Waiting for an Energy Policy

An important meeting of participants in the energy sector, held under Chatham House rules on the January 23, deplored the absence of a comprehensive energy policy in Australia and, in particular, a long-term plan for reliable and affordable electricity.

The participants took the view that a resilient electricity grid had to be technologically neutral:

“The challenge is to keep the power on and ensure that electricity remains affordable. A technology-neutral approach is required that considers all possible solutions without prejudice or predisposition to any option. The emphasis must be on the cost of deployment rather than seeking innovative solutions. This approach can allow for the optimisation of the energy mix and enable deployment of both intermittent and baseload power at the lowest possible cost.”

The absence of energy policy certainty on the part of both federal and state governments was a major criticism from the meeting.

According to the report of the gathering: “There was dismay that Australia’s failure to meet its energy needs had been an obvious and slow crisis to which the federal and state governments had not adequately responded. Decisions affecting the electricity sector, rather than being directed by a clear policy framework, had been made on an ad hoc basis in response to a range of drivers.”

The main criticism of the Commonwealth and state governments was the failure of COAG to define what it wanted energy policy to do.

At the moment energy policy is being driven by the fear of blackouts.

Despite the bravado on the part of some state Premiers, if power failures in Victoria or South Australia bring down the grid in NSW it could spell the end of the national electricity market and possibly the chances of a national policy.

Federal and state governments need to provide strategic guidance on what they want from a national energy policy.

This means that some governments will need to bite the bullet on power sources and accept that nuclear and coal have to be part of the mix if Australia is to have reliable and affordable power while, at the same time, making substantial cuts to emissions.

Unless a national policy can be resolved quickly it’s likely that a substantial portion of the manufacturing sector will go to the wall.

Participants in the meeting were not convinced that the National Energy Guarantee will provide the solution.

The Energy Security Board had ignored a substantial amount of expert advice that could have helped define the issues.

Nonetheless there was hope that the ESB’s discussion paper would be the starting point for a world’s best energy policy.