Securing Australia’s energy future: key learnings from global visionaries

ACCC

In response to disruptive forces accelerating and driving seismic shifts in how we generate, buy, sell and share energy, markets across the globe are rapidly transforming their energy ecosystems.

Recent research from Accenture, in partnership with the Energy Networks Association and CSIRO, has revealed the more successful jurisdictions have adopted a clear vision of the future with a plan and major reforms – they are not pursuing just incremental reforms, according to Accenture’s utilities strategy lead for Australia and New Zealand Simon Vardy.

“While Australia has some of the most pressing drivers for change (high prices, high rooftop solar penetration and increasing reliability concerns), it has traditionally taken a more ‘incremental’ approach to its reforms; devising one intervention or rule change at a time,” Mr Vardy said.

“Yet, with technology and disruptive forces rapidly gaining strength, incremental reforms risk inconsistency and sub-optimal outcomes.

“What this ultimately means is that a ‘wait and see’ strategy for Australia would inevitably fail and result in lost opportunities for both businesses and citizens.”

Mr Vardy said there are four key learnings identified in the joint research that the Australian energy sector should consider to ensure future relevance.

Evolving network operator business models will benefit from long-term visions and pragmatic roadmaps, rather than ambitious programs that do not adequately consider existing levels of capability.

“It is important to balance the scale and pace of reform with the capability base of the existing utilities and market structure. Risks and delays can result in significant issues and/or project failure,” Mr Vardy said.

“To overcome this, programs need to have a greater focus on enhanced customer outcomes, and new revenue streams are required to ensure alignment between consumers, new market actors and network operators.”

A vibrant and competitive retail sector aids third party investment, innovation and can help align to overall customer outcomes.

“Jurisdictions with strong retail competition facilitate innovation and ‘market animation’, which allows new regulatory processes and incentives to succeed, and promotes partnerships, thereby diluting risk,” Mr Vardy explained.

Wholesale, Capacity and Ancillary services can open up new value streams for Distributed Energy Resources (DERs) and enhance grid reliability. 

“Opening up new markets and focusing on interconnection standards and protocols accelerate DER uptake and business model evolution. California is a standout here with its AB 327 and its new ruling allowing just 500 kW to be aggregated and dispatched into the wholesale market,” Mr Vardy said.

Government aided ‘experimental room’ and innovation could drive infrastructure development and encourage network operators to partner to build new business models.

“Unlock the value of the entire energy ecosystem by stimulating innovation, enhancing retail competition and creating network incentives and revenue streams,” Mr Vardy said.