Coalition energy policy collapses into chaos

…the Australian Energy Market Operator warns of an immediate shortage of power this summer and a longer-term threat from 2022 if Liddell shuts down as planned. The alarming conclusions, to be released today, say South Australia has up to a 33 per cent chance of failures this summer while Victoria has a risk of up to 43 per cent, raising the prospect of “load shedding” that cuts power to households and businesses.

AEMO is scrambling to find spare energy capacity before ­December to fill the gap, in a windfall for companies with diesel generators that can feed power into the east coast electricity grid at premium prices.

AEMO warns that NSW has up to a 46 per cent likelihood of “significant” unmet demand after Liddell closes, including outages lasting from two to six hours, unless the strategic reserve is set up to build new generators.

The new recommendations are separate from the dispute over whether to endorse a clean energy target to encourage renewable power at the expense of fossil fuels. The government is aiming to address the immediate problems with capacity and reliability before the debate on the target.

Energy Minister Josh Frydenberg said the new report on ­“dispatchable capacity” re­inforced measures already underway including mandating that renewable generators provide battery storage to improve ­reliability and all providers give at least three years’ notice before they close, in a bid to repeat the hit to prices and supply when the ­Hazelwood generator closed.

AEMO counters the push within the Coalition partyroom for a government subsidy to build new “high-efficiency” power plants, in a clear finding that could reshape the internal debate ahead of the decision on a clean energy target.

AEMO tells the government to avoid “unnecessary investment in new power plants with uncertain long-term business ­viability” and echoes similar warnings from the nation’s Chief Scientist, Alan Finkel.

The regulator’s new report calls instead for the “possible ­extension of the capability of some existing resources” such as expanding the coal-fired power stations already operating.

And the response at the AFR:

The Turnbull government has secured an in-principle agreement from AGL to sell its Liddell coal-fired power station in NSW to another operator who would be willing to keep it operating for at least five years beyond its scheduled closure in 2022.

Prime Minister Malcolm Turnbull has begun negotiating with AGL CEO Andy Vesey after the energy market regulator warned there was neither the time nor market incentive to build new coal-fired power stations to combat problems with reliability and price caused by a rush towards renewable energy and a lack of national energy policy.

Mr Vesey made it clear on Tuesday AGL would not extend the life of the power plant, saying the company was “getting out of coal” and was “committed to the closure of the Liddell power station in 2022, the end of its operating life”.

After Mr Vesey made these points on Twitter, Mr Turnbull rang him directly seeking clarification because it was at odds with what Mr Vesey had told him in a conversation earlier in the day.

Mr Vesey reassured Mr Turnbull, who is determined to avoid a repeat of the sudden closure of the Hazelwood power station, that AGL would be prepared to sell the power station to “a responsible party” who would continue to run the plant for profit alone.

This is plain chaos. Even the process was botched as various headlines contradicted one another through the evening. We’ve got the usual mix of a vacillating PM, ideological and party division, policy on the run, back flips, front flips and and cobbled responses to policy challenges with implications lasting decades, not to mention ad hoc intervention in markets with no consensus-building.

Who is going to buy this power plant under government fiat? What guarantees are they going to get for doing so? What promises will be made about the RET, gas policy, the CET, NEM so on and so forth? Surely it will be the tax-payer.

The idiot Coalition now finds itself champion of a renewable energy target specifically designed to close coal-fired power stations, and the buyer of last resort for said coal-fired power stations.

All so we can not fix a gas shortage which simply needs a little domestic reservation.

I mean, seriously, there is no brain at work here at all.