WITH power prices a hot topic of discussion early last year, the federal government directed the Australian Competition and Consumer Commission to conduct an inquiry into retail electricity pricing.
Competition in retail electricity markets should mean lower prices for residential and business consumers,” Prime Minister Malcolm Turnbull said when the inquiry was announced in March. “However, retail electricity markets don't appear to be operating as effectively as they could. A better deal in electricity is vital to keeping the lights on, delivering cheaper prices to families and businesses and sustaining jobs, particularly the thousands of jobs in our energy intensive industries."
The ACCC handed down its final 398-page report on Wednesday, and one of the most talked-about of its 56 recommendations has the federal government effectively becoming a “buyer of last resort” by offering to buy some of the output of “appropriate new generation projects”. This appears to have eased some of the concerns of those who believe that a new coal-fired generator will be needed some time soon, regardless of the acknowledged inroads that wind and large-scale solar are making into the market.
Time will tell whether this is the case or not. If renewable power lives up to the promises of its boosters by using a diversified array of power and storage sources to deliver guaranteed reliable electricity around the clock regardless of the weather conditions anywhere in the National Electricity Market states and territories, then the fervour for a new baseload power station will quietly subside. If not, then the presence of government-guaranteed power purchases may well provide the sort of policy certainty that coal’s supporters say is needed to finance a new power station.
On the other hand, there is little if anything that coal’s supporters can do to undermine the main arguments against its use: one being its environmental damage, the other being that if the reliability issues of renewables can be solved with batteries and other storage solutions, then we are talking about a power type with zero fuel costs – something that even the most efficient coal or gas-fired power station will have difficulty in competing with.
In the short term, the ACCC also says its policy prescription will bring down power prices, but as long-suffering consumers will attest, they have heard that promise before.