makes it harder to attract funds.
“We just need that extra bit of support and innovative financing to get those projects over the line,” he said.
Brad Smith said larger projects had also struggled.
“That’s why these funds are a really large intervention to make sure these projects that are so important for energy security get built and get built on time,” he said.
“The market needs a lot of certainty in order to access capital. Having the public funds available is one of the most important things to de-risk a project.”
Which will be more effective?
That depends who you ask. Most experts say it depends on how these programs are implemented and they all said more work was still needed.
The executive director of the Australia Institute, Richard Denniss, said Labor’s plan would get things happening more quickly.
“If you want to drive big change in a hurry, it’s better to do it through the public sector. What’s different here is who’s driving the bus.
“There is a government saying to the market: ‘There’s money here, who would like to build things?’ Whereas there’s Labor saying: ‘These are the things we want to build, who’d like to help us build them?’”
Wayne Smith said Labor’s focus on storage and its model – based on the federal Clean Energy Finance Corporation – was beneficial.
“That’s a great model and we’re really pleased that they’ve adopted that point,” he said.
“The focus on renewable energy storage … that puts them ahead of the game.”
Why are both parties investing in this sector?
The promises were welcomed by a sector that has been calling out for government intervention to plug the gaps where private markets are failing.
Denniss said it is good to see governments throwing money into decarbonising the economy.
Brad Smith described the efforts as “heartening”.
“Both major parties [are] recognising that the public wants action on climate change,” he said.
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