National Energy Guarantee

Publication date: Tuesday, 07th November 2017.

National Energy Guarantee

In October 2017 the Energy Security Board (ESB) provided the COAG Energy Council with advice on changes to the National Electricity Market (NEM) and legislative framework. The proposed national energy guarantee (NEG) aims 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 NEG is a way 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 NEG requires retailers to contract with or invest in generators or demand response to meet a minimum level of dispatchable ‘on demand’ electricity. Retailers must also keep their emissions below an agreed level.

The guarantee is designed to integrate energy and emissions policy – both energy and emissions targets are reflected in a single energy price. That energy price will signal how much electricity the market needs and when it is needed, while also reflecting the cost of meeting Australia’s emissions targets.

Request for further analysis on the NEG

In October 2017 the ESB was asked by the Commonwealth government to provide a report, including modelling analysis, on the national energy guarantee. This work, led by the Australian Energy Market Commission, will be an input to discussions at the COAG Energy Council meeting in November 2017. The ESB is working with stakeholders to test modelling assumptions and scenarios.

Webinar: Stakeholder briefing on the NEG

On 10 November 2017 the Energy Security Board held a live webinar on the NEG. A recording of the webinar (approximately 45 minutes) is now available here.

Next steps

The COAG Energy Council will discuss the NEG at its November meeting and decide whether to proceed to the detailed design phase. Broad consultation with state governments, industry, consumers and other stakeholders would occur during the detailed design phase.

The ESB has proposed the following timeframe:

  • reliability guarantee starts in 2019

  • emissions guarantee starts in 2020, replacing the Renewable Energy Target.

Categories

Council Priority Issue