The key regulators and rule-makers that govern Australia’s increasing redundant electricity market have flagged potential delays to 16 different reforms because of the Covid-19 pandemic, in a move that will shield incumbent fossil fuel generators from increased competition from new technologies.
The Australian Energy Market Commission, along with the Australian Energy Regulator and the Australian Energy Market Operator, have already proposed an additional one year delay to the switch to 5-minute settlement, a change considered essential to encourage more big batteries and demand management, and to put an end to the rorting of the 30-minute settlement period by coal, gas and hydro generators.
The shift to 5-minute settlements had been fought ferociously by incumbent generators, and resisted by the rule-maker itself, until it finally decided to accept the change, but only implement it by mid-2021, six years after it was initially proposed. The switch to 5-minute settlements will now be pushed back to mid 2022, much to the applause of the fossil fuel generators.
In a new document published on Tuesday, the market bodies have now flagged potential delays to a total of 16 energy reform projects, which have had their status shifted from “progress as planned” to progress. The identity of the individual projects at stake have not been identified, in keeping with the appalling lack of transparency in Australia’s energy markets and regulatory governance.
The Australia Institute decided the delays as “cynical tactics” from the coal industry and incumbent gentailers that would threaten energy market reforms – some of them cited as crucial by AEMO to ensure that the rules and regulations kept abreast of new technologies. AEMO says the current market structure is no longer fit for purpose.
“There is a great risk that the incumbent coal generators and retailers that dominate the National Electricity Market will succeed in delaying reforms which threaten their interests and open up them market to competition from clean energy,” says Dan Cass, the energy policy and regulatory lead at The Australia Institute.
“Major global and national investors including Blackrock own clean energy assets in the NEM and have had to challenge MLF and other rules that harm their investments. They will have to take stock of what regulatory delay means for their current and future investments in Australia.”
International investors have already flagged a suspension of investment in new large scale renewable energy projects in Australia as a result of the policy and regulatory uncertainty. Some, like UK infrastructure giant John Laing, have put their development portfolios up for sale.
The fall in renewable energy investment – down by 50 per cent in 2019 from the previous year – has already been lamented by the likes of the Reserve Bank of Australia and clean energy bodies such as the Clean Energy Council.
“Pressure for delay from the coal generators and retailers that dominate the market is clearly self- interested,” Cass said.
“If the incumbents want the already slow pace of NEM reform to be stalled then they must open their books to the regulators and present credible evidence of reliability or financial risks to the market.
“Delaying key market reforms such as Five Minute Settlement and Wholesale Demand Response would hurt Australian energy consumers, increase emissions and further destabilizes the grid.
“The fossil fuel industry is desperate to reduce competition from renewables and would never let a good crisis go to waste. If these reforms are delayed, it could keep ageing coal generators going for longer.”
This view was echoed on Wednesday by the International Energy Agency, which released a new report that suggested that renewables must be the focus of post Covid-19 economic recovery plans, by creating firm policy, ambitious targets, and accelerating – not delaying – market and regulatory reforms. A number of private bodies along with a number of private bodies.
But Australia is increasingly determined to make gas investment, and gas infrastructure, the centre-piece of its recovery plans, and refused to budge on its weak emissions targets.
It has also proposed reducing red tape on dubious “carbon abatement” projects for farmers, in changes to the Climate Solutions Fund that analysts say could allow big emitters to get paid to lift emissions, rather than cut them.
It will also encourage investment in carbon capture and storage, and push the Clean Energy Finance Corporation and the Australian Renewable Energy Agency away from their core renewable energy mandates.
