A ‘perfect storm’ brewing to turn energy sector on its head

a 'perfect storm' brewing to turn energy sector on its head

A panel of experts have come together to discuss the impact of new energy on the Australian energy sector and on consumers.

The Next Generation Energy Forum, held in Melbourne and hosted by the University of Wollongong’s SMART Infrastructure Facility and Accenture, brought together observers and participants of the energy sector’s current transformation to debate the environment consumers will experience in the near future.

SMART honorary professional fellow Les Hosking – who is a non-executive director of AGL Energy – said new technologies and players to the energy services sector are enabling customers to take control of their energy needs.

“At the consumer level new technologies are emerging, which are having the effect of reducing consumption and reducing reliance on the central grid supply. Specifically solar panels and energy storage through batteries plus smart meters, which digitally capture consumption activity, enable consumers to take independent control over the management of when and how energy is consumed,” he said.

“This fundamental change from the traditional energy supply chain will question the current energy market rules and operational framework, and suggests the future role required of regulation, market operation and the energy supply and services provided by generators, networks and retailers could change significantly.

“Regulators and existing energy market participants are now actively assessing the likely direction of the new technology drivers and the likely consumer responses in expectation of changes to regulation and competition dynamics that will inevitably coincide with change,” he said, acknowledging industry is seeking consistent policies and laws from the federal and state governments that permit a cost-effective transition towards clean, affordable energy.

Grattan Institute energy program director Tony Wood said the policy and regulatory framework for energy supply established more than a century ago has survived largely intact, until now. Whether it will survive the next 10 years, however, is being called into question.

“A perfect storm of climate change policies, falling gas prices and a broken regulatory model will confront energy businesses and governments over the next decade, with few clear images of how they might emerge on the other side,” he said.

“The new world of ‘prosumers’ – consumers who also produce their own electricity – has the capacity to turn the old business model of a supply-led electricity market on its head.”

Australian Energy Market Operator chief operating officer Mike Cleary said the key challenge for suppliers was to find the right balance between cost, energy reliability, and emissions levels.

“Consumers want low-cost reliable energy, and increasingly they want clean energy. But, at the same time, investors must make a return on their investments, and community views must be considered,” he said.

“This is particularly important as the sector adjusts to a change in the liquefied natural gas industry, declining consumption and increased network costs in the electricity sector, and emerging technologies such as battery storage.”