Interview: Nadia Howland
Energy Source & Distribution gets to know IEEFA Lead Analyst, Australian Electricity Johanna Bowyer, whose expert analysis provides the electricity sector with valuable insights into the energy transition.
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What does your role at IEEFA involve, and what do you enjoy most about the job?
In my role at IEEFA I analyse the Australian electricity sector. I write about industry trends, conduct financial analysis of energy technologies and assess policy and market developments shaping the energy transition. What I enjoy most about this role is the breadth of topics I get to explore, and the chance to collaborate with experts across the sector.
You have an engineering degree in photovoltaics, and your early career saw you working in engineering-focused roles and in research at CSIRO. What prompted you to move into financial analysis and energy economics at IEEFA?
My previous experience was more engineering focused—in home energy systems monitoring, PV system design, and electricity distribution networks research. Then I worked in management consultancy where I gained insight into how companies make decisions and respond to market and policy changes. I was excited to combine these two backgrounds at IEEFA, where I analyse the electricity sector from a financial and economic perspective, and examine the system-wide trends shaping the energy transition.
The latest DMO shows electricity price relief for most Australian regions. Does this mean we’ve reached a tipping point in our energy transition, or do we still have a long way to go?
With demand in the National Electricity Market increasingly served by wind, solar, and storage, wholesale electricity prices are being driven down in abundant renewables periods (typically the middle of the day), while utility-scale batteries are adding competition in wholesale peak periods (typically the evening). This is a significant change from historical wholesale electricity price patterns.
As each future coal power plant exits, theoretically it’s possible we could see tighter supply and potential temporary wholesale electricity price upticks after the exits if we don’t have sufficient replacement capacity installed. This was seen with the Hazelwood exit in 2017. So, in terms of wholesale prices, there is still much left to play out over the next decade.
Network prices are the other key part of power bills, and with higher interest rates, inflation, and new expenditure there has been upward pressure on network prices in recent years. It will be key to keep network costs to efficient levels to keep overall bills as low as possible in the coming years.
The AEMC anticipates overall electricity price reductions of around 5% over the next five years, followed by a 13% price rise over the subsequent five years as they forecast the renewables build-out may not be fast enough to avoid a tightening of the supply-demand balance. The AEMC projects network costs in the NEM will be stable, and notes there is an opportunity to lower costs through better network utilisation via a faster uptake and more coordinated use of CER.
Overall, it is key to remember that the total energy cost a customer sees is not just dependent on electricity prices and gas prices, but also dependent on the volume of electricity and gas the customer consumes and whether they have installed solar, storage, and efficient appliances. At IEEFA, our modelling found that upgrading to solar, storage and efficient electric appliances could slash household energy bills by more than 90% in many regions. Electrification of transport also provides an opportunity to reduce petrol and diesel household costs.
In your opinion, what are the biggest hurdles Australia is facing at this point in its decarbonisation journey?
In my opinion, the biggest hurdle we are facing in the energy transition is building renewables and transmission fast enough to reach the 82% target by 2030, and coordinating the new entrant capacity with coal exits. The development process for new renewables and transmission projects is still slower than it would ideally be.
Another key challenge is unlocking the potential of the demand side: energy efficiency, demand flexibility, and distributed solar and storage installed on household and business premises can play a major role in the energy system, but require the right regulations, markets, and policies to realise that potential.
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What do you enjoy doing when you’re not busy working?
I enjoy hiking in Australia’s beautiful national parks, and immersing myself in a good book with a hot cup of tea.
