A plan for Australia’s energy future has been met with a mixed response from resource and energy sector leaders.

Viewed as the blueprint to the way forward for a lower emission future, Dr Alan Finkel AO outlaid the Final Report of the Independent Review into the Future Security of the National Electricity Market.

Commissioned by federal and state energy ministers last year, the review was tasked to evaluate the country’s energy security and reliability and was largely prompted by the SA blackouts which put the national spotlight on energy security.

COAG Energy Ministers agreed the review would provide advice to governments on a coordinated, national reform proposal.

Most notably, the Review Panel concluded that a Clean Energy Target is the most effective mechanism to reduce emissions while supporting security and reliability.

“Our electricity system is entering an era where it must deal with changing priorities and evolving technologies. If the world around us is changing, we have to change with it. More of the same is not an option, we need to aim higher,” Dr Finkel said.

“If we adopt a strategic approach, we will have fewer local and regional problems, and can ensure that consumers pay the lowest possible prices over the long term.”

Dr Finkel said the blueprint provided a strategic plan for Australia’s electricity future but governments needed to take the steps to implement the recommendations for the solutions to be realised. “It is up to Federal, State and Territory Governments to take these recommendations, make decisions, add detail and drive it forward,” he said.

Orderly transition measures

The Review Panel concluded that a Clean Energy Target was the most effective mechanism to reduce emissions while supporting security and reliability.

“Existing large electricity generators will be required to give a three years’ notice of closure to stimulate investment opportunities for new generation and give communities time to adjust to the loss of a large employer,” Dr Finkel said.

Dr Finkel noted Australian, State and Territory governments would need to agree to a national emissions reduction trajectory to underpin the orderly transition measures.

“During the transition, security will be achieved through obligations on new generators to provide essential services to maintain voltage and frequency,” he said.

“Further, new generators will be required to guarantee supply of electricity when needed at a level determined following regional assessments by the market operator.”

System planning

The report recommends a system-wide grid plan to inform network investment decisions and ensure security is preserved in each region.

This would also include a list of potential priority projects to enable development of renewable energy zones.

Stronger governance

The report calls for a new Energy Security Board to drive implementation of the blueprint and deliver an annual health check on the state of the electricity system.

“The National Electricity Market is 5,000 kilometres long, spans five states and one territory and has more than 9 million metered customers. It’s essential that we get it right,” Dr Finkel said.

The report drew on an extensive public consultation process, with more than 390 public written submissions received and around 450 attendees at public consultation sessions held in five capital cities in early 2017.

The report also undertook more than 100 meetings with stakeholders.

Industry reaction

The Finkel Report attracted only cautious support from the nation’s biggest power generators.

EnergyAustralia managing director and Reserve Bank board member Catherine Tanna told The Australian that the Finkel report contained sensible measures.

“We urge all parties, industry and government alike, to take the time to consider the report in its entirety,” Ms Tanna told The Australian.

“A sensible next step is for governments to engage industry and other stakeholders on the reform package to understand its implications and discuss the best way to implement it.”

In the article, Origin Energy chief Frank ­Calabria said he hoped the report would pave the way for a more co-ordinated national approach to energy and climate policy, but it was far from settled.

“The important work now begins as industry and governments work together to translate recommendations into actions,” Mr Calabria said.

Australian Energy Council chief executive Matthew Warren said the new model proposed by the review was a potential game changer to the current energy policy and investment gridlock.

“For the past decade we’ve been trying to devise economic instruments to force the early closure of high emissions electricity generators. This has resulted in a decade of discussion and experimentation with carbon pricing or taxing in some form,” he said.

“Dr Finkel’s report identifies that the real challenge in the national electricity market has shifted: old coal generators are exiting faster than we can replace them. What we face is an investment problem rather than a carbon pricing problem.

“The Finkel Review provides a welcome re-set in the debate on energy and climate policy in Australia. It provides a real and credible pathway to build a lower emissions grid and lower energy prices whilst maintaining a reliable system.”