Energy Security Board chief Anna Collyer,the Commonwealth’s chief energy policy adviser,briefed the meeting on a “capacity mechanism”,which would reward energy projects for guaranteeing power supplies that can be called upon when needed,rather than only paying them for the power they produce.
The policy is aimed at encouraging investment in so-called “dispatchable” power projects including fast-start gas plants,big batteries and pumped hydro,but has raised concerns among environmentalists and the Victorian government because it may also prolong the life of fossil fuels in the energy market.
Speaking to media after the meeting,Bowen said the capacity mechanism was a “matter of urgency” and a draft policy would be prepared by the AEMO “imminently”.
He would not be drawn on the inclusion of coal in the capacity mechanism,or if states had disagreed over this issue,but said he thought the “principles are pretty clear that it should support new technologies” – which would mean pumped hydro and batteries.
Last year,Victorian Energy Minister Lily D’Ambrosio said she was “drawing a line” under any market revisions that would result in payments to existing coal and gas generators merely to be idle but available.
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Alinta,one of the largest Australian energy companies and owner of the Latrobe Valley’s Loy Yang B coal-fired power station,on Wednesday said the severity of the east-coast energy crunch meant the reform must be introduced more urgently than the previously targeted start date of 2025,and should be extended to coal plants.
“Bring it forward,” Alinta chief executive Jeff Dimery toldThe Age andThe Sydney MorningHerald. “In the current market,the consequences to us of not being there are dire.”
Origin Energy chief executive Frank Calabria has also called for ministers to consider an earlier introduction of the capacity mechanism than 2025.
“I think these events,as stark as they are,should remind us that we want to have more resilience in the system as we go through this,” he said.
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“I do get that the design is important … but I just think they’ve got to do that on the basis that as soon as they finish that design and implementation,the sooner investments can be made with confidence.”
Calabria said the capacity market should be focused on new investment,but he was “happy for[the inclusion of coal] to be in the debate”.
Environmental advocates said Wednesday’s announcement was as significant for “what it doesn’t contain as for what it does”.
“There were no boondoggles for fossil fuel mates,no pointless political wedges or culture war jabs,” Environment Victoria chief executive Jono La Nauze said.
“Finally,we appear to be having an adult conversation about the serious and pressing issue of energy transition.“
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