Australian Government adopts NEG: steers away from’Green Energy’ black hole

turbine-backup Signs of a return to sanity down under. The Australian government has opted for reliability over renewables in the power sector.

In the wake of the “System Black” power failure that knocked out South Australia for up to two days in late 2016, the country’s government has dumped the existing clean energy-based policy in favour of a radically different one.

In October 2017 the Energy Security Board (ESB) provided the COAG Energy Council with advice on changes to the National Electricity Market (NEM) and legislative framework. The proposed national energy guarantee (NEG) aims to support the provision of reliable, secure and affordable electricity with a focus on ensuring:

the reliability of the system is maintained
electricity sector emissions reductions needed to meet Australia’s international commitments are achieved
the above objectives are met at the lowest overall costs.

The NEG is a way to encourage new investment in clean and low emissions technologies while allowing the electricity system to continue to operate reliably.

To deliver this transition, the NEG requires retailers to contract with or invest in generators or demand response to meet a Retailers must also keep their emissions below an agreed level.

The guarantee is designed to integrate energy and emissions policy – both energy and emissions targets are reflected in a single energy price. That energy price will signal how much electricity the market needs and when it is needed, while also reflecting the cost of meeting Australia’s emissions targets.

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