Source : BUSINESS NEWS
REGULATORY inertia. Jittery proponents. Ministers beating around the bush. All hallmarks of a government mired in policy paralysis.
This is the situation facing companies trying to decarbonise the Pilbara by heeding the state’s call to build a common-user energy grid fed power by mammoth green infrastructure projects.
Five main proponents have proposed about 45 gigawatts of green power generation across the Pilbara.
Currently, we have an energy minister (who also happens to be the minister for the Pilbara) who won’t even answer if she will allow proponents to break the law.
That seems to me a pretty important query to address for a person whose job it is to uphold and update laws. The longer the state government dillydallies behind closed doors, the more likely it is investor patience will wear thin.
And then there is Fortescue.
While the company has not explicitly stated it wants to feed its power into a common-user grid, powering other industries as proposed would likely necessitate this, and founder Andrew Forrest has expressed his desire to provide “power for all”.
As it stands, that would be illegal.
Fortescue is building its grid under Mining Act tenure, which forbids the powering of non-mining uses such as other industries, or residential.
There is plenty of merit in changing the law to allow it, however.
Permitting the biggest renewable energy builder in Western Australia – Fortescue – to pursue its goal would speed up decarbonisation of the Pilbara immeasurably.
Notwithstanding there are genuine consent and consultation shortcomings with pastoralists, councils and traditional owners that would have to be ironed out.
So long as the government hesitates on this front, Fortescue’s investors and stakeholders will be wary about the legality of what it has proposed.
If the intention is to uphold the law as it stands, the government needs to be clear about what can and cannot be powered under the Mining Act.
Fortescue is justifiably exploiting a grey area to its benefit. It must be addressed.
Billions of dollars of investor cash is at stake from other proponents, which are planning their projects as per the Land Administration Act (LAA).
Of APA Group, SP Energy, Yindjibarndi Energy and Intercontinental Energy, only Yindjibarndi has managed to navigate the onerous planning and consultation requirements to start construction.
If Fortescue is allowed to sign agreements with the Pilbara’s major sources of power demand – other miners and industry – under its easier, cheaper-to-build energy, those proponents may as well close their chequebooks and take their capital elsewhere.
Yindjibarndi Energy is likely the only survivor should this occur as its current and potential customers are far away from Fortescue’s network.
APA Group may still have a shot, too, if BHP comes to the party. It is incumbent on the state government to give these proponents clarity, given they have bought in to its Pilbara decarbonisation rhetoric.
The state government says it is working with proponents and has a team to expedite LAA projects.
Yet there is no certainty any major offtakers will be left to buy their power by the time their projects are shovel ready.
For the government to still be talking about ‘working with’ proponents while Fortescue is already more than 1GW into its network rollout (under what the government says is the wrong tenure pathway) is ludicrous.
Investor confidence is at stake, and any fallout ultimately lies at the feet of the state government.
