Double NEGative?

Double NEGative?
Unless you live under a rock, it’s a fairly safe bet that you have heard about the National Energy Guarantee – or NEG, and with everyone harping on about it, you probably know exactly what it is, what it will mean and how it will affect the energy market overall. Don’t you?

No? I can’t say I’m surprised. If they wrote a book on the subject, it wouldn’t exactly be a page turner, suffice to say this is probably one of the most important decisions our politicians are likely to make on our behalf, so at the very least you should know exactly what we’re in for if everything passes.

So what is the NEG, what does it claim to be, and what does it claim to solve? Well, if the hype is to be believed, it solves a number of issues, by both preparing our current grid infrastructure for reliable and fast uptake of renewable energy technologies while reducing carbon emissions nationally – that is if you believe the hype; in reality, those 2 key components are already taking place at a much faster rate than the NEG proposes, and the introduction of this policy will more than likely in fact slow the renewable energy industry down to an almost screaming halt, while not actually making energy for the average consumer even slightly cheaper.

Although it’s generally agreed amongst industry players that a standardised approach to carbon emissions and energy reliability across Australia would be welcome, the NEG has received it’s share of criticism - largely due to its lack of detail. For a policy which is essentially the backbone solution for carbon emissions and electricity costs for the Turnbull government, there is an almost scary lack of information about exactly how it is going to be implemented. This level of indecisiveness and lack of clarity is fine if you’re talking about a night on the town sipping Pina Coladas, but probably not so ok when you’re discussing federal policy – which is notoriously hard to change once it’s in place.

But to understand what the NEG actually is, it’s necessary to go back to where it started, which is, well… no one really knows. The first iteration of the NEG was conceived in about 3 days, which is obviously sufficient time to write federal policy which affects the future of the entire energy industry. No one knows who commissioned the policy proposal, and no one knows who wrote it, but it very quickly became the Liberal Bible for future energy policy. The problem was that; 1) it was painfully geared towards satisfying the slew of climate change deniers and skeptics lining the back bench of the cabinet of the Federal Coalition Government, as well as appeasing the big players in the market, giving them the power to restrict competition and promote carbon-based electricity generation, with little regard at all for a clean energy future, and 2) painfully incomplete. Regardless, the renewable energy sector continued its forward momentum with the dark cloud of the NEG overshadowing future growth, which has now meant the sector is healthier than ever, with the potential to reach the 2020 Renewable Energy Target earlier than expected.
Make no mistake though, large scale renewable project development is about money; Although there’s definitely a sense of pride for people in the renewable industry for creating and developing new and improved technologies that are good for the environment, the investors that have the bankroll to build these projects first and foremost are doing so in order to see a return for their outlay, a return which will become almost non-existent if the National Energy Guarantee goes forward in its current form. Investment drives the industry, and the NEG would essentially put an end to that, solidifying an archaic reliance on finite resources in Australia, and putting us even further behind the rest of the world.

One of the interesting things about the proposal is its claim of doubling renewables by the year 2030, which replaces the target set by the RET to achieve 33,000 Gigawatt Hours by 2020 and does away with the LRET and SRES schemes in place to offset large scale carbon emissions and support small scale installations respectively – yet, the current installed capacity is set to double by the year 2022 regardless of whether there is a NEG in place or not, smashing that target by a good 8 years. What’s important is what happens after that time, which with a NEG in place, is nationally guaranteed to be nothing.

A common argument from climate change deniers about renewable energy technology is its lack of baseload generation – by its very definition it is reliant on the sun shining, or the wind blowing, yet as the price of grid storage applications continue to drop, making dispatchable generation with almost instantaneous reaction times possible, this argument becomes increasingly redundant and only serves to outline the many absurdities of the proposal, many of which are the baselines for the policy and are either completely erroneous, or based on garbage facts.

On a retailer front through, one thing this policy does do is force small retailers out of the market due to higher fixed compliance costs, which gives incumbent retailers an advantage when it comes to vertical integration and operational scale, this doesn’t look good for competition in the markets, particularly when the big players already hold such dominance. The NEG is basically handing the reigns of the energy industry over to the guys who are already convincingly taking advantage of their customer base and gaming the National Electricity Market for their financial gain.

Anything else about the NEG remains largely conjecture, as the modelling hasn’t been made public, with only a handful of the details being leaked to the media, a fact which is yet another bone of contention for many people; if this is the government’s flagship policy, why have the details not been made public now only a week out from the decision being made on it? It really only leaves people asking what is being hidden.

I guess we’ll have the chance to find out next week, we can just hope that some level of sensibility is able to be negotiated into the policy prior to it becoming an embedded part of our national government policy structure. In its current form though, it is set to put the brakes on the renewable energy industry, return control of the electricity market to the big players and remove competition while doing nothing to bring down the price of electricity for the average consumer. Something that will yet again have profound effects, particularly on our rural communities where operating costs are already outrageously high, and creating financial stress on our primary producers, many of which are already looking down the barrel of yet another drought.

About the Author

Patrick is the Marketing and Communications Manager at Yates Electrical Services. When he's not designing stuff and writing stories, he performs as an acoustic soloist and spends time with his beautiful little family.

Patrick also likes long walks on the beach, sewing, and photoshopping himself to look like one of the Avengers. Booyah!