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Garbage can theory and Australia's National Electricity Market: Decarbonisation in a hostile policy environment

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  • Simshauser, Paul

Abstract

After two decades of consistent economic and technical performance, conditions in Australia's National Electricity Market (NEM) deteriorated sharply in 2016/17. Prices more than doubled on the east coast, tripled in South Australia (SA), and the SA regional grid collapsed. Nothing spectacular occurred with final demand – this was a supply-side energy crisis driven by the exit of 18% of Australia's coal-fired generation fleet and the inadequate entry of new plant. Australia's NEM encountered an uncoordinated exit-driven episode of the Resource Adequacy problem. In the USA where 18% of coal plant has also exited, Resource Adequacy and low cost energy has been maintained by the entry of an enormous fleet of wind, solar and gas-fired generators. In Australia, an equivalent response did not occur; decades of climate change policy discontinuity meant the speed of coal plant exit was unpredictable, entry of renewables delayed through stop-start policy, and gas-fired plant was subject to critical hold-up due to excess LNG plant investment. Resolution requires a united and stable climate change policy architecture that works with, not against, the NEM's world-class institutional design, and greater transparency around planned plant exit.

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  • Simshauser, Paul, 2018. "Garbage can theory and Australia's National Electricity Market: Decarbonisation in a hostile policy environment," Energy Policy, Elsevier, vol. 120(C), pages 697-713.
  • Handle: RePEc:eee:enepol:v:120:y:2018:i:c:p:697-713
    DOI: 10.1016/j.enpol.2018.05.068
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    Cited by:

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    4. Simshauser, P., 2021. "Renewable Energy Zones in Australia’s National Electricity Market," Cambridge Working Papers in Economics 2119, Faculty of Economics, University of Cambridge.
    5. Tracey Dodd & Tim Nelson, 2019. "Trials and tribulations of market responses to climate change: Insight through the transformation of the Australian electricity market," Australian Journal of Management, Australian School of Business, vol. 44(4), pages 614-631, November.
    6. Nong, Duy & Nguyen, Trung H. & Wang, Can & Van Khuc, Quy, 2020. "The environmental and economic impact of the emissions trading scheme (ETS) in Vietnam," Energy Policy, Elsevier, vol. 140(C).
    7. Billimoria, Farhad & Poudineh, Rahmatallah, 2019. "Market design for resource adequacy: A reliability insurance overlay on energy-only electricity markets," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.
    8. Yasir Alsaedi & Gurudeo Anand Tularam & Victor Wong, 2021. "Impact of the Nature of Energy Management and Responses to Policies Regarding Solar and Wind Pricing: A Qualitative Study of the Australian Electricity Markets," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 191-205.
    9. Saleem H. Ali & Kamila Svobodova & Jo-Anne Everingham & Mehmet Altingoz, 2020. "Climate Policy Paralysis in Australia: Energy Security, Energy Poverty and Jobs," Energies, MDPI, vol. 13(18), pages 1-16, September.

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