PAUL CULLIVER: But let's now go to the Federal Minister for Energy Angus Taylor who joins me on the line this morning. Good morning.

ANGUS TAYLOR: Morning Paul. Thanks for having me.

PAUL CULLIVER: You are in South Australia today and you're announcing what is a $50 million fund to look at- well basically shoring up grid reliability. As we well know, two and a half years ago, the state blacked out. Adelaide got their power back fairly quickly, but towns at the edge of the grid suffered quite a lot - Ceduna, Streaky Bay, places in the Southern [indistinct]. We've also got the competing issue of Coober Pedy runs- the council runs their own power there. So how would this fund help those communities?

ANGUS TAYLOR: Well it would support the development of what are known as micro grids which is a grid on the edge of the network which is essentially self-contained. So it's the equivalent of a household saying - we're going to set up our own system so we can serve ourselves and we're not reliant on power coming in from the outside. And that's particularly important when you get to the edge of the grid because they're more susceptible to blackouts and often a lot harder to get back onto the system when something goes wrong, as you saw here in South Australia. So we think there's real potential to do that now with new technologies that are emerging, an array of different technologies that can support these micro-grids, that we do want to encourage them. And the good news is it actually reduces the costs of maintaining and building new transmission lines as well, which is good for everybody. So a real economic opportunity to do this; it will increase reliability as well and good for those towns that are in those remote areas that are often forgotten in these sort of circumstances.

PAUL CULLIVER: So usually if you want power reliability you go and buy yourself a diesel generator. How would this work different to that?

ANGUS TAYLOR: Well that's been the traditional way of solving the problem and it's not as though diesel generators will go away overnight, but we've now got increasingly good solar technologies - they've come down in cost a lot in recent years; battery technologies are also emerging. There's other ways of storing power that are emerging as well. So those technologies give us solutions that we didn't have in the past and that means we can find innovative ways of making sure that we shore up the power, affordability and reliability for these communities in ways that we couldn't in the past.

PAUL CULLIVER: Okay. So for these communities listening going - yes, please, we need something that means the lights will stay on and the power stays on, how do they get access to this?

ANGUS TAYLOR: Right, so 50 million dollars and this is money which supports them to do the work, to work out how to do it because it's not easy, you need real expertise here. And having seen a number of these being done within Australia and around the world, you've got to bring in experts who know what they're doing and can set it up, who can plan out exactly how much power you need; what technologies are best suited for that particular community. So this money will do all that - be there to do the work for them. If the community wants to access it, they'll apply through a sort of a normal government competitive process. And we're particularly keen, we think South Australia is a very good candidate, some of the communities in South Australia are very good candidates for this program.

PAUL CULLIVER: Okay so this will get you over the initial hurdle of the fact that investigating it and figuring out how to work it is expensive. Does the micro-grid itself have to be a good business case to then be able to pursue it?

ANGUS TAYLOR: Well, look, of course it has to be a- there has to be a business case there, there's no doubt about it. But once the plan is clear, there are lots of ways of then financing the development of the micro-grid. And government may well play a role at that point as well. I mean, independent of this program, we are underwriting new generation into the marketplace; we announced a shortlist just a couple of days ago. Twelve projects around the east coast of Australia and four of those are actually in regional South Australia. So we are playing a role in underwriting those investments that ultimately have to happen. And that's a very important part of the role the government is playing in making sure we keep prices down and kept the lights on.

PAUL CULLIVER: I do want to ask you more about those underwritten projects in just a second, but just to focus on these micro-grids, if I may. Looking at them, you also talk in the media release today about cheaper electricity. I mean how do you guarantee that these people can get cheaper electricity off a micro-grid?

ANGUS TAYLOR: Well there's no guarantee. The purpose of this money is to work out how to make electricity cheaper, how to make that happen and whether or not you can. But very often you can and the simple reason is that the cost of transmitting the energy to these remote communities on pylons is very expensive. You lose energy along the way and there's an enormous amount of cost in building the transmission, rebuilding it or just maintaining it. And so by having a micro-grid, you can take those costs out. And that means you get more affordable and more reliable power while you're at it.

PAUL CULLIVER: Alright. I understand we don't have too much time, but just very quickly on Coober Pedy, they already are self-sufficient - the Coober Pedy council runs their own power, it effectively is its own micro-grid already. So how might they benefit?

ANGUS TAYLOR: Well look, they may need upgrades. I mean, technology is always improving and you know we're open to proposals on upgrading those micro-grids and Coober Pedy is one we're very conscious of. So the challenge in this area is that technology is always improving and importantly, the new technologies are becoming more and more affordable. So there may be opportunities for community like that to reduce their cost of power by making use of those emerging technologies.

PAUL CULLIVER: Alright. So three pumped hydro projects as well as one gas project on this short list for being underwritten by the federal government. Why is it pumped hydro that's come to the fore here?

ANGUS TAYLOR: [Inaudible] pumped hydro in South Australia. Look, we need in South Australia flexible generation that can jump in fast, that's fast start technology it's called, which can come in when the wind stops blowing and the sun stops shining. I mean, we've got an enormous amount of wind and solar that's been built in South Australia. You've lost a lot of your baseload power here. So we need a solution which can come in very fast when the wind drops or the sun goes behind a cloud or the sun goes down. And that's where both hydro and gas play a very, very important role. We need more of it. And another benefit here though is that you've got a market which is tightly controlled by a few big energy companies. We need more competition. We need to break that open. That's where the market's failing [inaudible] and that's why the government is stepping in. Four fantastic projects. We don't know which ones of them will ultimately make the cut, but there's a lot of new capacity there for the size of the South Australian market. We think these projects in any combination will have a very big impact on affordability and reliability of power in South Australia.

PAUL CULLIVER: And how many do make the cut?

ANGUS TAYLOR: Well that's the process now. From here on in, we work through each of the four projects and we select the final projects. Each one of them though is big enough even on its own to have a real impact on the South Australian market. It's not a huge market here, so one or two really good projects will make a difference. They may all succeed, I don't know at this point, but these four candidates we're going to work hard on over- as quickly as we can, given how important it is to solve this energy problem we've got in South Australia.

PAUL CULLIVER: Alright. Look, I understand your time is short, but perhaps hopefully we can, given the importance to this region, we might have some more conversations before the election, Minister.

ANGUS TAYLOR: Would be absolutely delighted to.

PAUL CULLIVER: Thank you so much. Appreciate your time.