Energy Security Board chair Kerry Schott said the Turnbull government's decision to abandon the National Energy Guarantee's emissions target was "terribly disappointing" but the states still need the policy's reliability obligation in place as they added more renewable energy to the grid.

Dr Schott, handpicked by the government to drive the NEG through the Energy Security Board over the past year, said states still needed to ensure they had adequate dispatchable capacity in their electricity markets as their shares of variable wind and solar energy grew.