Delivering Affordability and Managing Flexibility During Australia’s Energy Transition

AGL welcomes the opportunity to comment on the Energy Security Board’s Post-2025 Market Design Consultation Paper, a copy of which is available here. The Post 2025 Market Design project provides a critical opportunity to assess and update the design of the National Electricity Market, to ensure it is fit for purpose for the energy transition that is underway.

The energy transition will be shaped by the forces of customer, community and technology. Customers are seeking affordable energy prices, but are increasingly interested in greater choice about their own energy production and consumption, and their carbon footprint. Community attitudes will continue to influence public policy choices around reliability standards and sustainability, and cost trade-offs associated with these.

Technology is driving down costs of new forms of energy and storage, leading to a system characterised by greater distribution and flexibility. This provides enormous opportunities to benefit consumers and reduce emissions, but this changing energy mix requires complementary adjustments to maintain grid reliability and stability.

Delivering on consumer expectations regarding affordability, however, will be key to a sustainable market design.

A coherent and achievable reform program that maintains affordable and reliable power during Australia’s energy transition can be achieved with a package centred around the following four priorities:

• development of an operating reserve to provide additional market-based incentives for dispatchable power;
• development of new markets for essential security services (along the lines suggested in the consultation paper);
• efficient build and use of transmission infrastructure to minimise the cost to consumers; and
• new frameworks for demand response and distributed energy resources, to flatten load profiles, increase competitive pressure on networks, and thereby contribute maximum value to owners and the broader consumers.

A copy of AGL’s submission to the Consultation Paper, elaborating on these priorities, is available here.