Current NEG ineffective and expensive band-aid

The Australia Institute Climate & Energy Program has released a special update of their National Energy Emissions Audit, assessing the value and effectiveness of the current NEG using figures from the Australian Energy Market Operator (AEMO).

The Audit update shows multiple scenarios in which much larger emission reductions and levels of renewable energy generation can be achieved in the National Electricity Market (NEM) than envisaged in the current NEG, and at a lower cost.

Key Findings:

  • AEMO believes renewables of about 50% by 2030 is possible with secure reliable power, under some approaches the renewable share could reach nearly 70% without compromising security and reliability, provided that new transmission lines and various other grid upgrades are completed in a timely manner.
  • The proposed NEG 26% emissions reduction target is virtually meaningless, as it will be exceeded well before 2025 in all of AEMO’s scenarios. By 2030 emissions reduction could reach nearly 40%, or even more under some scenarios
  • Under the ‘Slow’ scenario, where the fall in grid consumption outweighs the slower growth of new renewable capacity, the reduction in emissions relative to 2005 reaches 49%
  • While under the ‘Fast’ scenario, where the acceleration of renewable generation construction outweighs the acceleration in electricity consumption, the reduction in emissions by 2030 reaches nearly 53%
  • Under the ‘Neutral’ scenario, emissions almost reach the target level in less than two years from now, and decisively exceed it in 2022-23.  By 2030 the reduction reaches 39%.  

“AEMO believes renewables of about 50% by 2030 is possible with secure reliable power, under some approaches the renewable share reaches nearly 70% without compromising security and reliability,” says Dr Hugh Saddler, author of the report.

“With efficient planning and investment in an effective mix of network services, it will be quite possible to ensure that the electricity supply system of the NEM remains secure and reliable

“It would appear that the design of the National Energy Guarantee has been based on the simplistic assumption that, because only one technology can provide all of the services in a single package, as it were, continued choice of that technology must be the most effective and least cost way of providing those services.

“This would be as if AEMO were a home energy audit listing improvements undertaken to keep the house warm, and the NEG is effectively only concerned with how well the heater works.

“The NEG is only concerned with one narrow solution: dispatchable power, and by doing this it is failing to give all Australians the best and most cost-effective solution.”

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