‘Lights on’ must be Energy Security Board’s priority

A few years ago, when Adani was struggling to gain approval for its coalmine in central Queensland, Australians were appalled reading about life in parts of India where households were struggling without reliable power. It seemed unimaginable then that a resource-rich, advanced country such as this could face the prospect of blackouts and an energy crisis. In keeping with its raison d’etre, the Energy Security Board has made the right call in rejecting demands for fossil fuels to be cut from its draft ­capacity mechanism. It was essential that coal- and gas-fired plants did not exit the power grid before replacement renewables and storage generation were in place, the board decided.

The board exists to meet consumers’ needs. It was established by the nation’s energy ministers in August 2017 to provide “whole-of-system oversight for energy security and reliability to drive better outcomes for consumers”. Most, but not all, Australians will agree with the board not ruling out gas and coal. Simon Holmes a Court, whose Climate 200 group helped sponsor the teal independents at the federal election, says the mechanism should focus on storage to back up renewables. “The sooner we expand storage, the sooner we can close existing coal and gas. Anything that prolongs the life of coal and gas must be rejected,” Mr Holmes a Court said. But at what price to households and businesses? And surely not until the reliable storage of renewables is able to carry the nation’s baseload power demand?

Under the ESB capacity mechanism, generators would be paid for guaranteeing standby supply to meet ­demand, helping to avoid a repeat of the current grid suspension. As federal Energy Minister Chris Bowen says, the states will implement the capacity mechanism in a way that “is suitable for their particular purposes and needs” in line with a nationally agreed emissions reduction trajectory. Victorian Energy Minister Lily D’Ambrosio, for instance, wants fossil fuels excluded from the mechanism. But the ESB also warns the state faces a threat from a renewables drought – extended periods of low wind and solar – that could lead to a “significant and sustained gap” between demand and clean-energy generation.

Which raises an interesting question about the approach of other nations committed to cutting greenhouse emissions. Japan, for instance, which is scaling back its reliance on coal, is including gas and more efficient coal-fired power plants in its energy plan to 2030, as well as nuclear power. It is not alone. Faced with its own potential power crisis over Russian gas supplies, Germany is planning for the European winter, looking to use coal-fired power stations that would have been idle this year and next as reserve facilities. The precautionary measures are to remain in place until March 2024, cutting German reliance on Russian fossil fuels.

Australians support the transition to renewable energy. But they expect reliable power, including in peak times during cold snaps and heatwaves, at a reasonable price. They face paying hundreds of dollars a year more on power bills when new rates start on July 1. Given concerns over prices, the Australian Competition & Consumer Commission audit of energy companies’ profits and margins as part of a probe into soaring energy bills is timely.

Nor does the public want to see Australian companies disadvantaged. Mining, chemical, transport and energy companies, which operate 97 of the 215 biggest-emitting facilities in the nation, have warned the Albanese government against adopting a “one-size fits-all” safeguard mechanism amid concerns they could be left behind by international competitors. Climate change action across trade-exposed and energy-­intensive sectors, under Labor’s 2030 plan to slash emissions by 43 per cent, is expected to take some industries longer as they adopt new low-emissions technologies.