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National Energy Guarantee approved by Coalition party room

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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. 

 

 

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National Energy Guarantee Approval – Next Steps

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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.

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NEG – National Energy Guarantee and its Australian Future

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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! 

 

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Self-forecasting trial for solar/wind farms.

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A $10m trial funded by ARENA (the Australian Renewable Energy Agency) will allow operators of solar and wind farms to start self-forecasting in order to improve information for the Australian Energy Market Operator and potentially decrease prices.

Self-forecasting – How will it help?

Self-forecasting trial for wind and solar farms
Self-forecasting trial for wind and solar farms (source: aemo.com.au)

The AEMO currently predicts outputs in five minute intervals – but they’re sometimes not completely accurate and as such can require companies to spend extra money so the grid remains stable. These extra costs are then passed onto the consumers by the retailers (by raising power prices). If we were able to have more accurate forecasting of output by solar/wind farms this would decrease prices for everyone.

The new trial will be undertaken by ARENA and the AEMO, and, according to Federal Energy Minister Josh Frydenberg, local factors (i.e. weather, geography, operational conditions) will be factored in and result in a complete overhaul of the way renewable production prediction is made across Australia’s National Energy Market.

“If successful, this trial could see wind and solar farms providing their own ‘self-forecasts’ that take into account exactly what’s happened when and where they are located. For example, if a cloud passes over a solar farm or if the wind changes,” Mr Frydenberg said.

 “Self-forecasting at the source will allow wind and solar farms to not only maximise the amount of renewable energy dispatched into the grid but also avoid the need to pay for frequency controls services.”
 
Problems are currently arising when AEMO are over or under-forecasting the amount of energy a farm generates – as it can decrease the stability of the grid which then uses frequency control services to manage the supply and demand. The costs of these services, as always, end up being paid by the end-user. 
 
ARENA chief executive Ivor Frischknecht​ said the trial should help cut down on the costs of grid stabilisation which come from inaccurate forecasting:

“If the forecasts are too high, the wind or solar farm may be obliged to pay for the costs of stabilising, which increases the price of electricity and is ultimately passed on. We are hoping this initiative will change how forecasts for variable renewable energy are used in the electricity market.”

 

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sonnen in South Australia – HQ, manufacturing plant.

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sonnen in South Australia – the German battery manufacturing giant (which is also the world’s largest home storage energy company) have announced that they’re going to move their Australian headquarters from Sydney to Adelaide. The announcement was made last week during a huge week for renewables in SA – with the upcoming election both major parties have promised $100m in solar loans for South Australian residents.  

sonnen in South Australia

Along with the administrative tasks (i.e. the ‘headquarters’) of sonnen’s Australian operations, they’ll also be setting up a full energy storage manufacturing facility in the state.

Chris Parratt, the Australian boss of sonnen’s Australasian business, said the company will have a solar battery manufacturing facility ‘up and running’ in Adelaide within six to nine months.  According to the Australian Financial Review, Parratt says the facility will be able to produce 10,000 systems a year, including sonnen’s flagship sonnenBatterie line. He noted that they are looking at four separate locations in Adelaide, including the former Holden car manufacturing site and the former Mitsubishi car-making factory in Tonsley Park precinct. 

sonnen in South Australia
sonnen in South Australia – sonnenBatterie eco 8.2 (source: sonnen.com.au)

Parratt noted that sonnen have set up a similar facility in Atlanta in the United States of America in a fast timeline last year telling a press conference (along with South Australian Premier Jay Weatherill) that they’re confident in scope management:

“We believe in about six to nine months we’ll be producing our first energy storage system,” he said. 

sonnen already have 30,000 household batteries installed in Germany, making them the world’s largest home storage energy company. 

It looks like this will go ahead regardless of whether Weatherill’s incumbent party or the South Australian Liberal leader Steven Marshall wrests control of the state – the latter is against renewable energy targets but has also committed to a $100m means-tested subsidy for up to 40,000 households to get interest free solar loans. 

Weatherill was quick to extol the employment ramifications of the move, having been told he was “doubling down to chase his losses” by federal energy minister Josh Frydenberg last week with regards to raising the RET from 50% to 75%:

“We saw yesterday I was accused of being a problem gambler. Well today, South Australia has hit the jobs jackpot,” Mr Weatherill said, referring to Sonnen’s plans, which will create 130 new immediate jobs, rising to 190 by the end of the year, and then another 300 jobs for trades people to install the batteries.

It’s shaping up to be a very interesting election in South Australia. Who are you voting for, and why? Let us know in the comments. 

 
 

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