However, the company suggested a better approach would be to “limit the scope” of the mechanism to new resources only.
“This provides more confidence as it is based on a transparent identification of a problem, namely any reliability gap forecast by the Australian Energy Market Operator,” he said.
Origin and EnergyAustralia also said more needed to be done to facilitate and manage the orderly exits of coal-fired power stations. “Certainty on closure dates should de-risk new incoming investment, which would help accelerate the transition,” EnergyAustralia said.
The Energy Users Association of Australia, representing some of the nation’s largest corporate energy users including Woolworths, BlueScope Steel and building material supplier Brickworks, said the risk of differing state-by-state capacity mechanism rules risked driving up bills and inflating costs for customers.
“We must strive for a nationally consistent approach to energy market reform to avoid unnecessary, inefficient investment and duplication of consumer costs,” said chief executive Andrew Richards, whose members employ more than 1 million Australians.
Opponents of the capacity mechanism, including environmental campaigners, have dubbed the proposed capacity mechanism “Coal Keeper” and fear it may delay the transition to net-zero emissions.
Large renewable energy developers have also argued the reform is unnecessary and may lead to higher bills, calling instead for the introduction of a national “storage” target to spur big batteries and hydro projects.
“Government needs to be looking at ways to bring more clean, low-cost renewable energy into homes and to power industry without paying unreliable and expensive coal and gas to stay open,” the Clean Energy Council’s Kane Thornton said last month.
Richards, in his submission, urged ministers to be wary of those suggesting that deploying more renewable energy could “somehow fix the issues created by increasing levels of variable renewable energy technology”. He added that grid-scale batteries, which presently had between two and six hours of duration, could not alone resolve the gaps in supply and reliability that were emerging across the market.
The Australian Energy Council, representing the nation’s major power generators and retailers, called for the mechanism to treat all technologies equally in terms of their ability to support the grid, and said concerns about emissions should be addressed though targeted environmental policy.
“A capacity mechanism is intended to provide resource adequacy assurance to meet customer needs with respect to reliability,” the group said.
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