Bluescope Steel urges caution about stopping coal or gas too quickly

Excluding existing capacity from the new mechanism – which has been recommended by some market participants – would accelerate the disappearance of coal-fired power, which provides system security and base load dispatching capacity for the grid. , according to Bluescope.

“It should be possible for thermal generating capacity to participate in a capacity market to ensure affordable and reliable power until equivalent new renewable capacity closes – supported by a series of federal policies and initiatives. and state – becomes available,” he said.

No duplicate fees

Bluescope Steel – which needs reliable round-the-clock power to produce steel – said capacity market services should only serve as a “complement” to suppliers, rather than replacing them. their basic revenue stream in the energy market.

The Australian Aluminum Council – representing bauxite mining, alumina refining and aluminum smelting, which accounts for around 10% of the energy consumed in the NEM – said BSE must s ensure that large consumers do not face duplicate costs under a capacity mechanism.

“The capacity mechanism should support both existing participants and new participants, as long as customers are not paying twice for the same provision of service,” Australian Aluminum Council chief executive Marghanita Johnson said. in a memoir.

“The replacement ability must be available before the existing ability is released.”

Ms Johnson said the ability of states to opt out of the capacity mechanism, or only allow new entrants, could lead to less available capacity and higher electricity prices.

“It would essentially become a subsidy to certain types of capacity, paid for by consumers, which is inconsistent with the national energy goal,” she said.

Australian Energy Regulator chair Clare Savage said the capacity mechanism would help with the energy transition. Eamon Gallagher

Ms Johnson said the capacity mechanism needed to be kept simple to be operational in mid-2025 and then refined over time.

“This should send a signal to investors, while ensuring that consumers are not paying for unnecessary services in the market that are hardwired into the future,” she said.

Australian Energy Regulator chair Clare Savage – who is also vice-chair of the ESB – acknowledged that there were different views on the capacity mechanism, but said it would be crucial to help ease the transition to a low-emissions economy.

“There are a lot of different views we hear about the capacity mechanism and a lot of them are driven by where people fit into the system,” Ms Savage said. FRG weekend.

“What the Energy Security Board is tasked with doing is taking a step back from all of this, hearing all of these viewpoints, but then getting a sense of what is the best design of market for our system as we transition to net zero.”

The ESB will submit the final design of the capacity mechanism to energy ministers by the end of the year, with plans to start auctions in 2024 before it becomes operational in July 2025.