Transcript Mark Feather - EU Centre on Shared Complex Challenges

Electricity industry: A transition
a low-carbon future
Challenges and policy
implications
Changes occurring in the electricity sector
• The Energy Market in Transition – strategic challenges
for the sector are and will affect our work program…
• Impact of new technologies, climate change policies,
increasingly engaged consumers.
– Generation sector – impact of intermittent generation across
the NEM, Cth climate change policy uncertainty
– Networks – decreasing utilisation (DG and batteries), more
dynamic distribution networks, networks involvement in
downstream markets/ring fencing
– Retail – entry of new energy service providers into the
market, impacts on consumer protection, treatment of
vulnerable customers, dispute resolution framework,
competitive neutrality.
• Policy trilemma – price, GHG emissions, security of
supply
• Market reform through COAG Energy Council a priority.
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A sector in transition
Overall demand for electricity declined
or stayed flat for the last six consecutive
years. Peak demand trends are
changing
Key drivers: slowing industrial demand,
consumers adopting energy efficiency
products and 1.5 million installations of
solar PV (20% in Vic)
Investment in wind has been ongoing,
coal and gas plants have closed in
QLD, NSW, Vic, Tas
Major changes being experienced
across wholesale market, network and
retail sector – impacts of increased take
up of renewable generation, DG and
new energy services + increasing
consumer engagement.
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Wholesale markets - the SA experience
• Electricity/gas price peaks in South Australia in July
2016
• Confluence of events responsible:
– Cold weather brought higher electricity demand
– Augmentation work on the Victoria to SA interconnector –
reducing imports
– High gas prices impacting on Torrens Island Power Station
• A number of industrial customers unhedged
• Market worked as expected – price spikes will send
investment signals for additional capacity
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What does the SA experience tell us?
• SA experience demonstrates need for:
– demand side reform and action on energy efficiency
– east coast gas market reform
– leadership through COAG Energy Council on transitioning
energy sector, supporting renewable energy and
integration with climate policy
• COAG Energy Council initiatives
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work on impacts of climate policies on energy sector
Review of regulatory investment test for transmission
AEMC system security market frameworks review
Time to review the NEO?
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Composition of Victorian generation
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Wind generation capacity in Victoria
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Clean energy transition
• Expected that Victoria’s reliance on brown coal
generation will decrease
• Important that system security and reliability are
maintained
• Future market options include:
– Potential for large scale storage to complement renewables
– Investment in gas fired peaking plant
– Demand side management options
• Victorian Government Actions:
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Renewable Energy Action Plan
Demand Side Management Framework
New Energy Technologies Sector Strategy
Centre for New Energy Technologies
Working with the COAG Energy Council on clean energy
transition
– Energy Efficiency and Productivity Strategy and NEPP
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Victoria’s Renewable Energy Roadmap
Removing barriers
to distributed
generation and
storage
Transforming
Victoria’s
Generation Sector
Driving growth
in the Victorian
renewable
energy sector
Supporting households
and communities to
invest in renewable
energy
Direct Government
facilitation and support
http://www.delwp.vic.gov.au/energy
Victoria’s Renewable Energy Action
Plan
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Victoria’s Renewable Energy Targets
Announced in June 2016
25% by 2020, 40% by 2025
Auction Scheme
Up to 5,400 MW of new renewable generation capacity
4000 additional jobs in 2024-25
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Victorian demand management framework
The Government will establish a policy framework that:
– Incentivises and supports greater, more timely and more
effective demand management in Victoria by consumers,
networks and third parties
This framework will:
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Enable Victoria to respond to changing patterns of demand
Create long term savings for consumers
Address barriers to demand side management
Support the introduction of opt-in cost reflective network
pricing
– Assist in the longer term transition to renewable energy
sources
– Support the reliability of Victoria’s electricity supply
– Drive national energy market transformation.
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Demand trends in Victoria
(Source: NEM Review, Metered demand, extracted 22
September 2016).
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Solar PV uptake in Victoria
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Peak demand creates pressure on localised areas
of the network
(source: http://nationalmap.gov.au/renewables/)
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Victorian energy efficiency initiatives
• Energy efficiency is one of the best ways for
homes and businesses to reduce bills and
greenhouse gas emissions.
• The Victorian Government is committed to
transitioning to an energy efficient economy.
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Energy Efficiency and Productivity Strategy
The Victorian Energy Efficiency Target (VEET) scheme
The Residential Efficiency Scorecard
• $24.2 million in 16/17 State Budget for energy
efficiency
• Energy Efficiency and Productivity Strategy to be
released later this year
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What action is the COAG Energy Council taking?
• COAG Energy Council is leading work on:
– Energy Market Transformation
– Gas Market Reform
– Integration of energy and climate change policy
• Gas Market Reform
– Gas markets characterised by absence of competition,
liquidity and transparency
– COAG Energy Council has signed off on major gas market
reform implementation package
– Northern and southern gas hubs, access to gas pipeline
capacity, better market information
• Energy Market Transformation
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National response – COAG Energy Council
Energy Council endorsed program of work – Energy
Market Transformation- with a focus on four key
themes:
– Enhanced competition and innovation
– Empowering consumers
– Ongoing power system security – incl AEMC and AEMO
system security work
– Efficient investment and operation of electricity
infrastructure
Work streams include:
– Stand-alone systems
– Battery registration
– Consumer protections for behind the meter supply
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Stand-alone systems/micro grids
Issues
• Consumer protections
• Reliability and service standards
• Regulatory challenges
– Networks
– Retail
Key questions
• Should stand-alone systems/microgrids be regulated
under a national framework?
• What principles should be adopted in determining the
need for, and nature of, any new regulatory
arrangements that will apply to stand-alone energy
systems?
• What protections are necessary for customers serviced
by stand-alone systems?
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Energy storage registration
Issues
• Power system planning and operation
• Emergency response
• Safety (to the installers, line workers and the
networks)
Key questions
• What data?
• How should data be collected?
• Who should host the register?
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Energy storage registration
Total installed battery storage capacity in the NEM
(Source: National Energy Forecasting Report 2016, AEMO)
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Consumer Protections for behind the meter electricity
supply
Electricity for on-site use where system is located on
owner’s property (e.g. PV, battery storage, co-gen plant,
portable generator)
Different customer protections apply depending on
business model
Issues
• Information Provisions
• Dispute Resolution
• Vulnerable Customers
• Competitive Neutrality
• Exploring the need for tailored regulation – balancing
innovation with consumer protection
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