The mainstream media may have embraced Malcolm Turnbull’s National Energy Guarantee, but analysts see red flags all over the place. Here are some reasons why people should be concerned.
It looks a lot like a de-facto carbon price: Energy analysts say it is a little early to tell, because there are no actual details, but it looks variously like a emissions intensity scheme, or a mix of a baseline and credit scheme and a capacity market.
Market analysts Reputex describe it as a de-facto carbon price. “The attributes of the NEG will, in effect, establish a de-facto price on greenhouse gas emissions from the power sector, and provide a robust source of demand for Australian Carbon Credit Units (ACCU),” it says.
But this carbon price will be invisible: That’s because the “market” will be hidden by the complexity of energy price caps and hedges. That is a major concern. There is absolutely no transparency in this market, which is why the big gen-tailers are in favour of it, because it hands them absolute control and discretion over the market and investments. It’s hardly reassuring for the consumer. The power of the energy oligopoly is simply reinforced.
The emissions target are manifestly inadequate: The target that the ESB was asked to work with – a 26 per cent cut in electricity emissions from 2005 levels by 2030 – is manifestly inadequate, for even Australia’s current climate commitment (it loads a lot of effort on to other sectors), but also to the ultimate goal of capping global warming well below 2°C. Even Origin Energy recognises this, noting the cavernous gap between the Paris target and the current emissions trajectory, a trajectory made worse by the government’s hint that any emissions targets will be “back-ended” to 2030.
And those emissions targets may have been largely met, already: The big question is how much new investment the scheme will pull in. Not a lot. That’s because, as David Leitch tells us, the current build-out of renewables under the renewable energy target, and the closure of the Hazelwood power station has already got the country much of the way there.
Worse, he notes of Snowy 2.0: “(The government) is funding a very expensive project designed to supply a reliability rule that they have expressly forced onto retailers. In essence it is making a rule that requires retailers to buy the output from its own project. The mafia would approve.”
It could mean zero additions to large-scale renewables: The advice from the ESB suggests a range of 28-36 per cent renewables by 2030, and 18-24 per cent wind and solar share. This estimate includes rooftop solar, according to ESB chair Kerry Schott. Given the anticipated, and one would suspect, unstoppable uptake of rooftop solar by households and businesses in response to high power prices that are not coming down, it means that at the bottom end of their range, the ESB is predicting virtually no new wind and solar projects in the country between 2020 and 2030.
The price cuts are trivial, so consumers will find own way with solar and storage: The promised price reductions of around $100 a year have not been modelled, may be as low as 50c a week, and may just be a figment of Pierce’s imagination. It just hasn’t been modelled. Given the absurdly high price of electricity in Australia and the competing forces of rooftop solar and storage, that offers nothing to consumers.