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The head of one of Australia's biggest electricity companies has rejected coal as a solution to Australia's energy crisis.
In an exclusive interview with The Businesss, AGL chief executive Andy Vesey also urged the Federal Government to adopt the recommendations of chief scientist Alan Finkel, who delivered a report on our future energy needs a fortnight ago.
Dr Finkel recommended the adoption of a Clean Energy Target but insisted that all new renewable energy investment include some form of storage or back-up to ensure a stable flow of electricity.
According to Mr Vesey, AGL has opted for renewable energy, such as wind and solar, to be backed up by gas because it is the cheapest option.
"The economics are relatively simple," he said.
"If you look at the price of building large-scale coal, and look at the alternatives such as large-scale renewables that are firmed up with gas, we see the advantage in the long run — what we call the Levelised Cost of Energy — going to those other options.
"We do not believe that new coal plants are going to be the lowest cost options in the market."
AGL boss rejects Government coal plant plans
There has been fierce debate since the Finkel Report was released with the Federal Government split on the issue, this week hinting that it may help fund the construction of new coal-fired plants.
That is not a prospect Mr Vesey relishes.
"My view is simple. I believe the market should depend on private investment and I think when the Government enters a market, it should do so very thoughtfully," he said.
"What's important is that people invest in the market and if it's private capital or even government capital, is that they choose the lowest cost and most efficient alternatives.
"We don't believe that coal is that."
The AGL boss also hinted that this week's Federal Government intervention in the gas market would be unlikely to keep energy prices lower for an extended period, arguing that new investment in electricity generation is what was needed.
AGL customers are facing price hikes of up to 20 per cent this year, due in part to the closure of the giant Hazelwood coal fired generator in March.
Finkel report 'important' and needs a good hard look
Prime Minister Malcolm Turnbull said the Government's intervention in the gas market would immediately put downward pressure on prices.
Mr Vesey did not agree, saying that longer term price cuts could only be achieved through investment in new power plants — which will take a long time to develop.
That would reduce the wholesale price of power, which could then be passed on to the consumer.
"What we would hope is that good government policy and policy that drives bi-partisan support, we can see those wholesale prices and forward prices start to come down," he said.
The furore over the Finkel Report, and the divisions within the Federal Government over the future of coal, have clouded the report's recommendations.
"I think the Finkel Review has to get a very fair hearing," he said.
"It's important, broad, it covers a lot of bases. The Finkel Review isn't a cafeteria list.
"There's a policy architecture there and we're very hopeful people will give it a good hard look, have conversations and find a way to come out the other end supporting that blueprint."
Mr Vesey said that while it was healthy to debate these issues, both sides needed to focus on whose interests they were serving.
"Good healthy debate is very important and what's very important for both sides is that people shouldn't be positional," he said.
"They should look at the facts, they should have open and honest conversations and keep in mind who has to be the beneficiary at the end of the day, which is the consuming public."
Topics: energy, alternative-energy, wind-energy, solar-energy, oil-and-gas, electricity-energy-and-utilities, business-economics-and-finance, federal-government, australia
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