Woolworths quadruples energy investments to offset soaring prices – The Australian Financial Review

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Competition is not working for electricity consumers, NSW Labor says.

Woolworths has quadrupled capital investment since last year in cutting energy usage and improving energy efficiency and will increase installation of solar PV panels at supermarkets as it seeks to rein in soaring energy costs.

Investments are being made to switch all lighting in stores to LED, improve efficiency in refrigeration and air conditioning, as well as in a new energy management centre, Tony Louka, head of the energy transformation project, told an energy users’ forum in Sydney.

Mr Louka wouldn’t reveal the investment involved but described it as “significant”.

Brad Banducci, the chief executive of Woolworths, which consumes about 1 per cent of the total electricity generated in Australia, warned of the impact of rising energy costs this year, saying the company is “trying to outrun a bear” amid soaring electricity and gas prices.

The company is also investigating direct purchase contracts for renewable energy, through corporate power purchase agreements, and is looking at opportunities for battery storage, Michael Shelley, manager energy and services, told the forum.

Problem ‘likely to last’

Energy users across the country are taking steps to tackle soaring bills but they need to realise that direct purchasing of power and investing in renewables involve higher risks, said Gilles Walgenwitz at energy procurement adviser Energetics.

But he said there was a range of options users could consider to counter supply contracts now typically costing more than $100 a megawatt-hour and that are unlikely to soften significantly judging by forward power prices.

“Clearly we have a problem and this problem is likely to last,” Mr Walgenwitz said.

“You have possibly other options to consider than just waiting for the government to re-regulate the retail market”.

Speaking earlier, NSW shadow energy minister Adam Searle amped up NSW Labor’s commitment to re-regulate electricity prices under a future Labor government in the state, saying that competition has clearly failed customers.

Mr Searle said Labor would closely examine the controversial recommendations from the Thwaites inquiry in Victoria to see if they could also be applied in NSW, including the proposal for a no-frills electricity offer that could be easily compared between retailers.

He said government needed to look at “how re re-regulate prices, not whether” given that competition was not delivering for either businesses or their customers.

Suppliers wary

NSW Labor leader Luke Foley’s statement this year that a Labor government would re-regulate the electricity industry raised consternation among suppliers, many of which are also worried about the Victorian recommendations.

But Mr Searle said that deregulation had only resulted in huge increases in electricity prices, far above the inflation rate.

“By re-regulation what I really mean is making sure that there are appropriate obligations on all of the players in the electricity system so that consumers get a fair deal,” he said, adding Labor is not talking about moving away from a market framework.

“We need to have a good long hard look at this, not just changing things for the sake of it but also not persisting with some crazy ideology that’s clearly not working.”

NSW energy minister Don Harwin said rising energy prices were clearly a concern, particularly for large users, but that projects such as Snowy 2.0 and the thousands of megawatts of renewable energy projects in the development pipeline were already working to temper forward wholesale prices.

The minister also appeared to back the move within federal Labor to lay a framework for extending the life of coal-fired power stations to rein in prices.

“What we need is to harness least-cost energy sources – existing coal and new clean energy,” he said.

“We need to give certainty to allow people to invest in new clean energy and in maintaining old coal.”

NSW could lose 10,780 megawatts of baseload coal-fired power generation by 2038, based on the technical lives of existing plants, representing a huge amount of capacity that needed to be replaced, said Transgrid’s head of network planning and operations, Gerard Reiter.

The first major plant due to close, AGL Energy’s 2200 MW Liddell generator, is due to close by 2022-23, leaving little time for further “endless debate” over policy, Mr Reiter said.

“The time to do something is now.”

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