Australia must urgently plan a new energy system for the imminent post-coal era, says a new Grattan Institute report.

Keeping the lights on: How Australia should navigate the era of coal closures and prepare for what comes next finds that coal will cease to be a material contributor to the National Electricity Market (the NEM) by about 2032.

The federal and state governments need to start designing a new NEM now to ensure the lights stay on and electricity remains affordable into the renewables-dominated net-zero era.

‘Australia’s great energy transition – from fossil fuels to renewables – is not going well,’ says report lead author and Grattan Institute Energy and Climate Change Program Director Tony Wood.

‘Governments have lost faith in the market being able to deliver enough electricity to the right places at the right time, consumers are fuming about high power prices, and investors have been spooked by frequent and unpredictable government interventions.

‘We may be able to muddle through the next few years with the current messy mix of ad hoc and uncoordinated policies, but Australians will not forgive our political leaders if they mess up the post-coal era and fail to deliver the trifecta of clean, affordable, and reliable energy.’

The report identifies three priorities for planning the net-zero energy system:

1. Designing a market structure that will help ensure adequate energy resources in a high-renewables system.

2. Signalling the introduction of an enduring carbon price for the energy sector, to guide future investments and gas plant closures.

3. Integrating and coordinating so-called distributed energy resources such as batteries and rooftop solar.

‘Australia’s future prosperity depends on governments getting this right,’ says Mr Wood.

‘Our report charts a path through the energy policy minefield.’

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