By PHILIP HOPKINS
THE peak energy body, the Australian Energy Council, whose members includes Latrobe Valley operators AGL and Energy Australia, maintains that affordability is the key to ensuring public confidence and ongoing community support for the energy transition, which it says is now delicately balanced. The current chair of the board is Damien Nicks, Managing Director and chief executive of AGL Energy.
The AEC’s Chief Executive, Louisa Kinnear, said a survey of the AEC’s chief executive officers, ‘Delivering Australia’s energy transition affordably’ – highlights the challenges in meeting the country’s energy and emission ambitions.
The chiefs remain committed to supporting net zero on the premise that the least cost, lowest impact pathway is an energy system dominated by renewables and firmed by battery storage, gas and pumped hydro. The AEC has a range of members, including energy retailers and generators such as AGL, Energy Australia and Origin Energy.
The survey says replacing ageing, emissions-intensive generation is not costless.
“The CEOs want a more open and honest dialogue about the challenges and costs of the energy transition,” Ms Kinnear said.
The survey also reinforces the critical importance of policy certainty and stability as Australia enters the “difficult delivery phase” of the energy transition and the need to support customers.
The survey report includes recommendations to address affordability and includes some guiding principles on how governments and industry can work together to successfully deliver a reliable, low emissions and affordable energy system.
“Industry has an important role in supporting customers through the energy transition and we don’t shy away from the need to invest in and advocate for initiatives that help to improve energy affordability for all customers,” Ms Kinnear, said.
“We are keen to work collaboratively with federal and state governments to ensure that the policy and market settings give us the best chance at ensuring affordable and reliable energy supply is accessible by all.”
The survey of the CEOs of the leading energy retailers, generators and investors was undertaken by SEC Newgate and commissioned by the AEC. The importance of ensuring affordability of Australia’s power supply was one of the key issues flagged by the CEOs, along with the danger of price and supply shocks in the system, and concerns about the impacts these could have on vulnerable customers.
CEOs noted that prices had never been under more pressure, with the large-scale investment required to replace and decarbonise generation assets and delays in the rollout of some renewable projects.
“I think it’s the calm before the storm, and … the storm is coming around cost and competitiveness,” according to one gentailer CEO.
“Network cost is only going to go up, and go up by increasing levels. And the Australian consumer is not really wise to that yet because they haven’t seen the worst of it,” another gentailer CEO noted. “… the cost of this transition is really going to affect the people who can afford it the least, so people that are already struggling to pay their power bills are going to get slammed with more cost from more of the transmission and distribution costs that are yet to come, and the higher cost of electricity with storage that’s got to be factored in,” according to a retail chief executive.
Commenting on the transition, CEOs said: “The transition right now is delicately poised and at quite an important point. There have been these bumps along the way. It is taking longer to deliver the new generation and transmission projects, transmission is obviously a critical path.”
“The energy transition now is as much about system security as it is about emissions reduction, and sometimes we emphasise one at the expense of the other and we need to actually hold them both together.”
