Since the report was released, the Council of Australian Governments (COAG) Energy Council has committed to 49 of the 50 recommendations handed down by Dr Finkel. The only recommendation that has not been actioned by the Government, and that has been causing quite a debate in the sector, is the clean energy target (CET). It has now been replaced by the National Energy Guarantee (NEG).
It is an important discussion to have because it will provide clarity on the expectation we have for the emissions profile of the energy sector, and that gives investors clarity. Greater clarity will ultimately result in lower costs for making investments in the sector.
In the end, it is not going to be as big an issue as some might expect because we have already made a lot of progress, thanks to the Review.
Aurecon has been delivering specialist and technical engineering advice for some of the country’s biggest and most exciting storage projects including the South Australian Government’s 100MW lithium-ion battery, and Territory Generation’s 5MW Battery Energy Storage System (BESS) in Alice Springs. These game-changing technologies are an important step in ensuring network reliability as Australia transitions to a renewable future.
Improve Government policy and regulation
“We need bipartisan support for a clear path forward that addresses the energy trilemma.”
The energy sector has been crippled by a political tug-of-war for at least a decade. We’re now paying the price for the lack of certainty and direction as the mix of policy interventions and market system clearly does not deliver the outcomes the majority of Australians desire. To finally resolve this long overdue problem, we need to do three things:
Firstly, we need a national dialogue to reach a societal consensus for how to trade-off between cost, affordability and emissions reduction of the energy sector for Australia. We will achieve a consensus if we have a fact-based dialogue that is grounded in engineering and economic reality, not political pre-conceptions and party lines.
Secondly, based on a broad based and thus hopefully bipartisan consensus, we must now refine and adjust the policy and market settings for our energy system to achieve the desired outcome. This will be a task for State and Federal Governments who define the framework for our energy system. This framework then provides the foundation for market institutions such as the Australian Energy Market Commission (AEMC), the Australian Energy Market Operator (AEMO) and the Australian Energy Regulator (AER) to oversee and operate our energy system. The Finkel review has already provided one blueprint of how a future system could operate.
Finally, once the direction is set and implemented, we must stop meddling. A sector that requires multi-decadal investment decision does not cope with frequent major changes in direction.
If we don’t follow this simple but no doubt difficult to implement plan, our nation will be far worse off. We will pay more, experience more interruptions and achieve less emissions reductions. Furthermore, the cost, reliability and emissions compromise is unlikely to be the compromise that the majority would like to see. There is no alternative to fixing the system now!
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