Australia, Policy, Projects, Renewables, Solar

Australia’s energy crisis looms

Energy crisis, renewables, renewable energy

According to a new report from the Grattan Institute, Australia must take immediate action to reform its national energy market and pave the way for a post-coal era dominated by renewables to avoid energy crisis.

The report, titled “Keeping the Lights On,” warns that the current National Electricity Market (NEM) is ill-equipped to handle the rapid transition away from coal-fired power and towards renewable sources like wind and solar.

“Australia’s great energy transition – from fossil fuels to renewables – is not going well,” Tony Wood, the report’s lead author and Grattan Institute’s Energy and climate change program director said.

“Governments have lost faith in the market being able to deliver enough electricity to the right places at the right time, consumers are fuming about high power prices, and investors have been spooked by frequent and unpredictable government interventions.”

The report highlighted several concerning trends in Australia’s electricity sector. One was safety margins being eroded with the market operator increasingly resorting to emergency reserves and backup tools.

In addition, coal plants are experiencing more frequent outages, prompting urgent interventions from ministers. The report went on to outline that the construction of new transmission infrastructure to support renewable energy projects has also lagged behind.

According to the Grattan Institute, coal will cease to be a material contributor to the NEM by around 2032, underscoring the urgency of preparing for a post-coal era.

The think tank calls on the federal and state governments to start designing a new NEM now to ensure a reliable, affordable, and clean energy supply.

“We may be able to muddle through the next few years with the current messy mix of ad hoc and uncoordinated policies, but Australians will not forgive our political leaders if they mess up the post-coal era and fail to deliver the trifecta of clean, affordable, and reliable energy,” Wood warned.

The report outlines three key priorities for planning the net-zero energy system:

  • Designing a market structure that will help ensure adequate energy resources in a high-renewables system
  • Signalling the introduction of an enduring carbon price for the energy sector to guide future investments and gas plant closures
  • Integrating and coordinating distributed energy resources such as batteries and rooftop solar

“Australia’s future prosperity depends on governments getting this right,” Wood said. “Our report charts a path through the energy policy minefield.”

The report recommends the Federal Government initiates a cross-government review examining the roles of market participants, bodies, consumers and governments.

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