The Federal Government came out today with what they feel is the best way forward for Australia’s Energy policy. Disregarding the recent Finkel Energy Review, spearheaded by the Government themselves, it seems that, after consultation with industry insiders and relevant stakeholders, a new way forward, known as the National Energy Guarantee, was announced.
With expectations in recent weeks of a Clean Energy Target, or a modified version of one, being the most sensible way forward as agreed across the Energy industry, the Government now faces a turbulent period ahead, as it attempts to sell its new policy to Australia.
Although still relatively fresh, the details surrounding the policy came through as rather vague. That being said, this is what we know so far;
A variety of policies are set to replace the Renewable Energy Target (RET) in 2020. These will cover the spectrum of generation sources available to Australia and provide no subsidises or trade based schemes to support their uptake.
The Government’s focus is primarily on price reduction for Australian households, investment certainty over the long term and a reduction in market based policies, which they believe to be clouding the markets and creating an unfair playing field.
Power will need to be produced from all sources of generation with wholesale contracts being enforced for traditional baseload sources of generation (coal, natural gas, hydro) as well as intermittent but renewable sources in Solar and Wind.
A guarantee to the public that by the year 2020, household power bills will be reduced by $100 – $115 each year, from the year 2020.
Australia will continue towards is Emission Reduction agreement made in Paris, achieving a 26%-28% reduction in carbon emissions based on 2005 levels by the year 2030. Electricity accounts for around 30% of Australia’s overall emissions.
The move reflects the view of a conservative government with little intervention in the market, creating a level playing field and stepping back on implementing policies based on ideology.
What this means in the short term is little to be fair. The announcement comes with the intention of proceeding the RET that ends in the year 2020. We are confident that the scheme won’t be touched until this point and the projects that go online in the next few years will be grandfathered to protect any investment being made. These all-encompassing announcements tend to take time. Releasing the idea is one thing but selling it to the public, navigating the policy through parliament and rolling it out can take years.
What we are expecting is a surge in projects and installs as we head towards 2020 as well as long period of back and forth between the two parties about moving it all forward. For now, the sun will continue to shine, the wind continues to blow and business will continue on as usual.