Optimising the energy transition By Tim Nelson, Executive General Manager of AEMC and Associate Professor, Griffith University
AUSTRALIA IS AT THE FOREFRONT of the transition
complementary gas-fired generation, pumped
sweeping through electricity systems around the
hydro and energy storage.
world. New disruptive technologies are fundamentally changing the way in which electricity is produced,
The AEMC has identified five areas of strategic focus to maximise the benefits to consumers during the technology transition in energy generation and distribution.
consumed and stored. At the same time, governments and civil society are committing to greenhouse gas emission
24 SPRING 2019
In the coming years, this should place downward pressure on prices. This shift in the technology investment mix has led to policy makers considering how best to
attitudes towards technology and investment.
ensure that the transition is implemented in the
It has never been more important to embrace the proposition that energy policy should be in the long-term interests of consumers. The Australian Energy Market Commission guide on how to interpret the National Energy
“
financial close.
reduction targets which are also changing
(AEMC) has recently provided an update to its
Smart, digitally-enabled technologies allow households and businesses to take advantage of demand response as an alternative to building infrastructure to service peak electricity demand for only a few hours a year.
In fact, around 8,000 MW of new power generation is currently under construction or at
long-term interests of consumers. The Integrated System Plan, completed by the Australian Market Operator (AEMO), provides a useful starting point for thinking about what the grid may look like in the future. We are moving from a small number of large
Objectives (NEO), which relate to the long-term
geographically concentrated generators to a
interests of consumers.
large number of small geographically dispersed
The update includes an assessment of how
generators. Within the AEMC, we are considering
climate change mitigation and adaptation risks
how coordination of generation and transmission
manifest through the NEO.
investment can maximise consumer benefits.
The AEMC has also announced five areas
Our Coordination of Generation and
of strategic focus to maximise the benefits to
Transmission Investment (CoGATI) program is
consumers of the technology transition underway.
considering how to use pricing signals and access
We will be working closely with our
rights to ensure where possible that market
stakeholders on furthering understanding of the
participants, rather than consumers, manage the
issues raised by these priorities.
investment risk and opportunity associated with
The AEMC welcomes rule change requests from our stakeholders that seek to address these
this transition.
matters.
System security
Generator access and transmission pricing
Australian energy companies have embraced
Electricity generation was historically
one of only three markets in the world to be in
concentrated in regions with access to coal such
the most advanced stage of renewable energy
as the Hunter and Latrobe Valleys.
integration according to the International Energy
But with the rapid decline in technology costs associated with new renewable technologies, changing patterns of electricity demand and investor concerns about carbon risk, there has been a surge in investment in new renewable technologies and significant interest in
renewable technologies. The South Australian region of the NEM is
Agency (the other two being Denmark and Ireland). Around half of South Australia’s electricity is now sourced from renewables. This is presenting new challenges for ensuring the system is secure.
