Originally posted: August 14th, 2018
Households and businesses across Australia are struggling to power their lives with the ever growing cost of energy. As a result, the government is implementing a National Energy Guarantee to address the public’s concerns. Steven Noske, an Australian executive with over 30 years of experience working in the oil and gas industry, explains what this means for home and business owners throughout Australia.
Energy Prices and the Energy Trilemma
Australian citizens are struggling to keep the lights on in their homes and businesses, as it seems there is no end in sight for the rising energy prices. Specifically, Steven Noske explains, South Australians are facing the highest electricity prices in the country, as other Australians have greater access to numerous energy plans, creating higher price competition and cheaper options.
Australia is facing three main issues when it comes to their energy, also known as the energy trilemma: affordability, reliability, and emissions. Firstly, electricity bills have more than doubled in the last decade due to provider and generation costs. Secondly, the supply of electricity as outlined by the National Electricity Market in 1998, is no longer meeting the needs of Australian citizens. This is evident by statewide blackouts and “load shedding”, where demand for electricity is greater than what the main power supply can handle. Lastly, although emission levels are at their lowest in 27 years, it is increasing the cost of energy. Their must be a way to provide energy that is both inexpensive and environmentally friendly.
A National Energy Guarantee (NEG)
To tackle this energy trilemma, the government has created a National Energy Guarantee (NEG) that promises to create energy market certainty and bring reliable energy to every state with low emissions energy systems. Steven Noske explains that this guarantee is putting households and businesses first, with the expectation that energy bills will be reduced by over $500 by 2030. Not only will this make energy more reliable and affordable for citizens, NEG will also encourage investment in the electricity sector. More investment leads to a larger supply of electricity, which leads to lower prices. Additionally, the Australian Government is focusing investments on creating a cleaner energy system. Efforts include supporting carbon capture and storage (CCS) and funding concentrated solar thermal power plants. With NEG, the Australian Government is finally addressing the energy trilemma.
Arguments Against NEG
Although NEG promises to lower the price of energy and level of emissions for Australian citizens, Steven Noske warns that many are skeptical. Energy transition specialist Simon Holmes argues that NEG is a “half-baked” solution that so far does not fully address the problems it promises to address. Similarly, Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis, argues that in order for the Australian Government to deliver on their promises of fixing the energy trilemma, the Government must focus efforts on changing the grid transmission and distribution, which accounts for 50% of the retail price. Some environmental groups oppose the NEG as they fear the policy does not focus enough on emissions reduction. Instead, they argue for a larger focus on renewable energy, which will also drive down electricity prices. As it stands, more details of NEG must be released to the public, and NEG must be reworked to ensure that it can deliver on its promises to solve the energy trilemma.