EY Australia releases action plan to fix energy grid

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EY released an action plan to fix Australia’s energy grid ahead of the Council of Australian Governments (COAG) Energy Council Ministerial meeting on 22 November 2019.

In an effort to prevent Australia’s energy grid falling into disarray over the next decade, EY has developed key recommendations for the Federal, State and Territory Governments to implement. This plan includes:

  • AEMO needs a new funding compact to undertake an enhanced coordination role for Australia’s energy grid as power becomes more decentralised – this coordination and management role does not negate the need for network providers to build the system
  • As part of this new role, AEMO should be given more power to influence the network architecture to efficiently manage a decentralised National Energy Network
  • Further rollout of smart meters for households to better understand their consumption and generation of energy
  • Better use of data to enable peer-to-peer communication and coordination of the energy grid in the future rather than continued reliance on a strong central authority to undertake those tasks
  • Investigation of demand-side incentives, including instantaneous price signals, to encourage more efficient use of energy by users such as households and businesses

EY Oceania Energy Transition Leader, Matt Rennie said, “The time for waiting is over. Billions of dollars need to be spent in the next 20 years, we simply can’t afford to wade into the water with our eyes closed. It is clear we need concerted action now to ensure Australia’s energy grid remains reliable and efficient.”

“Our energy market operator must be given the power and resources to ensure Australia’s transition to renewable and decentralised energy is a success. AEMO is going to need a new funding compact to re-imagine and implement an even more complex and data-driven grid. We recommend they are given a significant additional capital injection to fulfil this expanded remit.”

Mr Rennie said that the expansion of AEMO’s role into the distribution network will also undeniably require buy-in and flexibility from the current market participants.

“I understand that the network businesses in particular get a little bit nervous that AEMO is going to come in with their system operator hat on and manage the individual distribution networks,” Mr Rennie said. “But if the grid is to transform, we simply need to clearly delineate the roles of market participants and recognise that system operation will extend into decentralised energy in the future. The distribution system will become the source of generation in a decentralised world.”

“There are a number of outstanding questions that must be resolved in a clear, coordinated and consistent manner – and it’s our view that engineering reliability should be the first priority of policymakers. AEMO is best placed to answer these first-order questions, with input from other parts of the energy grid,” Mr Rennie said.

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