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States wave through NEG that is even worse than thought

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Here’s a question that may appear in a trivia night near you sometime soon, so it’s a good idea to get ready.

Name something that is worse than useless: One sure answer will be the National Energy Guarantee, particularly as framed under the federal government’s emissions reduction target.

The COAG energy ministers meeting in Melbourne today.

State ministers on Friday gave the “amber” light for the Energy Security Board to continue work on its design of the NEG – and its so-called emissions and reliability obligations – despite big reservations about the scale of ambition which will be set by the federal government.

Many have said that the emissions reductions assumed under the NEG for the electricity sector – 26 per cent by 2030 – will be worse than business as usual, and criticise the government’s decision to seek only a “pro-rata” goal for the electricity sector.

But it is much, much worse than that.

New analysis from Owen Kelp, one of the principals of ACIL Allen, a leading energy consultancy that has not always been seen as a friend to renewables, suggests the NEG is assuming that electricity only achieves 5 per cent of Australia’s overall emissions reduction target by 2030.

How is this so? Kelp argues that Australia’s emissions should be seen as a “budget”, rather than a number achieved in a particular year.

Australia is happy to use this when declaring it has met its Kyoto targets, but in a sleight of hand has sought to paint its 2030 target under the Paris agreement as an annual goal, rather than an overall budget.

Kelp explains his calculations and the implications, in more detail here. But it underlines a critical point – the NEG is being used by the government as a deliberate attempt to put the brakes on the clean energy transition.

This is ironic, because the energy institutions within the ESB have clearly realised that the clean energy transition is not just feasible, but desirable, from the perspective of costs, emissions, reliability and investment.

And it poses another issue that the government has so far refused to address, but which is now appearing to bubble away in the background:

If virtually no emissions reductions are to be obtained from electricity – despite its ability to gain the cheapest and easiest abatement – then how is the government ever going to meet its Paris target, and which sector is going to have to carry the burden?

Deputy prime minister and national leader Michael McCormack raised this issue in Canberra on Thursday, at a National Press Club event, saying he did not want to see the onus fall on to the transport sector, which in any case will struggle to achieve emissions reductions without a big switch to electric vehicles, and a renewables dominated grid, particularly when even the lightest emissions standards are dismissed as a carbon tax and quickly abandoned.

It also begs another question. The NEG’s promised price reductions are based largely on the results of the renewable energy target, with the new investment likely to cause two-thirds of the reductions assumed under the modelling.

The rest of the price reductions are based on the NEG requiring more renewables to be built. But all new private analysis, almost unanimously, suggests that the NEG will not cause new renewable energy investment to be made.

But federal energy and environment minister Josh Frydenberg marches on.

“The intention is to lock into legislation the 26 per cent recuction in emissions,” he said on Friday. “We propose no change out to 2030.”

He also signalled no change on offsets, another major sticking point. A tonne in India is the same as a tonne abated in Australia, he said. Maybe, but it does not result in the same local investment.

The result of this, of course, is that the government policy would cause no new renewable energy investments in the decade from 2020-2030 – the industry would have to rely entirely on the household market, the corporate market, and state-based schemes.

Some bigger electricity retailers may also be encouraged to invest in renewables if they have to close down their coal-fired generators, such as AGL in 2022 and Origin by 2032 – although Frydenberg stressed again today that his government was not in any hurry to usher out coal power.

“There’s a lot of life left in them,” Frydenberg said of the country’s 20 coal generators. “Coal has good chance to play vital roll in system. We should not be demonising coal.”

As for renewables, for the meantime it looks like investment will fall off a cliff.

Mark Butler, the Labor spokesman on energy and climate, repeated his stance that Labor will “simply not agree to locking in a decade of inaction just because Malcolm Turnbull won’t stand up to Tony Abbott and his merry band of climate change deniers in the Coalition party room.”

One of those climate deniers, Craig Kelly, who speaks on energy on behalf of the Coalition back-bench, continued his opposition, saying the NEG would still force “otherwise uneconomic renewables into the grid.”

“If renewables are the cheapest, the market will adopted (sic) them and no one would use coal or gas because it’s more expensive,” he said in an email to a RenewEconomy reader.

“But the truth is, claims that ‘renewables are the cheapest’’ is just a complete deception – a lie if you like. For you can’t compare the price of intermittent electricity generation with 24/7 dispatchable generation – they are not the same product, they are not interchangeable.

“But that has never stopped those riding the gravy train, and pocketing billions in subsidies, from spreading lies to an often gullible unthinking audience, that want to believe.”

The deadlock over emissions means that Australia is no closer to bipartisan policy on energy and climate than it has ever been.

Because of the ESB reassessment on the reliability obligation, which will likely never be triggered, and the weak emissions target, which means the emissions obligation will never be triggered, then there is little to show for this policy.

Emma Herd, the head of the Investor Group on Climate Change, said investors, energy companies and business groups have all acknowledged that the level of ambition under the National Energy Guarantee can and should be increased.

“Unless the emissions reduction target is increased under the National Energy Guarantee, the policy risks failing to address investment uncertainty.”

In New South Wales, the acting premier John Barilaro, has been quoted as saying that the government should nationalise key assets such as the Liddell power station, and back a potential push into his favourite technology, nuclear energy.

It signals that Australia is lurching further to the right, and getting closer to the Trump administration policy, which is being openly directed by a series of key appointees who are openly hostile to climate science and renewables.

The latest proposal there is for the US government to re-invoke a war-time measure that required government support to ensure power generators stayed on. It is being used to add more subsidies to loss-making coal generators and nuclear plants.

In Australia, the Labor states are still hopeful of a change in federal government policy, and have suggested that this will be a condition of its final approval of the NEG, but this is unlikely to occur.

Victoria has also posed a list of questions it wants answered about the functioning of the NEG, as well as the emissions reductions target.

It denied reports it already waived its demand for “additionally” for its own target. Incorporating individual targets under the federal target means the likes of NSW, with no renewable incentives, will need to do even less because of the high targets in Victoria and Queensland.

Despite the positioning, the COAG meeting did what it was always expected to do: give approval for further work to be done on the detailed design of the mechanics of the NEG.

The ESB will do further work on the design of the policy – which is already much improved from the version presented last November. A COAG energy ministers phone hook up will take place in June, with a meeting on the final design scheduled for August.

The big issues – that of ambition, or actually facilitating the clean energy transition that the ESB now concedes is the key to a cleaner, cheaper and more reliable grid – have been put off until August.

Note: This story has been update to include Victoria’s rejection of suggestions it had abandoned its push for “additionally” of state-based targets.  

Pocket
  • Joe

    The change that is needed is a change in Government, ASAP. Just have to laugh at the Barilaro and his idea of nationalising Liddell. I mean, who was it that ‘gave away’ Liddell to AGL?

    • George Marsh

      Delay to August is perhaps the best outcome for the NEG … one more delay then and we will likely be in a better place …. with a fresh Labor government … or is that too optimistic?

  • Patrick Comerford

    From here on in to the August meeting to decide on the final fate of the NEG the Labor state governments will be walking the tight rope. They should take very serious heed of Anastacia Paluchuk last election victory late last year. She came to understand the seriousness of her governments electoral chances only during the campaign and where her government stood on any public funding of Adani. At public meetings around the state but especially Brisbane and the SE she was told load and clear there was no room left for having an each way bet. The effected seats in central Qld or the seats in Brisbane. She wisely went the right way even if it was a fairly dramatic backflip. So here we are again. If the state labour governments lock the pathetic Turnbull emissions targets in for the next ten years they will be toast. This one isn’t down to Bill Shorten or Federal Labor. This is down to the state Labor governments involved in the NEGs future. They better understand what’s ar stake here.

  • John Mitchell

    Its another failure and it’s only been kicked down the road, yet again. These bunch of Red neck dysfunctional BUFFOONs did the same with same sex marriage.

    • Peter Campbell

      More kicking down the road till we get a better federal govt. might be the best we can get for now.

      • neroden

        Demand that the Governor General dismiss the government and call elections. This gang of frauds has no legitimacy any more.

        • Carl Raymond S

          There’s the matter of proof. I’d like to see Four Corners (investigative journalism show by the public broadcaster) do a piece that links the NEG to coal industry sponsorship. If they could get some recorded deal making, it could blow the whole scam wide open. We’re being diddled. While coal was cheaper, it had a right to be phased out slowly at a rate the economy could afford. Now that fossils are more expensive than renewables, there’s no excuse to hold back the transition. Indeed, it’s immoral given the CO2 crisis – a threat to our species survival.
          They are using the excuse of reliability, based on one storm that affected South Australia, a storm so intense it bent over steel transmission towers. It’s a bogus case.

          • Mike Westerman

            Carl – the proof is not hard to find: Canavan’s post thanking the mining sector that he felt honoured to represent is still up there. I can’t remember in his oath of office that he was there to represent sectional and commercial interests. He claims that the mining sector provides “real jobs”, discounting the enormous contribution of 1000s of real people installing solar and windfarms, but also ignoring that in terms of jobs per $capex, mining is a tiny employer. Compare that with the ongoing transformative impact of extremely low cost, non polluting energy…

          • Aaron Adamson

            You people are insane.

            Renewables are not cheaper than coal.

            It’s an artificial price thanks to subsidies.

            See all that coal and gas in the graph?

            It’s what keeps the lights on.

          • Carl Raymond S

            Your price data is out of date, new solar with storage cheaper than coal. Even Scott Morrissy admits it. Portugal close to 100% renewable now. They have lights too.
            Insane, is to think the Keeling Curve won’t hurt us. (Google it)

          • Rod

            It is an artificial price due to subsidies. 5 trillion per year for fossil fuel subsidies according to the IMF
            https://www.theguardian.com/environment/climate-consensus-97-per-cent/2017/aug/07/fossil-fuel-subsidies-are-a-staggering-5-tn-per-year
            You are a product of our poor education systems. A gullible fool.

          • Mike Westerman

            Try telling that to someone in Beijing or Delhi dying of respiratory disease because of coal and diesel smog!

            In Tassie they don’t need coal and gas to keep the lights on. There is no intrinsic relationship between lights and coal. It’s a political choice about whether you think it fine to dump NOx, SOx, particulates, CO2 etc into the air, and dust at the mine, using enormous amounts of water in the process, and not have to pay for it regardless of its impact on people. A country living under the rule of law says no.

            The cost right now of a HELE coal station including supporting infrastructure is $80/MWh vs solar at $40/MWh unsubsidised. Not hard to do the maths. Even adding pumped hydro to firm it up overnight still leaves you south of $60/MWh average.

  • Marg1

    God help us.

  • Rob Campbell

    Giles there is one thing for certain, no one in their right mind would build or rebuild a coal fired power station in this current environment. So I don’t see how Josh can expect anything other than a huge boom in gas fired electricity which will push up our domestic gas prices and consume what is ultimately a commodity that should be metered out rather than squandered so that there is something left for our kids. Without HUGE subsidies from the taxpayer, coal fired power is dead in the water, so it’s gas all the way which is the whole reason wholesale prices have spiked so much already. It’s crazy that Queensland burns two gigawatts of gas on hot summer days when that can be easily done with solar. It won’t be long until the NEM is awash with cheap power during the day, more than enough to charge our new fleet of electric vehicles. There is a valid argument for a fossil fuel reserve in the interim, and it should be just that, gas, at a premium but only when the wind don’t blow and the sun don’t shine. But having coal fired power means spinning reserve “just in case” and it just doesn’t make sense. Wouldn’t it be funny if we went back to producing ‘town gas” and exported coke. This actually makes more sense for shoring up renewables than straight coal. There is now a new focus on hydrogen, imagine the storage held in a pipeline that stretched from central to eastern Australia, it could be month’s worth of clean and reliable power and it’s renewable.

    • RobertO

      Hi Rod Campbell, The Jaaack ass group (coal ash group) would have no problems in building a new coal power station at the taxpayers expenses (remember taxpayer pay tax so they are rich and can afford to have their money spend by us in the Jaaack ass group). It not their worry that it will be a loss making idea and it will push up the price of electricity for us Australians. The only thing that matter to them is, I want it, I will have it, and I will be proud of it, even if it kills the planet.

    • Alastair Leith

      It’s right that we need to meter out gas, but it’s not about saving fossil gas reserves and unbooked resources for our kids. It’s about the fact that this industry from a climate change perspective is as bad (and in many cases worse) than burning coal.

      Our kids (depending on their age I suppose — I don’t have any) need to be already at 95-100% RE and looking at decarbonisation of the Ag (54% of Australian GHGs), buildings, industrial processes and transport sectors.

      Each LNG hub emits some 10 megatons of CO2 a year just chilling and compressing methane and separating it from the CO2 it co-mingles with. We really don’t know how well the separation is done, and how much methane is vented for convenience or out of sheer ignorance ignorance. Methane is 105x as potent as CO2 over twenty years kilo for kilo. Then there’s the Fracking about to be unlocked in the NT and possibly WA, do body in the outback to monitor their feckless methane emissions, and we know from aerial detection in the USA using NASA, NOAA and Ivy League resources we don’t have in this country that these emissions can be many times higher, factor of 10x higher than industry ‘assumptions’. Even abandoned wells can become ‘super-emitters’ periodically emitting pulses of methane that can total more than 10% of lifetime production.

      Agree gas, be it fossil or biogas, can play a balancing role for winter wind droughts. Hydrogen (or other derivatives) look promising for stationary storage and fuel cell use. When most nations get to 50% there’ll be a flood of technological development in this area I expect on business merits alone.

  • RobertO

    Hi All, by August we will have added both new Wind, new Commercial Solar and about 0.6 GW household solar and some additional storage (about 1.2 GW all up) which should make it easier for the Labour state to kill this stupid idea. We should have an idea on when we will be voting on a Fed Gov (and watch out for the bribes and lies as they try to keep power). The sooner the NEG is canned (destroyed) the better we will be. We can then start to plan on how we proceed with an RE planned change over.

    • john

      You do realise what is needed is about 20.000 mw of wind and 20.000 of solar and about the same amount of storage to make a difference. Perhaps more storage all over the network would work.
      As i see it we have about 200 mw if that is on the network so a lot of work to do both for Solar and Wind let alone PHES.

      • riley222

        Dont care if those figures are right or wrong, its obvious a lot more needs to be happening. We need an explosion of storage all around the grid ,soaking up an excess of renewables. Who or what is going to organise this?

        • baseload renewables

          The first sentence of the letter to the Energy Ministers from Kerry Schott:

          “Dear Ministers,
          The national energy guarantee is designed to produce a clear investment signal so the cleanest, cheapest and most reliable generation can get built in the right place at the right time.”

          This my own very rough take on things:

          Don’t know who, nor what, is going to make an explosion of storage all around the grid, but it will occur when the expected ROI is suitable enough to take a punt on the deployment of the technology. I haven’t read the details of the new NEG proposal as yet: http://www.coagenergycouncil.gov.au/publications/initial-design-guarantee
          but comments on this site suggest that Australian RE is going to suffer through an investment crash if this goes ahead.

          A quick look at the OpenNEM graphs suggests there’s a long way to go to displace existing coal if we’re talking solar and wind, let alone storage. However, the growth rates over the past few years is encouraging.

          New RE is probably cheaper than new coal in Colorado as reported here: https://reneweconomy.com.au/plunging-costs-make-solar-wind-and-battery-storage-cheaper-than-coal-83151/

          Furthermore, the CEO NextEra Energy (a company that includes the third largest utility in the U.S.) suggests (in a briefing to investors, no less) that by the early 2020s, new unsubsidized wind and solar will be CHEAPER THAN VARIABLE OPEX OF EXISTING COAL: 2-4 c/kWh v 3.5-5c/kWh:
          https://www.vox.com/energy-and-environment/2018/1/29/16944178/utility-ceo-renewables-cheaper

          That said, the U.S. market is not the same as the Australian market. Although I can’t find much on opex costs of existing Australian CFPS, I’d say it’s probably lower than 3.5-5 c/kWh here (any info from anyone would be great). This ca. 2014 report from UQ on p.14 (bar graph) suggests about 1-2 c/kWh in 2009:
          https://eemg.uq.edu.au/filething/get/137/2014-4.pdf

          A $20/tCO2 price puts an extra 1.6 c/kWh on existing coal opex…effectively doubling it to roughly 2.5-3.5 c/kWh, pushing it close to or past par with new-build solar/wind LCOEs in the (very) near future. This is why the makeup of emissions policy on the NEG is a concern to all interested parties. However, even with no carbon pricing, existing coal opex will increase with time as the stations get older (eg Liddell) and assuming no new stations are built. Imagine what a $50/tCO2 price would have done to the market.

          Even if the NEG goes through unchallenged, the RE tech is still on the early side of the learning and experience curves. According to Bloomberg NEF, the benchmark global LCOE of Li-ion BESS has reduced by 79% since 2010, and solar (7c/kWh) and onshore wind (5.5c/kWh) by 18% in the last year alone according to Forbes:
          https://www.forbes.com/sites/mikescott/2018/04/03/power-shift-anything-coal-and-gas-can-do-renewables-and-energy-storage-can-do-cheaper/

          This whole NEG thing might buy coal a bit more time for the existing generators. If the price trajectories continue, who knows? Maybe a 10-year lock on 26% emissions reduction will be a moot point in a few years…but it’s not a moot point now. An explosion of storage might occur, but it might not be storing an excess of renewables. A charge-low discharge-high pricing strategy and FCAS revenue might see more BESS entry to the market when the capex is right. I wonder what Elon thinks.

        • riley222

          Mod, (Giles?) Baseload Renewables posted an excellent and informative reply to my post, but its disappeared into the ether. I’m sure there was nothing in the post leading to it being removed. I recieved an email of the post which I can forward if needed. Cheers

          • No idea. i’m only moderator and i been off for 24 hours. usually it is the poster who accidentally deletes it when editing, or deliberately. that’s the only way it can happen,

          • riley222

            Ok, thanks Giles.

          • baseload renewables

            Not sure what happened there but I left my browser window open overnight, or I may have deleted it by accident early this morning. I was a bit disappointed too as I have no copy. Glad to hear you have one. If you could please repost it that would be great.

          • riley222

            ok, baseload renewables,here is a cut and paste of the email containing your original excellent reply. love the moniker.

            A new comment was posted on RenewEconomy

            baseload renewables
            The first sentence of the letter to the Energy Ministers from Kerry Schott:
            “Dear Ministers,
            The national energy guarantee is designed to produce a clear investment signal so the cleanest, cheapest and most reliable generation can get built in the right place at the right time.”
            This my own very rough take on things:
            Don’t know who, nor what, is going to make an explosion of storage all around the grid, but it will occur when the expected ROI is suitable enough to take a punt on the deployment of the technology. I haven’t read the details of the new NEG proposal as yet: http://www.coagenergycounci
            but comments on this site suggest that Australian RE is going to suffer through an investment crash if this goes ahead.
            A quick look at the OpenNEM graphs suggests there’s a long way to go to displace existing coal if we’re talking solar and wind, let alone storage. However, the growth rates over the past few years is encouraging.
            New RE is probably cheaper than new coal in Colorado as reported here: https://reneweconomy.com.au
            Furthermore, the CEO NextEra Energy (a company that includes the third largest utility in the U.S.) suggests (in a briefing to investors, no less) that by the early 2020s, new unsubsidized wind and solar will be CHEAPER THAN VARIABLE OPEX OF EXISTING COAL: 2-4 c/kWh v 3.5-5c/kWh:
            https://www.vox.com/energy-
            That said, the U.S. market is not the same as the Australian market. Although I can’t fin d much on opex costs of existing Australian CFPS, I’d say it’s probably lower than 3.5-5 c/kWh here (any info from anyone would be great). This ca. 2014 report from UQ on p.14 (bar graph) suggests about 1-2 c/kWh in 2009:
            https://eemg.uq.edu.au/file
            A $20/tCO2 price puts an extra 1.6 c/kWh on existing coal opex…effectively doubling it to roughly 2.5-3.5 c/kWh, pushing it close to or past par with new-build solar/wind LCOEs in the (very) near future. This is why the makeup of emissions policy on the NEG is a concern to all interested parties. However, even with no carbo n pricing, existing coal opex will increase with time as the stations get older (eg Liddell) and assuming no new stations are built. Imagine what a $50/tCO2 price would have done to the market.
            Even if the NEG goes through unchallenged, the RE tech is still on the early side of the learning and experience curves. According to Bloomberg NEF, the benchmark global LCOE of Li-ion BESS has reduced by 79% since 2010, and solar (7c/kWh) and onshore wind (5.5c/kWh) by 18% in the last year alone according to Forbes:
            https://www.forbes.com/site
            This whole NEG thing might buy coal a bit more time for the existing generators. If the price trajectories continue, who knows? Maybe a 10-year lock on 26% emissions reduction will be a moot point in a few years…but it’s not a moot point now. An explosion of storage might occur, but it might not be storing an excess of renewables. A charge-low discharge-high pricing strategy and FCAS revenue might see more BESS entry to the market when the capex is right. I wonder what Elon thinks.
            8:49 a.m., Friday April 20 | Other comments by baseload renewables

          • Ren Stimpy

            You do realise don’t you that assistant energy minister Craig Kelly won’t even get ten words into that lot without being distracted by a bird going berko outside his window, or anything else really.

          • riley222

            Ha, ten words too generous to his tolerance of all things renewable. The situation is like monty python combined with Yes Minister.
            You do get the feeling within the Libs its approaching a point where they’ll have to move in the direction the voters want, and thats a major adjustment towards integrating renewables and storage throughout the grid. Whether or not Craig Kelly et all can cop this in the interest of the Libs is doubtful, I’m expecting fireworks soon.

          • Mike Westerman

            I’m waiting to see Newspoll #31 after last week’s revelations in the “completely unnecessary” RC into Banks and Finance. I think people now have a rock solid link between zero cred and this government.

          • Ren Stimpy

            All I’m saying is that it’s pointless writing to the outer reaches of the bell curve if you want to effect change.

          • riley222

            Don’t agree. Sometimes good ideas get taken up out of the blue by forward thinking people in power. I like to hope that it can still happen.

          • Ren Stimpy

            There are no forward thinking people in power. Yet.

          • riley222

            Baseload renewables, I did repost early this morning, I just checked and saw on my profile that my repost had been marked as spam! I let Discus know it wasn’t by clicking the ‘not spam’ button and they’re ‘working on it’. Never had that happen before and I’ve linked things previously, it must be one of the links upsetting an algorithm. Heres hoping a human being gets to look at it soon.

        • baseload renewables

          Actually, I’ve just rechecked my account and the service provider thought that my post was spam…perhaps because there’s a few links in my post. Anyhow, I’ll try to un-can the spam now…stay tuned…

          • baseload renewables

            They’re working on it.

      • RobertO

        Hi John, I was making the point that RE is increasing so therefore you are increasing the reliability of that type of product for supply reasons.

  • Ken Dyer

    Fyrdenberg; ““The intention is to lock into legislation the 26 per cent reduction in
    emissions,” he said on Friday. “We propose no change out to 2030.”

    If Australia can get over the track record of former environment ministers (eg Greg Hunt, named the best minister in the world in 2016),

    https://newmatilda.com/2016/02/10/7-times-greg-hunt-proved-best-minister-world/

    the Frydenberg and his NEG will be just another bump in the road in the inevitable and accelerating ascent of renewable energy over coal.

    That it will come at the expense of the environment and climate change is very sad, more so in the fact that the perverted ideologies of these ministers have condemned their children to a future that is increasingly uncertain and that will certainly be warmer.

  • Ken Dyer

    Hey not so fast!
    Reported in Brisbane Times
    “Labor states say they will withhold final support for a landmark
    national plan to merge climate and energy policy until the federal
    Coalition guarantees a future government will not be blocked from
    ratcheting up carbon savings.”
    In other words, Frydenberg stick your NEG where the sun don’t shine!

    This is how out of touch the Federal Government is:
    “The government intends to lock into the policy a 26 per cent emissions reduction target by 2030, based on 2005 levels.”

    So instead of locking in at 2018/19 levels, they want to put in a 13 year old target. They might as well use the figures from 1856 for all the good 2005 figures would do.

    • Alastair Leith

      There’s no way Andrews and ACT can agree to hatchet their own targets, it would be politically naive to even consider it without major political kickbacks — and i can’t see Turnbull offering them anything other than road funding, that wouldnt be enough in my view. Maybe a High Speed Rail from MELB-CAN-SYD with later extension phases eventually reaching BRIS would test their nerve!

      • Eric

        40% by 2025 is a fair bit. By the time we get to 2025 the debate will surely be largely behind us with renewable and storage clearly having won the day.

        • Alastair Leith

          I’d like to see them upwardly revise the target when they start seeing how easily they can tender these PPAs (that’s what happened in the ACT partly because the wind industry was on life support). But who knows? Who would have predicted the debacle of the last 10 years in 2005?

          • Eric

            That’s true. God forbid, Abbott might rise again! It’s very sad that Abbott wasn’t allowed to go to an election and be killed off for good. He is like a Zombie apocolypse.

  • Ben Dixon

    Not Enough Guts Turnbull.

    • Rod

      Now that could catch on.

  • Carl Raymond S

    “We should not demonise coal” says Josh, referring to a substance with the potential to obliterate our species (should we be stupid enough to burn it). Perhaps he’s right, the real demons wear suits and frame legislation to protect their sponsors, not their electors.

    • Alastair Leith

      Touché (on behalf of Joshie).

    • Joe

      ,,,,did I see in the background ‘Lump of Coal Scotty’ hand that ‘coal baton’ over to Joshie?

    • Aaron Adamson

      You had better go have a word with the Indians and Chinese who are building upwards of 500 hele coal fired power stations.

      • mick

        i want some of what your’e smoking

      • Joe

        Please give us the detail of those…..upwards of 500 new Coalers.

      • Rod

        Silly boy, you really believe that? I’m sure you have some proof for that baloney?

  • john

    What is going to happen is situation nothing to do situation normal.
    Nothing to see here move along.
    You have a problem with this ?

  • Andrew Roydhouse

    Isn’t the real elephant in the room and the real reason electricity prices are so high due to the supply offering/bidding process?

    Why does every electricity supplier offering mW receive the price paid for the last amount of mW needed to match the expected demand?

    The source of the power does not matter, nor the price offered. All generators whether fossil or renewable all share in this gravy train and keep mum about the spoils.

    The wind farm operators are just as happy as Loy Yang A when a gas peaking plant ends up offering at a price of say $10,000 per mWh for 50 or 100 mW completing the say 8,930 mW required for that 5 minute period (and then averaged over the entire 30 minutes).

    So LYA and wind farms share in the same spoils. Even if they offered supply at $60 per mWh

    No political party seems to want to broach this topic either. Donations anyone?

    A simple fix would be two small regulations.
    1) That each generator needs to be able to demonstrate a clear link between the price they offer at and the cost of that generation and the implied margin sought.
    2) If the implied margin sought is greater than X% (say 50%) then a super profits tax is payable on those earnings at 75%.

    Running these figures suggests that the wholesale power price would drop by as much as 40% overnight.

    After all, why does the Fed and State Govts support effect price collusion?

    Why is that ACCC?

    • Alastair Leith

      Noticed Alan Fels dusting of his suit this week with the RC into Banking industry going down. Can’t think of a single effective thing the ACCC ever did in public life except provide a cloak of legitimacy for neoliberal doctrine, PPPs and the like.

    • Alastair Leith

      Gentailers are 50% shareholders in the AEMO. When you have a markets, the market always wins :-).

    • Ren Stimpy

      Re 1) The price they offer would already demonstrate a clear link to the cost of that generation, because they’re not going to offer a price that would result in a loss.

      Totally agree though, this business of the last one in setting the price needs to end. It’s a system designed for the obsolete baseload-with-peaking model, made obsolete by the new cheap-variable-renewables-with-dispatchable-firming-and-storage model.

  • neroden

    Conclusion: Go off the grid. Get your own storage and solar. The LIEberals have decided to jack grid power prices through the roof.

  • Robert Comerford

    So for all their protestations about being environmentally responsible the ACT and Vic governments are a party to this coal supply guarantee scam.
    Well done all!

  • Eric

    Articles like this are not going to help the cause of emissions reduction. The reality is that new renewables/ with storage are cheaper than new fossil and they are only going to get cheaper over time. Everyone knows this.
    No new coal plants will ever be built in Australia. Even Tony Abbott knows this, he is just using energy policy to bring his arch enemy, Turnbull, down.

    At one level the NEG doesn’t mean anything beyond being a policy straw man designed to allow both major parties to leave energy to the markets and the operators. While allowing them politically to appear as though they have appeased their base.

    In the short term it is quite a good idea to cost in the reliability aspect of renewable energy. But that is not going to elongate the life of old coal fired power plants. On the contrary, it will probably accelerate the close.

    • baseload renewables

      I’ve been kind of sleepwalking into thinking that the whole RE economics thing was going to shut out coal rather soon, and that this carbon price thing was a bit of a moot point. But I did some brief research on the economics of the whole thing, hopefully to be posted soon in a response to an earlier comment that was brandished as spam by my service provider (but they’re working on it, see below in a day or two).

      What I found was that the price on carbon, whatever it looks like, is a very central issue in the matter. If the carbon pricing regime continued as suggested by Garnaut in 2008, i.e. 4% increase p.a. starting from $23 in 2012, we’d be up to nearly $30/tCO2 by now, equivalent to a premium of about 2.3 c/kWh on coal-fired electrons. Given the O&M cost of Australian CFPS is about 1-2 c/kWh (based on the very limited information I could find on the subject), this carbon premium would place new-build wind and solar LCOE close to or beyond par with EXISTING coal power opex/kWh, not just new-build coal power. With no end in sight to 4% incrementation, the writing would definitely be on the wall. Keeping the carbon price at bay will prolong the point in time at which NBREAP (that’s my new acronym for new build renewable energy & power, if no one else has coined it yet) comes to par with the old coal fired power plants.

      So if the BESS, capacitors and Snowy 2.0 😉 have their say, there is going to be little to zero problem in meeting the reliability obligation (as it appears that this is going to be a systemic obligation rather than a per generator obligation, thank heavens). While this (reliability obligation) may indeed act to reduce the life expectancy of the coal stations as you suggest, I would add the converse: the wet-lettuce approach to emissions will prolong their life expectancy, because NBREAP LCOE will have a longer way to go in undercutting existing coal plants, because coal plant opex/kWh is lower with wet lettuce.

      I’m going to make a salad. With dry lettuce.

      • Joe

        Nice that you mention carbon pricing. In the EU the carbon price has been in the range $Euro 13.00 – 14.00. per tonne CO2 the last couple of weeks which is around the $AUS 20.00 mark. Our / Aust. Govt has spent $2.5 billions of our hard earned via The Emissions Reduction Fund ( Direct Action – a flop as Aust CO2 emissions have risen each year the last 3 years ) ) which I think has averaged out at about $12.00 per tonne CO2. We are getting closer to the EU and Labor / Julia’s ETS was to have linked with the EU price when the ETS was to revert to a floating price after the initial 3 year fixed price. How how much more money is The COALition going to piss away before the inevitable happens, a legislated scheme to put a price on emissions……perhaps a change in Govt. will get us there but I haven.t heard Shorten / Labor speak about legislating a price on emissions. China’s move to a National ETS should be the signal as to what is going to happen.

      • Eric

        I don’t disagree. But unfortunately thanks to The Greens, we lost the opportunity to get bipartisanship on carbon a decade ago. Although I’m not sure even if we had, it would have survived for long with the likes of Abbott and Co patrolling in Canberra.

        The reality is the hard right and their backers will always destroy a naked price on carbon in this country. The only option is to try and sideline them, which Turnbull has had a devil of a job doing. But he has succeeded in some areas, appointing Audrey to AEMO has seen a huge change in the way the energy system is being managed nationally. Audrey is changing it behind the curtain and it is driving the hard right insane.
        I don’t like Frydenburg particularly but he has managed a very difficult situation in his own party well. At least we have an option of sorts.

        It is what it is. It could have been so much better but the fossil fuel lobby is powerful in Australia. Let us pray for at least a two-term left-leaning Labor government with a strong mandate on renewable energy and climate change. And Greens if you are listening, keep out of the way this time!

  • Eric

    In a way, the NEG is just a political straw man designed to appease both the left and right of politics. If it has one good use it will rid the sector of political interference for good.

    The NEG introduces a reliability guarantee into energy contracts. Which means that new renewable projects will need to also cost a certain factor of reliable energy.
    Once companies turn their attention to the reliable side of renewable energy the costs of energy overall will quickly come down.

    The NEG won’t elongate the use of fossil fuels, it will accelerate their demise. I find it strange that Renew Economy can’t see this. But I guess sites like this thrive on controversy and angst!

    • Phil NSW

      Sorry Eric I can not agree. Political interference is ‘guaranteed’ (ark ark). The LNP government will be voted out at the next election for there lack of foresight in the energy arena. Labor will dismantle the NEG as soon as they get in, just like Tony Abbot set about dismantling Labor’s energy agenda once he got into power. The LNP know they forced up the price of electricity by doing this but still managed to accuse Labor for the increase. Now he has his Monash Forum gnawing away with his kitchen cabinet remains in control and still does not see he continues to introduce policy which will push up electricity prices.

      • Eric

        I should have been more specific. The NEG “if” it is agreed by both parties.
        Labor will ramp the target and increase the build out of renewable when they get in. But the NEG will allow for this or it won’t be agreed.

        There really is no future for fossil with or without the NEG. The posturing from the far right is just a game, aimed at destabilizing Turnbull as much as anything. But their position is irrelevant because the economics are against them, they know that themselves.

    • RobertO

      Hi Eric What I do not understand is how a contract (Exchange of Money) can Guarantee Supply of a generator when the receiver of the money has a reliability factor of about 50 % and the receiver is going to use the money to keep a process going that is (may already have started) losing money in terms of its costs of supply. Surely we get a better guarantee of supply with more of the supply that is cheaper and quicker to build and its reliability is only about 93%, and factoring in its capacity factor it need a better overbuild.

  • Ben

    I’m not sure the description of the ESB endorsing renewables as feasible and desirable from the perspective of costs, emissions, reliability and investment is completely accurate.

    Recent reports from ESB, AEMC, AEMO identify electricity security as a risk. They cite several parameters including increased variability of supply and retirement of synchronous generators, plus market pressures, all requiring a rethink of the technical and economic fundamentals of the NEM to accommodate increasing levels of renewables.

    More renewable generators are coming and the ‘system’ needs to manage. The organisations managing the ‘system’ are identifying higher risk, the risk needs to be managed.

    • That’s one way of putting it. Another way of putting it is:
      We’ve seen this coming for nearly a decade, and been urged by those in the industry to respond by implementing rules and emphasis on energy efficiency, demand management, changes to rules that encourage battery technology etc etc. But we’ve done nothing. In fact, we’ve made every effort to delay any change because the people that fund us don’t want any change. Now, it kind of looks inevitable, so I guess we should pull our finger out and look like we’re doing something.
      As they say in their reports – wind, solar and demand management are the future. The change is mostly in their thinking and their management practices.

    • Mike Westerman

      The principle risk is the risk of doing nothing or doing too little. AEMO has identified that the risk of losing a large generator is obviously greater than losing small ones. They have also proven in their trials at Horsndale and now in Tas what is well known: that STATCOM-ES systems can add stability at very fast rates. But there’s no point in knowing things if you don’t act accordingly.

      • Ben

        Yes, there would be a different flavour of discussion if the connection agreements for large scale wind and solar specified some form of transient stability control with storage.

        • Yes, and even more interesting discussions if AEMO and AWMC had those discussions with the synchronous generators. particularly over the lax governor control response. been waiting for that discussion for a while now.

          • Ben

            The governor control is an interesting one, but it’s tough to blame anybody except the rule maker – nemmco at the time.

        • Mike Westerman

          We have seen very much more interest in recent months from wind and solar developers in PHES but driven by the revenue imperative of selling into the evening peak at higher prices than are likely otherwise, not driven by some imagined security risk. Those implementing BESS of course look at the Hornsdale STATCOM-ES model, but this is a niche market aimed mainly at FCAS rather than energy markets.

          What is increasing the risk to project FID is ill-advised and plainly nonsensical commentary from outliers like the Monash Group and failure by the government to refute it.

  • palmz

    OK, if states that are pushing quite high RE targets have said they are interested dose that not mean their is more detail to what the NEG is than what we can currently see.

    I have not seen any of them pull back their 2030 targets, so something is a miss here.

  • Jonathon

    18 balls, one racket, one polluted court, just leaning the rules of tennis while being coached by the dirtiest players ever to have played the game.

  • RobertO

    HI All , Or put another way 20 Coal power stations, 20+ millions transport vechicles and they nearly all produce CO2 plus heat. That about 1 Million tons of CO2 per day and how much heat (what we export that other parts of the world burn)?
    Could we halve that amount in 5 years? Could we reduce that to 100 000 tons in 7 to 10 years? It all comes down to the question “What do we as a nation do we want to do?”