Path cleared for release of Turnbull's reliable energy package

Malcolm Turnbull's long-awaited energy package will be released as soon as next week after the energy committee of cabinet approved the package on Wednesday, clearing a major hurdle to the policy's release.

The energy package will dump Chief Scientist Alan Finkel's proposal for a clean energy target and, instead, focus on a clutch of measures aimed at fixing reliability issues in the National Electricity Market, and improving electricity affordability.

The full cabinet is now likely to examine the package of measures next Monday ahead of the package being presented to the Coalition party room as early as Tuesday morning.

Along with resolving the same-sex marriage issue this year, finalising its post-2020 energy policy is a key political objective Malcolm Turnbull has set his government, and is seen within the Coalition as a necessary hurdle to be cleared if the government is to revive its fortunes in 2018.

Energy Minister Josh Frydenberg. Photo: Andrew Meares

Energy Minister Josh Frydenberg. Photo: Andrew Meares

The politically contentious package has been crafted to meet a trio of economic, environmental, and political imperatives that have bedevilled governments and undermined investment uncertainty in the energy sector for a decade.

But it also risks re-firing a simmering climate change and energy affordability argument in Australian politics that has torn down a succession of leaders, and caused deep philosophical divisions within the conservative side of the political establishment.

Already the government has shifted the rhetoric of the debate from one predominantly aimed at addressing carbon output and meeting Australia's international commitments, to one of guaranteeing household and business energy security in a grid increasingly vulnerable to blackouts due to a reliance on abundant but non-syncronous solar and wind generation.

Fairfax Media has been told the measures will include provisions designed to ensure that coal fired power plants nearing the end of their life such as the Liddell plant in NSW, which is due to shut in 2022, as well as Vales Point (NSW), Yallourn (Victoria) and Gladstone (Queensland) can stay open and firing as long as possible, to ensure the supply of baseload power.

It is likely there will be a generator reliability obligation, as suggested in the Finkel review, to ensure that renewable energy produced by solar or wind is "firmed up", either by battery storage, pumped hydro storage or "peaking" gas plants, which supply power at time of peak demand.

The energy package will also address the need for Australia to reduce its emissions by 26-28 per cent by 2030, as committed to in the Paris climate change agreement.

But it is increasingly clear the Turnbull government is banking on technological advancement and the falling price of renewables to ensure that Australia meets those Paris targets.

Earlier this week, Energy Minister Josh Frydenberg said it was possible to "simultaneously put downward pressure on prices and enhance the reliability of the system, while meeting our international emissions reductions targets".

He stressed the importance of reliability and affordability, highlighted the fact that in the past seven years, the cost of wind-powered generation has halved and said that by 2020, battery technology costs are expected to fall 40 to 60 per cent.

A source familiar with the Turnbull government's energy package said the reliability was the major problem that the energy package would try to solve, highlighting blackouts in South Australia and warnings of energy shortages in Victoria contained in the Australian Energy Market Operator's recent report.

Ministers will be told the policy aims to let the multiple technological advances under way in the sector handle the climate change end of the problem with the government's role being to ensure the reliability and affordability challenge is addressed.

To do this, the Turnbull government is expected to place an emphasis on how renewable energies such as wind and solar can be buttressed by partnering with gas, pumped hydro, and battery storage.

The story Path cleared for release of Turnbull's reliable energy package first appeared on The Sydney Morning Herald.

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