Australia: National Energy Guarantee (NEG) update

Last month, the National Energy Guarantee (NEG) got the amber light from the Coalition of Australian Governments (COAG) Energy Council to progress to the next stage of its development. The Energy Security Board (ESB) is now tasked with filling in the finer detail of the NEG in order to present its final design to the COAG Energy Council in August. Last week the ESB released a series of Issues Papers that will facilitate discussion with State representatives and the ESB Technical Working Groups on some of the most significant design issues. So, as the NEG begins this second design phase, it's a good time to look back at how far the NEG has come and consider what the road ahead looks like.


On 15 February 2018, the ESB released a Consultation Paper (the Consultation Paper) seeking input into the high level design of the NEG. The Consultation Paper gave the energy industry its first look at how the NEG could be implemented – see Corrs' detailed breakdown of the Consultation Paper here.

The Consultation Paper received over 150 responses from stakeholders to the energy industry. Notable responses included:

  • the Australian Competition and Consumer Commission response which flagged that the NEG could exacerbate existing competition issues in the electricity wholesale market;
  • the Clean Energy Council response which emphasised that encouraging investment in renewable energy generation should be a primary goal of the NEG, and noted that some features of the NEG, such as the proposed carbon credit system, may discourage this investment; and
  • the Tesla response which contended that the NEG's 26% emissions reduction target is too modest and the NEG broadly overlooks the benefits that can be driven by battery storage systems.


Last month, the ESB submitted the National Energy Guarantee: High Level Design Document (the Design Document) to the COAG Energy Council for consideration. The COAG Energy Council has accepted the Design Document and given the ESB its blessing to continue with the next stage of its design process.


The Design Document clarifies that the NEG emissions guarantee will be facilitated through a central registry that uses the existing infrastructure of the National Greenhouse Energy and Reporting Scheme (NGERS). Each entity that is registered as a 'Customer' under the National Electricity Rules (Customers) will be required to submit a summary of MWh purchased on the wholesale spot market to the registry, which will then use the NGERS emissions data to develop an average emissions intensity for each Customer. The NEG's regulator would compare this figure against the emissions target to assess each Customer's compliance.

Significantly, the Design Document specifies that State based renewable energy schemes will be allowed to continue in parallel with the NEG. Further, any emissions reductions achieved by the States' schemes will contribute to emissions reduction targets under the NEG. States with emissions reductions targets that are more aggressive than the 26% target proposed by the NEG have criticised this arrangement and continue to push for 'additionality' within the scheme.


The procedure proposed in the Design Document for the reliability guarantee is similar to the 8 step process put forward in the Consultation Paper phase, but offers more detail on the timelines involved. The reliability guarantee is underpinned by 10 year forecasts submitted by the Australian Energy Market Operator (AEMO). The market will be expected to react to AEMO forecasts to remedy any looming reliability 'gaps'. If, three years prior to an upcoming reliability gap the market has not remedied the gap, Customers' NEG obligations are 'triggered' and Customers may be required to demonstrate future compliance plans to meet the reliability standard. If the gap persists one year prior to a forecast reliability gap, the AMEO can exercise its 'procurer of last resort' powers.

Interestingly, under the AEMO's current forecast of the energy landscape, there are no reliability gaps identified for the next 10 years. If these forecasts hold, Customers' NEG reliability obligations may not be triggered.


There are several critical NEG design details which remain unclear in the Design Document and will need to be fleshed out in the coming months. For example, the Design Document does not clarify when Customers will be permitted to carry forward 'over-achievement' of the emissions reduction target to the next compliance year. The Design Document also flags that there will be flexibility for Customers to defer compliance with the emissions reduction targets – but does not specify when Customers will be eligible for this deferral.

Further, as per the Consultation Paper, the Design Document confirms that the Commonwealth Government will be responsible for policy decisions on issues such as:

  • how the national emissions target will be set;
  • how external offsets may be used by Customers; and
  • how Emissions-Intensive Trade-Exposed exemptions will be treated.


The ESB will continue refining the NEG's design over the coming months. The Issues Papers released by the ESB last week will allow the ESB to focus on some of the most significant decision points in the NEG's final design. The ESB plans to release a draft final design document mid-June and submit its final design of the NEG to the COAG Energy Council for approval in August.

From there, the ESB's proposed timeline has the NEG making its way through Federal Parliament in early 2019. The ESB aims to commence the reliability guarantee in 2019 and the emissions guarantee in 2020, but with many more hurdles on the horizon for the NEG, these timeframes are looking fairly ambitious.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions