Forewords by CEO and Johanna Bowyer of IEEFA

IN MY VIEW

ONCE THE EUPHORIA of the election result recedes we will fully appreciate the scale of the energy transition before us which is truly monumental.

As I write this, the lunacy of making gas Australia’s transition fuel is now fully apparent. Gas prices are pushing electricity prices up to new highs. A gas fuelled recovery anyone? A gas led insolvency more like…

John Grimes, Chief Executive Smart Energy Council

Now is the time to launch a national ‘cut the gas’ campaign. Households and businesses across the nation should be urgently investing in heat pumps for hot water and space heating and cooling, induction cooktops and cutting their gas connections for good.

Economically it would save tons of money over the long-term. Environmentally it extinguishes the carbon bomb going off in every gas-connected house and business across the country. And sending everyone broke.

This is all happening while we need to transition all petrol and diesel fuel transport to renewable electricity. While we bring the percentage of renewable energy up over 85 per cent by 2030. While we establish a renewable energy export industry, producing

THE WORLD IS CURRENTLY experiencing an

energy price and supply shock. Coal, oil and gas prices around the world have reached record high levels.

The impact of high international gas and coal prices is feeding through to Australia’s National Electricity Market which is now seeing extremely high wholesale electricity prices. They’ve risen 141 per cent since Q1 last year.

These high prices are filtering through to customers’ bills with the Australian Energy Regulator increasing default market offers by up to 20 per cent nominally. High energy prices will also filter through to the cost of goods and services.

There is going to be pain in the short term. Businesses and households will suffer bill shock.

As long as Australia relies on coal and gas we will be exposed to international price fluctuations in these commodities. renewable gases, chemicals and energy intensive embedded products (think refined zinc) to the world.

Doing this does not happen by chance. Much of it will be really hard. We will quickly hit skilled worker constraints. New transmission takes a long time to plan and build, even if you want rapid improvement.

But what a great problem to have. This is where we need to bring a whole-ofgovernment approach. To harness both the commonwealth and the states on a whole-of-government transition plan. To use the brightest minds in the country to projectmanage the transition.

I have long said the smart energy transition will be as big as the industrial revolution.

It will just happen ten times quicker.

Johanna Bowyer is Lead Research Analyst – Australian Electricity, IEEFA

To reduce exposure to volatile fossil fuel prices Australia must decarbonise its energy system.

The Federal Government’s Powering Australia plan targets 82 per cent renewables by 2030, up from 31 per cent renewables in 2021. This appears to be in line with the Market Operator’s Step Change Scenario in its Draft 2022 Integrated System Plan (ISP).

A key part of the Powering Australia plan is $20 billion for the Rewiring the Nation Corporation to upgrade the grid. The newly established Corporation is expected to focus on transmission to enable the buildout of the Integrated System Plan.

This investment will help unlock the full potential of the renewables sector.

The Powering Australia plan also aims to remove taxes from low emissions vehicles, develop a National Electric Vehicle Strategy, and install 400 community batteries and 85 solar banks.

The plan needs to be detailed further, but nonetheless marks a turning point for Australia’s energy decarbonisation journey.

Australia now has two major factors driving decarbonisation efforts forward: the huge need to reduce dependence on currently extremely expensive fossil fuels, and a Federal government supportive of renewables, storage and transmission.

By 2050 the NEM needs to grow large-scale renewables capacity by nine times, distributed PV capacity by five times, storage capacity by twenty times and manage an orderly exit of all coal-fired generators – according to the ISP Step Change Scenario.

The hard work begins now.