Ten unanswered questions about the Liberals’ dirty energy plan

Analysis of the Victorian Liberal Party’s modelling to support today’s promise to contract 500 MW of new ‘dispatchable’ power and intervene to keep Yallourn operating until 2032, raises a number of important questions says Environment Victoria.

The modelling, undertaken by Frontier Economics, (and available here) has a number of significant flaws, including the assumption Yallourn will close in 2020 and that the Victorian Renewable Energy Target will continue under a Liberal government. Environment Victoria asserts that these concerns must be addressed if this policy is to be taken seriously.

1. Will Matthew Guy’s Liberal Party scrap the Solar Homes policy?
The Frontier modelling undertaken for the Victorian Liberals assumes that the Solar Homes policy to provide half-price solar to 650,000 Victorian households will be cancelled under a Liberal government. The Victorian Liberal Party needs to be clear about whether or not it plans to scrap Solar Homes.

2. How will bill savings from renewable energy be delivered if Matthew Guy scraps the Victorian Renewable Energy Target?
The Victorian Liberals’ modelling does not match up with its current policy to scrap the VRET. Instead the modelling assumes that the VRET will be delivered in full. The electricity bill savings the Liberals have been promising in the media today are in large part a result of the 5400 megawatts (MW) of renewable energy projects that will be built under the VRET.

Matthew Guy has been clear that he plans to scrap the VRET if elected. If the VRET is scrapped, any bill savings resulting from the Liberals’ policy would be much smaller or non-existent.

3. How much will a new power station cost Victorians?
The Liberal’s modelling is silent on how much a new power station will cost. It also neglects to mention how much it will cost to ensure Yallourn, Australia’s oldest and dirtiest coal power station, stays open for another 14 years.

These costs are likely to be passed on to Victorian consumers in the form of higher energy bills, which are not accounted for in the Frontier modelling.

4. Will hospitals, schools and transport providers be forced to pay more for a new gas-fired power station?  
Modelling assumes that a new 500 MW gas-fired power station will be paid for by state government energy users like hospital, schools and public transport. This energy will be more expensive than alternative sources.

Mr Guy must make clear if he is planning to increase funding allocations to government departments to compensate them for forcing them to buy more expensive gas-fired power.

5. Does today’s announcement mean that Matthew Guy has given up on the Federal Coalition delivering coherent energy policy?
The Liberal Party’s modelling assumes that the reliability guarantee developed by the Federal Coalition will fail to bring sufficient generation online, and therefore that state intervention is needed. This contradicts comments made by Mr Guy last week that climate and energy policy was best delivered by the Federal Government.

6. Why does the modelling assume that Yallourn will close in 2020?
Yallourn’s owners EnergyAustralia insist that the power station will operate till 2032. The Frontier modelling assumes Yallourn will close in just two years, a view not shared by other energy market analysts. It appears Matthew Guy’s Liberal Party is trying to run a scare campaign that Yallourn is about to close.

7. If renewables are the cheapest form of new supply, why has the modelling focused on gas and coal?
The modelling clearly states “renewables result in greater competition and this causes prices to fall”, yet all estimates are based on a gas-fired power station.

8. Does this announcement close the door on batteries?
In 2017, 1.9 GW of new batteries were installed worldwide, however the Liberal’s modelling only refers to batteries once. This suggests that a new gas-fired power station is the Liberal’s preferred form of dispatchable power.

9. Has the Victorian Liberal Party modelled the impact of a new gas or coal power station on Victoria’s emissions?
The most recent IPCC report says we must rapidly cut emissions over the next decade but keeping Yallourn open and building a new gas or coal power station will only increase emissions.

No attempt has been made by the Victorian Liberal Party to show how their plan is compatible with meeting our climate targets and reducing emissions.

10. Will the Liberal Party shield any new power station against a future carbon price?
A carbon price would significantly increase the price of coal or gas power. The modelling is silent on whether the Victorian Liberal Party will lump taxpayers with the cost of operating this new plant into the future by protecting the new power station against any future carbon price.