Key proposals in respect of system planning include the introduction of an integrated grid plan as well as making system-wide investment decisions on interconnection and developing a list of priory projects. An Energy Supply Board is proposed that would deliver an annual system health check. AEMC, AEMO and AER would be resourced, strengthened and made more effective through coordination provided by the ESB. The need for better coordination between regulators and interested parties is a familiar international refrain. Joining up the gaps between those responsible for grids, generation policy, licensing, consumer protection and even financial markets regulation will be important in an ever more complex world. Paradoxically, post-privatisation structures in many jurisdictions have had the effect of making this kind of "central" planning less, rather than more, easy to implement.
Appropriate policy settings are the pinnacle of energy market reform in the furtherance of an efficient and cleaner outcome for Australia and the globe. As my colleagues note, the Finkel review furthers that. From my perspective as a competition and regulatory lawyer, the way that policy trickles down into regulation and regulator functions must be carefully traversed.
As the Australian energy market welcomes new players with new expertise and technologies, a fit-for-purpose regulatory framework is imperative. Practicing in this area, I find that difficulties confront proponents due to the sometimes impenetrable matrix of rules, such as the National Electricity Rules. Also, as regulatory gaps reveal themselves in emerging areas, availability of timely guidance and indications from the regulators (like the AER, AEMO and CER) can be an impassable frontier.
Regulatory silence or ambiguity are navigable, but uncertainty and wasted resources make innovation an uphill quest. The worst is where an application of rules by the “black letter” is counter-intuitive and repugnant to the policy aspirations of electricity security, reliability and low emissions. While regulators can only work with what they’ve got (in terms of the regulations they must apply), lack of resourcing and bureaucracy can intensify the issue.
I welcome Finkel’s recommendations for stronger governance, especially the recommendation to review the National Electricity Rules to streamline them in light of changing and technologies and conditions (recommendation 7.7). I also believe that ensuring that network investment incentives echo policy more closely (Recommendations 5.4 and 5.5) will make the future proposition, for both traditional utilities and new proponents, a positive one.
Claire Forster, Special Counsel, Competition and Regulatory
The Finkel Review recommends that the Federal, State and Territory Governments agree to a national emissions reduction trajectory and a national strategic energy plan. What interests me in particular is the interplay between the call for national agreement and the individual initiatives of the various State and Territory Governments, in particular the Queensland Government’s 50% renewable energy target by 2030. The recently released Powering Queensland Plan affirms this commitment and foreshadows the establishment of a government owned generator (referred to as ‘CleanCo) to operate existing renewable and low emissions energy generation assets and develop new renewable energy generators. There is an unprecedented pipeline of solar projects in Queensland and a proposed deployment of new hydro generation to be investigated by the newly established Queensland Energy Security Taskforce – we are more than just the ‘sunshine state’.
The proposed clean energy target and the generator security and reliability obligations are technology agnostic but the detail of how these would be implemented and the impact on renewable energy development costs remains to be seen – so too, therefore the impact on the achievement of Queensland’s RET. It is hoped that any national energy policy alignment allows the recent upturn in renewable energy projects to continue while at the same time ensuring energy security and stability.
Rebecca Hoare, Partner, Environment & Planning and Climate Change