After a week of uncertainty over the gas price crisis, the nation's energy ministers have agreed to a plan to pay providers to help fill shortfalls in supply.
Federal energy minister Chris Bowen and his state and territory counterparts met on Wednesday to discuss solutions to the market crunch — but there were limited options with the budget deep in debt and no short-term fixes available.
Mr Bowen says the meeting was not a "silver bullet" for the current price surges, but they would ensure the market would be in a better position for future crises.
The ministers have agreed to advance work on a capacity mechanism, which will require the energy retailers to pay power providers to maintain extra capacity in case it is needed.
Mr Bowen says he wants to see a draft for that plan from the energy security board as soon as possible.
"We have instructed the Australian Energy Market Corporation and the energy security board to proceed at pace with the development of a capacity mechanism.
"I'm not putting a date on at this stage, but it is a priority for me," he said.
A similar policy was initially floated by the Coalition, but some states resisted due to concerns about payments being used to prop up old technology – like coal.
Mr Bowen says that is not his plan for the mechanism.
"I think the principles outlined are pretty clear that it should support new technologies and by that I mean I support storage and renewables being a particular focus of capacity mechanism going forward," he said.
The full details on exactly what is included or excluded from the mechanism are yet to be fleshed out and became a sticking point during negotiations under the previous government.
More responsibility for supply will also be given to the market operator, which will be given the power to procure and store gas for future shortages.
Mr Bowen says the infrastructure already exists to stockpile gas reserves.
"There's storage facilities around the country, we agreed to work to give AEMO that power and to give them that power expeditiously," he said.
"That won't work today — but it will give us the capacity and the tools necessary to manage this crisis going forward and to avoid crises like this into the future."
The government will also enhance the regulatory powers of the market watchdog, particularly around gas, to ensure transparency for consumers.
The ministers have also agreed to put the wheels in motion for a national energy transition plan, ahead of their next meeting in July.
