Chris Bowen is forging ahead with a plan to pay baseload energy providers to maintain extra capacity to fill periodic shortfalls in supply.
Federal Energy Minister Chris Bowen is forging ahead with a plan to pay baseload energy providers to maintain extra capacity to fill periodic shortfalls in supply, as one of a suite of measures aimed at fixing the reliability of the crisis-ridden energy system.
“Our expectation is that coal probably won’t be part of that mechanism and that is because the purpose of the mechanism is to check in the new capacity to replace the coal that is coming out. We don’t see coal as part of the capacity mechanism,” he toldIt is one of several measures being pursued by the federal government, along with the imposition of a domestic gas reserve for future and expanded gas fields, and rejigging the domestic gas trigger so it is activated by price, not supply.
Labor supports the principle of the mechanism and believes it should also be used to encourage new technologies such as storage. “Most Western countries use capacity markets – most parts of the United States, the UK, Germany, Singapore, Japan – it’s actually quite uncommon for there to be an energy-only market like there is here on the east coast. And it’s quite clear that you have to manage a market not just for the good times. We’ve had our capacity market since 2006, and it’s been working very well.”
“The reason that the domestic gas policy works is it keeps the market well supplied with gas. And a well supplied market will have a low price and the challenge on the east coast is the market is not properly supplied, and therefore the price is high.”
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