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Title: Energy-only markets and renewable energy targets: Complementary policy or policy collision?
Contributor(s): Nelson, Timothy (author); Reid, Cameron (author); McNeill, Judith  (author)
Publication Date: 2015
Open Access: Yes
DOI: 10.1016/j.eap.2015.04.001Open Access Link
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Abstract: Australia's 20% Renewable Energy Target (RET) was designed and implemented against a backdrop of several decades of continuous growth in electricity demand. Since the introduction of the policy in 2009 electricity demand has declined continuously. In this article, we analyse how Australia's National Electricity Market (NEM) has responded to falling demand and significant additional installed capacity as a result of climate change-related policies. We conclude that an energy-only market design, barriers to exit for incumbent plants, and time inconsistency of policy has resulted in investment in new renewable energy projects becoming largely intractable. In our opinion, changing the RET fixed GWh target will not alter this fact. To overcome barriers to exit, we examine three options for complementary public policy in the short-term: direct government intervention; a marketbased solution; or regulation. In the long-term, a redesign of the energy-only NEM market seems inevitable.
Publication Type: Journal Article
Grant Details: ARC/LP120200192
Source of Publication: Economic Analysis and Policy, v.46, p. 25-42
Publisher: Economic Society of Australia Inc
Place of Publication: Brisbane, Australia
ISSN: 0313-5926
Field of Research (FOR): 140209 Industry Economics and Industrial Organisation
140205 Environment and Resource Economics
140214 Public Economics- Publically Provided Goods
Socio-Economic Outcome Codes: 910211 Supply and Demand
910204 Industry Costs and Structure
910205 Industry Policy
Peer Reviewed: Yes
HERDC Category Description: C1 Refereed Article in a Scholarly Journal
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Appears in Collections:Journal Article
School of Psychology

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