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COAG splits over clean energy target, but 49 Finkel ideas approved

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Energy ministers at COAG meeting. Source. Josh Frydenberg tweet.

Energy ministers at COAG meeting. Source. Josh Frydenberg tweet.

Four Labor states and governments have formalised their push to purse their own clean energy target mechanism, officially breaking away from the federal government after the Coalition refused to endorse the Finkel Review’s recommendation on the issue.

The COAG energy council meeting in Brisbane endorsed 49 of the 50 recommendations from the Finkel Review, and endorsed the decision to get rid of the “limited merits review” that affects network spending. However, the federal government said it could not commit to a clean energy target.

South Australia, Victoria and Queensland, along with the ACT, said they would ask the Australian Energy market Commission to study how a CET might be implemented by the states saying “they can’t wait any longer”.

It is not clear how long this will take, and how quickly legislation can be introduced, or if it can survive state-based partisan politics given that both the South Australia and Queensland Labor governments are facing elections in the next 12 months.

The role of the ACT is also unclear, given that it will reach its target of 100 per cent renewable energy by 2020.

These same states this week all committed to zero net emissions by 2050, in a ceremony marking the visit of former vice-president and climate campaigner Al Gore.

“It is incredibly frustrating that despite the overwhelming community support for a market mechanism, the Federal Government is still resisting committing to all 50 Finkel recommendations,” South Australia energy minister Tom Koutsantonis said in a statement.

“Opposition from the coal lobby and the right wing of his party is preventing the Prime Minister from acting in the interests of all Australians.”

The federal Coalition has been riven by divisions over the proposed CET, with conservative commentators unanimously condemning the idea, and the rump of Far Right Coalition MPs also voicing their opposition.

Federal energy minister Josh Frydenberg said COAG had agreed a “significant set of reforms ….  to ensure a more affordable and reliable energy system.”

The recommendations include the creation of an Energy Security Board. Each jurisdiction will send through a name; and the next few weeks the states will agree on a chair and deputy chair. The other members will be the heads of the three main energy industry regulators, rule-makers and operators.

  

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  • David leitch

    Well as John Grimes pointed out yesterday welcome to bureaucracy squared.

    We now have COAG energy committee, the coag energy secretariat, the aemc, memo, aer. On top of that there are separate, and I am certain growing State energy departments and now we get the energy security board. I can sleep easy now.

    What about the Generator Reliability Obligation? Where did we end up on that thought bubble?

    • David leitch

      To answer my own question:

      “New obligations on generators will bring more dispatchable capacity to the market and minimise the system reliability challenges flowing from an increasing share of intermittent renewable energy generation. Requiring generators to guarantee a level of dispatchable capacity before they enter the market will help ensure enough generation capacity is available to meet demand.

      Following the outcome of the AEMC’s Reliability Panel Review of the Reliability Standard and Settings, and advice from AEMO on optimal levels of dispatchable capacity, the Energy Council will submit a rule change request to the AEMC to implement the Generator Reliability Obligation.” COAG energy committee communique

      • Cooma Doug

        I was on shift the day the market started. I was on shift the day the carbon tax started. Also on shift the day the market commenced the 5 min bid and target grid wide. Lucky also to be on shift when the FCAS market was commissioned.
        Having seen these transitions I can tell you one certain fact.

        Demanding large storage is not necessary. The money and investments will go where the outcomes are best for profit and the players will know where that is before a button is pushed. Certainty is all they need and a level playing field for all technologies.

        It was a stunning moment the day we started selling frequency control and voltage control. It was a strange feeling getting paid to run a syn con and just say you are there if needed.

        It seemed to be a scam selling things we had been doing for nothing for 100 years. In a few years your house will be full of products and you will be paid for actions you do now for nothing. Think of the load shifting opportunities in large shopping malls and large residential buildings.

        • Mike Westerman

          I’m not sure I’m with you Doug in your belief in markets: perfect competition, and the resulting optimal allocation of resources, require a number of elements that are unlikely to ever be present in the electricity market. Electricity is a different product where it is mission critical in a 24×7 operation compared to a curtailable operation. Think of smelters vs a water supply authority. Further, and fundamentally, the barriers to entry are significant and for different technologies don’t necessarily match short or long run costs. Externalities are not adequately priced, market power is concentrated, and buyers may not have a direct enough or flexible enough connection with sellers.

          Which all adds up to a far from perfect market. That’s not to say a transactional market has no place, just that it will only work where it is placed in a comprehensive framework of rational intervention. The latter seems lacking: AEMO now seems ready and willing to do its job, but the Federal government is just as determined to put sticks in the spokes of as many wheels as it can.

          Sure, there is likely to be significant potential for “negawatts” but also for large scale MWh stored, behind the meter generation and storage but also remote generation with transmission. Some will be provided by a well informed, well regulated market, others by careful planning.

          • Cooma Doug

            I recall a moment when we had to put 1200mw on line at a price I remember 12 dollars a mw. We were “constrained on” and the 1200 mw target was necessary to avoide a voltage colapse on a 132kv line on the other side of the adjacent state grid.
            Really wierd thing to happen and no way could I see logicly why it was and naturally it was very confusing.

            My research in the following days made me realise how complex the system annalysis can be and the countless options there are in providing system security.
            There were many wierd things that happenned over recent years that exposed issues that were quickly corrected and dealt with bt AEMO.

            The day that the carbon tax started, the traders told me the price would drop 25 dollars a mw.
            We were all thinking they were nuts and didnt believe it would all sort out in the first minute.

            The first targets were big changes in mw but the prices were exactly as predicted.

            The market does things often that seem a bit crazy. But it is aways right. If there is an error, it is an input error. There are back up processes that huard against this also. The tidy up is followed by detailed retrospective annalysis and action is taken in a progressive manner.

            I have absolute faith in AEMO and co and those adjusting the rules and technical processes that will guide the transition.

  • Mike Westerman

    I’d say the incumbent FF generators have won this particular battle then, even tho’ they know they will lose the war. Further delays mean more time at high FF driven prices in the market, and more uncertainty for investors. But it also means more households will get on with more rooftop solar and batteries, and these idiots seem to forget that households vote, businesses don’t. The cure could be ugly…

  • Just_Chris

    I’ve been thinking about the CET. In some ways it is a rock and a hard place for the Libs. If they set it too low then the states will just laugh at them because it will have no relevance and be totally over shadowed by the state targets. If they set it higher than the states they’ll totally blast through their 28% target for Paris and have to go back on everything they’ve said. There is also the setting of the CO2 cut off which will disadvantage certain generating techologies which will always lead to a massive political stink. So what if we never get a CET? As far as I can tell we basically get to where we need to without it.

    • Rod

      Assuming the next State elections return Labor.
      The Murdoch press has published so much BS about SA’s issues and are anti RE and anti Labor. We have one (fake) newspaper and the great unwashed believe everything they read in it.
      I fear SA Labor will be the first to fall.

  • Ken Fabian

    Frydenberg – “- to ensure a more affordable and reliable energy system.”

    But, I notice, not to ensure an ongoing transition to low emissions that goes beyond any interim targets, capable of doing our nation’s share of what it takes to regain climate stability.

    At every point the LNP seeks to cast affordability and reliability as essential but serious emissions reductions as non-essential; not just not essential but as the necessary sacrifice that should be made to achieve the affordability and reliability. Like their assessment of the science on climate, their assessments of what is affordable and reliable is deeply skewed and opposition to renewable energy is to some extent a “logical” consequence of that denial of the reality and seriousness of the climate problem.

    Emissions and climate considerations are left out of anything any LNP minister says about energy and I seriously doubt that is an oversight. That the biggest energy “subsidy” is the ongoing “amnesty” for FF miners and users on cost of climate and health consequences is not simply passed over, it is purposefully passed over, most often with added distractions added.

  • DJR96

    Ultimately, when you step back at look at the NEM as it is now, you realise that it essentially hasn’t changed since it was created late last century using a market model from that era.
    But the energy landscape has changed significantly since then. Lots of new technology and in particular, generation sources that simply have different characteristics to what there was last century.
    The market mechanisms haven’t evolved or changed at all to adapt to this new paradigm. That in itself is THE failure of the market. The market mechanisms MUST be reformed to suit the 21st century.

    What is needed?
    Analyse different market models:-
    -Multi-settlement process
    -Pay-as-Bid
    -Day ahead market

    Also creating a new service category- Network Storage Service Provider (NSSP) for energy storage entities. Which can be further divided into tiers according to the function and purpose they perform.
    The storage doesn’t have to pretend to be just generation. Generation doesn’t have to maintain stability for which they’re not good at. Transmission and distribution can do just that only. Each service can just do what they’re good at only. And the market mechanism can adapt to provide the best efficiency from each of them too.

  • Rob G

    I notice the representative of the coal lobby was present, Mr Canavan.