New research for Endeavour Energy from Deloitte has revealed targeted investment in electricity networks is critical to keeping the lid on electricity prices in the long term.
Endeavour Energy’s Chief Executive Officer,Tony Narvaez, said “We want the best possible outcomes for customers so that network costs are kept as low as possible while we deliver a grid ready for the future.”
“Investment certainty is needed to modernise electricity networks to connect future generation and support the delivery of individualised services at the lowest possible cost to help customers better manage their energy use.
“We all want the lowest possible power bills. Endeavour Energy’s customers pay the lowest network charges in NSW, with a residential customer now paying $75 less per year today than they did in 2012.
“Since being privatised in 2017, we have maintained that commitment and shaved $60 million from our operations and passed the savings onto customers, with our network charges decreasing by a further two per cent each year from 2019 to 2024.
“Deloitte has found, however, that if the push to drive down prices leads to under investment in electricity networks, customers end up paying much more for years to come.”
Mr Narvaez said Deloitte found that while reducing network investment initially delivered price decreases, it would result in much higher prices for customers over the next 20 years.
“By 2037, nearly half of the energy supplied in the National Electricity Market will come from wind and solar,” Mr Narvaez said.
“The dispersed nature of future generation translates to a greater reliance on resilient networks to unlock their maximum value for customers.
“Electricity networks have begun this transition after changing very little over the past 100 years.
“We need to make sure we are ready for customers to get the greatest benefit from their investments in solar, batteries and electric vehicles.
“In the future we will need to manage power flows to, from and between customers and the grid, while still maintaining the reliability and stability of power supply for all customers.
“This will help optimise customers’ investments in new technology and avoid more expensive network investment in the long term.”
Mr Narvaez said affordability needed to be considered over the long term, which required policy and regulatory certainty so investors will commit the capital needed to transform networks.
“Network transformation won’t happen if returns are too low or too uncertain, and will translate into higher prices for customers in the long term.
“At a time when we need capital to transform electricity grids for a vastly different future, investors must have confidence to invest through stable, predictable and transparent energy policy and regulatory settings,” Mr Narvaez said.