The chairman of federal parliament’s environment and energy committee says a fresh approach is needed on energy policy, including a new federal loan mechanism to upgrade the coal fleet and a “lock in” mechanism for the clean energy target.
Ahead of a much telegraphed meeting in Canberra on Monday between the Turnbull government and the head of AGL, Andy Vesey, about extending the operating life of the Liddell power station, the Nationals MP Andrew Broad told Guardian Australia he believed the ageing New South Wales plant was “about stuffed”.
Broad is the chairman of parliament’s multi-partisan standing committee on environment and energy, and that committee has been pursuing an extensive inquiry into modernising Australia’s electricity grid, which will report soon.
Broad said rather than pursuing a piecemeal approach, the key development required to lower power prices for consumers was certainty and that could be achieved by implementing a consistent energy policy that could survive multiple parliaments.
“If you are going to attract investment, then you have to create certainty,” he said.
Broad said the government would be wise to consider a policy which included:
Restricting gas exports for two to three years to bring prices down;
A “lock in mechanism” for the clean energy target recommended by the chief scientist, Alan Finkel, where power provision arrangements would be contracted out for eight years at a time, effectively preventing governments from changing the parameters of the scheme;
A new federal loan mechanism that power generators could access to reconfigure the coal fleet in order to increase efficiency and lower greenhouse emissions;
And active federal investments in new transmission infrastructure to bolt renewables more effectively into the grid.
AGL wants to shut down the Liddell plant in 2022 but has its own plans for the site, which include investigating a switch to gas peaking capacity in New South Wales, supplemented with renewables.
The Turnbull government wants to extend the life of the coal plant for an additional five years. The government says Vesey has signalled privately he is prepared to sell Liddell to a “responsible” owner.
The Labor leader, Bill Shorten, said “the solution to the energy crisis we’re facing right now isn’t talking about extending a coal-fired power plant in five years’ time.
“We need more generation in the system now. That means more gas, more renewables and more storage.”
Labor is yet to say whether it would support an extension of AGL’s operating life in the event the company sold the plant to another operator, or agreed to the government’s demands.
Monday’s talks come as the thinktank the Grattan Institute has called for preparatory work on what it calls a “capacity mechanism” to encourage new investment in generation.
The energy program director at the Grattan Institute, Tony Wood, says that option should only be adopted “if all other market reforms have been exhausted and supply is still under threat”.
Under a capacity mechanism, generators would be paid not only for the electricity they produce to meet current demand but for committing to provide power for years into the future.
The energy market operator or retailers could contract for sufficient electricity to meet future demand, to ensure new generation and storage is built in time.
“Australians have endured a decade of toxic political debates about climate change policy, South Australians suffered a state-wide blackout last year, consumers across the country are screaming about skyrocketing electricity bills and energy companies are shutting down big coal-fired power stations,” Wood said.
“It is understandable that governments feel the need to do something. But the danger is they will rush in and make things worse. What Australia needs now is perspective, not panic.”
Ahead of a much telegraphed meeting in Canberra on Monday between the Turnbull government and the head of AGL, Andy Vesey, about extending the operating life of the Liddell power station, the Nationals MP Andrew Broad told Guardian Australia he believed the ageing New South Wales plant was “about stuffed”.
Broad is the chairman of parliament’s multi-partisan standing committee on environment and energy, and that committee has been pursuing an extensive inquiry into modernising Australia’s electricity grid, which will report soon.
Broad said rather than pursuing a piecemeal approach, the key development required to lower power prices for consumers was certainty and that could be achieved by implementing a consistent energy policy that could survive multiple parliaments.
“If you are going to attract investment, then you have to create certainty,” he said.
Broad said the government would be wise to consider a policy which included:
Restricting gas exports for two to three years to bring prices down;
A “lock in mechanism” for the clean energy target recommended by the chief scientist, Alan Finkel, where power provision arrangements would be contracted out for eight years at a time, effectively preventing governments from changing the parameters of the scheme;
A new federal loan mechanism that power generators could access to reconfigure the coal fleet in order to increase efficiency and lower greenhouse emissions;
And active federal investments in new transmission infrastructure to bolt renewables more effectively into the grid.
AGL wants to shut down the Liddell plant in 2022 but has its own plans for the site, which include investigating a switch to gas peaking capacity in New South Wales, supplemented with renewables.
The Turnbull government wants to extend the life of the coal plant for an additional five years. The government says Vesey has signalled privately he is prepared to sell Liddell to a “responsible” owner.
The Labor leader, Bill Shorten, said “the solution to the energy crisis we’re facing right now isn’t talking about extending a coal-fired power plant in five years’ time.
“We need more generation in the system now. That means more gas, more renewables and more storage.”
Labor is yet to say whether it would support an extension of AGL’s operating life in the event the company sold the plant to another operator, or agreed to the government’s demands.
Monday’s talks come as the thinktank the Grattan Institute has called for preparatory work on what it calls a “capacity mechanism” to encourage new investment in generation.
The energy program director at the Grattan Institute, Tony Wood, says that option should only be adopted “if all other market reforms have been exhausted and supply is still under threat”.
Under a capacity mechanism, generators would be paid not only for the electricity they produce to meet current demand but for committing to provide power for years into the future.
The energy market operator or retailers could contract for sufficient electricity to meet future demand, to ensure new generation and storage is built in time.
“Australians have endured a decade of toxic political debates about climate change policy, South Australians suffered a state-wide blackout last year, consumers across the country are screaming about skyrocketing electricity bills and energy companies are shutting down big coal-fired power stations,” Wood said.
“It is understandable that governments feel the need to do something. But the danger is they will rush in and make things worse. What Australia needs now is perspective, not panic.”
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