Thursday, 19 November 2009

State money `plan B' for power

Wednesday 18/11/2009 Page: 8

ALMOST 15 years after the Kennett government took the state government out of the electricity business, Victoria's main employer body has called for it to go back in, warning that the markets are too risk-averse to invest in the new power options the state will need.

In a report to its Victoria Summit, a Victorian Employers' Chamber of Commerce and Industry task force warns that Victoria will need 6000 MWs of new generating capacity by 2030 - the equivalent of six Loy Yang B power stations - or 12,000 MWs if the present coal-fired plant is shut down. The State Government has been urged to become more heavily involved in planning and financing new low-emission sources of power generation, and the new transmission lines required to make them viable.

While strongly backing research and development of carbon capture and storage to keep brown coal viable in a carbon constrained age, the report urges the state to also develop a plan B (developing renewable energy sources) and a plan B+, in which Victoria would go nuclear. "Long-term prosperity for Victoria requires a vision for a carbon-competitive future," report convener Vicki McDermid of Pitcher Partners told the summit.

Secure, low-cost electricity from brown coal had been a vital competitive advantage for Victorian business, she said, but to retain that edge would require an "energy revolution' in sources. The market could not be relied on to provide the power we need when we need it, the report said. Financial markets were risk averse when confronted by new technology, requiring some form of state involvement to get new generating sources off the ground.

This would be particularly true if nuclear energy were to become Victoria's best option, she said. In his address to the summit, Premier John Brumby called on the Rudd Government to speed up its development of renewable energy in Victoria, as the state prepares for the impending emissions trading scheme.

Mr Brumby said the Federal Government should quickly announce the allocation of $1.6 billion in its solar energy program. He also called on money collected from the carbon trading scheme to be spent on renewable energy projects. "Changes to our energy mix will not necessarily be easy," Mr Brumby said.

"But one thing is certain: a strong move towards renewable and low-emissions energy will mean more aggregate investment in the state, not less." Applications for projects under the scheme are due to open by the end of the year, with the selection of projects next year. Victoria last week received more than $66 million for a wave energy program in Portland.