Delivering on Australia’s Energy Transition

The peak body for energy retailers and generators, the Australian Energy Council, congratulates the Labor Party on its re-election and encourages the Government to prioritise sustainable, enduring energy policies that provide investment certainty at lowest cost.

The Australian Energy Council’s Chief Executive, Louisa Kinnear, said “Diverse energy policies were put forward during the election campaign and now it is paramount we get behind the energy transition and ensure it can deliver affordable, reliable and lower emissions electricity.

“We are in the middle of an era-defining energy transformation that requires policy stability, continuity, and long-term reform that can endure beyond election cycles. We encourage all members of the 48th Parliament to commit to working to deliver the energy transition for the benefit of Australians.

“The energy system of 2050 will be delivered by wind and solar, backed by hydro, storage and gas. There is more work to be done to develop the market settings that will deliver this outcome, whilst managing the energy trilemma of affordability, reliability and sustainability.

“The right market settings will provide investors with the confidence to deliver the right energy source at the right time to replace existing thermal plant like coal that will retire over the next decade and beyond. This approach will avoid system and price shocks and deliver least-cost outcomes for consumers,” Ms Kinnear said.

The AEC believes the key energy priorities for the upcoming term of Government are:

• Focusing on affordability: The energy transition is a huge undertaking, requiring unparalleled levels of investment in networks, storage and replacement generation. It is crucial that the transition proceeds at least cost to consumers, requiring both industry and Government to have affordability front of mind as they make decisions. It is also important to recognise that bills are unlikely to significantly reduce in the near term and be upfront with consumers about this, with targeted financial support available to vulnerable customers to ensure nobody is left behind.
• Harnessing Consumer Energy Resources (CER): Coordinating energy from rooftop solar and battery systems will help reduce system costs. With more than 4 million rooftop solar systems across Australia, services like retailer-led Virtual Power Plants (VPPs), will help to deliver network and system cost reductions. The Government’s election commitment supporting consumer batteries is a positive one, but this program would deliver greater economic benefits if it were coupled with an incentive for customers to share the value of that battery by participating in a Virtual Power Plant.
• Backing in the NEM Review. The AEC supports the consultative approach taken by the Expert Panel during the first phases of the NEM Wholesale Market Settings Review. This Review is critical and must support market-based solutions that drive investment in energy sources that can provide firm energy in a high-renewables system. We call on all jurisdictions to continue to work constructively with the Federal Government to support the Review process.
• Prioritise system security. Currently the market does not value the full range of system security services needed for a net-zero emissions system. As the system prepares for thermal plant exits, essential system services must be better valued through the establishment of spot markets for services like inertia, which is needed to keep the system stable.
• Ensuring gas supply for electricity generation and retail: Gas will be a critical fuel to support a transitioning energy system, and more gas fired generation will be needed than is available today, albeit used less frequently. The Government should continue to work with industry to develop market-based approaches rather than price or supply interventions that can ensure adequate supply of upstream gas into the future, with further intervention a last resort.

Ms Kinnear said “There is sufficient understanding across the energy industry about the critical factors that will deliver the lowest-cost transition. Now we just need consistent, enduring and coordinated policy.

“The AEC encourages the use of market-based incentives that support long-duration storage, gas supply and generation and better coordination of energy generated from rooftop solar systems in ways that work for all customers.

“We look forward to working with the Albanese Government and the next Australian Parliament in support of strong, stable and effective energy policy.”

About the Australian Energy Council

The Australian Energy Council is the peak industry body for electricity and downstream natural gas businesses operating in the competitive wholesale and retail energy markets. AEC members generate and sell energy to 10 million homes and businesses and are major investors in renewable energy generation. The AEC supports reaching net-zero by 2050 as well as a 55 per cent emissions reduction target by 2035 and is committed to delivering the energy transition for the benefit of consumers.