Green light for Prime Minister’s last-ditch power plan to push down power prices

UPDATE: Prime Minister Malcolm Turnbull has been given the green light to put in place a new energy policy that will axe renewable subsidies and force power retailers to source “reliable” electricity.

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PRIME Minister Malcolm Turnbull has been given the green light to put in place a new energy policy that will axe renewable subsidies and force power retailers to source “reliable” electricity.

In a video posted to social media immediately after the meeting, Mr Turnbull said the strategy that had been agreed on would deliver lower prices, more reliable power supplies and help Australia meet its international commitments to reduce greenhouse gas emissions.

“Energy companies will have to guarantee the reliability of their energy supplies to ensure the lights stay on.

“These guarantees will ensure there is a place for all power sources in the nation’s future energy mix: solar, wind, coal, gas, batteries and pumped hydro.

“Our plan has no subsidies, no certificates - and no tax.

“It doesn’t involve the Government picking winners; it truly is technology neutral.”

Mr Turnbull told reporters in Canberra the policy the government had settled on — a National Energy Guarantee — was the “lowest cost way of keeping the lights on”.

The plan was recommended by the independent Energy Security Board.

Under the policy, household energy bills are forecast to fall an estimated $110 to $115 per year between 2020 and 2030.

And they’ll have to guarantee their energy sources will enable us to meet out emissions reduction commitments.

Earlier today, he was accused of effectively following Donald Trump in pulling Australia out of the Paris Agreement on climate change.

Greens leader Richard Di Natale dubbed the Prime Minister “cowardly” when he made the accusations today before the government unveiled its new energy plan.

But it’s understood the majority of the backbench supported the plan.

A senior Government source told The Advertiser the plan would lower prices more than the $90 a year flagged under chief scientist Alan Finkel’s Clean Energy Target.

Cabinet discussed the proposal Monday night ahead of the presentation at Tuesday’s Coalition party room, in what has been touted as a test of his leadership.

As foreshadowed in The Advertiser, the plan includes scrapping subsidies for renewable energy generators and is heavily geared towards energy security and forcing down power prices.

Energy retailers would be forced to meet new reliability and emissions quotas. It would not “punish or subsidise” any generator, likely slowing the exit of coal-fired power stations

South Australia bore the brunt of the national energy crisis with surging power prices and suffering through multiple blackouts last summer, including one that cut power to the entire state.

Prime Minister Malcolm Turnbull during Question Time. Picture: Kym Smith

An Australian Competition and Consumer Commission report released this week found power prices had increased by more than 60 per cent in the past 10 years.

The last-ditch attempt by the Government to come up with a palatable energy policy will likely be a major test of Mr Turnbull’s leadership.

One source said if this new proposal did not get the tick of approval from the party room, there would be no agreement on an energy plan in this term.

The head of the coalition’s backbench energy committee, Craig Kelly, was briefed on the new approach after Monday night’s meeting, welcoming the focus on dispatchable switch on/switch-off power.

“The problem with solar and wind, as wonderful technologies as they are, when there is no wind you get no electricity generation and as soon as the sun sets you also get zero electricity generation as well,” he told ABC radio on Tuesday.

“So as good as technologies as they are, you’ve got to have them backed up in some way and that’s either got to be a coal-fired power station, a gas generator or some form of battery.” He defended the idea to ditch the clean energy target, as recommended by Dr Finkel.

“The Finkel report contained 50 recommendations. If we’ve recommended 49 that’s a 98 per cent strike rate,” he said.

Assistant treasurer Michael Sukkar welcomes the new plan as it focused on reliability and affordability.

Foreign Minister Julie Bishop described the federal government’s energy plan as a “game changer”.

“Last evening the cabinet decided on a proposal that we believe will guarantee affordability and, importantly, reliability and will enable us to meet our Paris agreements,” Ms Bishop told ABC radio.

“The whole mechanism is geared toward reliability but it ties it to environmental policies, so for the first time we have energy policy and environmental policy working together to guarantee reliability of supply.

“It will make it more affordable and it will also enable us to reduce our greenhouse gas emissions in accordance with our international obligations.”

But Opposition energy spokesman Mark Butler slammed the Coalition’s new plans and said the Government was “hell-bent on destroying renewable energy”.

It comes as a plan to stop power companies price-gouging households and businesses was blasted by Senator Nick Xenophon, who labelled it a “short-term sugar hit”.

The Government yesterday passed a new law to prevent energy companies using the courts to contest the amount of money they can recoup from customers.

Energy Minister Josh Frydenberg last week signalled the Government would not implement a CET, which would require energy retailers to source a set amount of the power from “clean” sources.

ACCC chairman Rod Sims said a CET would not necessarily lower prices despite chief scientist Alan Finkel’s modelling showing a 10 per cent reduction over 30 years.

It is understood that the new plan, unanimously backed by the independent Energy Security Board, would include a required level of reliability, as well as ensuring emission levels were consistent with the Paris Agreement.

The Government’s plan, which sources said was entirely new and not lifted from another country, would not provide direct incentives to generators.

Retailers would have to buy a set amount of power from reliable sources which include coal, gas, pumped hydro and batteries.

In SA, the high volume of wind and solar would likely mean that the generators with reliable power would be paid more for power than renewable sources which could not be relied upon.

This would likely mean new generators would be forced to meet set obligations but it would leave the market to work out the value.

The Government has endorsed 49 of Dr Finkel’s 50 recommendations, including a generator reliability obligation, under which each region would be assessed to ensure enough power is available on-call to meet consumer demand for electricity.

This new scheme was understood to have been developed by the Australian Energy Market Commission as it worked on the generator reliability obligation.

Under existing policy, renewable generators earn lucrative certificates for every megawatt hour of power they generate, which has been criticised for distorting prices.

Conservative MPs have condemned the level of subsidies renewable generators are given and warned the Prime Minister they could not support extending handouts. Labor has accused Mr Turnbull of capitulating to former Prime Minister Tony Abbott and fellow conservative backbenchers over their threats to cross the floor.

Mr Abbott yesterday continued to intensify pressure on Mr Turnbull over energy.

“Let’s have no further subsidies for unreliable power. Let’s get cracking with the new coal-fired power station. Let’s do what we can to end the gas bans and let’s remove the bans on nuclear,” Mr Abbott told 2GB radio.

“The important thing is to stop running the system to reduce emissions and to start running the system to give us affordable, reliable power so that our jobs are safe, industries are secure and people’s cost of living is not going through the roof.”

Mr Abbott said he was not opposed to a return to the prime ministership, but only if he was drafted into the position by his colleagues.