Energy industry discusses Finkel review implications

wind farm

PwC and The Australian Financial Review hosted an industry roundtable of energy leaders recently to talk about the Finkel Review and the current state of energy in Australia.

ERM Power chief executive John Stretch said a balance had to be found between reliability of supply, prices and environmental stability, with business consumers becoming aware in South Australia of the higher prices in store.

“At the moment everything has been about renewables, but cost has suddenly reared its head,” he said.

Transgrid chair Kerry Schott said subsidies for consumers to take up renewable energy generation had hidden the real cost.

“All the subsidies that consumers got on their solar panels and so on haven’t helped with the education process about what costs are, because they have been completely veiled,” she said.

Ms Schott also raised the issue of the regulatory rules hindering innovation and the roll-out of grid-scale batteries.

“It (regulation) was fit for purpose some time ago but it is not fit for purpose now,” Ms Schott said.

The roundtable discussed the rules, which regulate monopoly assets such as networks, were holding back other markets such as peer-to-peer trading between households and utility scale batteries.

PwC energy and utilities leader Mark Coughlin said the regulations were too purist and would be one of the big challenges for the energy industry into the future.

Tesla Energy Australia director Mark Twidell said storage systems might need their own regulations as the existing rules may not drive the lowest cost solution.

“If your goal here is affordable, reliable, lowest-cost energy then would you exclude certain parties from that market?” he said.

“How you regulate for shared ownership is going to be a critical piece.”

Grattan Institute energy program director Tony Wood said the supply chain had been split into regulatory streams.

“When you look across the entire supply chain you can see the value,” he said.

“When you cut it up… sometimes the cost is in one sector, the value is in another sector, so it’s much harder to deliver on that value even though theoretically it is significant.”