Statement in response to release of Energy Security Board (ESB) Options Paper

The Australia Institute has welcomed the Energy Security Board’s Options Paper for the redesign of the National Electricity Market but warned against a proposal that would effectively tax consumers to prop up unprofitable coal power stations.

“The Options Paper contains a seriously risky proposal that would prolong the lives of unprofitable, highly polluting coal power stations in Australia,” said Dan Cass, energy & regulatory policy lead at the Australia Institute, and was appointed by the ESB to a group of expert stakeholders to advise on thermal retirements.

“Agreement to prop up coal power on the grid would be an admission of defeat. The whole purpose of market redesign is to allow coal to retire safely and for consumers to benefit from a smooth transition to cleaner, cheaper sources of electricity and grid security services.

This coal support would come from a proposed physical retailer reliability obligation (P-RRO) which is outlined in the section on Resource adequacy mechanisms and aging thermal retirement of the ESB’s Options Paper Part A.

“This new policy would push up prices, reduce competition and undermine clean energy. It is a stealth subsidy to coal hidden in the electricity bills of consumers.

“The federal government tried to abolish the Energy Security Board and then attempted to stop the Post-2025 redesign. Now it is using so-called National Cabinet to control the process and twist the outcome. The federal government needs to stop interfering in the NEM and start leading.

“There is no reason to subsidise unprofitable coal power stations. All governments have agreed to the Integrated System Plan which will replace the energy generated by coal with up to 50 GW of large scale renewable energy and up to 19 GW of storage and other dispatchable capacity built by 2040.

“It is unbelievable that as Australia’s allies and trading partners phase down coal power, Australia could consider extending its reliance on coal. This will damage our international reputation, push up prices for industry and households and harm competition.”