Nats spruik NEG power price potential for regional businesses

Nats back NEG power price reduction potential


National Energy Guarantee gains Coalition support, but role of coal still unclear


Regional businesses struggling with power prices are at the heart of the Nationals message on the Coalition’s National Energy Guarantee, which won the Government’s support after a fractious debate in the Coalition party room today.

“This is a 100 per cent commitment from the Liberals and Nationals to put downward pressure on power prices,” said Deputy PM and Nationals Leader Michael McCormack.

The Nationals leader addressed media today flanked by his Deputy Leader Bridget McKenzie and Resources Minister Matt Canavan.

It was a strong show of support for what has become a signature policy of Malcolm Turnbull, who has been dogged by criticism of the policy from former PM Tony Abbott and former Deputy PM Barnaby Joyce.

“We’re making sure we respond to the demands of people in regional Australia, those small businesses, families and households who have told us about the pressure of power prices,” Mr McCormack said.

Deputy Nationals Leader Bridget McKenzie said the NEG would help to save processing jobs that are under threat by rising power prices.

“There are 8000 people who work in food manufacturing businesses – which are located predominately in the regions, and it’s energy intensive production work. Cheaper power prices mean those Australians get to stay employed,” she said.


The NEG is described as a “technology agnostic” scheme which requires retailers to source a minimum amount of so-called dispatchable power (i.e gas, hydro or coal) while also ensuring other sources comply with greenhouse emission reduction targets (likely to be so-called intermittent wind and solar power).

The Coalition argues that stable, long-term policy will generate more private investment into energy generation. To date, it has released scant detail on the policy, and conjecture over the NEG’s full impact is rife.

One key concern for regional industries is the uncertainty over Australia’s commitment to the Paris climate targets, which is a 26pc reduction to carbon emissions on 2005 levels by 2030.

If the NEG doesn’t drive investment into renewable energy and deliver significant emissions reduction in the energy sector, other industries will be left to pick up the slack.

Energy generation accounts for about 38pc of Australia’s carbon emissions. The next two highest emitters are transportation (12pc) and agriculture (28pc).

There’s also uncertainty over the ongoing role of coal fired power in Australia’s energy mix. 

The Australian Competition and Consumer Commission’s report into the energy sector, released last month, called for public investment in power supply agreements to underwrite investment in new power generation.

The ACCC said government could fund off-take agreements for low fixed-price projects that cost between $45–$50 a megawatt hour for the last 10 years (years 6 to 15) of projects with a 15 year investment cycle.

Grattan Institute associate Lucy Percival describes the ACCC’s recommendation as “a risk sharing mechanism” which could spur beneficial investment in power supply, but coal would likely miss out.

“Could that investment be coal, in conjunction with the NEG coming in? It doesn’t seem that would be a likely technology,” Ms Percival says.

“It’s probably better suited to smaller projects. I don’t know if a coal fired power station fits the bill of what the ACCC expects - particularly because it needs to work with the NEG.

“All major generation companies in Australia are moving away from coal. It’s unclear if coal plants would be an attractive investment under this mechanism - given they require a 40 to 50 year commitment and the ACCC is looking at a 15 year investment horizon."

Matt Canavan said the ACCC’s off-take measure could support new coal fired power plants among other energy projects.

“The means of how we gets there needs to be worked through,” he said today.

“It’s not about government dipping into its coffers or subsidising certain types of power, it about government standing behind investment that is going to lower power prices. All I’m focused on is the result.”

Mr Turnbull said today that a coal fired power plant would “fit the description” of baseload power the government sought to encourage.

​Labor wants to set a target of 50pc renewable energy by 2030 and for Australia to exceed the Paris accord with a 45pc reduction to carbon emissions.

The Government will need support from Labor in federal parliament to pass its legislation, as well as cooperation from the states, which will convene to discuss the policy following today’s endorsement in the Coalition party room.

The story Nats spruik NEG power price potential for regional businesses first appeared on Farm Online.


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