The crisis hit at a time when global coal and gas prices are at record highs, and last week led the energy market operator to cap wholesale gas prices and for the first time force exporters to divert gas supplies to the domestic market.
Australia needs new back-up capacity for renewable energy as coal-fired plants, which provide around 65 per cent of the country’s power supply, are set to close down over the next 20 years, with several closing in the coming decade.
To help drive investment in new power capacity, ministers agreed the country needs a “capacity mechanism” which would provide payments to owners of power that is available at any time, such as energy storage, for when the sun is not shining or the wind is not blowing.
Regulators plan to release their latest proposal for a capacity mechanism shortly.
“And we are very keen to see that implemented as a matter of some urgency,” Bowen said.
The capacity mechanism was first proposed nearly a year ago, but faced opposition from those who see it potentially prolonging the life of coal-fired generation.
Bowen said ministers agreed the capacity mechanism should encourage “new technology”, but declined to say whether it could include payments to coal-fired plants.
Longer term, they also agreed to work on a national energy transition plan, in stark contrast to the past decade when states set their own goals in the absence of a national policy.
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