Blackouts Loom: National Energy Guarantee Aims to Keep Australia’s Lights On When the Wind Stops Blowing

With reliable power in short supply this coming Summer (and beyond), PM, Malcolm Turnbull was bound to act. In yesterday’s post, we detailed how the National Energy Guarantee is meant to work, what it does and what it will not do.

At the heart of the NEG is a simple objective: keep everyone’s lights and air conditioners on, when temperatures rise along with the demand for power.

Australia will go down in history as the Nation with the most abundant energy reserves on the Planet and, paradoxically, the most expensive and unreliable delivery of electricity in the world.

The NEG might be said to be too little, too late.

STT sees the NEG as heavy-handed government intervention, the consequence of earlier heavy-handed government intervention, being the Federal government’s Large-Scale RET.

How the NEG operates in practice, and whether it achieves its objective, is down to the Energy Security Board. Some might consider being handed responsibility for Australia’s power pricing and supply calamity, a bit like being asked to slurp from a poisoned chalice. The chairwoman of the ESB, Kerry Schott, appears undaunted by the prospect and appears to even relish the challenge.

Power ‘just needed to be sorted out’, says Kerry Schott
The Australian
Andrew White
21 October 2017

The chairwoman of the government’s new Energy Security Board has rejected claims the proposed National Energy Guarantee could raise electricity prices, arguing it provides a stronger market signal for investment in new generation capacity than previous schemes.

In an interview with The Weekend Australian, Kerry Schott said problems caused by South Australia’s high reliance on renewables had helped focus the board on a scheme that would deal with the continuing rise of intermittent power sources such as wind and solar at a lower cost.

The board devised the NEG as an alternative to regular intervention by the market operator that resulted in high-priced gas having to be fed into the market.

Dr Schott, who chairs arguably the country’s most powerful female-dominated board — four of five directors are women — said she was motivated to give up other board seats for the ESB job by a sense of national duty.

“I thought the politics of this have been so bad for so long that for the good of the country it needed to be fixed,” said Dr Schott, a former senior bureaucrat and investment banker. “Power is such a basic requirement, particularly in the cities, that it just needed to be sorted out.”

The NEG proposal was delivered to the government eight days ago and announced on Tuesday. It came after the board had met fortnightly since being established in early August. Other board members are Australian Energy Market Operator chief executive Audrey Zibelman, Australian Energy Regu­lator chairwoman Paula Conboy, Australian Energy Markets Commission chairman John Pierce and the Business Council of Australia’s head of energy and climate change, Clare Savage.

Dr Schott said although the solution appeared to have been devised quickly, it had been in the mind of the main regulators for a long time and been brought into focus by South Australia’s issues.

South Australia derives up to 42 per cent of its power from wind and solar farms but has suffered blackouts and load shedding. The AEMO has intervened regularly, directing gas-fired generation that can cost up to $14,000 per megawatt hour to be available for the sake of system stability when renewables generation is high.

“South Australia has been a bit of a canary in the coal mine,” Dr Schott said. “Once you get a high proportion of intermittent generation in the system, you have to pay much more attention to reliability.”

The NEG proposed by the board and approved by the Coalition would require electricity retailers to buy a portion of their supply from ready-to-go sources such as coal, gas, hydro and batteries, as well as renewable sources such as wind and solar that help the country meet its inter­national climate commitments.

Dr Schott defended a prediction by the board that the NEG would cut $115 a year from bills from 2020, amid criticism that dictating a share of energy from different sources could raise prices. By providing certainty, it would encourage investment in new generating capacity and put the onus on retailers to “find the best mix of energy to meet their requirement at the lowest cost”.
The Australian

Kerry Schott takes on the greatest unnecessary challenge in history.


Relishing a challenge is one thing, being hung out to dry for failing to meet it, is another. By loading up the Energy Security Board with the ultimate responsibility for keeping the lights on, any major load shedding event or mass blackout will be seen as an opportunity for bureaucratic crucifixion. The executive branch of Federal government tends to protect its own, right up to the point when the public starts baying for blood.

STT is not saying that the ESB will fail, but simply pointing out that the stakes are high, and that failure will be treated with ‘rolling heads’ and ignominy. The expectations being placed on the ESB are high, as The Australian’s Editor points out. And for good reason.

Turnbull’s plan at least tries to keep the lights on
The Australian
21 October 2017

The end of car manufacturing in this country, marked poignantly yesterday with the final Holden driven off the assembly line at GMH’s now defunct plant at Elizabeth, South Australia, was a dramatic demonstration of the decline of the broader manufacturing sector across the nation in recent decades. Many factors have contributed — from reduced tariffs and the rise of Asian competition to inflated energy prices and union intransigence — but it also gives us pause to consider our power crisis.

Plentiful cheap energy was one of the natural advantages underpinning this nation’s development but, alas, it exists no longer. Just a decade ago Australia’s electricity was the fifth cheapest of 35 OECD nations; now we are the 12th most expensive and rising. For all the damage it has done, it is a simple fact the rise in energy costs has been driven largely by deliberate government policies, mainly enacted to reduce carbon emissions to meet global climate change targets.

Malcolm Turnbull’s energy policy announced this week is no silver bullet but it stands out as a carefully considered attempt to right some of the policy mistakes made by both major parties in the past. The Weekend Australian has long argued the renewable energy target was an unwise market distortion increasing costs on consumers and industry, undermining the electricity network and abating carbon emissions at a high price.

It is a relief to know the RET will be capped at the legislated 2020 level of 33,000 gigawatt hours, but this is already too high and will see more subsidised wind and solar farms installed in the next two years. This generation will continue to be subsidised through large-scale renewable energy certificates until 2030. So the poor decisions of the past are still washing through the system and will not be fixed any time soon.

Mr Turnbull and Environment and Energy Minister Josh Frydenberg have devised a new National Energy Guarantee that will force retailers, state by state, to purchase set amounts of renewable energy (to meet emissions reductions goals) and a minimum amount of dispatchable power (to underpin baseload power). It is an additional strand of government intervention and it is still aimed at increasing investment in low-emissions technology to meet the Paris climate commitments. But at least it is simple and, crucially, attempts to circumvent chronic system vulnerability caused by an investment strike in thermal power.

The Coalition, Labor and the Greens have conspired over a decade to make a mess of the nation’s climate and energy policy. The major parties have changed their approaches, broken promises and rolled leaders of this issue. Like the fabled Irish traveller, you wouldn’t want to be starting from here. But the NEG plan is a deft attempt to find a bipartisan way forward and provide investment certainty.

It should be embraced by Labor and the states as a means to settle national policy. Then a debate about our emissions reduction targets and whether they are justifiable, affordable or worthwhile can continue without everyone worrying whether the lights will stay on.
The Australian

Has anyone got Kerry Schott’s mobile number?

7 thoughts on “Blackouts Loom: National Energy Guarantee Aims to Keep Australia’s Lights On When the Wind Stops Blowing

  1. Hello, I was asked to pass this on to you.
    kind regards
    Andreas Marciniak
    Can you get this to “StopThese Things”:
    The Minnesota Legislative Energy Commission held a hearing on Wind Turbine Noise and Health Effects on Thursday, October 19, 2017.
    a. Overview of Current Wind Permitting Process: Dan Wolf, Public Utilities Commission; Jonathan Kelly, Department of Commerce
    b. PUC Administrative Record Report: Kristi Rosenquist, Citizen Wind Energy Expert
    c. Dr. Mariana Alves-Pereira, Lusofona University, Portugal
    d. Robert Rand, Founder, Rand Acoustics
    e. Chris Kunkle, Regional Policy Manage – West, Wind on the Wires
    f. Michael Hankard, Wind Turbine Acoustics Consultant
    g. Dr. Mark Roberts, Health Sciences Board Certified Preventative & Occupational Medicine
    Dr. Alves-Periera testified that for the health symptoms to not be caused by wind turbines would require that you believe this is a world-wide “collective hallucination”. She also stated that walls in homes would need to be about 30 – 70 meters thick to block the low frequency noise.
    Robert Rand explains why a noise standard shouldn’t be used to regulate wind turbine siting.
    My favorite question: MN Senator Mathews asks the wind industry representatives at @ 1:42 ‘Are you saying that if these people just changed their attitude and would have a more positive perspective of turbines, they would start having a better night’s sleep?’
    Materials and audio are available at the link below. And “yes” much of the material is from me and I am the second and second-to-last testifier.
    This is the first hearing/ meeting on wind turbines in Minnesota where I felt like there was an actual desire to learn something, not just get to the wind industry’s forgone conclusions.

  2. It seems to me that this is just more of the same Liberal party efforts in trying to make a leather purse out of a sow’s ear. It’s the same weasel words: “canary in the coal mine”, “lower costs” that the climate change proponents brandish about, but mean little. And the framework for the NEG does not appear to address the shortcomings of renewable energy sources, but just seems to be yet another effort to legitimise and integrate them into an already screwed up electricity grid: “The NEG proposed by the board and approved by the Coalition would require electricity retailers to buy a portion of their supply from ready-to-go sources such as coal, gas, hydro and batteries, as well as renewable sources such as wind and solar that help the country MEET ITS INTERNATIONAL CLIMATE COMMITMENTS.”
    If I had a guess, the NEG is just a means to get the grid crisis off Turnbull’s desk. Will it accomplish anything meaningful? Doubtful! While CO2 remains as the political equivalent to the monster under the bed and the “meet its International Climate Commitments” as the dubious method to deal with this imaginary monster, then I don’t hold out any hope for significant change. Let’s just elect the green party and get this economic collapse over and done with as quickly as possible.

  3. STT appears to make no comment about this new energy security board – a very wise move I dare say. Well, let me make a comment – what an absolute farce, just another board full of ‘renewables’ proponents who have never, ever in their lives had to make a living by sending an invoice, headed by an arts graduate who doesn’t care less what it takes and what it costs to keep the lights on provided her beloved intermittent, unreliable renewables manage to be plastered across the rural Australian landscape destroying lives, destroying livelihoods and failing to save the planet – what a joke. If you think you’re paying too much for electricity now, just wait until this lot are finished with you. As Miranda Devine once quipped ‘the money lost on the NBN will seem like pocket money compared to the RET and REC system’ (not an exact quote but that’s what it meant). Every single day under Turnbull’s government this issue gets sicker and sicker – unless it stops the nation will die from it. The RET and REC has to be abolished now so we can start again.

  4. Unless the Coalition abandons the RET legislation totally they are toast come the next election. Without a clear choice between the loony Labor/Green energy policies and those of the Coalition Turnbull is finished. Turnbull’s latest NEG Magic Pudding seeks to be all things to all people, but the truth is people don’t trust him and they are tired of his endless, vacuous thought bubbles.
    The only thing that can restore (slowly) Australia’s once reliable, affordable electricity is total abandonment of the RET legislation – no subsidies to new renewables, and very short grandfathering of current subsidies. And please spare me the crocodile tears about the sovereign risk this would impose on wind investor assets. Do those rent seekers really deserve better treatment than that handed out to the owners of coal generation assets who saw the value of their assets trashed by this capricious legislation? Likewise, what level of consideration has been shown to poor people struggling to pay their power bills or country residents who have seen the amenity of their properties trashed and their health compromised?

  5. Keeping the lights on is a basic necessity; but forcing a greater number of rural neighbours to live in or remove themselves from the distressing conditions under increasing sweep-paths of massive, useless wind turbines to meet energy demands of city life remains inequitable. Although recommended by Senate Inquiries into wind farms, legislations have not been updated nor changed to protect those of us whom are detrimentally impacted by wind turbine or industrial sound and vibration issues. General denial of detrimental impacts prevails. Rural Victorian and Australian soundscapes, landscapes, biodiversity and habitats have been critically altered to the detriment of life surrounding industrial wind energy plants. No quick or otherwise political solution for this mess in all its entirety, means the grubby business of making renewables owners, shareholders and supporters profits at the expense of all Australians continues.

  6. Any government serious about providing reliable, affordable electricity would immediately abolish the RECs subsidy and call for bids to provide long term baseload power on a take or pay basis (by government). Nothing else will work.

    The refusal to do the obvious means that this is just so much more spin by Frybull, with no substance, and can be expected to have just as much substantive consequence as their other thought bubbles.

    And the ESB members are either knowingly participating in this further attempt to gull the Australian public while royally shafting them, or those members are too clueless to have any part in Australia’s electricity system.

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