National Energy Guarantee

Publication date: Tuesday, 07th November 2017.

In October 2017, the Energy Security Board (ESB) provided the Council with advice on changes to the National Electricity Market (NEM) and legislative framework. The proposed National Energy Guarantee (Guarantee) aimed to support the provision of reliable, secure and affordable electricity with a focus on ensuring:

  • the reliability of the system is maintained
  • electricity sector emissions reductions needed to meet Australia’s international commitments are achieved
  • the above objectives are met at the lowest overall costs.

The Guarantee intended to encourage new investment in clean and low emissions technologies while allowing the electricity system to continue to operate reliably.

To deliver this transition, the proposed Guarantee was designed to require retailers to contract with or invest in generators or demand response to meet a minimum level of dispatchable ‘on demand’ electricity where there is an identified gap. Retailers would also need to keep their emissions below an agreed level.

The Guarantee was designed to integrate energy and emissions policy, where both energy and emissions targets would be reflected in a single energy price. That energy price would signal how much electricity the market needs and when it is needed, and reflect the cost of meeting Australia’s emissions targets.

On 20 August 2018, the Commonwealth Government announced it would not continue with the emissions component of the Guarantee.  

As Australia’s energy system continues to transition, it is important that the energy system remains affordable and reliable. To help address this, the Council agreed to implement the reliability component of the Guarantee—the Retailer Reliability Obligation (RRO). The RRO commenced on 1 July 2019.

Development of the National Energy Guarantee

Date

Process step

October 2017

The Commonwealth requested the ESB provide advice on changes needed to the NEM and legislative framework to ensure the system provides reliable, secure and affordable electricity.

The Commonwealth accepted the recommendation of the ESB to adopt the Guarantee. The Commonwealth asked the ESB to provide initial advice on the Guarantee, including detailed modelling, led by the Australian Energy Market Commission.

November 2017

The ESB held a live webinar on the Guarantee.

The ESB presented their advice to the Council. Council agreed that the ESB should provide further advice on the Guarantee.

February 2018

The ESB released its first consultation paper on the Guarantee.

All Submissions, subject to any claims of confidentiality, have been published.

April 2018

The ESB presented a high level design of the Guarantee to the Council following a two month consultation process. More information on the consultation can be found here.

Council agreed that the ESB would continue to develop the detailed design of the Guarantee and bring back the final design in August for determination.

May 2018

The ESB released issues papers on the Guarantee to facilitate discussions with jurisdictions and Technical Working Groups on several detailed design elements.

June 2018

The ESB released a draft detailed design of the Guarantee for public consultation.

The Commonwealth Government also released a draft detailed design document on the design elements that are its responsibility for consultation.

August 2018

The ESB released a final detailed design of the Guarantee following further consultation. Details of the consultation process can be found here.

The Commonwealth also released a final detailed design document on the elements of the Guarantee that would be its responsibility, following a separate consultation. Details of the Commonwealth’s consultation process can be found here.

The Council agreed to the release of exposure draft amendments to the National Electricity Law that would implement the Guarantee.

On 20 August, the Commonwealth announced it would not continue with the emissions component of the Guarantee. The Commonwealth stated it would continue to work with the states and territories to progress the RRO.

October 2018

The COAG Energy Council noted the Commonwealth Government’s announcement that it will not continue with the Guarantee.

The Council agreed to progress legislation to implement the RRO.