Electricity market is transforming despite political inaction
Advertisement

Electricity market is transforming despite political inaction

This week, the ACT government will table draft legislation to tweak the rules that govern how Canberrans can buy electricity. The changes are minor: they would affect only tenants who share premises with others, such as people who live in an apartment block, nursing home or caravan park, or shopkeepers in the same shopping centre. The proposal would allow them to buy power collectively, via the site owner, and potentially save money on their bills.

The legislation is warranted and uncontroversial, even though it may crimp some tenants' preference to buy from a different supplier. Yet it illustrates a far greater problem: the tangled layers of outdated regulations, across jurisdictions, that guide and often hamper the electricity market.

<i></i>

In the coming decade, few markets are likely to undergo as many changes as is the national power grid. Yet this market may well be the most regulated and complicated in Australia. Some of the regulation is crucial: the grid comprises many regional monopolies (and near-monopolies) whose services must be priced and overseen independently. It involves large traditional generators that are unable to adapt to change quickly; smaller renewable generators (even micro-generators owned by households); public and private-sector owners of distribution infrastructure; an increasingly dynamic retail marketplace; and, in the absence of a consistent national approach, a mishmash of renewable-energy incentives.

The market is also shaped by huge amounts of public spending and subsidies (especially on fossil fuels), which aren't necessarily directed to Australia's best interests. The current federal energy debate is locked in a bizarre, ideologically driven blame game that has been oversimplified into "coal versus wind and solar". It is misleading and counterproductive at a time policymakers need to be innovative and quick-moving.

Despite this political stasis, the industry itself is transforming. Embarrassingly, it took the intervention of Tesla owner Elon Musk to progress public debate in South Australia, where blackouts caused by poorly maintained infrastructure had generated little more than partisan point-scoring. Solar and battery technologies are improving exponentially. Households are becoming far more energy-efficient. The incentives for consumers to move off the grid – generating and storing their own power – are growing, and government inaction will spur them along.

Without radical regulatory reform, a tipping point in Australia's electricity market – whereby a mass exodus of consumers leaves large power generators economically unviable – will become a real possibility. Some may even welcome such a scenario as an inevitable step into the future. Yet the price would be steep, especially for power-intensive industries. In the meantime, Australians are still waiting for their political leaders to switch on to the real debate.

Most Viewed in National

Loading
Advertisement