Australia’s Electricity Blueprint For The Future – Finkel Review Report

Finkel Review - Energy In Australia

What’s known as the “Finkel Review” was released on Friday, a document touted as a blueprint to optimise Australia’s ailing National Electricity Market (NEM).

The Review Panel is headed by Australia’s Chief Scientist, Dr. Alan Finkel. Other members of the panel are Karen Moses FAICD ,Chloe Munro, Terry Effeney and Professor Mary O’Kane AC.

Recommendations made in the “Independent Review into the Future Security of the National Electricity Market” final report relate to three pillars – orderly transition, system planning and stronger governance.

Among the recommendations:

Clean Energy Target (CET)

The Review Panel arrived at a conclusion a Clean Energy Target would be the most effective mechanism to slash emissions while supporting security and reliability. It’s a very different beastie to a renewable energy target as it’s based on a “technology-neutral” approach that also involves non-renewable technologies such as gas and coal. The Panel says the target would provide incentives to encourage new generators.

Giving Notice

Large electricity generators with facilities already operating won’t be able to just take their bat and ball and go home. They’ll need to give at least three year’s notice before shuttering facilities to allow for an orderly transition, both in terms of impacts on grid supply and employment.

Security And Stability

New generators would be required to provide essential services to maintain voltage and frequency, plus guarantee supply when required.

One Plan To Rule Them All

A system-wide plan would inform network investment decisions and security, including priotising of projects to support development of “renewable energy zones”.

Energy Security Board

An Energy Security Board would drive implementation of the blueprint and report annually on the state of the electricity system.

“The National Electricity Market is 5,000 kilometres long, spans five states and one territory and has more than 9 million metered customers. It’s essential that we get it right,” said Dr. Finkel, who believes the blueprint will deliver a “world-class” electricity system.

Implementation would see emissions reduced by 28% below 2005 levels by 2030, then towards zero emissions in the second half of the century.

Under the blueprint, energy consumers will be financially rewarded if they agree to manage their electricity demand and share resources such as solar panels and battery storage.

The authors state the recommendations would result in a reduced need for upgrades to transimission and distribution networks; reining in costs in that regard. Increased competition should also put downward pressure on electricity prices.

This is no quick fix and while Dr. Finkel predicts some modest savings down the track for energy consumers, electricity prices will rise in the short term; and those rises will far exceed any future reduction. For example, In New South Wales, South Australia and the ACT, significant hikes will occur in just a few weeks time.

Australia’s Clean Energy Council was generally quite positive about the report.

“The CET and reforms put forward by the Chief Scientist have the opportunity to lead Australia’s energy system into the 21st century,” said Clean Energy Council Chief Executive Kane Thornton.

However, Mr. Thornton expressed concern about some of the recommendations and how they may effect renewables; such as the proposed ‘Generator Reliability Obligations’ that he says “needs careful consideration to ensure they do not act as punitive measures that stifle innovation and unnecessarily drive up costs.”

For detailed analyses of the Report and other reactions to it, RenewEconomy has run a series of articles:

The full report can be downloaded here (PDF); but be prepared to invest a significant amount of time to read it cover to cover, as it’s 212 pages.

While the various parties duke it out over the contents of the report and what is implemented remains to be seen, solar power systems will remain a solid investment for reining in energy costs; now and into the future.

About Michael Bloch

Michael caught the solar power bug after purchasing components to cobble together a small off-grid PV system in 2008. He's been reporting on Australian and international solar energy news ever since.

Comments

  1. Pat Comerford says

    The climate war continues. Finkles review is a political sop to the LNP right wing and vested fossil fuel interests. Rather misguidedly much store was put in this review mainly stressing the authors reputation and credibility. As its turned out if you canvas opinion across the spectrum of interested parties, which this article did not, then the conclusions to date grade it a failure.

  2. Chris Yorke says

    If you prefer an intellectual study, rather than one based on self-serving industry pleas and amateurish personal prejudices, then Finkel’s report is a breath of fresh air.

    Based only upon a on reading of the executive summary and the authors’s short public interviews, Finkel delivered a decent result; one of the best two or three published to date in this area.

    Best aspects of the Finkel report:
    1. The CS has drawn a distinction between policies aimed at carbon suppression and those aimed at promoting renewable energy for its own sake.
    2. renewable energy generators should pay for more of their own storage, a suggestion in line with other recos (e.g. from AEMO) calling for renewable plant owners to bear the costs of integrating them into the grid.
    3. Better, clearer governance in NEM, but only after COAG appoints a Board. One hopes COAG agrees on scope and power of a new Energy Security Board. (Hmmm. have to think about that.)
    Weaknesses
    Though it is a good effort as far as it goes, it does not attempt to forecast future energy demand and leaves governments to join the dots. From what I read, Finkel takes no stand on population growth or economic growth, though both are enormously important to the energy policy field. Without consensus on a population target, it is nonsensical to set other targets.
    Though it was outside his terms of reference, Finkel did not come to grips with the efficacy of the NEM in an environment fraught with political intervention and policy contest. The assumption the NEM will continue was not debated.

    Even so, Finkel’s report should become a valuable input into further inquiries.

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