AGL Energy (AGL) welcomes the opportunity to comment on the Energy Security Board’s (ESB) capacity mechanism high-level design consultation paper.
While we agree with the ESB that there is some merit in considering additional incentives for dispatchable capacity, the ESB has not put forward a compelling case that its present high-level design, consisting of a centralised capacity mechanism to operate alongside the existing NEM structure, is the best approach when compared to other resource adequacy options available.
Instead, we consider there are other more compelling options, such as reserve mechanisms, which address similar concerns while also providing additional benefits to energy customers and the broader market.
We are particularly concerned at the potential for the proposed design to result in excessive costs for energy customers, and to dampen incentives for the broad range of emerging supply- and demand-side options that currently support reliability but also contribute to affordability and decarbonisation objectives.
A copy of AGL’s submission is available here.