More than two years on from the sudden closure of Victoria’s Hazelwood coal power station, quite a mess remains. It is clear the federal government’s market interventions have not worked. Electricity prices are higher and supply is tight. Consumers are not happy.
In the face of this, federal and state governments have felt pressured to act – especially after several severe blackouts attracted fever-pitch media coverage and prompted a national debate about electricity reliability. But their approach has been ad hoc and has made things worse in the long run.
Australia is in the midst of a great energy transition. The nation’s entire coal fleet will close over the next few decades, and the government must urgently improve its policy response or electricity consumers will continue to suffer. We propose a solution that ensures coal plants close in an orderly way.