Power industry backs national approach to reforms

Electricity suppliers have thrown their weight behind a push by the country's top energy policy adviser for a national approach to spurring on-demand power generation amid worries of a splintering between states that could further delay new projects.
  1. Electricity suppliers have thrown their weight behind a push by the country’s top energy policy adviser for a national approach to spurring on-demand power generation amid worries of a splintering between states that could further delay new projects.

    The Energy Security Board’s latest proposals for a redesign of the National Electricity Market to ease the transition to cleaner energy have been met with broad support by the electricity industry as companies digest the details of the options on the table.

    After finding that the security of electricity supply is at risk because of a flood of weather-dependent renewable power onto the market, ESB chief Kerry Schott has called for market participants to get behind the reforms that she says are absolutely needed to ensure the lights stay on during the transition to lower-carbon energy.

    Options on the table include a national approach to investment schemes such as that controversially introduced late last year in NSW to drive investment in new “firming” generation such as gas and pumped hydro to back up fragile wind and solar power generation.

    Beefing up obligations on electricity retailers to guarantee in advance the generation they need to meet peak customer demand is also under consideration, as is a bank of reserve generation to call on as required.

    Sarah McNamara, head of the Australian Energy Council, which represents major suppliers such as Origin Energy, said the ESB’s task had been complicated by splintered measures by individual states aimed at supporting generation.

    AGL Energy and EnergyAustralia both called time-out to reconsider plans for new gas-fired power stations in NSW after the state government announced its surprise new energy infrastructure strategy in November.

    “While jurisdictional approaches are understandable, we continue to argue that a national and co-ordinated approach to energy policy is the framework most likely to deliver the best results for customers – namely reliable, affordable and sustainable electricity supply,” Ms McNamara said.

    “The board’s backing for a NEM-wide approach to integrate jurisdictional energy plans and schemes is welcome,” she said, adding that the industry group was still studying the details of the reform proposals.

    Ms McNamara said the interconnected system of the NEM was coming under pressure now more than ever as the market sought to accommodate and manage the state-based policies.

    EnergyAustralia’s head of markets Ross Edwards said the supplier is keen to see the NEM design evolve “to maintain reliability and system security and to encourage investment as the power system transitions”.

    “While there is still much to do, we are pleased to see the health of the NEM improved last year and we will be taking part in the upcoming ESB 2025 formal consultation process to help drive regulatory and policy reforms for the benefit of all,” Mr Edwards said.

    AGL also voiced support for the ESB’s work to redesign the NEM to help ensure the market is prepared for the transition to cleaner supplies.

    “We believe Australians are committed to a cleaner energy future, and that it’s up to industry, regulators and governments to ensure the transition is orderly and meets the needs of all the market participants for affordability, efficiency and the confidence necessary for investment,” an AGL spokeswoman said.

    “We look forward to working with the Energy Security Board and other stakeholders to develop a market design that meets these aims.”

    But the ESB’s report, which highlighted the risk to secure electricity supplies because of the rise of intermittent renewable generation, triggered another call by Nationals senator and former federal resources minister Matthew Canavan for investment in new coal power generation, further exposing the divisions within the Coalition on energy policy.

    “We just need reliable power … we invested way too much in types of power which are unreliable, which are weather-dependent and therefore put at risk the security of the system,” Senator Canavan told Sky News.

    He described the Energy Security Board’s call for urgent reforms to the NEM as “weasel words” and said what was needed was investment in reliable power such as coal, gas, hydro or nuclear.

    “Renewable power [sources] are the dole bludgers of our power networks –they only turn up to work when they want to, when the sun shines, when the wind blows,” he said.

    “Let’s invest in reliable forms of power which are there 24/7.”

    But federal Energy Minister Angus Taylor called for “balance” between the record levels of investment that have been injected into wind and solar power with investment in dispatchable, flexible generation, as well as noting changes in the market rules that are needed to ensure power was available when it was needed.

    He called on state governments to work towards a national approach.

    “I would encourage all state governments to work closely with the Energy Security Board and the federal government on this market design,” he said.

    “These changes that the ESB is looking towards are the areas that will deliver that affordable, reliable, sustainable energy that we want as a country,” Mr Taylor said.

    Source: Financial Review