Energy transmission industry ramps up call for market mechanism and says clear regulation could lead to zero net emissions by 2050

This article is more than 3 years old

This article is more than 3 years old

Australia’s electricity and gas transmission industry has intensified a call for a market mechanism to drive orderly transformation in the energy sector, warning a lack of clear regulation will result in higher prices for consumers and a less secure grid.



Energy Networks Australia (ENA) says clear policy settings could ultimately save Australian energy customers $100bn, and allow a smooth transition, where large-scale variable renewable energy can be integrated securely, creating the prospect of Australia’s electricity sector achieving zero net carbon emissions by 2050.

A new roadmap from the ENA to be released on Friday says the energy market is in the middle of a profound transformation that will only intensify over the next two decades.

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Modelling produced for the report suggests that by 2050, up to 45% of Australia’s electricity supply could be provided by millions of distributed, privately owned generators, in homes and businesses.



The report notes the trend towards decentralisation of power generation creates “profound adaptation challenges for the system’s architecture, stability and efficiency given it was originally designed for almost 100% of generation at the transmission end of the system”.

The report’s estimated $100bn in cost savings is a function of governments rolling out nationally consistent policies that would encourage the two parts of the system to work harmoniously together – the current poles and wires of the national market, and the virtual grids in homes and businesses.

Allowing efficient co-optimisation would prevent overinvestment in poles and wires.

The ENA’s chief executive, John Bradley, said with stable policy settings, networks could buy grid support from customers instead of building their own infrastructure.

The rise of distributed energy between now and 2050 will coincide with decarbonisation in the national grid.

The report suggests by 2030, around 40% of generation could come from renewable technologies in Victoria and Western Australia, with an increasing share in New South Wales and Queensland as coal generators are retired.

The report points out that Queensland alone will boast solar generation capacity almost as large as its current coal-fired generation capacity by 2030.

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The chief energy economist at the CSIRO, Paul Graham, who collaborated on the report, said the east coast grid would probably require the equivalent of 25 new large-scale solar or windfarms being built in just five years.

But the report points out that the massive technological transformation is rolling out in a policy vacuum.

“There is currently no enduring, clear long-term climate policy. There is also a lack of integration between electricity sector planning processes and climate policy,” the ENA report says.

It notes barriers to efficient decarbonisation “will be exacerbated if distributed energy resources are not utilised to support system balancing, facilitated by network optimisation systems”.

The release of the roadmap follows the publication of a draft version last December just before the Coalition decided to rule out an emissions-intensity scheme for the electricity sector after a brief internal revolt.

The ENA’s new report continues to argue that an emission-intensity baseline and credit scheme for the electricity sector, and “technology-neutral” carbon policy, would allow the transition to low-emissions power sources at least cost to households.

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It says an intensity scheme or an “alternative policy of similar merit” should be rolled out by 2020, and the government should pursue “review opportunities to introduce an economy-wide carbon pricing mechanism” by 2026.

Bradley says the intense transformation required in the electricity sector will only be possible if the industry agrees on a clear roadmap, and with “stable and enduring carbon policy to support investment”.

A range of influential organisations have told the current Finkel review of the national electricity market the Turnbull government needs to put a price on carbon or adopt a market mechanism to drive emissions reduction.

A string of peak bodies have used the review to call for the adoption of a market mechanism, including the National Farmers’ Federation, the Investor Group on Climate Change and the Business Council of Australia, which explicitly called for an emissions intensity scheme.

The current industry consensus around carbon pricing is a major turnaround in a very short period of time.

Three years ago some of the same groups urged the parliament to get out of the way so that Tony Abbott could repeal the Gillard government’s “carbon tax”.