Who is Turnbull trying to fool with the National Energy Guarantee?

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Turnbull’s plan for the National Energy Guarantee depends on fooling three key constituents: his own party, as a leaked email reveals; the mainstream media; and the industry itself. The evidence suggests he is half way there.

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AAP Image/Mick Tsikas
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AAP Image/Mick Tsikas

“There’s a dramatic transformation that’s taking place in Australia’s energy system, a once in a lifetime transformation as we move into the world of micro-grids, demand management, rooftop solar and battery storage.”

It’s the type of observation that readers might expect to read in a publication like Reneweconomy. But who was the forward-looking visionary who authored this statement? A university researcher? An evolved network owner? Someone seeing the future at AEMO (such as its CEO)? Or an environmental NGO?

No, it was federal environment and energy minister Josh Frydenberg, who made the comments to the Albury Border Mail as he visited the site of a proposed community solar farm a fortnight ago, and then talked to folk signed up to the ground-breaking Yackandandah micro-grid.

Frydenberg even repeated much of this line in parliament this week, when asked a Dorothy Dixer in question time by Cathy McGowan, the member for Indi who accompanied him on the tour.

Yes, this is the same Josh Frydenberg who has spent much of the last year and a half decrying the very people who want to embrace this transformation, decrying federal Labor’s 50 per cent renewable energy target “as reckless and irresponsible”, mocking the Tesla big battery, and launching any number of attacks against the former South Australia Labor government’s renewables initiatives.

And this is the same Josh Frydenberg who is trying to force the National Energy Guarantee upon the Australian energy market, browbeating the Labor states and territories into accepting that something must be better than nothing.

And this is the same policy proposal that – on evidence presented so far – intends to do the very opposite of the rapid transition lauded by Frydenberg. According to independent analysis, and its own modelling, it actually intends to throw progress on emissions and the renewable energy transition into reverse.

To convince people of the idea that the NEG is something that must be better than nothing, has required from Frydenberg and prime minister Malcolm Turnbull some political double-takes of breathtaking scope, and a level of deception designed to fool members of his own party, the media, and the energy industry itself.

The evidence is that they might be half way there.

The party room was won over first, with the promise that this was not a carbon price at all, and nor would it threaten the primacy of fossil fuels in Australia’s energy mix. The government even commissioned modelling that sought to tell them that the pace of renewable installations would be reversed rather than accelerated by the new policy.

An email, circulated to environmental NGOs and clean energy representatives in early February by Ben Skinner, formerly of the Australian Energy Market Operator, and now head of policy development at the lobby group Energy Supply Council, is revealing.

As Skinner explained in this email, in seeking support for the policy and understanding of the political theatrics, the original 8-page advice on the NEG presented to the government by the Energy Security Board was “written in an obtuse style” quite deliberately.

“This was partly because several parties held the pen, but also somewhat intentionally in order to manage the very difficult political situation at the time with respect to anything that could be interpreted as a form of carbon pricing. It was that writing style that got it through its most difficult hurdle in its first few days: I need say no more on that matter.”

Skinner’s observations are interesting, not just because of the content, which speaks for itself, but also because of his knowledge of the intent of the ESB letter. He left AEMO before Frydenberg officially asked the ESB – of which AEMO is a member – for an idea to help the Coalition out of its political fix in early October.

Skinner tells RenewEconomy that he had no involvement in the 8-page letter and that his observations were “circumstantial supposition.”

Still, it may leave open the suspicion that the NEG was something cooked up by what some refer to the “energy mafia” – including lobby groups like the ESC and the Business Council of Australia, who were so quick to support the idea when released; and the Minerals Council of Australia, whose former policy chief now directs climate traffic in Turnbull’s office.

With the internal party politics brought to heel with barely a whimper, the next target was the mainstream media, and its ability to put pressure on state governments.

And disturbingly, because mainstream media chooses to focus on politics rather than policy, this has proved no more an obstacle than the Coalition’s own party room.

The Murdoch media were obviously no issue, but even the Guardian quickly jumped on board, declaring that any opposition to the NEG by Labor would amount only to “playing politics.”

Fairfax, too, has been won over, with the Canberra Times writing an editorial last week, also published in The Age, imploring (following the defeat of the Labor government in South Australia) the Labor-Greens ACT government to support the NEG.

“ACT Labor and The Greens need to ask themselves if their ideological purity trumps the national interest,” the editorial thundered. “Surely 80 per cent of something has to be worth more than 100 per cent of nothing.”

Frydenberg’s office could hardly have been more pleased with the editorial than if they had written it themselves. But the Fairfax assertions are, of course, complete tripe.

And we know this because the third grouping that needs to be fooled for the NEG to proceed as planned is not so easily duped. And their detailed submissions have unveiled the biggest con about the NEG – that it is so ill-defined, so preliminary and so overwhelmed by complexity that it can barely be described as a plan.

It is certainly not 80 per cent advanced toward anything, and the Fairfax Media editorial writers should be ashamed and embarrassed for saying so and blindly picking up Coalition talking points.

Indeed, as currently conceived, the NEG will do the very opposite of what it pretends. Far from addressing the environmental, reliability and cost issues surrounding the National Electricity Market, it risks making each of them worse.

This is the substance of the more than 100 submissions from the industry itself from network owners, from retailers large and small, from renewable energy developers, battery and pumped hydro storage developers, software developers, and engineers.

To broadly summarise:

It will be worse than doing nothing. Several studies now point to the fact that on current policies, Australia will reach around 40 per cent renewables by 2040. The NEG seeks to cap this at 36 per cent by locking in an emissions target that is less than business as usual.

It is based around the assumption that the electricity industry’s emissions reduction target for 2030 should be 26 per cent. Yet new analysis has shown that emissions will fall by 29 per cent if there are no policy changes. So the NEG seeks to be worse than doing nothing.

It will lift prices rather than reduce them. For all the modelling that has been done on theoretically pass through mechanisms, there is one simple observation made by everyone – all the way from the ACCC, the networks, the small and medium-sized retailers and others: this design could kill competition. And that means higher prices. Full stop.

It is too complex. By trying to be something for everyone, particularly to the incumbents, and in trying to pretend that this won’t be some sort of carbon price, the designers have produced a plan of such complexity to be effectively unworkable.

The reliability guarantee makes no sense. The ESB haven’t even gotten around to spelling out the meaning of reliability, what technology will count towards it, and what won’t. Nor has it said how this can be managed.

It doesn’t actually address the problem. Frydenberg and Turnbull argue that the NEG is essential to delivering reliability. But as AEMO point out in their latest briefing, the NEG only addresses part of the problem. The rest must come from market design.

As the AEMO argues, the market rules are no longer fit for purpose, they favour ageing, increasingly redundant technologies, and simply don’t encourage investment in the smart technologies – those mentioned by Frydenberg at the start of this article.

What’s more, many in the industry, such as the government-owned Snowy Hydro, say that the reliability mechanism is not needed.

Others, such as Tesla and Genex, the respective builders of the Hornsdale big battery and a huge solar-pumped hydro storage facility in Queensland, say that the legislation could have the perverse effect of discouraging investment in battery storage and pumped hydro, the very technologies the ESB says are needed.

Despite all this, the ESB has said it intends to plough on and present a “high-level” design of the NEG, taking in the substance of the submissions it received just a few weeks ago, to COAG energy ministers soon after Easter.

But there appears to be too many spools to unravel. Requests have been made to shift the burden from retailers to generators, or to exclude smaller retailers. There is nothing to suggest these suggestions will be taken up.

The policy also needs to dovetail with the Integrated Security Plan being developed by AEMO, and the numerous other market rules seen as essential to usher in that glorious transition that Frydenberg occasionally admits is upon us.

It also needs to sort out – possibly among the ESB members themselves – whether this policy sees the energy market as a synchronous machine and seeks ways to protect it, or one that will see rapidly evolving technologies and management. One view is to raise barriers to the future, the other seeks to lower the drawbridge.

But the content of this won’t become clear until August, when the final design begins to emerge (presuming that further work is approved at the April COAG meeting).

It may be that the ESB can pull a rabbit out of the hat and deliver a workable, meaningful and forward-looking policy. Many certainly hope so. But until this happens, the NEG cannot be considered as 80 per cent towards anything, and should be treated with at least some degree of skepticism and hard analysis until it is.

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57 Comments
  1. Paul Surguy 8 months ago

    There are no rabbits left in the hat to pull out

    • Joe 8 months ago

      Why pull rabbits when you can pull lumps of coal.

      • Andy 8 months ago

        Especially from Tony’s “suppository of wisdom”!

  2. Miles Harding 8 months ago

    We are well into the era of delusional politics, so the only people they need to fool are themselves!

  3. PacoBella 8 months ago

    I recently wrote to Dr Anthony Lynham , Qld Minister for NRM and Energy requesting he vote against the NEG at the next meeting. The trouble is, to avoid being wedged by the Qld opposition (Deb Nastyham) he will probably vote to let them plod on with the obfuscation until August – another half a year lost! Giles, you need to keep pushing potted summaries of the industry viewpoint to Fairfax, ABC and The Guardian to try to get this info out into public view and readers need to keep “liking” articles like this to try to get it out into social media. Who knows how to get coverage of this stuff in Facebook? Is there any point?

    • RobertO 8 months ago

      Hi PacoBella, I have written to my federal labour pollies asking them to advise the Labour State Governments to can the NEG. It only take one state government to say no and the idea should be dropped. However it appears that even the state governments can be bought with promises of money or more jobs (or lies of). All we can do is try.

  4. MikeH 8 months ago

    That is a great photo of Dumb & Dumber.

    • Joe 8 months ago

      Two is nice but four is better still…room there for Two Tongues Turnbull and his hand puppet Joshie.

  5. howardpatr 8 months ago

    Mr Turnbull:- You once said “I will not lead a party that is not as committed to effective action on climate change as I am”. That was in 2009.

    What an utter hypocrite Turnbull is.

    The only good thing that has happened under Turnbull’s watch, when it comes to “action on climate change”, is the appointment of Audrey Zibelman. There is a fair chance that was not due to the hypocrite Turnbull.

    • Chris Ford 8 months ago

      Nah, plenty of gòod things have happened on Turnbull’s watch. In spite of him.

    • Nick Kemp 8 months ago

      He’s not being a hypocrite on this because you can hardly argue he is leading the party

      • Catprog 8 months ago

        Or he is just as committed to action as his party. Just not very much for either of them.

  6. Carl Raymond S 8 months ago

    When the energy transition needed help, they wouldn’t give it. Now that it has a life of its own, they insist on butting in to slow it down. For truck sake Malcolm, Josh, just GO AWAY! If you don’t, the people of Australia will happily show you the door on Election Day.

    • John Saint-Smith 8 months ago

      My local LNP MP, Ted O’Brien once asked me ‘What is the one thing in one sentence, that you would like the Government to do in relation to the renewable energy sector?’

      As I knew time was pressing, I responded “Just get out of the way!”
      He seemed genuinely hurt, and said, “Last week I had a representative of the mining industry sitting where you are now, and when I asked him the same question (re mining) he said the same thing.”

      Perhaps the Lazy Negative Party is just suffering from relevance deprivation syndrome.

      • Alastair Leith 8 months ago

        Because one-sentance policy discussions are all that so many Liberal/National/Labor party MPs are capable of unfortueately.

        In one sentence can you reduce all the complexity of what my PM calls the “trilema”?

      • neroden 8 months ago

        Well, if you get another chance, you could tell him:
        — implement the five-minute rule immediately. As in, tomorrow, not “after study and planning”.
        — Order the networks to pay for fast frequency response on a millisecond basis so that batteries get paid for their services.

        These seem to be two places where the federal government is interfering with renewable energy right now, and where they could stop interfering.

    • MaxG 8 months ago

      Unfortunately they won’t — as seen in SA and TAS, and at the fe(de)ral level.

      • Tom 8 months ago

        Tassie’s election didn’t have anything to do with RE, which is unfortunate, because lack of RE vision is one of the things holding our state back.

        • Nick Kemp 8 months ago

          Not sure what you mean there Tom. Tassie’s energy is more renewable than any other State. Can you explain what you think we should do next?

          • Tom 8 months ago

            Basically we need more wind and solar, and it needs to be built, owned, and operated by the government or its state-owned enterprises.

            In the interim we need to have a lower threshold for importing energy and a higher threshold for exporting electricity so that our hydro reservoir levels are restored to much higher levels.

            We’re dependant on imported energy for about 15% of our electricity. Much more in a dry year.

            We need to cut through the “noise” of second interconnectors and pumped hydro – they are completely unnecessary in Tasmania. As you say Tassie has the highest renewable energy penetration – what is often forgotten is that it is almost all immediately dispatchable, which effectively allows us to store variable energy very easily by substitution.

            We need to increase our annual electricity production to become a net exporter; to be ready for electrification of our transport network, and to have a cheap and ready supply for new industry.

            We probably need some strategic new transmission infrastructure to “open up” appropriate regions to wind and utility scale PV development.

            On the subject of cheap – the way to keep it cheap is to keep our generation, transmission, and retail companies in government hands. Privatisation or power purchase agreements are only going to lock in high prices for decades.

          • RobertO 8 months ago

            Hi Tom, so the only reason for the interconnect is to secure Tas to the main island above it.

          • Mike Shackleton 8 months ago

            Tassie could fulfill the role of “Snowy 2.0” by just installing more wind power so as to reduce dependence on hydro power. An extra Basslink could then take advantage of that stored hydro energy in periods of peak demand. My understanding is that there isn’t a lot of hydro in Tassie that is suitable to conversion to pumped storage as a lot of the systems are run of river – but not running a hydro generator so that the reservoir can fill up has a similar effect without the losses induced by pumping.

  7. Chris Drongers 8 months ago

    Let’s look forward ten years ; solar and batteries provide three days of domestic power at half the price of a grid connection, the (hardly used) second car is in the garage and has V2G capability to support household consumption when cloud lingers or the teenagers have a sleepover, the car also has autonomous driving capability and is networked to the houae energy management computer which will send the car off on its own overnight to recharge at the local shopping centre supercharger for which the householders have a subscription for ‘energy as a service’ similar to their internet and phone connections. How will the NEG maintain the local distribution network as househols abandon it and will it allow the variety of energy schemes that will need to be tried to find the right one for each area/household/climate combination?

    • rob 8 months ago

      Please make it happen now! I’m not well mentally……..just went to the Butcher shop and it was like a night club……been a customer for 40 years so they all know me and thank god one of the lovely girls sent me outside and served me from there, whilst I had my hand clasped over my ears……….Please bring on this future…….I never want to leave the house again

      • rob 8 months ago

        edit ……It was probably a way off response

    • Marc Talloen 8 months ago

      Chris, right now a V2H would already be good enough for me. It may be an illusion to ever expect the current major utilities and retailers to pay us a fair price for the electrons exported to them. Besides, a fully independent self-driving car may decide to do some sightseeing…LOL
      Of course if new companies such as DC power may get a foothold then V2G may make sense.

      • Chris Drongers 8 months ago

        Marc “Besides, a fully independent self-driving car may decide to do some sightseeing…LOL”
        You touched on an even better scheme – why own a second car with its benefits of V2G?
        Why not subscribe to a car-as-a-service plan? Most of the time this would (autonomously) ferry your kids to violin lessons after school and then switch hirers to pick up my kids from tennis before taking my neighbours to the opera. When the household battery runs low you could conveniently hire the car overnight and use it as a temporary battery supplementing the household battery.
        Like running over your data download limit this would be a bit more expensive per kWhr than using your own car but, like an occasional taxi ride, would be considerably cheaper than buying, registering/insuring, charging, maintaining a second car.

    • Ian 8 months ago

      Love your thinking. Here’s another scenario: the inner city unit’s computer, called lecky, checks the electricity retail market board every 5 minutes, some retailers are offering free electricity as a promotion for 30 minutes. Lecky buys 30kWh to be delivered for that time period to fill her depleted apartment battery. An hour later a different retailer posts a request for electricity to be exported at a premium for a period of an hour, lecky bids 15kWh to be exported. Later that night lecky’s owner gets a batch of wind electricity delivered from her share of a community wind garden situated 100km away . Lecky pays the grid authority a delivery fee from her store of electron-coins. Half way through the night Lecky’s battery is full, she sells the rest of the wind power to a retailer who offers her the best price for that time-period and is paid in electron-coins. Lecky’s energy trading continues for a month and then she provides an update to her owner, who for the first time that month, checks the report, sees that Lecky’s trading settings are suited to her needs , decides to invest some of the electron-coins in a bigger share of the community wind garden, uses some to order a nice piece of jewellery from China, gifts some to her elderly mother and the rest she leaves in the electron-coin account for the next month of trading. She notifies Lecky that she will be on holidays for 2 months and that the air-conditioner and water heater can be turned off for that time, she instructs Lecky to rent some on-grid virtual storage to make use of cheap electricity offers while she is away. She also decides to make a short term contract with the local supermarket to trade them her portion of the community wind garden’s output for the time she is away. They agree to swap her electricity output for eggs and milk.

      • Ian 8 months ago

        Chris, don’t stop now. Let the scenarios roll. 10 years from now . A container ship arrives in port from Germany, it’s filled with ‘skins’ from the big German Marques, BMW, VW, Audi etc. Nearby an assembly plant receives a shipment of battery-platforms by high-speed freight rail from South Australia’s Tesla/Panasonic Gigafactory. The German car skins are quickly fitted to the Australian made battery platforms and sent to customers throughout the city.

        • Nick Kemp 8 months ago

          Love it – we’ll import cars ‘Batteries not included’

      • Chris Drongers 8 months ago

        Love it! The electron-coins already exist.
        Australian company PowerLedger has two cryptocurrencies;
        – the higher level one is Powr which can be used to invest in electricity exchanges/companies and etc which set up markets of various types
        – the lower level one is Sparkz which is locked to 1c of value in local exchanges and is the method for trading kWhr of electricity from multiple generators/stores/futures to consumers/exchanges all tracked by IT secure smart meters (a side benefit of the IT secure system is keeping out Russian hackers).

        We eagerly await the first call to ‘sell’ some Powr to a company that will then issue Sparkz to buy and sell kWhr.

      • Chris Drongers 8 months ago

        That gurgling noise is the RWNJs choking on the impossibility of such a future.

  8. solarguy 8 months ago

    The NEG brought to you by the lying, sagacious bastards in government…………….soon to be in opposition.

    If the fools don’t get conned, that is.

    • Patrick Comerford 8 months ago

      Agree totally. All we need now is a statement from Bill Shorten that Labor will repeal the NEG legislation when they are elected and that will just about exhaust the LNP policy vacuum. Remember 29 down one to go.

      • Alastair Leith 8 months ago

        We have almost the opposite so far…

    • MaxG 8 months ago

      They do’t need to be conned, they happily endorse :))

      • solarguy 8 months ago

        Some will happily endorse because their idiots, the rest are up for grabs, need to be educated about the truth to make informed decisions. Shorten needs to step up on this one.

  9. Ben Dixon 8 months ago

    Keep it up Giles, I am sick to death of the federal snake pit in Canberra. Thanks for shining a light on these bastards.

  10. Cooma Doug 8 months ago

    Questions for all who follow these issues. Sharing thoughts on these questions will help clarify many mysterious market issues.

    The electricity wholesale market is difficult to understand. The so called transition will be also. The inclusion of new technology will be many times more complex than the status quo. Lets tackle some of the animals in the mob and see if we can understand the behaviour.

    At the moment on the eastern grid there are available 13 GWHrs of storage daily. It isnt used for long periods to any significant extent. Maybe it is less than 4% long term, if you looked at the numbers over a few years. For example, there has been zero pumping since January 1 this year, heat waves included.

    Question 1
    If we had on the grid now, 350 GWHrs of hydro pump storage and 2000 extra MWs of generation, the pumps would not be used. Why is that the case?

    Question 2
    The 2000 mws of extra generation would be used in the market. Why is that the case?

    Question 3
    Power and energy on the grid are different products. If you have a solar and battery home on the grid, what products will you be selling?

    • Tom 8 months ago

      Great questions – especially question 3.

  11. bedlam bay 8 months ago

    Frydy is a total disgrace. Does he take us to be fools with his stock in trade sophistry and mendacity.

    • Kate 8 months ago

      I’m starting to think of him as Abbott lite.

  12. riley222 8 months ago

    Geez, some people are hard to please.
    We’re in a period of transition, the NEG is a political tool to allow the transition to continue, as opposed to the Abbott era, where things came to a halt and the aim was to take renewables backwards.
    It’s not set in stone, its a transitional tool. Appreciate what we’ve got and the way things are heading, its not guaranteed. Things could easily change for the worse, destroy at your own peril.
    I realise your enthusiasm prosecuting the case, but be careful what you aim to tear down, it could end up being a case where success leads to failure. Its going to be a long haul to move to renewables, and an orderly transition is essential, I believe the NEG will play a part.

    • Alastair Leith 8 months ago

      Nope. It’s worse that BAU with no policy change. You need to do some reading. If it isn’t set in stone, what does it achieve? (nothing except provide a protection racket for coal generation and perhaps the policy smokescreen for Libs to donate $1b to a coal power plant in QLD).

      All the Finkel Review recommendations already went through except for the CET (which was already as watered down as a thimble of soup in a sink of dishwater).

    • Alastair Leith 8 months ago

      It’s the aptly named NEG you are talking about not a REG presumably?!

      You seem to believe in something you don’t even know the name of, and it wasn’t a typo as ‘R’ is nowhere near ‘N’ on a qwerty keyboard.

    • neroden 8 months ago

      Nope. Read again.

      The NEG is *actually worse than business as usual*. It would cause us to have *less renewable energy*, and spend *more moeny on it*.

  13. larry w 8 months ago

    Seems the pollies need the support of the dumb fucks they made into dumb fucks in the first place.

  14. Rebecca 8 months ago

    The LNP are desperate, they have failed the Australian people at every turn. Worst government ever, not one suitable in the wings. They need to be soundy defeated at Federal Election.

  15. Radbug 8 months ago

    The Turnbull government has the smell of death about it. 29 losing Newspolls later, it’s starting to stink. Turnbull just can’t get above 47%, 2PP! History says the panic sets in 15 months out. That implies May, 2018. 30 more days to go and things are going to start to get “newsworthy” on the Coalition side of politics!!

    • neroden 8 months ago

      It’s a pity you have to suffer through the LNP incompetence and malice for another year. Isn’t there any way to get a vote of no confidence?

  16. Colin Edwards 8 months ago

    Frydenberg, the wind-vane rooster, will turn in any direction as happens to be needed.

  17. Les Johnston 8 months ago

    It is always good to have a re-read of the NEG because the political “commentary” appears to have glossed over what is actually written in the document. So vague, it becomes little less than imaginative waffle. It lacks so much in content that it becomes what ever you want it to be. It would be impossible to run a sophisticated high tech energy network to satisfy its requirements.

  18. Nick Kemp 8 months ago

    Today i read about a winery in the Tamar valley that is off grid. It’s is quite feasible for dairy farms to go off grid too because the power bills run at around $100,000 a year and now tasnetworks have decided that the farmer owns the poles on his land after the first one and so will have to pay to replace and maintain them. It is becoming increasingly economic for households to go off grid. Mines and refiners are brewing their own power. If this keeps up the Snowy 2 scheme will exist simply for lighting the flagpole on parliament house

  19. Chris Drongers 8 months ago

    So, what is this article saying? It seems that the artixle argues that the NEG is designed to have minimal effect beyond starting/focussing existing discussions on ensuring electricity supply.
    As existing supply is mostly coal based the NEG has been read as supporting coal.
    Imagine however being the professional accountant / power engineer trying to defend old failure prone coal plant output against fleets of variable solar and wind backed by pumped hydro and medium and small batteries. At the same time that grid desertion by smaller users accelerates.
    By this reading the NEG is a deliberate time waster to put off making decisions as the low carbon renewables strengthen their position

    • RobertO 8 months ago

      Hi Chris Drongers, remember the NEG is a contract of supply between Wind/Solar and mainly coal. How much money is it going to cost the Wind/Solar suppliers to get the coal power agreement. Note that the retailer also need to make sure that they know how much polution they are purchasing because it the retailer responsibility when they sell their product. The NEG is going to put pressure on Wind/Solar suppliers (and if they are using Hydro as their support supplier how much money is Snowy going to make, never mind Snowy 2 making. The hole idea is back to front and works as a support mechanism for Coal. It will protect coal until it canned and even then 2 Toungs want it so that a change of Fed Gov can not change the NEG (Why do the COALition want to protect the NEG to such a degree). It will never deliver cheaper power to Australians.

      • Chris Drongers 8 months ago

        I understand coal to be poor at ramping up and down, wind and solar pose problems for the system because they ramp up and down daily and at times rapidly during the day. It is a poor match to use coal to balance rapid changes in output from wind and solar.
        Invest in fast peaking plant (will be gas, not coal) and coal loses. Invest in more batteries/pumped hydro to smooth out production by wind and solar to let coal run optimally and coal eventually loses (the price peaks that give coal their profit disappear, the cost of storage progressively declines and the amount of storage progressively increases).
        How long would the NEG support coal backup in the LNP scenario – five years until more pumped hydro on line? The NEG may extend the life of coal plants a little but the progressive attrition due to age, fuel cost and loss of pricing power will still kill off coal plants albeit a few years later.
        If the NEG puts pressure on utility solar and wind, it will have little effect on household and smaller commercial solar which stand to benefit most from moderate amounts of storage. Looks like there will be over 2GW of small solar installed in 2018.

        • RobertO 8 months ago

          Hi Cris Drongers, the problem with the NEG is that it’s a money contract that will have the effect of completely slowing new Wind/Solar in Grid scale size (and if the costs are too high it will stop Wind/Solar). If Wind/Solar are too expensive then adding the costs of PHES will also be stalled for a minimum time frame that it takes to do the PHES (and if you need PHES how much less Wind/Solar will you do?). Given that the AEMC is thinking of ways to slow Household and Business Solar (some type of Grid Fee) there may also be a slowdown in that area. I do not believe that household batteries for all houses / business that have solar is the best option for Australia but the NEG may push consumers it that direction. To me it’s the equal of Collateral Debt Obligation of the financial money markets in 2009, really good money makers for Coal and really useless contracts for the owners of Wind/Solar Farms. Without the NEG we may see under Labour at a 50% RE target after the next election which I believe will be an abject failure in that they will overshoot to 75% by 2022. Transport will then slow down the transition but will not save coal. Depending on how the COALition frame the Laws around the NEG (can Labour break those laws) we could see the NEG keeping coal until sometime in 2035 to 2040. a much slower change over (coal may be running as an overall loss making exercise but the NEG payments keep them profitable).

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