❓ Dr. Honey questions the rationale behind Horizon Power's joint venture with West Australian Alternative Energy (WAAE), particularly regarding competitive advantage and alternative procurement methods. The Minister defends the JV as a response to market failure and supply chain challenges, ensuring renewable energy project delivery and addressing historical neglect of remote Aboriginal communities.
AnsweredQoN 230Legislative Assembly
QuestionView source ↗
HORIZON POWER —
WEST AUSTRALIAN ALTERNATIVE ENERGY
230. Dr D.J. HONEY to the Minister for Energy:
Yesterday the minister announced
that Horizon Power had acquired a 50 per cent interest in West Australian
Alternative Energy. The press release announced that the joint venture claimed
this partnership would support the government's target of an 80 per
cent reduction in carbon emission by 2030.
(1) How was this joint venture
relationship chosen?
(2) Why did
Horizon Power not simply enter into a normal power supply agreement with WAAE
to achieve the same outcome?
(3) Is it the
case that the government's participation in the JV simply provides WAAE
with an unfair competitive advantage over other potential energy suppliers?
WEST AUSTRALIAN ALTERNATIVE ENERGY
230. Dr D.J. HONEY to the Minister for Energy:
Yesterday the minister announced
that Horizon Power had acquired a 50 per cent interest in West Australian
Alternative Energy. The press release announced that the joint venture claimed
this partnership would support the government's target of an 80 per
cent reduction in carbon emission by 2030.
(1) How was this joint venture
relationship chosen?
(2) Why did
Horizon Power not simply enter into a normal power supply agreement with WAAE
to achieve the same outcome?
(3) Is it the
case that the government's participation in the JV simply provides WAAE
with an unfair competitive advantage over other potential energy suppliers?
AnswerView source ↗
(1)–(3) Horizon Power came to me with some problems over
the last period of time. The first was the question of purchasing batteries. A
massive global effort to reduce carbon emissions is causing supply chain
challenges, and Horizon Power's purchases of batteries are not
sufficiently large to attract the attention of international battery companies. Therefore, it is actually
buying its batteries in conjunction with Synergy, because otherwise it
would get no bids for the supply of batteries. Unfortunately, because of the
great success we have seen since the
change of federal government, where we now have a federal government that is as
strongly supportive of decarbonisation efforts as the Western Australian
government, that also means that the technical capacity of people to bid for
projects is changing. There are a lot more large projects and, again, Horizon
Power is finding that companies will not bid for the work it needs done. To
solve that problem, Horizon Power approached me to see whether the government
would approve a JV with a Western Australian business that would allow Horizon
to have a guarantee that it would have someone to do its renewable energy
projects.
There followed a rigorous due
diligence process that included Treasury analysis and work by the State Solicitor's Office and Energy Policy
WA, and a thoroughgoing review that took into account all questions relating to
competitive neutrality. I note that Horizon already has a JV called Boundary
Power with a company called Ampcontrol that supplies standalone power systems.
The question of competitive neutrality was one of the issues looked at.
However, I must emphasise that the problem for Horizon is not who it would
choose, but rather that it needed to have somebody to bid for the work. We
cannot have the important work being done by Horizon Power compromised,
particularly as we roll out the regularisation of electricity supply in remote
Aboriginal communities—a very, very critical program that is overcoming
the previous Liberal–National government's lack of attention to
remote Aboriginal communities when it was in power. It spent no money from
royalties for regions, just as an example, in remote Aboriginal communities. We
have to overcome that history of neglect and we have to make sure that that
supply is delivered. When there is market failure, we get government
intervention, and that is exactly what we have done.
the last period of time. The first was the question of purchasing batteries. A
massive global effort to reduce carbon emissions is causing supply chain
challenges, and Horizon Power's purchases of batteries are not
sufficiently large to attract the attention of international battery companies. Therefore, it is actually
buying its batteries in conjunction with Synergy, because otherwise it
would get no bids for the supply of batteries. Unfortunately, because of the
great success we have seen since the
change of federal government, where we now have a federal government that is as
strongly supportive of decarbonisation efforts as the Western Australian
government, that also means that the technical capacity of people to bid for
projects is changing. There are a lot more large projects and, again, Horizon
Power is finding that companies will not bid for the work it needs done. To
solve that problem, Horizon Power approached me to see whether the government
would approve a JV with a Western Australian business that would allow Horizon
to have a guarantee that it would have someone to do its renewable energy
projects.
There followed a rigorous due
diligence process that included Treasury analysis and work by the State Solicitor's Office and Energy Policy
WA, and a thoroughgoing review that took into account all questions relating to
competitive neutrality. I note that Horizon already has a JV called Boundary
Power with a company called Ampcontrol that supplies standalone power systems.
The question of competitive neutrality was one of the issues looked at.
However, I must emphasise that the problem for Horizon is not who it would
choose, but rather that it needed to have somebody to bid for the work. We
cannot have the important work being done by Horizon Power compromised,
particularly as we roll out the regularisation of electricity supply in remote
Aboriginal communities—a very, very critical program that is overcoming
the previous Liberal–National government's lack of attention to
remote Aboriginal communities when it was in power. It spent no money from
royalties for regions, just as an example, in remote Aboriginal communities. We
have to overcome that history of neglect and we have to make sure that that
supply is delivered. When there is market failure, we get government
intervention, and that is exactly what we have done.
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