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

• Published in: Energy policy Vol. 120; pp. 697 - 713
• Main Author: Simshauser, Paul
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Ltd 01.09.2018; Elsevier Science Ltd
• Subjects: Adequacy; Climate change; Climate change policy; Climate policy; Coal; coasts; Decarbonization; Delayed; Discontinuity; Electricity; Electricity pricing; Energy; Energy policy; Energy transition; Environmental policy; Garbage; Garbage can theory; Generators; Investments; Liquefied natural gas; Markets; municipal solid waste; Policy making; Prices; Resource Adequacy; South Australia; Supply & demand; Supply-side economics; Transparency; United States; Waste containers; Wastes; wind; Australia; United States > US; United States; South Australia; Resource Adequacy; Climate change policy; Garbage can theory
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2018.05.068

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. •Conditions in Australia's NEM deteriorated in 2016/17.•Coal plant is exiting, but entry of renewables has been delayed.•This follows two decades of climate change policy uncertainty.•Gas plant entry has been distorted due to gas market failures.