One senses that Chief scientist Alan Finkel is just a little frustrated.

The center-piece of his land-mark Finkel Review, the clean energy target, has been left in the gutter by weak-kneed politicians, and his attempts to bring perspective to the issue of storage has been branded as “eco-evangelism” by the same forces that make policy makers tremble in their bed at night.

Little surprise, then, that Finkel chose to focus his last energy speech of the year on the “Myths and Legends of the Australian electricity market”, delivered to the ANU on Wednesday afternoon.

And in doing so, he delivers some major brick-bats to both the country’s policy makers (politicians) and its regulators.

Finkel argues that Australia has managed a unique trifecta – high prices, high emissions, and high uncertainty – and fallen behind the rest of the world. And he has no doubt who is to blame.

“Everyone else has a strategy,” says one of the key points of his presentation (see above). The next line is equally damming: “Regulatory system suffering 10 years of policy paralysis.”

Energy insiders and observers know exactly what Finkel is referring to: the first is clear, the political impasse caused by the Far Right and its opposition to basic economics and science.

The second offender would be interpreted as the Australian Energy Market Commission – the rule maker that has stood in the way of blindingly obvious reforms such as introducing environmental considerations into the National Electricity Objective, and which has resisted and delayed nearly every proposed change that would nudge Australia’s ageing, creaking energy infrastructure into the 21st Century.

As an example, the switch from 30 minute to 5-minute settlements, a rule change seen as critical to supporting the introduction of battery storage and other fast response technologies, and to end the rampant but apparently legal gaming of the market by the big generators.

The 5-minute rule will come in, but not until 2021. Finkel was asked about this in questions, and was reasonably diplomatic: Timing was an issue, he said, but at least 2021 was better than nothing.

The bitter irony? The AEMC has now swept itself into the void created by the Coalition’s rejection of Finkel’s Clean Energy Target to propose a re-write of the rules and the introduction of a reliability and emissions obligation.

And who would get to write these rules? The AEMC. And again, it seems the underlying principle of the proposed National Energy Guarantee is that something must be better than nothing. Not everyone is sure about that.

Nevertheless, Finkel left the audience in no doubt as to what he saw as the long-term energy future: a cheaper, cleaner (zero emissions) and more reliable grid built around solar, wind, battery storage, pumped hydro and digitalisation.

To get there however, some major road-humps have to be negotiated – mostly in the form of policy-makers and rule-makers. And to do that, clearly some myths have to be dispelled.

These are the six myths that Finkel addressed in his talk, along with some of the key slides that went with them:

Myth One: It’s not too late to go back on energy market reform



It is too late, he says. There is rampant disruption from newer, smarter, cheaper technologies. What is needed are policies that provide a trajectory to zero emissions (Australia does not have one, not even a vague target), a mechanism (no again), and a reliability obligation (nope).

Myth Two: Renewable shares and emissions obligations are interchangeable

This was to underline the point that it is all very well to have high renewable energy targets, but a considered approach that takes in security, reliability and affordability needs to be included. That was what the Finkel Review was about, but the key component – the CET – was rejected.

Myth Three: It’s only about next summer

Nope, it’s about the long-term transition. This was an appeal for Australia to adopt some longer term policies – in electric vehicles, and even hydrogen; something that looks to the emissions challenges of the futures and plays to Australia’s huge advantages in minerals such as lithium, wind and solar, and its engineers and scientists.

Myth Four: The market will work it out

The table above summarises some of the key interventions Finkel recommended in his review – and most notably the strategic reserve and the day ahead market, that is favoured by the Australian Energy Market Operator, but whose future is clouded under the vague recommendations of the National Energy Guarantee.

Myth Five: Batteries are for toys and iPhones

Good timing. The Tesla big battery will be formally opened on Friday, and will be just the first of many large-scale battery storage installations, and will be followed closely by pumped hydro projects, be they Snowy Hydro 2, the Kidston solar plant and “water battery”, or the numerous projects being put together in South Australia and NSW. Storage will be the key to fill the gaps between wind and solar.

Myth Six: It’s easy

It will not be easy. Australia has unique challenges, not least the nature of its grid – the world’s most elongated, from Cape York down to Port Lincoln in South Australia.

It’s one thing to assume that change will happen anyway; Finkel says he would be much more comfortable with “certainty” than “hope.” It will need something that has not been achieved to date – a broad strategy, political strength, and effective market rules.

Here’s hoping.