NSW Government’s Light Bulb Moment
The newly elected NSW Labor Government has just released their first budget in twelve years, and it’s worth paying attention to. Sticking true to their campaign promises from the 2023 state election, the budget has energy at the forefront of their policy directives.
The 2023 NSW budget serves as a pivot point for the newly elected NSW Labor Government, helmed by Premier Chris Minns and Treasurer Daniel Mookhey. The budget aims to confront the urgent challenges of rising cost-of-living pressures affecting households and small businesses, while also displaying fiscal responsibility with a clear plan to return to a budget surplus within two years.
This dual focus underscores an approach featuring modest expenditures, but with a clear directive to bolster public infrastructure as a way to improve liveability while meeting the demands of a technological and climate-conscious economy.
As the state faces fast-approaching deadlines for the 2030 and 2050 emission reduction targets, the government has allocated to a large number of public investments. This ambitious blueprint prominently features the launch of the Energy Security Corporation (ESC), designed to collaborate with the private sector in accelerating the state’s shift away from coal dependency and towards shoring up the state’s energy storage capabilities. Further, the government has put a significant injection of funds into the Transmission Acceleration Facility, which aims to expedite the connection of renewable energy zones into the grid.
- $804m boosting the State’s Renewable Energy Zones (via Transmission Acceleration Facility)
- $1b to establish the Energy Security Corporation
- $263.5m towards EV infrastructure
- $480m towards local manufacturing capabilities
- $121m towards community climate resilience
- $4b for natural disaster support
- $500 rebate for 1.6m eligible families, pensioners, low-income households, veterans, carers, and self-funded retirees.
- 300,000 businesses that use less than 100 MWh of electricity per year will be eligible to receive a one-off $650 payment towards their electricity bill in 2023-24.
- Family Energy Rebate to $250 (extended from July 1, 2024)
- Seniors Energy Rebate to $250 (extended from July 1, 2024)
- Low-Income Household Rebate and Medical Energy Rebate $350 (extended from July 1, 2024)
Cost of Living Relief
The Minns Government has used this budget to alleviate the cost-of-living stressors for families and small businesses, echoing the central promises of their March 2023 election campaign. Support will include increased energy relief for families, senior citizens, and low-income earners, along with medical and life support rebates. Further measures include a one-off payment to eligible businesses that used less than 100 MWh of electricity in the past year.
The Government will invest $121m to enhance community resilience against frequent and extreme weather events and allocate $4b for natural disaster support. Given the recent El Niño announcement by the Bureau of Meteorology and the recent heatwave across NSW, proactive measures will be crucial for mitigating the effects of climate change on communities, wildlife, agriculture and infrastructure.
The Minns Government is allocating $480 million specifically to invigorate local manufacturing in the renewable energy sector. This investment aims not only to create jobs, but also improve domestic manufacturing capabilities.
Public Investments & Transmission
The NSW Government aims to keep the Electricity Infrastructure Roadmap on track with a $1.8b investment. This will focus on rolling out critical transmission and energy storage solutions. Concurrently, it aims to speed up renewable energy generation. These announcements are in direct response to questions on the speed of the transition and how our governments will ensure our 2030 and 2050 targets will be met.
The Minns Government has allocated $263.5m towards EV public infrastructure upgrades and as a direct result the previous $3,000 subsidy for new EV purchases has been removed. This policy shift towards a supply side approach signals the government aims to provide necessary infrastructure for the increased adoption of EVs without directly influencing consumer demand.
Households and Small Businesses
The cost-of-living relief measures, particularly energy bill rebates for families, pensioners, and small businesses will have a tangible short-term impact. Especially with the extension of energy bill relief for specific consumers to be extended from July 1, 2024.
Renewable Energy Supply Chain
The Transmission Acceleration Facility will receive a $804m injection into the State’s Renewable Energy Zones and $1b for establishing the Energy Security Corporation. A further $480m investment will bolster renewable manufacturing. These funding mechanisms are a boost for the sector, but also sends clear signals to investors that the energy transition will be a priority for the Minns government in the years to come.
The $263.5m commitment towards enhancing EV public infrastructure highlights that decarbonising the light vehicle sector will be a priority for the Minns Government. By removing the rebates for EV purchases and shifting towards publicly available infrastructure, the Minns Government is signalling a desire to have infrastructure in place in advance of a significant increase in EV numbers.
Early EV Adopters
The removal of the $3,000 EV subsidy may slow down new EV purchases in the near term.
Increased coal royalties of 2.6 per cent and the ESC’s mission to decrease coal-fired generation, shows a clear direction for the sector.
High Energy Users
High-energy users did not receive any additional support in this budget. The result of this is it could impact the cost of doing business in the state and the outcomes could either increase energy costs passed on to consumers, or affect business operation viability.
In a nutshell
The Minns Government’s budget reforms aim to increase the utility of publicly owned assets, improve funding for renewable generation, transmission, and storage, while supporting consumers with energy costs along the way. While the newly established Energy Security Corporation (ESC) has been posited to play a pivotal role in ensuring the sector future stability, affordability, and long-term viability, its effectiveness remains to be proven. The government will need to strike a delicate balance to foster public-private collaboration without deterring or crowding out future private investments.
On the whole, the $3.9 billion earmarked for energy in the 2023 budget sends a strong message to the market, stakeholders, and the wider community. It recognises the urgency of the energy transition and signifies a commitment to it. Although the budget has its pros and cons, it ultimately offers a semblance of certainty, affirming that energy remains a top priority as the state navigates the complex landscape of the transition, while being prudent towards a fiscally responsible economy.