We believe that the National Electricity Guarantee could provide a great opportunity to reconnect customers to the signals of the market – as long as we get the details right.  

We’re pleased to have this opportunity to have input on the National Emissions Guarantee Draft Detailed Design for Consultation.

For a growing business, we have committed substantial time, energy and resources to this issue given its significance and importance. Our business outcomes, which are projected to have continued and rapid growth moving forward, are clearly demonstrating the increasing value being obtained through (C&I) customers being “connected to the market signals”.

Flow Power is already dealing with and managing a number of the challenges identified in the consultation paper. Our Corporate PPA model is playing an important role in supporting the development of large scale renewables by providing price confidence to investors. As our model values developments that are positively correlated to the spot market price and our customers’ demand profiles, we will continue to first and foremost support best fit, cost effective solutions.

It is our firm belief that this will increasingly provide substantial value to business customers (by prioritising operations based on their business requirements and pricing profile) and to the market as a whole. Any change in arrangements must act to support and further enhance price signals that are fundamental to how this value is obtained.

We maintain the following concerns with respect to the current design mechanisms:

  • Most of the work completed to date, including much of the Technical Working Papers, continues to include high level design details that account for the current power system rather than evolving developments;
  • As we saw with network gold-plating, it appears many of the NEG obligations will result in worst-case scenario planning locking in potential forecast errors, thereby potentially removing the pricing signals that may otherwise drive the investment (or divestment) required.

We raised several items in our initial submission in March that we feel are yet to be fully explored, namely:

  • Arrangements associated with the guarantee must ensure transparency and liquidity in contracts associated with satisfying the reliability and emissions obligations – simply entering these items into a registry for compliance does not necessarily ensure suitable price discovery (as witnessed in the LGC market);
  • The treatment of demand response is still particularly concerning and may discourage adoption due to NEG compliance concerns

Although we thank the ESB for its interactions with our business in recent months, we still affirm there is much more detail that needs to be addressed and worked through before final ratification occurs, even if this means slowing down the current consultation rate in the interests of getting it right now.

A far worse outcome would be to race the implementation ‘in the National Interest’ only to be back at the drawing board within a few short years!

Read the full submission