2018 must be the year energy policy is decided

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by Andrew Richards, Chief Executive Officer, Energy Users Association of Australia

While energy and climate change policy has been a political contest for more than a decade, over the past 18 months solving the self-created crisis in our energy markets has been the topic de jour for a much broader audience. While it has been a “willing” discussion to date, it is just the warm up. Here, Energy Users Association of Australia CEO, Andrew Richards, outlines what energy users are looking for in 2018 and beyond.

In 2018, energy policy is set to be discussed at length and hopefully decided. This will require equal doses of luck, cooperation and rational policy design.

Hopefully stakeholders recognise that the stakes are high and that the status quo will only lead to even greater economic destruction.

This new process will be managed by the Energy Security Board (ESB) which begins its consultation on the design of the National Energy Guarantee (NEG) in February as it seeks to determine key design aspects of the scheme.

It will be a pivotal year for all energy users as it could see an end to the energy policy rollercoaster, an improved investment environment and an energy price trajectory that begins to trend downwards. And boy are they looking forward to that.

Even if you haven’t been paying close attention you would have noticed that energy prices have been skyrocketing in recent years with some businesses experiencing a trebling of their annual bill.

The prospect of bipartisan energy policy has energy users feeling optimistic and hoping that the days of price volatility, energy security concerns and forever increasing energy contracts may be numbered.

Despite the NEG policy not being the first, second or even third policy choice for many, the impact of having an investment grade policy in place that lasts beyond an election cycle is far better than no policy at all.

This is why we have offered our conditional support.

The policy malaise we are now in, which is largely self-inflicted, is on the verge of creating major economic destruction.

Many businesses are hurting with some seriously considering relocating productive capacity to countries that have a more stable energy environment, while many are looking for alternatives and ways to offset energy costs.

When the NEG policy consultations with the ESB begin, the Energy Users Association of Australia (EUAA) will be looking to ensure that the “long-term interests of consumers”, a key aspect of the National Energy Objectives, are at the forefront of policy design.

All too often energy users feel this key objective is only given lip service and that clearly needs to change.

After a decade of uncertainty and policy driven by ideology rather than science, technology and economics, we must recognise the days of ultra-cheap energy are gone. To deal with this we must re-adjust expectations and think differently about energy if we are to find a way forward.

Large energy users represent around 40 per cent of the energy used in Australia every day.

These are the businesses that create, sell or distribute the essential goods and services that are used, or are made into, everyday items that Australians purchase every day.

Getting control of prices across this group has a direct financial benefit for all Australians.

There are a myriad of opportunities and we must investigate them all.

Increasingly we are seeing large energy consumers underwriting energy generation by signing Power Purchase Agreements and contracting energy directly.

Others are increasingly accessing demand management opportunities, improving their knowledge of where they use energy and then improving energy productivity and energy efficiency, installing solar PV and batteries, or utilising bioenergy and trapping waste heat for energy.

Internationally, hydrogen fuel is replacing gas as a transport fuel and a trial of hydrogen is about to get underway in Australia which will investigate the opportunity to substitute hydrogen for gas in our network. New energy contracting strategies are also being investigated.

Progress is impossible without change. Despite the transformation in our energy system still having some way to go along its bumpy journey, remaining focused on consumers will give us the best opportunity to create energy markets that generate reliable, sustainable and affordable energy.

And that is good news for all energy users.

2018 will be a deciding year for energy policy in Australia. Get involved in the conversation, make sure you are being heard, or live with the consequences.

You can become a member of the Energy Users Association of Australia by visiting euaa.com.au. EUAA is also running its National Conference: Future Thinking from 2-3 May, which will see large energy users and other energy market participants converge on Etihad Stadium. Tickets are available for members and non-members via the EUAA

 

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