Wednesday, 08 August 2018
Posted by Monika Gudova
You’ve probably heard of the NEG already, but do you really know what it is and what it means for you? With high power prices putting stress on Aussie budgets and renewable energy gaining popularity, understanding what’s going on in the Australian energy market is more important than ever. So to get you started, we’ve answered some FAQ’s to break down the who, what, when, where and why’s of the NEG.
In a nutshell, the NEG (National Energy Guarantee) is the Turnbull government’s plan for Australia’s energy network between 2020 and 2030. Its three main objectives are:
This framework won’t apply nationwide, but rather within the National Energy Market (NEM). This includes NSW, ACT, QLD, VIC, SA, and TAS, and excludes NT and WA. Each state will be able to set their own emission reduction goals, but their outputs will all contribute to the national average.
The NEG promises that it will drive a reduction in household energy prices. New investment in renewable energy as part of the guarantee is expected to make a substantial contribution to lowering energy prices by up to 20% in the National Energy Market. In 2017, the NEG forecasted that the policy would see household bills drop by $400 a year, an estimate that was recently revised to $550.
Other sources are claiming that further investment into renewable energy, independent of the NEG, could provide much bigger savings. Many environmental groups, such as Greenpeace Australia, are saying the NEG’s 26% emissions reduction target is “grossly inadequate”. They suggest that a 45% target would be more suitable, which would see prices fall to around $60/MWh by 2030 compared to the NEG’s predicted $70-80/MWh.
The NEG has received broad support from the energy sector and criticism from environmental groups. The disagreement largely comes from the two opposing groups being unable to agree on renewable energy goals, and has split Aussies into two camps.
Regular Aussies are primarily interested in cutting their household energy bill, so opinions on the NEG are mixed due to uncertainty around what exactly will drive down energy prices.
What those fighting against the NEG are driving home is that it doesn’t support growth in the renewable energy sector, and isn’t doing enough to reduce carbon emissions and stop climate change.
The RET (Renewable Energy Target) is a Federal Government policy already in place that will see at least 23.5% of Australia’s energy coming from renewable sources by 2020. With current investments in the RET, it’s predicted that the NEG emissions reduction target of 26% by 2030 will be met by 2021.
This is causing people to worry whether the NEG will actually stunt the growth of the renewable energy sector due to its low emission reduction target.
To go ahead, the policy needs to receive support from all states in the National Energy Market. The decision as to whether or not Australia adopts the NEG is set to be made in early August but it’s future is uncertain, mainly due to a recent push to scrap the NEG and instead focus on making renewables Australia’s main energy source.
Whether or not the NEG passes, you’re probably looking to reduce your energy bill however you can. Check out Mozo’s energy comparison tool to compare energy providers and see whether you can cut costs by switching your energy plan.
If you’re considering green energy plans or switching to solar, head over to our energy cost cruncher for quotes from providers in your area, and make sure to tick the boxes for green energy or solar panels.