The design of the Turnbull government's national energy guarantee (NEG) is "innovative and elegant", and could supply as large a share of renewable energy into the market as proposed by the Finkel Review, Bloomberg New Energy Finance says.
While cautioning that the scheme to impose minimum reliability and emission reduction goals on the electricity market remains "in the early stage of development", the plan could result in 42 per cent of power being sourced from renewable energy by 2030, the energy consultancy said.
"It solves a whole bunch of problems in one package ... in an incredibly elegant way," Kobad Bhavnagri, head of BNEF in Australia, told Fairfax Media.
"Those who think it is throwing a lifeline to coal are mistaken."
BNEF's comments come as the federal government gave the states and territories just one day to respond to the NEG modelling scenarios it has asked the Australian Energy Markets Commission to canvass.
The scenarios include testing impacts of a straight-line reduction of emissions from 2020 to 2030, and an "optimised non-linear" one that presumably allows for a ramping up for renewable energy towards the end of the period, according to the letter sent to state governments and seen by Fairfax Media.
Mr Bhagnagri said he was surprised the briefing notes given to the states on Tuesday had predicted only a 28-36 per cent share of renewables by 2030. Various groups have seized on this estimate to criticise the plan.
If there were losers in the scheme, it might be large-scale solar and wind energy projects, which might be limited to 4.8 gigawatts of new capacity from 2021-30 because rooftop solar could crowd them out, BNEF said.
Mr Bhavnagri weighed into the debate about whether the scheme would generate a price on emissions, saying "the scheme does implicitly create a carbon price".
Tom Koutsantonis, South Australia's Treasurer and Energy Minister, said the scheme was "a carbon price but does not bear its name".
"There's only one way to [meet the Paris climate goals] and that's to restrict the emissions of carbon," Mr Koutsantonis told a lunch in Sydney. "They've got a price signal in place to do that - that is a carbon price."
Model uncertainty
One notable aspect of the scenario modelling - sent to the states and territories for comment on Friday - was federal Energy Minister Josh Frydenberg's request the Australian Energy Markets Commission should "assume a constant target post-2030" in its work.
"Does this mean that electricity emissions would flatline from 2030, or that demand for electricity would flatline?" Alan Pears, an energy expert with RMIT University asked.
"Does it mean that all scenarios should assume the same carbon budget to 2050?"
"The modelling should test whether the NEG can deliver on a 2-degree pathway," Mr Bhavnagri said, referring to the upper limit of the Paris climate goal.
"This is a core sensitivity. For power sector policy to be credible and durable, it must have the capability of meeting that goal," he said. "Many of the world's largest corporations stress-test their portfolio's for a 2-degree world. If BHP can do it for it's shareholders, I think the Australian government should do it for the nation,"
Two ministers complained to Fairfax Media about the short time given to provide feedback.
"This is not a sign of a government that wants to genuinely engage on an important piece of work," one of them said.
"[There's] insufficient time for us to consider it properly and respond," the minister said. "Very unimpressed."
Dylan McConnell, a research fellow at Melbourne University, said the Energy Security Board was being asked to do a "monumental" amount of work within the three-week deadline set by Mr Frydenberg to provide results by November 13.
"It's practically asking the Australian Energy Markets Commission to re-do the modelling in the Finkel Review," Mr McConnell said, referring to the eight-month effort led by Chief Scientist Alan Finkel.
He noted that while Mr Frydenberg sought modelling of the impact of Snowy 2.0 - potentially a $4 billion project to increase pumped-storage in the Snowy Hydro scheme - to be included in the modelling, other measures were excluded from the minister's request.
The government should also ask for modelling for the renewable energy targets of Victoria and Queensland, and South Australia's energy plan, Mr McConnell said.
"Once again the Energy Minister [Mr Frydenberg] is dictating to the states even though, like everyone else, they are still waiting on the details for this plan," Mark Butler, federal Labor's climate spokesman, said.
"It's not just Labor state premiers - the Hodgman government [in Tasmania] have said they are not convinced on Turnbull's plan and need more details," he said.
Fairfax Media sought comment from Mr Frydenberg.
with Cole Latimer
