The Energy Policy I took to the 2025 election

Liberal Energy Policy 2030

PORTFOLIO: Energy

SHADOW RESPONSIBILITY: The Hon. Dr Steve Thomas

BACKGROUND

A. LABOR’S POSITION

The McGowan Government announced the substance of its energy transition plan on the 14th of June 2022 (see appendix 1).

This plan announced the closure of all state owned coal generation by 2030, and a fund of $3.8 billion to be available to Synergy to fund the transition.

This plan is underpinned by the Whole of System Plan (WOSP) released in 2020, which is now significantly out of date given the June 2022 announcement. This has been acknowledged by the Minister for Energy, who originally said that an updated version will be delivered by the end of 2023 and has now indicated a date of 30th September 2025 (just after the next election).

If it was to be re-written by experts, it would demonstrate that the current transition plan will not work.

The State Government’s plan means that over the next six years it will close almost a thousand Megawatts of baseload coal generation capacity, which it says it will replace with renewable generation and storage. In the 2022 Legislative Council budget estimates this investment of around $3.8 billion this was identified as 4,400 megawatt hours of lithium big battery storage and 810 megawatts of additional wind farm capacity.

Of the additional wind generation 400 megawatts will be built by the Water Corporation at a cost of $800 million to supply power to the next desalination plant. Synergy would retain the other 410 megawatts of generation capacity, presumably also at a cost of $800 million.

During the 2023 budget process $3 billion of this investment was further defined as –

• 2,000 megawatt hours of new battery storage to be built at Collie at an estimated $1.64 billion.

• 800 megawatt hours of additional battery storage to be built at Kwinana (Kwinana 2) at an estimated $657 million.

This represents a cost of $821,428 per megawatt hour.

Both of these costs are likely to be underestimates, as the recently finished 200 megawatt hours Kwinana 1 big battery cost $172.7 million or $863,500 per megawatt hour.

While battery costs have been declining it has not been as rapid as some advocates have suggested.

The Cook Labor Government has identified in budget estimates that the announced funding of $3.8 billion is not fully cash flowed, and that only $3 billion is identified in the budget papers. The remaining $800 million is apparently planned for spending out to 2030. This leaves an opportunity to Opposition commitments to be funded.

Recent reports also suggest that the privately owned Bluewaters coal power station may also go by 2029, taking another 440 Megawatts out.

The biggest problem is that of storage of renewable generation at night when there is no wind, because the state has no plan on how to provide it.

The McGowan strategy is that the private sector will provide an as yet unknown miracle solution sometime in the future to solve the issues of storage and continuity of supply.

The former Energy Minister is on record as saying the Labor Party will never build another fossil fuel power station in Western Australia, although industry has suggested they will have to change their minds on this.

However, in 2023 budget estimates he had to backtrack, saying that “it is unlikely that we are going to need any more gas megawatt hours, but we might need more gas megawatts”. This suggests while gas generation might remain stable over the year the peaks of demand during the renewable transition will require additional capacity.

B. OTHER PARTY POSITIONS

The Greens would close down all fossil fuel generation tomorrow and leave us in the dark.

C. CURRENT LIBERAL POSITION

The energy policy the Liberal Party took to the last election has no relevance to future debate or action.

PROPOSAL

The Liberal Party will keep the lights on as we transition to more renewable generation and storage by:

1. We will extend the lifespan of existing coal generators where necessary and where possible until renewable generation supported by gas generation backup and energy storage can meet the needs of the state.

That means that the speed of existing power station closures will match the match the timeframes for future additional delivery in gas, renewables and storage.

This will depend on the age and viability of existing units, and the ability of coal suppliers to deliver the fuel in an economic manner.

We will focus primarily on the Collie A station, which has had significant maintenance done in recent years, and units 7 and 8 at Muja.

The current obsolescence dates for these are 2036 for the Muja units and 2040 for Collie A. However, in Government we would need to determine their capacity to operate into the 2030s.

Unit 6 at Muja was planned to be shuttered by October 2024 and will be completely closed in April 2025. This is the make it possible to get it restarted if the Government runs out of power next summer. It will close permanently one month after the next state election.

It is unlikely that all of those units will endure extended lifespans beyond those currently planned, and some investment may be needed even to achieve their current projected lifespans.

2. We will commit to building 300MW of new gas generation capacity.

This will require work to boost gas supply in the Dampier to Bunbury Natural Gas Pipeline (DBNGP) to ensure adequate supply.

The cost of construction is estimated at $264 million in total. This would be taken from the $3.8 billion transition funding.

The construction period would begin in 2027 with an expected completion date of 2030.

This additional capacity is needed to underpin the grid as coal units are closed down.

It is likely that the private sector would show significant interest in the construction and operation of a new 300 MW gas generation plant, which would mean private capital would construct the unit with a contract for offtake.

The addition of 300 megawatts of gas generation capacity would require a review of the Dampier to Bunbury Natural Gas Pipeline capacity, with a view to increasing capacity to meet demand.

Synergy contracts are likely to be met under the current capacity, but there has been considerable private commercial interest in expanding use of gas.

A Liberal Government would work with the pipeline owners Australian Gas Infrastructure Group to ensure both the public and private demand for domestic gas can be met.

3. We recommit to being net carbon neutral by 2050 and work on a genuine and deliverable transition over that time.

This will include continuing with the current Government’s battery and wind farm construction to deliver the 4,400 megawatt hours of lithium battery storage and the additional 810 megawatts of wind generation capacity.

The full transition to a renewable future will require far more renewable generation capacity and far greater storage than currently planned.

It will also require transmission line upgrades that will add billions of dollars of cost.

The Liberal transition will see us focus on generation and storage milestones that will set the timelines for change rather than setting arbitrary timelines that cannot be met.

this means the ability to maintain supply and allow for some modest growth in demand will determine the speed of existing power station closures and the timeframes for future investment in renewables and storage.

For example, the modest “future ready” scenario of the 2023 SWIS Demand Assessment identifies that over 50 Gigawatts of new generation and firming capacity will be required, and over 4,000km of new transmission lines.

4. We will watch carefully technological advances in all areas of electricity generation and storage and adopt them when they are proven economic and productivity performers.

We will monitor all generation options for Western Australia, from the currently economically deliverable solar and wind generation to other potential sources such as wave, tidal, geothermal and nuclear energy.

At this point in time wind and solar generation have proven economically viable sources of generation but require significant investment in storage and firming to be reliable. The WA Liberal Party believes they will play a major role in generation into the future.

The Liberal Party remains source agnostic and will retain the capacity to adopt developing technologies.

The Western Australian Liberal Party is not afraid to look at nuclear power generation for the state energy grid when it becomes economically viable.

The peak demand in the South West Interconnected System is 4,000 to 4,500 Megawatts, which means the ideal size of a new generator is about 300MW.

The world’s first truly commercial 300MW small modular nuclear reactor is currently under construction in Canada, and I am watching the economics of it carefully.

If the long term cost of production for these units goes below US$100 per Megawatt hour they will start to be much more competitive.

In 2022 the World Nuclear Association suggested the Levelised Cost of Electricity (LCOE) of nuclear energy from larger units was approaching this milestone, saying “For nuclear power (2200 MWe plant), capital cost including financing (at a high discount rate) ranged from $7675 to $12,500 per kilowatt, and the LCOE accordingly varied from $129 to $198/MWh.”

By comparison estimated LCOEs for coal and gas range from US $60 to US $140/MWh.

If the economics of small scale nuclear generation stacks up in the future, we will take a closer look at it.

The eastern states energy grid is in a much different position, with a demand more than ten times ours. This means that larger, more economically viable nuclear generation plants could be used there now.

The most prospective action would be to replace the high emissions brown coal generation in Victoria.

For this reason, I am happy to support the Federal Opposition’s push in the east. I think it is certain that they will need nuclear energy to meet both their carbon reduction and energy supply goals.

We support the lifting of the moratorium on nuclear energy at the Commonwealth level so new nuclear technology can be fairly assessed as an option for a balanced energy mix for Australia in the future.

In WA, the Labor Government’s energy transition plan is also in tatters, but with a smaller market we have a simpler option.

To keep the lights on and air conditioners running during a transition to a lower emissions future, at a cost the people can afford, WA will need to maintain coal use until gas generation is ready replace it, and then use gas to take us to a high technology, low emissions future.

That future may include nuclear generation when the cost stacks up.

5. The Liberal Party will take advantage of our key natural resources to support the development of the renewable energy sector in Western Australia.

Western Australia is critical to the world’s transition to a low emissions future, and this needs to be harnessed and encouraged.

A Liberal Government will support the expansion of the vanadium industry by providing a five year royalties exemption for vanadium mines established in Western Australia. The current rate or royalty on vanadium is 2.5%.

KEY MESSAGES

The Liberal Party will deliver a transition to cleaner energy that will keep the lights on and air conditioners running, and we will do so at a cost that consumers can afford.

We remain committed to reaching net carbon neutral by 2050, and the energy system will play a critical role in that.

We will invest in, and stimulate private investment in, renewable capacity and storage as a part of our transition package beyond that currently announced by the Labor Party. In doing so, we will retain the vast majority of the current Government’s investments but seek to better integrate them into a deliverable outcome for the state.

We remain open to all energy generation options once they become commercially feasible. We are not afraid of the science of nuclear energy, but it has to be based on commercial and economic details developed in a proper business base. We will maintain coal use where necessary and where possible until gas generation is ready replace it and then use gas to take us to a high technology, low emissions future.

ECONOMIC IMPACT

The current state Government funding for the transition was announced as $3.8 billion in a media release of the 14th of June 2022.

In the 2023 budget process this was reduced to $3 billion in specific projects.

This leaves $800 million in announced Labor funding that is as yet unattributed.