Tesla, Enphase lead new energy players calling on ministers to drop “coal-keeper” tax

Leaders of a number of emerging and innovative energy companies – including Tesla – have called on Australian energy ministers and the Energy Security Board to abandon a proposal to financially prop up coal and gas generators.

In an open letter published in newspapers on Wednesday, the group call on energy ministers and the Energy Security Board to abandon a proposal to establish a ‘physical retailer reliability obligation’ – that effectively amounts to a capacity market that some have dubbed “coal-keeper.”

The proposal has been floated by the Energy Security Board as part of a package of energy market reforms, and slammed by opponents who say it will subsidise increasingly unviable fossil fuel generators.

Rather than paying for the electricity generated by a power stations, capacity markets provide financial incentives for power stations to merely remain available to produce power, even if they don’t.

Such a market could provide a financial reward to coal and gas generators, depending on how it is structured, and such a proposal is being touted as a way to keep ageing fossil fuel generators in the market for longer.

IEEFA and Green Energy Markets have estimated the mechanism could end up as an annual tax on consumers of $7 billion, if modelled on the mechanism in Western Australia. Others want a more nuanced focused on fast and flexible technology.

“The ESB has proposed a new reliability mechanism that would prop up unprofitable coal generators, increasing costs and delaying the clean energy transition,” the letter says.

A new ‘Physical Retailer Reliability Obligation’ (PRRO) would force retailers to buy new certificates from existing coal and gas generators; effectively a subsidy from consumers to generators. This risks significantly increasing energy bills without improving reliability.”

“The PRRO would increase market concentration by undermining smaller retailers. This would threaten innovation and competition which the NEM needs to help consumers access new technologies and reduce costs.”

The letter has been organised by The Australia Institute and has been signed by representatives of a number of innovative clean energy companies, including Tesla’s local energy director Mark Twidell.

It has also been signed by global inverter company Enphase, emerging retailers Flow Power, Enova Energy and Energy Locals, as well as the heads of Reposit Power, Solar Analytics and ReAmped Energy, as well as Saul Griffiths’ Rewiring Australia.

The group argues that energy market reforms should focus on mechanisms that support further investment in renewable energy technologies, energy storage and helping households and businesses to participate in mechanisms like demand response that can help reduce energy costs while contributing to improved energy reliability.

“The solution is to put consumers in charge of their energy to help them save money, and to embrace the opportunities presented by the falling price of renewables and energy storage. This will provide consumers with more affordable, reliable, and clean power,” the letter says.

“Governments should support flexible, reliable options such as demand response, battery storage or pumped hydro, rather than give financial windfalls to old, inflexible and polluting generators.”

Details revealed by RenewEconomy on Tuesday showed that the final design of a capacity market mechanism could be as long as 18 months away, with the ESB handing ministers a ‘high level’ proposal for the energy market reform.