What the Finkel report means for Australia’s energy

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A Clean Energy Target and a NEM-wide integrated grid plan, and increased notice for generator closure, are among the recommendations handed down by Australia’s Chief Scientist, Dr Alan Finkel, in the final report of the Independent Review into the Future Security of the National Electricity Market.

The review was commissioned by federal and state energy ministers in 2016, following concerns over Australia’s energy security and reliability. Blackouts in South Australia were one of the issues that prompted the review.

The final report was presented to the Council of Australian Government (COAG) Leaders in Hobart.

The blueprint outlines four key outcomes for Australia’s National Electricity Market (NEM):

  • Future reliability
  • Increased security
  • Rewarding consumers
  • Lower emissions

It aims to achieve these through orderly transition measures, system planning and stronger governance.

Orderly transition

The Review Panel concluded that a clean energy target is the most effective mechanism to reduce emissions while supporting security and reliability.

In addition, existing large electricity generators will be required to give three years’ notice of closure, in order to signal investment opportunities for new generation and give communities time to adjust to the loss of a large employer.

The orderly transition would be underpinned by agreement from Federal, State and Territory governments to a national emissions reduction trajectory.

The report outlines that during the transition, security will be achieved through obligations on new generators to provide essential services to maintain voltage and frequency. New generators will also be required to guarantee supply of electricity when needed at a level determined following regional assessments by the market operator.

System planning

The report recommends a system-wide grid plan to inform network investment decisions and ensure security is preserved in each region. This would also include a list of potential priority projects to enable development of renewable energy zones.

The report says this transition presents significant opportunities to foster innovation and “the deployment of new technologies and improved integration of variable renewable electricity generators needs to be supported by better data, early testing of technology, cyber threat awareness and workforce preparedness.”

Stronger governance

The third pillar calls for a new Energy Security Board to drive implementation of the blueprint and deliver an annual health check on the state of the electricity system.

Dr Finkel said Australia’s electricity system is entering an era where it must deal with changing priorities and evolving technologies.

“If the world around us is changing, we have to change with it. More of the same is not an option, we need to aim higher,” Dr Finkel said.

“If we adopt a strategic approach, we will have fewer local and regional problems, and can ensure that consumers pay the lowest possible prices over the long term.

“The blueprint released today presents the essential elements for a strategic plan for our electricity future. It is up to federal, state and territory governments to take these recommendations, make decisions, add detail and drive it forward.

“The National Electricity Market is 5,000km long, spans five states and one territory, and has more than nine million metered customers. It’s essential that we get it right.”

The review included an extensive public consultation process, with more than 390 public written submissions received, around 450 attendees at public consultation sessions held in five capital cities in early 2017, and more than 100 meetings with stakeholders.

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