Guest essay by Eric Worrall
Subsidies for everyone – the Aussie Federal Government is pushing to make electricity retailers responsible for continuity of supply, which will likely force them to pay for fossil fuel generators to maintain reserve capacity to cover gaps in the renewable energy supply.
States push back against subsidies for coal and gas-fired power plants
By political reporter Melissa Clarke
Posted Thu 26 Aug 2021 at 6:27pm
- The government wants to introduce a scheme that would require energy retailers to pay for spare energy capacity in case it is needed
- Energy Minister Angus Taylor wants it to include coal and gas generators
- Renewables companies are lobbying against the plan
The Federal Minister for Energy and Emissions Reduction, Angus Taylor, is battling to get support from the states and territories for his plan to get electricity retailers to pay coal and gas-fired power generators to keep operating.
The federal government wants to introduce a Physical Retailer Reliability Obligation (PRRO) to ensure there is enough energy available in the National Electricity Market (NEM) at all times to fill gaps when wind and solar power cannot meet demand.
The PRRO would require energy retailers to pay for spare energy capacity in case it is needed.
That spare capacity could come from renewable resources like batteries, pumped hydro, and demand management, but the federal government wants it to also include unused capacity in coal and gas-fired power plants.
That could see energy retailers giving money to coal-fired plants and prolonging their use through the system, if their existing spare capacity is cheaper than developing new storage options.
While the Commonwealth is aggressively promoting it, the states and territories are yet to be convinced, given the scheme could undermine investment in the renewable alternatives.
What can I say – as an Aussie, there is a reason I have a big generator downstairs.
Aussie electricity providers in my opinion long since gave up on the idea that it is their job to maintain grid stability, so there has been a rush to the exit door, with operators of unfashionable coal and gas generators embracing the new renewable energy age.
The Federal government has belatedly realised that, unless they do something, the only people who will be held responsible for the inevitable blackouts and grid instability are the politicians who created this mess.
I doubt this last minute outbreak of almost sanity will save the situation. Coal and gas plant operators still have no motivation to invest in proper maintenance, or build new plants, so Australia’s end of life fossil fuel generators are likely rapidly becoming almost as decrepit and unreliable as the renewable energy systems which are supposed to replace them.
And somewhere squeezed in the middle of this circus will be the energy retailers, who will now be forced to buy expensive unreliable electricity from renewable plant operators when it is available, yet at the same time they will be forced to pay the owners of decrepit coal and gas plants to stand by, allegedly ready to jump in when the renewables fail. Under the new reliability obligation, energy retailers will also likely be expected to pay large fines to the Australian Federal Government, when everything inevitably falls in a heap.
No doubt energy retailers will soon start demanding subsidies of their own, to continue operating in such a hostile regulatory environment.