Guest essay by Eric Worrall

The Australian government is so impressed by the alleged plunge in renewable and battery storage costs they think it will no longer be necessary to subsidise renewables.

Coalition rethinks need for clean energy target as renewable cost plunges

The Turnbull government is rethinking the need to adopt a clean energy target, believing the rapidly falling cost of renewable energy means there may no longer be a requirement for subsidies.

In the keynote address to The Australian Financial Review National Energy Summit, federal Energy Minister Josh Frydenberg will highlight the falling costs of wind and solar energy, including battery storage capacity, as he stresses emissions reduction cannot come at the expense of reliability and affordability.

“It is challenging but possible to simultaneously put downward pressure on prices and enhance the reliability of the system, while meeting our international emissions reductions targets,” he will say at the start of the two-day summit that begins on Monday.

The speech will signal a possible shift away from plans to design and implement a CET from 2020 onwards, in the belief emissions reduction can be achieved without such a scheme.

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Mr Frydenberg will place great emphasis on reliability. Apart from already flagged reliability measures such a strategic power reserves over the next four summers, and the push to keep open the Liddell coal-fired power station, Mr Frydenberg will flag the introduction of “day-ahead commitments” to apply to the renewable energy industry.

Currently, a wind farm, for example, produces power on the same day it sells it into the market. Under the change, it would have to commit to provide the power the day before, meaning it would need either back-up storage or an agreement with a gas generator, for example, to meet the commitment should the wind not be blowing.

“It is against this backdrop of a declining cost curve for renewables and storage, greater efficiencies that can be found in thermal generation and the need for sufficient dispatchable power in the system that we are considering the Finkel review’s 50th recommendation to which we’ll respond before the end of the year,” he will say of the plans for a CET.

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