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The National Energy Guarantee – who is it benefiting exactly?


What is the National Energy Guarantee?

Electricity Meter

The national energy guarantee (NEG) is an energy and climate policy introduced by the federal government, which right now is the only one in play. The NEG is made up of 2 parts:

1. A Reliability Guarantee, which is set up to deliver the correct amount of energy required to homes and business. It does not specify where the energy will come from only that it will be from ready to use sources such as coal, gas, hydro etc.

As this clearly specifies energy will be coming from coal in the governments policy document we know that it’s not on the government’s action plan to phase it out, which given the current climate issues it just seems ridiculous. As the coal power plants come to the end of their life we as a country should be looking forward to a clean energy source such as wind or solar not building more dirty coal power stations to pollute this beautiful country with!

2. An Emissions Guarantee, the idea behind this is to ensure that Australia meets its international commitments, which we already know that Australia is falling shamefully behind in.

So what does NEG mean to my energy prices?

Electricity bill and light bulb

Well you would need to have been living under a rock not to know we had an issue with our energy prices and at the moment, it’s the consumers (that’s you) that are suffering. We need a better infrastructure to deliver the energy to Australian homes and businesses and we need to increase the amount of (clean) electricity getting to the market. Simple math’s, increased supply of energy will mean a fall in price. This is what the NEG is supposed to deliver. In theory the NEG will eventually lower energy prices in Australia. However, will it be implemented in the right way I wonder?

According to the Governments Energy website as of June last year energy prices over the last 10 years have more than doubled, this varies from state to state with some suffering more than others. This is largely due to insufficient infrastructure.

Where will the energy come from?

Solar v's fossil fuels

The coal power stations that have been closing have impacted the supply of electricity into the grid, which has contributed to the increase in price as less power has been hitting the grid, although this was a win for the emissions target!

The cheapest & cleanest form of energy to produce is wind and solar and this is where we should be investing and generating future energy from, it would meet both Reliability Guarantee and Emissions guarantee mentioned earlier. However, sad to say this government is not as forward thinking as we would like and there is intent on building more coal power fire stations that only have a shelf life of between 40 and 50 years. About 70% of coal fire stations in Australia are around 30 years old so you can see in about 10 years we are going to be in trouble if provisions are not made now.

However, do we want to follow the same path as before and build more of these polluting plants that are an eyesore on our beautiful country or is it time to start a new trend and pave the way for future generations instead of leaving them with another mess to clean up after?

Pros of the NEG
• Given the crisis we may face in 10 years it helps knowing it’s been addressed.
• This policy will hopefully lead to the development of new technology to assist with outages, such as batteries and pumped hydro to provide energy in the short term for these outages.
• It allows for more renewables to be flooded into the market to reduce emissions, this target will be ever changing depending on the government, however hopefully it will help phase out coal and move to a clean energy future.

Cons of the NEG
• There is no focus on phasing out coal for a clean energy, with more clean energy entering the grid it will assist in lowering the price of your electricity.
• Retailers may be able to use carbon credits to meet their emissions target which would be a large fail for renewables, as this would reduce the push of large scale renewables onto the Australian market.
• We need to ensure that the system is fair for all retailers we don’t want the larger energy providers to be able to easily push out smaller retailers, this will also help reduce the amount of clean energy providers out there as they tend to be smaller companies, they will also have more control over the price of electricity increasing the cost to you.

How does Save Energy Save Money feel about NEG?

Honestly, we are still on the fence, this is the only policy that’s here and is it better than nothing. It doesn’t seem to us to be geared towards phasing out coal and moving to a clean energy future. However at least there is some kind of an emissions guarantee where Australia will be attempting to contribute to there international commitment, what that will be still seems ever so uncertain.

What’s your thoughts on the NEG v’s Julia Gilliad’s carbon tax and how do you think renewable will fair in the end?

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Julie Moore is Co-founder & Director of Save Energy Save Money, Australia’s first energy and price comparison website. With over 10 years’ experience in the corporate world Julie ensures Save Energy Save Money provides you with the energy information you need to make informed decisions. Helping to contribute to a more sustainable Australia.

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