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| AGL has committed to eventually dump coal-fired power generation entirely. (ABC News: Dean Faulkner) |
The warning comes as the Prime Minister prepares to meet AGL chief executive Andy Vesey today over the planned closure of the Liddell power station in the NSW Hunter Valley by 2022.
The Grattan Institute's Tony Wood urged against the Government "arm twisting" Mr Vesey to keep Liddell open in the face of the company's commitment to eventually dump coal-fired power generation entirely.
"I think there's almost certainly a deal to be done there, but I think AGL would have a very strong view that their corporate position and their advertising says they're getting out of coal," Mr Wood said.
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| The Prime Minister will meet AGL chief executive Andy Vesey (L) later today. (ABC News: Nick Harmsen) |
Treasurer Scott Morrison said he was prepared to help AGL sell Liddell to a "responsible party" but repeated the importance of keeping it open to ensure future power supplies.
But Mr Wood counselled against any plan for the Government to intervene and possibly buy a guarantee to keep Liddell open, warning any perception of nationalisation would destabilise the market.
"I think it is always a bad idea for governments to intervene because then we're heading back towards re-nationalisation," he said.
"It is understandable that governments feel the need to do something, but the danger is they will rush in and make things worse. What Australia needs now is perspective, not panic."
Cost of energy security is higher prices: report
Instead, the Grattan Institute report said all sides of politics should work with energy companies and regulators on new ways to ensure reliable and affordable electricity supplies years ahead.
It suggests work needs to begin now on a "capacity mechanism" to encourage companies to invest in new power generation to reduce the growing threat of shortages and blackouts as early as this summer.
With such a mechanism, according to the report, energy companies could be paid for committing to providing power years into the future rather than only meeting the current demand.
However, the report warns the price of peace of mind for energy security would ultimately fall on consumers through higher energy prices.
"Eventually the customer pays for all of this. That's why it's very important to get this right to ensure we have the insurance we need to make sure we have the capacity in the future," Mr Wood said.
Last week, the Australian Energy Market Operator urged "a longer-term approach" in a bid to ensure electricity supplies.
The Grattan Institute report urged the Government to implement the recommendations of the Finkel Review, including a clean energy target to put a price on greenhouse gas emissions.
It also wants a more comprehensive assessment of future energy adequacy of generated supply and if capacity cannot be met, AEMO should introduce a new capacity mechanism.
Links
- Gas, not coal, the key to fixing electricity mess
- Former minister Canavan slams AGL for 'hypocrisy' over plans to ditch coal
- Grattan: Turnbull's rush for energy 'announceable' sows confusion
- AGL rejects Turnbull call to keep operating Liddell coal-fired power station
- The day Australia was put on blackout alert
- Coal and the Coalition: the policy knot that still won’t untie
- FactCheck Q&A: is coal still cheaper than renewables as an energy source?
- Finkel’s Clean Energy Target plan ‘better than nothing’: economists poll
- A perfect storm. An insider's view of failure of climate change policy in Australia
- The true cost of keeping the Liddell power plant open
- Coal-powered AGL boss Andy Vesey finds it's easy being green
- How will the reduced Renewable Energy Target affect investment?
- Australia’s biggest emitters opt to ‘wait and see’ over Emissions Reduction Fund
- What about the people missing out on renewables? Here’s what planners can do about energy justice
- Time for pragmatism, not panic, for the electricity market
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