Outrage over lack of NEG modelling as government regurgitates old release

Outrage has erupted in political and energy market circles over the failure of the federal government to produce any detailed modelling for the controversial National Energy Guarantee.

There has been widespread disbelief about the claims of the Energy Security Board used to justify the NEG – particularly its claims that wind and solar and large-scale battery storage investment would simply come to a halt for most of the next decade, with or without the NEG, and that the NEG could somehow reduce bills by a further $150 a year.

The Coalition government has been under pressure to release the detailed assumptions that backed the modelling, and was ordered to do so by the Senate on Monday.

But on Tuesday morning, in a statement from Senator Simon Birmingham’s office, it simply regurgitated the spreadsheet and other documents released last week by the ESB, with no modelling to explain how it arrived at its contested assumptions.

“There is nothing new (in this document),” said Ric Brazzale of Green Energy Markets. “This is quite extraordinary. States are being railroaded into accepting the detailed design without thorough assessment – it’s unheard of for such an important policy intervention.”

The Greens, which led the call for the release of the modelling, along with a group of more than 20 independent energy analysts, said it confirmed what was feared.

“There is no proper modelling, just a single Excel spreadsheet,” Greens spokesman Adam Bandt said. (Actually, to be fair, there are several of those.)

“Previous modelling reports for government reviews of the electricity market by Jacobs have run to hundreds of pages. It is now clear the government’s claims for the NEG are built on a foundation of sand. The NEG is a toxic farce.”

The government has been selling the NEG hard on the promise that it will reduce electricity bills by $550 a year, but nearly all of this – $400 – is to be delivered by the new wind and solar plants currently being contracted to deliver the renewable energy target.

The remaining $150 a year is said by the ESB to come from reduced financing costs for new investment delivered by having “certainty” from the NEG. But that claim is undermined by its own modelling that says there will be no new investment.

That claim in itself – not a single megawatt of wind, solar or battery storage from 2022 to 2030 – is regarded as completely bizarre by energy analysts, and goes against the scenario painted by the Australian Energy Market Operator in its Integrated System Plan.

That ISP, which lays a blueprint for integrating renewables in the future, sees 46 per cent renewables by 2030 in its neutral scenario, and more than 60 per cent in its “fast-change scenario,” based around Labor’s target of cutting emissions by 45 per cent.

The NEG modelling, on the other hand, predicted only 36 per cent renewables by 2030, with no new investment in large-scale capacity, and small-scale solar reduced by half. That modelling has damaged the ESB’s credibility because it is so nonsensical.

The NEG will be voted on by Coalition MPs on Tuesday before a planned phone hook-up with CoAG energy ministers later in the day.

It is likely, however, that agreement from the states will not be delivered until the Coalition agrees to regular reviews of the target, which aims to reduce emissions by 26 per cent by 2030.

The ESB says this target will largely be met even before the emissions component of the NEG comes into effect in mid 2020 – which presumably underpins its prediction of zero new investment – but appears to ignore state based economic and the economic advantage of wind and solar.

“The proposal to make major changes to the operations of our National Electricity Market deserves peer review,” said Simon Holmes à Court – a senior advisor to the Climate and Energy College at Melbourne University.

“Two weeks ago, 23 energy researchers from 11 universities asked for the complete release of the NEG modelling and access to the modelling team to discuss the assumptions and results.

“Disappointingly, the only response is a high level summary worksheet of the results. Several key assumptions are not clearly explained, no sensitivity analysis has been run, and neither scenario reflects a credible path forward.

“The key claim that the NEG will reduce prices by $150 is unsubstantiated,” he said.