Green Energy: Renewables sector up in arms as ‘coal friendly’ market proposal heads to Governments
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Changes to the electricity market that would provide generators incentives to maintain physical capacity in the grid are set to be proposed to national and state governments, drawing the ire of the renewable energy sector.
The Energy Security Board’s post-2025 market changes have long been criticised by the industry, which claims it will be used to induce coal-fired generators to stay in the grid past their used by date.
One of the sticking points is the introduction of a physical retailer reliability obligation, which is believed to be heavily supported by EnergyAustralia and Federal Energy Minister Angus Taylor.
The ESB’s summary of industry responses to the draft report acknowledged the bulk of the feedback was not supportive of the change.
“Stakeholders were largely unsupportive of modifications to the RRO as either the case for change had not been
made or the risk of imposing costs on consumers for little benefit was considered to be high, without more analysis,” it noted.
“Of those who believed modifications were necessary, there were mixed views on the shift to a triggerless financial vs a physical RRO.
“Some also noted that detailed design and analysis had not yet been conducted by the ESB and would be needed to properly assess the risks associated with each option.”
A statement from Taylor’s office said the introduction of a so-called capacity mechanism “will be crucial to ensuring that we can absorb renewables into the grid without threatening reliability and affordability.”
Understandably, news the measures were being put forward to Energy Ministers, many of whom have states that remain heavily reliant on coal generation, was poorly received in the green energy sector.
“What this will do is drive up the price of electricity for consumers and slow down the transition to renewables,” Smart Energy Council CEO John Grimes told The Guardian. “It will transfer wealth from electricity consumers to coal-fired power stations. It’s blatant and completely unacceptable.”
ESB chair Kerry Schott said in a statement “resource adequacy is a real and present danger” and that the changes would restore confidence energy is available when needed.
“We have had a very mild summer, and everyone has got very complacent, but we only need one hot summer in three jurisdictions together or a major unexpected outage at a big coal plant and we’ve got a real resource adequacy issue right on top of us,” she said.
Other key areas of reform, Schott said, include backing up power system security to provide “inertia, voltage and frequency control” in the market, improving the use and incorporation of rooftop solar and batteries, and upgrading the transmission network to reduce congestions for new large scale renewables.
Schott said the ESB will continue to work with the Australian Energy Market Commission, Australian Energy Market Operator and the Australian Energy Regulator to progress reforms to the National Electricity Rules while the advice is considered.
Investors responded well to ASX-listed renewables, storage and microgrid operator MPower Group’s (ASX:MPR) quarterly, after the company secured exclusivity over a host of sites on the east coast.
The company is planning to develop a portfolio of up to 20 5MW renewable hubs across the East Coast with an estimated value of $150 million.
It has locked in another three sites in Victoria and its first location in NSW to have 10 across Vic, NSW and SA on its books.
MPower plans to use lithium ion batteries to provide 5MW battery storage at its proposed sites.
The company received $3m through the second tranche of a $5m placement in the June Quarter, including from ESG investment funds, with cash on hand of $3.5m as of June 30 after outflows of $961,000 at its operations on $2.2m of revenue.
MPower shares were up 6.1% at 12.40pm AEST.