A new Energy Security Board paper suggests households will get $150 more per year in NEG savings on their energy costs under the National Energy Guarantee (NEG) than previously thought.
The ‘National Energy Guarantee, COAG Energy Council Decision Paper’ was released yesterday, to a handful of stakeholders.
In it, the ESB claims households will save on average $550 per year over the 2020s, rather than $400. The extra savings will come from more renewable energy projects being added to the energy market.
The ESB delivered the 39-page paper to state and territory governments ahead of the COAG meeting in August. According to Renew Economy, the ESB is reluctant to admit the paper even exists.
NEG savings with support for competition, coal and gas
The paper reiterates that the NEG will boost competition. It also continues to promote coal and gas by ensuring plant owners have incentives to keep operating.
Other points covered include:
- An increased flexibility for ‘over-achievement’ on emissions reductions. This includes allowing market customers to carry forward a limited amount to the following year.
- Large retailers will be obligated to take on additional contracts when a ‘reliability obligation’ is triggered.
- The option for some large customers to manage their own obligations regarding energy reliability.
In addition, the document mentions the possibility of an increase in the emissions reduction target down the track. It states that “the Guarantee framework will automatically accommodate the new target”.
There is no indication of how this would be done however, especially considering the Coalition hopes to lock in the 26 per cent target to 2030.
A higher emissions reduction target is needed: CEC, Reputex
Meanwhile, the Clean Energy Council continues to argue that the emissions reduction target is too low to encourage investment.
This lines up with modelling by Reputex, which finds a higher target is needed to reduce prices and drive large-scale renewable energy investment such as in wind and solar power. A 45 per cent target would lead to a 25 per cent reduction in wholesale energy prices according to Reputex.
The ESB paper also does not appear to have made allowances for the increasingly high uptake of rooftop solar installations across Australia.
While the Coalition says doing nothing on energy policy is not an option, many industry analysts seem to consider the NEG a ‘do nothing’ policy.
The ESB’s final changes do little more than tinker at the edges of the NEG policy as it stands.
