National Energy Guarantee approved by Coalition party room

The NEG (National Energy Guarantee) has been passed by the Coalition party room after a strenuous morning of debate – let’s take a look at what happens next. 

Next Steps For National Energy Guarantee

NEG - National Energy Guarantee
NEG – National Energy Guarantee (source: ABC News: Matt Roberts)

We wrote earlier this week about the NEG approval and how Prime Minister Malcolm Turnbull has a very hard road ahead if he’s to push this policy through parliament:

“The Labor Party has to decide whether they want to support cheaper and more reliability electricity,” Mr Turnbull said.

“We have got to bring an end to the years of ideology and idiocy which have been a curse on energy policy for too long and that is why industry – whether you’re talking about big industrial consumers or small business, consumer groups  – are calling on government, governments, and oppositions to get behind this policy.”

The four issues which we discussed earlier this week are still in a state of flux:

  1. The emission reduction targets can only ever increase and must not decrease.
  2. Targets need to be set in regulation (Energy Minister Josh Frydenberg has already rejected it).
  3. Emission reduction targets must be set every three years, three years in advance.
  4. Creation of a registry which is transparent and accessible by regulators and governments.

The opposition (federal Labor) are also in favour of the NEG but they want the 2030 emissions reduction target increased from 26% to 45%:

“We are still very keen on trying to find a bipartisan way through the deep energy crisis that has emerged under this Prime Minister,” shadow energy and climate change minister Mark Butler said.

“We will continue to fight for a much more ambitious investment setting for this sector so you do see new renewable energy jobs and investment and you do see downward pressure on power prices.”

According to former PM Tony Abbot, the NEG still needs a lot of work as most of its support is currently ‘conditional’ and at least a dozen members of the Coalition had expressed concern about the NEG. Abbot said that the provided explanations of how the NEG “might theoretically get prices down” sounded “like merchant bankers’ gobbledegook”:

‘We’ve got to be loyal to our electorates and to party members too and not show the unity of lemmings.’,” Mr Abbott continued.

The Australian Financial Review has the numbers at 26 MPs supporting the policy and around 10 yet to be convinced. 

For the next steps, the state ministers will be asked to support a month long public consultation on laws which will affect their constituents. The state legislation should then be finalised by the end of October and we’ll see what sort of shape (if any) the NEG is at that point. Federal legislation tied to the NEG will be introduced within the next 10 days. 

 

 

Read More Solar News:

National Energy Guarantee Approval – Next Steps

National Energy Guarantee Approval – the NEG has been approved by the states and territories of Australia ‘in principle’ – allowing it to move to the next step. There’s still plenty of discussion to go before we see anything signed off, but it’s a step in the right direction for those who believe in the NEG and its ostensible goal of cheaper, more reliable power with less carbon emissions.

National Energy Guarantee Approval

National Energy Guarantee Approval - Malcolm Turnbull
National Energy Guarantee Approval – Malcolm Turnbull (source: yourlifechoices.com.au)

As with most political decisions in this country, there is a lot of posturing and point scoring going on – depending on who you ask, it’s either a ‘great step forward’ or the governments ‘withholding support’. Regardless of the case, the Federal Government has now released a draft of the energy bill which will be taken to next week’s party room meeting for approval. If you want to learn more about what happened with the NEG during the week, please click here

The states want to see detailed legislation and some of them have ‘red line’ conditions which must be met before they fit in to the National Energy Guarantee – there’s still a long way before any of this becomes law in Australia.

Victoria were especially strident in their remarks about the NEG. Victoria’s Energy Minister, Labor’s Lily D’Ambrosio, said agreeing to the plan today would be like signing “with a blindfold on”. advising that they won’t support it unless the following four demands are met:

  1. The emission reduction targets can only ever increase and must not decrease.
  2. Targets need to be set in regulation (this one’s going to be a bit of a problem as Energy Minister Josh Frydenberg has already rejected it).
  3. Emission reduction targets must be set every three years, three years in advance.
  4. Creation of a registry which is transparent and accessible by regulators and governments.

The emissions reduction target in the NEG is to bring down emissions in the electricity sector by 26 per cent by 2030.

COAG Energy Ministers will have another discussion after the Coalition Party Room meeting on Tuesday. Watch this space! We’ll keep you posted.

Read More Solar News:

NEG – National Energy Guarantee and its Australian Future

NEG – The future of Australia’s National Energy Guarantee hangs in the making this week as state government cabinets meet to discuss their positions on it, ahead of Friday’s Council of Australian Governments meeting.

NEG – National Energy Guarantee

The Australian is reporting that Energy Minister Josh Frydenberg has accused Labor states of “politicking and posturing” ahead of the meeting.

NEG - National Energy Guarantee - Energy Minister Josh Frydenberg
NEG – National Energy Guarantee – Energy Minister Josh Frydenberg (source: JoshFrydenberg.com.au)

“This is politicking and posturing ahead of Friday’s meeting, because the states know all well and good that what will hopefully occur on Friday is that we agree to the design of the national energy guarantee subject to a phone hook-up after the policy has been through the federal Coalition party room,” Mr Frydenberg said on ABC radio.

Mr Frydenberg continued talking about what Australia can expect from the NEG: 

“It’s a 38 million tonne reduction, but importantly it’s a $550 annual saving to Australian households and a 20 per cent reduction in wholesale prices,” he said.

He noted that there’s no reason for the state governments to cause any issues for the NEG as they will still retain the right to have their own RETs:

“Nothing in this policy prevents the states from having their own renewable energy targets. “They complement what is being done at the federal level, but we do need the federal government to maintain whole responsibility for this, because it’s a national problem and it requires a national solution, and it’s the federal government that is the signatory to Paris, not the states.”

Ed McManus, chief executive of Meridian Energy Australia and retailer Powershop, said states should back the NEG despite the emissions target being less than many of us had hoped. Mr McManus said he thinks some of the potential benefits of the NEG are already taking root in the futures market:

“I do believe some of the benefits of the NEG are already built into the forward prices. You only need look at the impact of the recent coal outages on calendar 2019 wholesale [futures market] prices, where prices have rallied $7-8 per megawatt hour,” Mr McManus said.

Labor frontbencher Michelle Rowland discussed what she sees as NEG flaws:

“We have a situation where we have very low emissions targets under this government’s policy, but in particular, this would absolutely stifle investment in renewable energy, and if you want to talk about jobs, you need those large scale renewable energy investment decisions to be made in order to drive those jobs into the future in this sector,” Mr Rowland told Sky News.

“This government wants to say it’s focused on innovation and science and all the rest of it. “Again, this shows that there is absolutely nothing joined up when it comes to their policies in this area.”

As usual it’s impossible to expect the politicians to stand up and try and make decisions to benefit the nation, so who knows what to expect ahead of Friday’s meeting. Renew Economy have a great hit piece on how the coalition have come up with the $550 / year figure. We weren’t exactly overly charitable about it when Malcolm Turnbull announced the National Energy Guarantee last year, so it’ll be interesting to see what happens over the coming weeks. Watch this space! 

 

Read More Solar News:

‘National Energy Guarantee’ a national disgrace.

Malcolm Turnbull’s leadership has been fraught with spineless (or a complete lack of) policy and the Government’s announcement of a National Energy Guarantee yesterday was congruent with what we’ve come to expect. In short, their national energy policy removes the Clean Energy Target, has 0 renewable energy policy after 2020, and defers critical decisions to state Government, the Australian Energy Regulator, and the Australian Energy Market Operator. The ‘National Energy Guarantee’ policy is based on a unanimous recommendation by the independent Energy Security Board, chaired by Dr Kerry Schott.

National Energy Guarantee

As per the official document, the National Energy Guarantee will actually comprise of two separate guarantees, determined and enforced by different bodies: 

The reliability guarantee will be set to deliver the right level of dispatchable energy—from ready-to-use sources such as coal, gas, pumped hydro and batteries—needed in each state. It will be set by the AEMC and AEMO. The goal of this is to help stop blackouts like those seen in South Australia last year and reduce prices by using long-term contracts rather than short-term spot prices. 

The emissions guarantee will be set to contribute to Australia’s international commitments. The level of the guarantee will be determined by the Commonwealth and enforced by the AER. This means that renewable subsidies and incentives have been scrapped completely – retailers will be responsible for ensuring their power is efficient enough to help Australia meet its international obligations (our Renewable Energy Targets signed up during the Paris climate change conference). No word yet on what the penalty would be for those not reaching this target but presumably they’d be able to make up for it the next year or face a light slap on the wrist. 

This is a ‘technology- neutral’ position which does not ‘pick winners’ – so it’ll be interesting to see how this pans out. What impact will it have on the myriad Australian solar farms currently in various stages of development? What about future plans? 

Residential Energy Prices

The Government estimates this Guarantee ‘could’ lead to a reduction in residential bills – around $100-115 per year over 2020-2030. They’re hoping to reduce spot price volatility without using subsidies or taxes – which theoretically could help the ballooning cost of electricity in Australia. See the graph below which is labeled ‘% increase’ on the Y axis – which may make it a little more difficult to see that the price has more than doubled every year since 2012. With Australian wages stagnating and underemployment at an all-time high, something needs to be done about these gigantic increases. But is this really the way to go about it? 

National Energy Guarantee - Average Retail Electricity Price Increases 2004-2017
National Energy Guarantee – Average Retail Electricity Price Increases (source:energy.gov.au)

We understand it’s difficult to balance this rapidly increasing price with the subsidisation of new technology which can take time to show results, but this 50c/day saving is hardly the ‘game-changer’ it’s hailed to be – so the myopic choice of ignoring Chief Scientist Alan Finkel’s recommended Clean Energy Target in favour of a 50c / day saving Turnbull can’t even guarantee is a perfect metaphor for the endemic, anaemic, short-sighted policy we’ve come to expect from Australian politicians over the past decade or so. How far can we kick the can down the road? I guess we’ll find out. 

It’s becoming increasingly clear that coal-fired generators have no future in Australia. Have renewables reached the point where they don’t need any help from the Government with regards to subsidies or tax breaks? Prima facie this looks like an atrocious plan for renewable energy and Australia’s energy future as a whole.

Read More Solar News: