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United States : Make Neg Work to Reduce Power Costs and Improve System Reliability.

The National Energy Guarantee (NEG) must provide a technology-neutral approach which reduces energy costs for Australian families and businesses while ensuring system reliability and reducing emissions.

Australias mining industry which uses more than 11 per cent of Australias electricity wants the NEG to work so Australias international comparative advantage of reliable, low-cost energy can be restored, system reliability can be secured and Australia stays on its emissions reduction pathway.

Over the past decade, Australia has moved from having some of the lowest to some of the highest energy costs in the developed world.

Power price increases have undermined the resources sectors international competitiveness. Further increases would force mining companies to look elsewhere to invest and create jobs, and hurt families already struggling to pay their bills.

If the NEG is to deliver on its stated objectives of delivering affordable reliable energy with lower emissions and without subsidies or taxes, it must include the following features:

A technology neutral approach for all low emissions energy sources including renewables, gas, nuclear, advanced coal technologies (such as High Efficiency Low Emissions HELE) and carbon capture and storage

Clean Energy Finance Corporation funding to address financing gaps should be made available to all low emissions energy sources

Measures to address the policy risk stopping investment in new, least cost 24/7 dispatchable energy supplies to ensure Australia has the generation it needs under a coordinated climate and energy policy, specifically:

Providing access to international and domestic offsets

Ensuring the Australian Energy Market Operator's forecasts are accurate and reliable, including regular updates of how accurate its forecasts are against actual outcomes

Resolving how the Reliability and Emissions Guarantee contracts will work in practice including whether they will lead to a greater concentration of market power within the energy sector, putting at risk the expected outcomes of the Guarantee

The need for policy transparency in developing the proposed Complementary Measures including more detail on measures such as demand response, strategic reserve, and day-ahead markets which will affect reliability, price and possibly emissions requirements

A full public consultation process should be undertaken by the ESB prior to enacting any of these Complementary Measures, given the need

for open and transparent testing of proposals to change the way in which the NEM operates.

Replacing Australias ageing baseload fleet with sufficient levels of lowest cost dispatchable power generation available 24/7 will be critical in not just limiting wholesale price increases, but actually reducing prices.

Without policy certainty and consequent investment in power generation to deliver a system that is lowest cost, dispatchable and available 24/7, Australia will face a high-cost energy future which will reduce competitiveness and punish families with higher bills.

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Publication:Mena Report
Geographic Code:8AUST
Date:Mar 24, 2018
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