ESB Chair Noted Major Restructuring Necessary To Retain Electricity Supply Security

The country has been given “just months” to fix major electricity market issues. This was following the blistering assessment of the state of the energy sector.

As the Energy Security Board (ESB) released its latest Health of the National Electricity Market report, Dr Kerry Schott, Chair of the Energy Security Board cautioned that the market needed a quick restructure to ensure the longevity of supply.

Established by the energy arm of the Council of Australian Governments, the ESB opted to “support the transition of Australian energy markets and advance the long-term interests of consumers”. It has oversight of energy reliability, security and affordability.

Upon analysis of the reports, the government found that the safekeeping of electricity supply “remains the most concerning issue” for the National Electricity Market (NEM), this includes all states and territories except Western Australia and the Northern Territory. The report said, “Increasing penetration of variable renewable energy resources … is making it more difficult to maintain security.”

The report cited that AEMO (Australia Energy Market Operator) has had to intervene in the market far more than in earlier years in order to manage security issues. With that, AEMO issued more than 250 directions in 2019-20, compared to 158 the previous year, when some power generators were asked to increase or decrease their output to shore up electricity supply.

Meanwhile, the said report had embraced the growth of renewable energy, revealing its success in “substantially” lowering emissions. This goes along with the electricity sector, as they keep on track to cut emissions by more than 50 per cent by 2030 based on 2005 levels.

However, Dr Schoot warned the failure of regulation to keep pace has become a critical issue.  In an accompanying statement, she said “The technology and renewables-driven transformation of our energy market is no longer and if or when proposition. It is here and now. The pace of change is accelerating. Band-aid solutions are no longer viable. “

She added “The current set of systems, tools, market arrangements and regulatory frameworks is no longer entirely fit for purpose. This pace of change means there are now just months to finalize the redesign of the electricity marketplace so consumers can reap the benefits of this change.”

She had given emphasis to the states’ actions are understandable given “years of insufficient action” across the sector, but warns the “diminishing patience of governments” could undermine the NEM. On the other hand, she noted that some players in the electricity sector were resistant to change.

Currently, given the failure of successive energy and emissions reductions policies at the Commonwealth level, the State governments have been executing their own renewable energy directives. In cooperation, Federal Energy and Emissions Reduction Minister Angus Taylor agreed that taking action now was critical to minimize disruptions.

To date, the ESB is examining options to recover electricity supply security, including a nationwide steady approach for state and federal governments to underwrite the development of “firming” technology, such as pumped hydro and gas plants.