Energy Regulatory Policy & Reform in Energy

Overview

Key issues

Upgrading the country’s national electricity grid: new technologies, allowing for bi-directional power flows and distributed energy resources, are required to drive the renewable energy transition. Once grid investment has ramped up, there will be opportunities to develop renewable energy projects to replace the early exit of coal-fired generators.

Deterrents to developing network projects identified by the Australian Energy Market Operator (AEMO):

• the “right” to embark on a network development is only permitted if the proponent demonstrates that the development is economically optimal over all other alternatives;
• likely shortages of components and skilled labour;
• social and environmental resistance.

Transparent and fair access to networks: rigorous ring-fencing arrangements will be needed; separate business operations for each asset in all but back-office functions might also be needed, along with data to demonstrate compliance.

Managing voltage fluctuations: AEMO has already in 2022 taken the unprecedented action of assuming control of the system under “administered price periods”, an emergency tool available in periods of extreme energy fluctuation and shortages. AEMO may need to do so again, most likely during colder months, until the national grid is better equipped to manage the new portfolio of energy flows.