The National Energy Guarantee has been touted as the “game-changer” that will keep the lights on, reduce emissions and reduce power bills. But will it address the technical issues of transitioning to a low-carbon market?
According to Energy Security Board (ESB) Chair Dr Kerry Schott, the NEG will integrate energy and climate change policy for the first time, giving investors the certainty they have been lacking over the past decade.
In late November, the fledgling policy cleared its first hurdle, with the Council of Australian Governments (COAG) Energy Council giving the go-ahead for further development. Industry, major retailers, the Clean Energy Council and the International Energy Agency (IEA) have all expressed guarded support, while calling for further details of how theNational Energy Guarantee (NEG) will be implemented.
Some of that detail has been provided in a recent consultation paper. But according to a submission lodged by Engineers Australia, one major omission is the need for power engineering expertise during implementation.
“Engineers Australia believes that to successfully implement many of the new policy strategies and mechanisms outlined in the paper, engineering expertise and experience will be vital,” the submission stated.
Engineers crucial to ongoing stability
One critical technical challenge is avoiding future National Electricity Market (NEM) failures, such as the 2016 South Australian blackout which has made energy security a major election issue in the state.
The NEG includes a reliability guarantee which is intended to ensure that there is enough power to meet peak demand at any time, and a strategic reserve as a backup, but does not address engineering considerations in detail.
One change affecting the NEM is the rapid transition to a greater proportion of inverter connected generation such as rooftop solar.
The Engineers Australia submission stresses that the NEG must address the technical issues of how to achieve a smooth transition from coal-fired stations reaching the end of their lives to new generation technologies. This will require detailed engineering input into the policy’s design and operation.
Mark Lendich, Chair of Engineers Australia’s Electrical College, has previously told create that power engineering expertise on NEM bodies is crucial to the ongoing stability of the electricity grid.
And the Finkel Report agrees. It highlighted the need for engineering expertise to be represented on the NEM governing bodies to allow the smooth implementation of technical solutions into the system.
Consolidated reporting and action
Another point made in the Engineers Australia submission was that the NEG and other current reviews of the NEM should be brought together under an overarching framework.
One recent report was the ESB’s inaugural annual Health of the National Electricity Market Report (HOTN), released in late December, which stated that the NEM was “not in the best of health”.
The HOTN report refers to other reviews and consultations, including: integrated system planning, frequency control frameworks, and demand side response (where users voluntarily limit their power usage at times of peak demand).
Engineers Australia states that it may be difficult for stakeholders to see how these reviews line up with the NEG, and work together to improve the health of the national grid.
Engineers Australia also raised the concern that the complexity of the NEG – which combines emissions and reliability obligations – may drive up costs for retailers which could be passed on to consumers; and pointed out that a shorter forecasting period for reliability gaps might favour some generation technologies over others.
Not over yet
While the NEG consultation paper and public forum in February provided an important opportunity for the public to comment, there is still a long way to go before the policy is finalised.
A draft policy design is due to be presented to COAG in April. If all goes well the final design should be approved at the end of the year – which will allow the enabling legislation and rules to be drafted and presented to parliament.
Lendich emphasised that the consultation paper was just one step in the ESB’s policy development process.
“It’s not over yet,” he said.