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Posted: 2018-06-23 14:00:00

'Sticking point'

While the emissions issue has been well flagged, the preclusion of emissions goal revisions for a decade and the absence of provisions for failing coal plants being withdrawn are emerging as new issues.

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Revising the plan initially only after 10 years "seems to be a change", Mr Rattenbury said. "That will be another sticking-point [in winning ACT approval]."

The Turnbull government's target of August 10 for approval of the NEG may be challenging, not least because complex design issues remain unresolved. Some Federal Coalition backbench MPs are also convinced the plan favours renewables over coal.

“The Commonwealth continues to work with the Energy Security Board (ESB) and the states and territories in finalising the [NEG] in the lead-up to the COAG Energy Council meeting in August,” Mr Frydenberg said, declining to comment on specific concerns.

The plan does not anticipate sudden exits of a coal-fired power station, Mr Rattenbury said. He described that absence as "an inherent flaw".

"We've seen the impact from Hazelwood" on triggering a spike in electricity prices, he said. The brown coal-fired power station gave just six months' notice of its closure in March 2017, and other plants have also shut abruptly.

Hazelwood power station's sudden closure in March 2017 sent wholesale electricity prices soaring.

Hazelwood power station's sudden closure in March 2017 sent wholesale electricity prices soaring.

Photo: John Donegan

'Pipe dream'

The likelihood of further withdrawals is increasing said Salim Mazouz, a principal at consultancy NCEconomics.

"As renewable energy's share increases, coal-fired power stations will have to load-follow more and more, ramping output up and down, and increasing the wear and tear on equipment," he said.

A notice period of three years for planned exits, as the ESB is now consulting on, "is a pipe dream", Mr Mazouz said.

Regulators will struggle to come up with penalities that would force an operator to spend possibly hundreds of millions of dollars to repair a failed boiler. "You can't have a stick", and so a three-year notice period would have little meaning, he said.

Dylan McConnell, a researcher at Melbourne University's Climate and Energy College, said new technical papers released on Friday also don't appear to address exits - planned or otherwise.

"Without a doubt, the biggest challenge to reliability is the unexpected closure or withdrawal of a large coal generator at short notice," Mr McConnell said.

As Mr McConnell noted in a joint submission on the NEG's design:

"If anything, the risk of sudden exit is rising as the coal plant fleet is ageing, the economics of coal plants is deteriorating and coal plants are increasingly load following, putting equipment under additional stress. Also, the effects of additional closures at short notice is likely to be more pronounced, at least in the short term, given the reduced capacity margins after the closure of the Hazelwood, [and South Australia's] Northern and Playford power stations."

Mark Butler, Federal Labor's climate spokesman, said the opposition was "still studying the latest details of the NEG design and engaging with stakeholders".

"The current emissions targets will completely strangle jobs and investment in renewable energy, and will not support one single large project for the entirety of the 2020s - pushing costs up and jeopardising reliability as old coal generators continue to fail," he said.

Peter Hannam

Peter Hannam is Environment Editor at The Sydney Morning Herald. He covers broad environmental issues ranging from climate change to renewable energy for Fairfax Media.

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