of high-emissions certificate cost new low emissions AEMO analysis for generation. passed on to generation as AEMC indicates Uneconomic plant consumers. investors respond this had greatest closes due to short to subsidy. In the AEMC adverse impact on term impact on modelling, power system wholesale spot wholesale prices security of prices. rise as total mechanisms system costs considered. increase following plant retirement. Can meet More The Authority’s May lead to encourage emissions targets technologies are modelling indicates overinvestment in new lower if measure can be eligible than relatively low new low emissions emissions increased over under a RET and impacts on retail generation as synchronous time. is therefore lower electricity prices. investors respond generation such as cost. to subsidy. gas and carbon Does not directly capture and incentivise the exit Somewhat higher storage. LOW of high-emissions resource costs EMISSIONS generation. than EIS in the TARGET (LET) Authority’s 3ºC scenario. Lowest resource costs after market based mechanisms under the Authority’s 2ºC scenario. Can meet Performs The Authority’s Transfers risk of Second highest emissions targets similarly to a LET modelling indicates investment to share of if measure but could lock in relatively low government and renewables under CONTRACTS adjusted over higher cost impacts on retail ultimately the Authority’s 3ºC FOR time. technologies if electricity prices. taxpayers. scenarios so could prices fall quickly. have security (CFD) Does not directly concerns. incentivise the exit of high-emissions generation. Unable to meet Lower resource Highest retail Provides some Depending on the required costs than under the certainty around design it could emissions technology-pull Authority’s date of closure for allow government reductions under options under the scenarios. plant which could to intervene to help the Authority’s 2ºC Authority’s 3ºC assist with with security. May REGULATORY Highest price scenario, but can and AEMC investment. be difficult to CLOSURE impacts under meet less stringent scenarios. compel plant to AEMC scenario. emissions targets. stay open e.g. due Highest resource to health and under the safety concerns. Authority’s 2ºC scenario. Will only reduce Can realise Can improve May reduce Decreased NATIONAL emissions if emissions access to efficient demand and demand, especially ENERGY energy savings reductions across technologies and wholesale prices, in peak times, SAVINGS are additional. eligible activities. reduce energy and lower could reduce SCHEME AND bills. requirement for pressure on DEMAND Can reduce cost new generation networks and MANAGEMENT of compliance for and transmission. reduce costs. MEASURES supply side sector.
of high-emissions generation. Uneconomic plant closes due to short term impact on wholesale spot prices. certificate cost passed on to consumers. In the AEMC modelling, wholesale prices rise as total system costs increase following plant retirement. new low emissions generation as investors respond to subsidy. AEMO analysis for AEMC indicates this had greatest adverse impact on power system security of mechanisms considered. LOW EMISSIONS TARGET (LET) Can meet emissions targets if measure can be increased over time. Does not directly incentivise the exit of high-emissions generation. More technologies are eligible than under a RET and is therefore lower cost. Somewhat higher resource costs than EIS in the Authority’s 3ºC scenario. Lowest resource costs after market based mechanisms under the Authority’s 2ºC scenario. The Authority’s modelling indicates relatively low impacts on retail electricity prices. May lead to overinvestment in new low emissions generation as investors respond to subsidy. encourage new lower emissions synchronous generation such as gas and carbon capture and storage. CONTRACTS FOR (CFD) Can meet emissions targets if measure adjusted over time. Does not directly incentivise the exit of high-emissions generation. Performs similarly to a LET but could lock in higher cost technologies if prices fall quickly. The Authority’s modelling indicates relatively low impacts on retail electricity prices. Transfers risk of investment to government and ultimately taxpayers. Second highest share of renewables under the Authority’s 3ºC scenarios so could have security concerns. REGULATORY CLOSURE Unable to meet the required emissions reductions under the Authority’s 2ºC scenario, but can meet less stringent emissions targets. Lower resource costs than technology-pull options under the Authority’s 3ºC and AEMC scenarios. Highest resource under the Authority’s 2ºC scenario. Highest retail under the Authority’s scenarios. Highest price impacts under AEMC scenario. Provides some certainty around date of closure for plant which could assist with investment. Depending on design it could allow government to intervene to help with security. May be difficult to compel plant to stay open e.g. due to health and safety concerns. NATIONAL ENERGY SAVINGS SCHEME AND DEMAND MANAGEMENT MEASURES Will only reduce emissions if energy savings are additional. Can realise emissions reductions across eligible activities. Can reduce cost of compliance for supply side sector. Can improve access to efficient technologies and reduce energy bills. May reduce demand and wholesale prices, and lower requirement for new generation and transmission. Decreased demand, especially in peak times, could reduce pressure on networks and reduce costs.