The proposed National Energy Guarantee scheme (the Guarantee) seeks to help improve the reliability of electricity supply while bringing down electricity prices and reducing emissions at the same time. To achieve this, the Guarantee aims to provide ‘clear investment signals so the cleanest, cheapest and most reliable generation gets built in the right place at the right time’.

These are the goals we all share. But it is unclear whether and how the Guarantee, as described in the ESB’s draft, could achieve this. A scheme with the proposed design might lock in inefficiently low ambition on emissions reductions in the electricity sector, potentially put upward pressure on power prices and may even fail to improve reliability.

In this submission, we highlight selected aspects of the proposal that in our analysis would need significant modification in order for such a scheme to be able to help meet the stated goals, and others that would need elaboration in order to assess how it would work in practice.

This paper was prepared by: 
Frank Jotzo – Crawford School of Public Policy, The Australian National University (ANU)
Salim Mazouz – ANU Crawford School and Natural Capital Economics
Dylan McConnell – Climate and Energy College, University of Melbourne
Hugh Saddler – ANU Crawford School and private consultant