It seems only a stake through the heart will kill CoalKeeper, the Angus Taylor-era proposal to force households and small businesses to prop up lethal, emissions-intensive, coal-fired power stations despite economic inviability.
The Energy Security Board (ESB) today released its “high-level consultation paper” on the design of the proposed “capacity mechanism” intended to assure reliability by guaranteeing sufficient capacity in the electricity market — although the paper notes that the National Electricity Market (NEM) “has performed well against its reliability objectives since the NEM started”. A capacity mechanism would not address soaring electricity prices driven by international market forces, and it cannot guarantee against unplanned outages that have occurred repeatedly across coal-fired power generators.
Evidently aware that the tag “CoalKeeper” has stuck to the proposal, the paper goes out of its way to assure the reader all is well. “For the avoidance of doubt, the purpose of a capacity mechanism is not to extend the lifespan of ageing coal generators,” it says, insisting that the “structural challenges” of coal-fired power can’t be fixed via the capacity mechanism.
ESB chair Anna Collyer goes further in an op-ed today, saying “in the past, the concept of a capacity mechanism has been dubbed ‘coal-keeper’. It is a catchy line, but it is not the intent. The intent is to design a tool that provides more certainty around dispatchable capacity — that is capacity that can respond to a dispatch signal on demand.”
Except, in the fine print of the discussion paper, the ESB admits that it will indeed function as CoalKeeper:
Participation of both new and existing capacity could allow better coordination of entry and exit decisions at lower overall cost. Auction prices revealed through the proposed centralised auction processes should reflect the costs to capacity providers of remaining in, or entering, the market. For example, a capacity provider may decide to factor in refurbishment or retrofitting costs into their bid [emphasis added], and if this is cost-competitive against new capacity, then customers receive the reliability benefit of this asset remaining in the market.
A number of stakeholders have pushed hard for the exclusion of existing capacity from the mechanism, which would prevent existing fossil fuel generators from benefiting from the scheme. The ESB has rejected this — despite existing capacity like old coal-fired power plants being well past the point of returning their cost of capital, and thus potentially having an advantage over new capacity from which investors would be seeking a return on investment.
The nearest the ESB comes to addressing this is allowing that there may be some form of special pricing for new capacity in bidding in the “capacity market”.
Nowhere in the ESB’s paper is there any recognition of the urgent need to shut down coal-fired power from the perspective of emissions abatement and of the hundreds of people who die as a result of exposure to coal-fired power every year. There is only the de facto recognition that states like NSW and Victoria simply won’t cop coal-fired power being protected, with the suggestion they can “opt out” of applying the mechanism to coal.
Even less convincing is Collyer’s assurance that this won’t involve higher costs for consumers.
The ESB is aware of concerns that a capacity mechanism could cause customers to pay more for the same level of service. This is not the intent, and will be avoided through careful design … The intent is not to provide an additional revenue stream, but rather an alternative revenue stream.
Working through the paper in search of an explanation for how this will happen doesn’t yield much other than that it will be addressed through “careful design”, as if previous generations of energy bureaucrats haven’t “carefully designed” the current rules that saw generators gouging consumers until last week’s market shutdown. The ESB appears to suggest it might be achieved if the market price cap would be lower in the presence of a capacity mechanism, but the only assurance is that it will “ensure customers pay no more than is necessary”.
The ESB feels its assurance about the “intent” behind CoalKeeper is sufficient to placate concerns about consumers being forced to prop up coal. You’d be hard-pressed to find anyone who thought the intent of the NEM was to enable such egregious gouging that the whole market had to be shut down, or that the intent of powerful fossil fuel companies was anything other than to manipulate the major parties and regulators to keep them operating. The intentions of bureaucrats have nothing to do with it.
Clearly, I have not read this report. Thank you Bernard for relieving me of the pain. Based on the couple of reports I have read on this ESB report it appears to be a victim of myopic bulls*t.
It seems to me that the whole electricity generation, transmission and reticulation industry is hide-bound by a spectacular lack of imagination; ie it see things it seems exclusively in terms of the past and in terms of a grid. Have they not noticed that renewables can be generated almost anywhere? Or that piss*ng money up against the wall on massive central generation may be idiotic where renewables can be much more local (like on your bloody roof and shared within your neighbourhood)? Of that Tesla installed a huge battery in SA in a fraction of the time and for a fraction of the cost of redundant thermal generators? Or that it may be that self-generation for industry will be both economically advantageous and provide almost limitless geographical choice (like producing green steel on the Pilbara coast or green aluminium across the coast of northern Australia).
Personally, I would be happy to be facilitated into complete self sufficiency so I never have to again read a thing about the angst of preserving the ‘grid’ or the bulls*t synthetic National Electricity ‘Market’ and I can start reading about the re-industrialisation of Australia though producing masses of the cheapest energy in the world and the production of the cheapest steel and aluminium in the world. That is the way to deal with any perceived threat from China. Make cheaper base metals than China could ever do.
And we have not even dealt here with the opportunities for green hydrogen.
With 3 year maximum electoral cycles Australia has mastered short-termism.
Murdoch’s boys know a thing or two about that.
After all that the fossil fuel dinosaurs are the winners. They got what they wanted, a mainline from the public purse straight into their viens with no sunset clause. Well played fossils.
Labor had better keep this dreadful, self-defeating compromise down to the current emergency. The longer the ‘coalkeeper’ scam goes on, the deeper its teeth will sink into the Government’s arse.
Is not the ESB one of those “stacked” boards we have been reading about, like the AAT? Why then should we be surprised by their love of coal, or more accurately, their love for the profits of coal?
We are at the end of the age of neoliberal capitalism although it might not look like it right now. The noise from the ESB about the effectiveness of the NEM is the buzzing of blowflies around a stinking carcass. Energy generation and distribution is a public good. If, as with the now defunct NEM, it is set up as a trough for rent-seekers, then rent-seeking, price-gouging, and regulatory capture are an intended feature of the system. Market failure is built in.
While the political duopolists keep insisting there is no alternative, the public KNOW it is a confidence trick.