The state government has flagged the winding up of renewable energy schemes in NSW if the federal government introduces a carbon tax, which it concedes is all but inevitable.
It also warned the state relies too heavily on electricity and gas from other states. The Energy Minister, Chris Hartcher, is keen to boost gas supplies in NSW.
The government is also studying a report outlining how to merge the three state-owned distribution companies - Ausgrid, Endeavour Energy and Essential Energy - into two, which is expected to result in the loss of hundreds of jobs. This merger is to be in place by the middle of next year.
An inquiry into the electricity industry being undertaken by Justice Brian Tamberlin is expected to recommend the sale of the distributors when it reports to the government next month.
While warning about over-reliance on renewable energy, Mr Hartcher indicated existing programs will need to be reviewed.
”Once the carbon tax comes into force, it’s certainly going to come into force, I don’t think there is any doubt about that, there’s going to be a need for a reassessment of the various programs,” he told a business lunch yesterday.
”The carbon tax is designed to do only one thing … to force up the price of electricity from coal-fired power and, if that’s the case, how you implement other renewable energy targets needs to be subordinated to it.”
Buying too much energy from interstate is leaving NSW exposed to disruptions, he said, referring to the period in February when electricity demand peaked at 14,820 megawatts, and NSW was forced to import 12 per cent of the total from other states.
”What happens when there are simultaneous midsummer heatwave demands in the eastern states, and what may that mean for NSW businesses and households?” he said. ”The impact could be exacerbated by unplanned generation outages or transmission failure. This would see us managing blackouts.”
Gas-fired power generation in NSW is forecast to triple over the next two decades with around 7000 megawatts of new peaking gas generation, 700 megawatts of new baseload gas generation and 400 megawatts of renewable generation to come on line, he said.
This will occur as gas supplies from both the Cooper Basin and Bass Strait are in decline. ”It is prudent NSW develop a gas industry to support its needs locally - both for energy generation - and for household use,” Mr Hartcher said.
As a result, the state government was to launch a gas industry development plan to ensure its evolution, both as a fuel source for electricity generation, as well as industrial and residential uses, he said.
