Energy Security Board’s Kerry Schott, AEMO’s Alex Wonhas and Energy Australia’s Catherine Tanna yesterday. PHOTO: AAPThe influx of solar and wind power into the energy grid could trigger federal rules forcing retailers to guarantee supply, driving a wave of new gas power plants to reduce the chance of blackouts.The country’s top energy policy adviser, Kerry Schott, said the rise of green power without matching new firm generation could trigger the Retailer Reliability Obligation, which came into effect on July 1, in the next few months.The Energy Security Board chairman said a report from the energy market operator due in August would determine whether Victoria, NSW and South Australia have an emerging gap in their generation capacity in the next three years. If so, that could trigger the Morrison government’s reliability rule – which was part of the now-ditched National Energy Guarantee – and puts the responsibility on electricity retailers to guarantee firm supply for customers.‘‘While supply is tight it is not necessarily at a point where it is a lay-down misere that it would get triggered; it will be very interesting to see that ... report,’’ Dr Schott told the Clean Energy Summit in Sydney.Triggering the reliability obligation would require retailers and big customers to ensure they can cover their share of a one-in-two-year peak demand with guaranteed supply.‘‘It can’t just be solar and wind – you’ve got to have it,’’ Dr Schott said later in an interview. ‘‘That will lead to more contracting and therefore more investment, because the thing that drives investment is contracts, not spot prices.’’Energy buyers’ reluctance to sign up for long-term contracts has delayed some proposed new plants, including a gas power station in NSW by AGL Energy, and Alinta Energy’s Reeves Plains gas generator in South Australia.Dr Schott saw no risk of a capacity gap in Tasmania or Queensland and said it was only possible in the other regions.Risks in Victoria include the state’s surging renewables generation which could impact existing coal baseload plants, as well as generator outages. In NSW, the closure of AGL’s Liddell coal plant in 2022 is a factor, while upgrades at interconnectors with Queensland and Victoria and potential new gas and pumped hydro plants by AGL, EnergyAustralia and Origin Energy will also come into play.The possible triggering of the obligation illustrates how tight supply is in the electricity market, where new solar and wind plants are coming online driven by state renewables targets, but fast-start gas and pumped hydro plants that could fill in the gaps are taking longer.The rapid growth in solar and wind saw the share of renewables grow to 30 per cent of midday power supply most days in June, causing wholesale power prices to sink towards zero on some days. That is putting pressure on baseload coal plants, raising concerns they will close down before their rated lifespan, further straining security of supply.EnergyAustralia chief executive Catherine Tanna said the need to generate flexibly posed ‘‘challenges’’, in particular for the ageing Yallourn brown coal generator in Victoria’s Latrobe Valley, currently due to run until 2032 but seen as vulnerable to early closure.She said the country’s energy supply system ‘‘is not yet ready for coal to disappear’’ with 60-65 per cent of generation still supplied by coal generators, which are also needed to keep the system stable and prices affordable. Early closure risks repeating the market ‘‘shock’’ seen when the Hazelwood power station in Victoria closed, driving up tariffs.AGL Energy chief executive Brett Redman separately told The Australian Financial Review Innovation Summit that coal power still has a long future.‘‘Renewable power can only take you so far without storage,’’ he said, citing a limit of perhaps 30-40 per cent of power.The retailer reliability obligation is one of the few policy measures going ahead under the Morrison government, which last year ditched the emissions reduction part of the NEG and has now seemingly abandoned efforts to work with state governments towards an integrated energy and climate policy.Federal Minister for Energy and Emissions Reduction Angus Taylor has not held a Council of Australian Governments energy council meeting since December, frustrating industry executives and state governments.Mr Taylor said the reliability obligation was ‘‘the only component of the NEG that will help reduce power prices’’. He said the government doesn’t see the need to revive the emissions reduction part of the policy because the National Electricity Market is ‘‘already on track to be 26 per cent below 2005 levels by 2030’’.NSW Energy Minister Matt Kean told the summit that NSW still supports the NEG as an integrated national mechanism for climate and energy policy, and declared the state ‘‘will consider going it alone’’ if the Commonwealth government didn’t step up.Victoria and Queensland have already implemented bold targets for renewable energy, but without the firming generation capacity to support them.But renewable energy developers, which are struggling with grid constraints and increasing volatility in wholesale power prices, want the federal government to take a lead to streamline the transition and prevent unnecessary costs. ‘‘Frankly, we are making it up as we go,’’ said Clean Energy Council chief executive Kane Thornton, describing collaboration between the state and Commonwealth as ‘‘near non-existent’’, with no meeting of COAG Energy Council for eight months and none scheduled.Dr Schott noted that the senior officials behind the various federal, state and territory energy ministers are still regularly meeting, and that a coordinated approach was vital.‘‘You can set whatever renewable energy targets you like but if you don’t pay heed to the need for capacity and flexibility ... what you then face is large renewable utilities not being dispatched because the system can’t cope with it,’’ she said.WITHJAMESTHOMSONRenewable power can only take you so far without storage.
and guess who just bought a gas power plant ......lol
Our competitors need to keep up and if you ask me are 3-5 years behind
IFN Price at posting:
47.5¢ Sentiment: Buy Disclosure: Held
