Federal Budget delivers $265m energy package

A $265 million energy package in the 2017 Federal Budget has been designed to boost the country’s energy security.

The package includes a number of measures to secure the nation’s energy system, including $90m to expand gas supplied, partly through increased unconventional gas exploration.

“The measures in this package will set Australia up for a modern and dynamic energy system, allowing us to keep pace with changing energy technologies, as we transition to a lower emissions future,” Energy Minister Josh Frydenberg said.

Mr Frydenberg said in order to deliver secure power in the medium-term, the government is launching a $5.2 million national interest and cost-benefit analysis study into the construction of gas pipelines from the Northern Territory and Western Australia to the east coast, through Moomba in South Australia.

“Improving the transparency, competitiveness and long-term security of Australia’s east coast gas market is a priority for the government as gas is a crucial energy source as we transition to a low carbon economy,” he said.

“To expand gas supply as part of a package of about $90 million, the government will extend funding by $30.4 million for the world leading Bioregional Assessments program to assess any potential impacts on waterways and aquifers from unconventional gas projects.

“Over the next three years the expanded program will examine new gas reserves and provide independent scientific advice to governments, landowners and the community, business and investors on future secure and reliable gas supply.”

This package also includes $28.7 million over four years from 2017-18 to encourage and accelerate the responsible development of onshore gas for the domestic market.

“To bring down the cost of gas for Australian families and businesses, the government has already committed to the most substantial gas market reforms in two decades,” Mr Frydenberg said.

“To deliver these reforms sooner, the government will provide $19.6 million over four years to the Gas Market Reform Group to better facilitate gas trading, encourage greater competition to place downwards pressure on prices and ensure gas markets are more transparent and accountable.”

The gas industry has welcomed the initiatives announced in the budget.

“The only genuine, lasting solution to the tight east coast gas market is more supply,” APPEA chief executive Dr Malcolm Roberts said.

“More supply will boost liquidity and competition in the market, putting downward pressure on prices.

“We have ample resources in Australia to supply domestic and export markets – we should be using those resources.”

The government has also committed $2 million to the Australian Energy Market Operator to improve publication of real time assessment of gas flows and market analysis, to make it easier for the market operator, businesses and investors to make informed decisions about gas market operations.

“It is imperative the states continue to work with the Australian Government to overcome regulatory barriers and inconsistent policies, to support streamlined and accelerated development of new gas markets,” Mr Frydenberg said.

Snowy Hydro Commonwealth buyout

The energy package also included a potential Commonwealth buyout of the proposed expansion of the Snowy Hydro scheme.

“The Commonwealth has indicated to the New South Wales and Victorian State Governments that, in order to accelerate the expansion of the Scheme, it is open to acquiring a larger share or outright ownership of Snowy Hydro, subject to some sensible conditions,” Mr Frydenberg said.

“These conditions include that the Scheme would have to remain in public hands and that Snowy Hydro’s obligations under its water licence would be reaffirmed.”

Mr Frydenberg said the government is also looking at further hydro-electricity and pumped storage opportunities in Tasmania, South Australia and Queensland.

$110m for Port Augusta solar plant

The government has also committed $13.4 million to support an Energy Use Data Model – world class data linking, analysis and modelling being undertaken by the CSIRO – to improve energy market forecasting that will facilitate better energy management and infrastructure planning.

As part of this, $110 million will go towards the construction of a solar thermal plant in Port Augusta in South Australia, and the government will separately provide up to $36.6 million over two years from 2017-18 to target investment in energy infrastructure in South Australia under a bilateral Asset Recycling agreement.

The Australian Energy Regulator will receive an additional $7.95 million to scrutinise energy providers to ensure they are serving consumers’ needs.

Funding for the ACCC

The Australian Competition and Consumer Commission (ACCC) will be provided $6.6 million during three years from 2017-18 for the monitoring of gas and electricity prices. The ACCC will also received $7.9 million to review retail electricity prices.

“The ACCC will produce a paper within six months on its preliminary insights into the strategies and pricing behaviours of key electricity retailers,” Mr Frydenberg said.

“The energy package will deliver practical actions to help Australians through the critical time over the next few summers while laying the foundations for long term reforms to ensure the energy market is better equipped to handle future challenges.

“Longer-term changes to our energy system are being considered in the context of the Independent Review into the Future Security of the National Electricity Market being conducted by Australia’s Chief Scientist, Dr Alan Finkel AO, and the 2017 review of climate policies.”