Energy policy could spur more shareholder hostility

Concerns over investor activism are rising as the federal government's new energy policy forces power companies to include coal and gas in their generation mix.

AGL's Liddell power station in the foreground and the Bayswater plant behind. 

The government's National Energy Guarantee is putting greater obligations on generators and retailers to ensure energy security and reliability of supply, which includes coal and gas.

According to Energy Minister Josh Frydenberg, coal and gas energy sources will account for between 64 and 72 per cent of Australia's future generation mix.

 Cole Latimer’s story in today’s Melbourne Age - “Energy policy could spur more shareholder hostility.”

Biggest risk to grid security is coal. gas settings, not wind or solar

The biggest threat to network stability in Australia’s electricity grid is not from an increase in renewables such as wind and solar, but the control settings on the dominant fleet of “synchronous generators” – namely the country’s coal and gas fleet.

These conclusions come in a significant new study – submitted to government authorities, network operators and the market rule maker – that could help turn the current debate about renewables versus fossil baseload power on its head.

The report – prepared by Kate Summers, an electrical engineer with Pacific Hydro, and energy systems expert Bruce Miller – is important because it suggests that the biggest threat to Australia’s energy security comes not from an increase in wind and solar, but from the control settings of the coal and gas plants that have dominated the grid for the last few decades.

It is the result, the authors say, of an economist-driven decision at the start of the National Electricity Market in 1999 to adopt a market-based system for ancillary services, in contrast to nearly every other market where frequency services are mandated with fixed contracts.

Read the RenewEconomy story by Giles Parkinson - “Biggest risk to grid security is coal. gas settings, not wind or solar.”