National Energy Guarantee will ensure affordable and reliable power: Malcolm Turnbull

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Canberra: Prime Minister of Australia Malcolm Turnbull has said that National Energy Guarantee will ensure people have affordable power that is reliable.

We keep the lights on and we can afford to keep them on – and that we meet our international commitments under the Paris Agreement to cut our emissions. In other words, it (National Energy Guarantee) delivers affordability, reliability and responsibility. – Malcolm Turnbull, Prime Minister of Australia

Turnbull was addressing earlier this week (17 October 2017). a press conference, along with the Minster for Environment and Energy and Members of the Energy Security Board here. The occasion was unvailing of the National Energy Guarantee.

Besides the Prime Minister, those present at the press conference included the Energy Minister Josh Frydenberg, members of the Energy Security Board – the Chair, Kerry Schott, the Chief Executive of the Australian Energy Market Operator, Audrey Zibelman, the Chair of the Australian Energy Market Commission, John Pierce, and the Chair of the Australian Energy Regulator, Paula Conboy.

Turnbull said National Energy Guarantee will ensure that we have affordable power. That it is reliable – we keep the lights on and we can afford to keep them on – and that we meet our international commitments under the Paris Agreement to cut our emissions. In other words, it delivers affordability, reliability and responsibility.

The Prime Minister went on observe there would be no more industry policy, no more picking winners, no more favouring one technology after another, but simply ensuring that there is a reliable energy system, so that people can keep the lights on, that they do so in a way that is affordable and, of course, by meeting international commitments.

Explaining Why energy would so much more affordable than other models, the PM pointed to National Energy Guarantee adding:

  • It provides investor certainty, which the market has been crying out for, for a long time.
  • It reduces volatility, which, of course, has been driving up prices.
  • It builds on so many other measures we have undertaken – making sure there is sufficient gas on the east coast market. We’ve already seen the wholesale price of gas coming down. Very significant move.
  • It is also part of our commitment to ensure that retailers do the right thing by their consumers, and thus benefiting from that.


So this is part of a comprehensive plan to ensure that energy is affordable, reliable and responsible.

Minister for Environment and Energy Josh Frydenberg said:

“This is a credible, workable, pro-market policy that delivers lower electricity prices.

It means no subsidies, no taxes, no trading systems. And what it does do is it creates a more reliable, affordable energy system which helps us meet our international commitments.

It builds on the work, the excellent work of the Chief Scientist Alan Finkel.

We accepted 49 out of the 50 recommendations, and obviously, this is a response to his 50th, which was the Clean Energy Target. And it provides us with a mechanism to deal with our Paris commitments and commitments into the future.”

Kerry Schott, Chair, Energy Security Board briefly outlined where it started and said that the Australian Government had asked the Energy Security Board for its advice on how to have an electricity system that was both reliable, would meet the agreements under the Paris Agreements, and also, be affordable and do what is possible to get prices moving in the right direction.

The government was recently, last week, given the advice, he said and went on to underscore the main elements that were in that advice.

Most importantly, Schott said, the obligation to have a reliable power system is now intimately linked with an emissions reduction target. And if you don’t have those two things linked together, you have a danger of an increase in intermittent renewables without having a reliable and dispatchable power to go with it, and it’s very important that you always have dispatchable power where you have intermittent resources.

And this is an issue that it is not Australia who is just facing this issue, it’s an issue that all countries are facing as the penetration of renewables that is are intermittent is going up.

Schott further said:

The other thing that we have recommended is that the standard for reliability, which is basically set by the reliability panel at the AEMC, and then put into practice by the Market Operator, it’s basically dictated by physics.

It is what you need for dispatch to keep your system stable.

And in each region, that standard varies because the power mix in each region varies. So if you have a lot of intermittent power, then your need for dispatchable resources is going to be a little bit higher. If you’ve got a lot of dispatchable resources, you don’t need much more.

So we set a reliability standard across the nation, across the market, and then that gets translated into a regional standard which is effectively state by state.

The other thing that we’ve recommended is an emissions target which is based on the Paris commitment, and the electricity industry will, makes up about a third of the tonnages related to the Paris commitment. You can derive an energy intensity requirement from that. Each of the generators know what the energy intensity is there. So you can tell where we are now, you know where we need to be no 2030 and you can set a course to get from here to there with as least cost and as efficient as possible.

And by placing the obligation on the retailers, they currently go into the market and contract for their load and you are just simply placing two more requirements on them which they can easily manage as part of the way they manage their contracting now.

So it will all be managed in the market.

Whether or not they’re complying with what is set will be regulated by the Australian Energy Regulator, and that’s basically the crux of the main thing that’s in our advice.

Importantly, what it does is it brings certainty to this industry which has not been here for a long time, and investment has pretty much stalled, excepting for that under the Renewable Energy Target scheme. This will bring more certainty back to the industry, and as soon as we’ve got more certainty, you can expect that there will be a price response in the right direction.

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