Submission to Department of Environment and Energy: Underwriting New Generation Investments

by Matt Grudnoff and Richie Merzian

The Australia Institute has considerable concerns about the proposed program tounderwrite new generation investments. In particular, the proposal seems to confusetwo separate issues. The first is that the reliability standard in the NEM is met. This ishighlighted in the consultation paper by reference to AEMO’s latest ElectricityStatement of Opportunities that the NEM will need an additional 1160 MW of firmingcapability in the next decade.

The second is the desire to reduce electricity prices by introducing more competitioninto the electricity generation market which was highlighted in the ACCC’s recentRetail Electricity Pricing Inquiry.

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