As a national voice for household and small business energy users, our everyday work involves understanding and navigating the national energy policy landscape.
For all who seek to advocate for a better, fairer system, or to create, influence or implement policy, this is a complex operating environment.
Policies and programmes have proliferated across Australia’s jurisdictions in recent years as state and federal governments take steps to protect and advance the interests of their constituents in an energy system that is undergoing two critical transitions: From one that is reliant on fossil fuels for power generation to one that is net zero in terms of carbon emissions. But also, from one featuring a small number of large, distantly located generators to one powered by a mix of assets — millions of which are owned by consumers in the form of rooftop solar, batteries, electric vehicles and other technology.
Australia’s Energy Transition: A snapshot of the Changing Policy Landscape is a direct response to the challenge of maintaining a ‘10,000 foot view’ of this fast-changing system, and the policy-making landscape, as a whole.
What is happening? Where and why? And how do all of these different policies and interventions relate to and inform each other?
This report, a collaboration between Energy Consumers Australia and KPMG, collects a large number of the policies announced or implemented across all Australian jurisdictions and applies a framework for understanding how and where they seek to make impact.
We believe it will be an invaluable reference for those seeking to understand and contribute to the complex policy landscape that is the Australian energy system in 2021.
Why we created this report
Energy is a shared responsibility. While states currently face different challenges and pressures, and are developing bespoke policies to address them, ultimately all states will need to address many of the same issues.
To achieve maximum efficacy and impact these actions would ideally be carried out in a consistent way, recognising that much of Australia is connected via a single system and operates a single wholesale market. Such a level of coordination will not be easy to secure, however, without clear national policy and an implementation plan — as well as a forum for sharing learnings between jurisdictions.
Before we can develop such clear, collaborative national policy we need something else: Greater visibility and shared understanding of the many different policies and programs currently being implemented by state and federal governments (as well as how they interact, both in intended and unintended ways). That’s the process this report sets out to begin.
In this way we can start to identify where potential gaps are, where unhelpful duplication or competing objectives might exist and where there is opportunity for collaboration in areas of common need. Most importantly, we can build a clearer picture of likely future outcomes for consumers, making sure we are including their changing needs and expectations as a starting point for future policy interventions.
The report contains six key messages
1. Jurisdictional policies are becoming a permanent driver for consumer outcomes
States are increasingly deploying their own approaches to the development of energy markets, moving away from the national framework. This is an important change that is likely to continue in the future and is already impacting on national approaches to and understanding of the energy markets. This trend will have an ongoing and permanent impact on consumer outcomes, as well as the role and function of national markets. It drives an increased need for communication and information sharing between jurisdictions.
2. Consumers should be placed at the front of policy-making
The energy market exists to serve consumers. When making policy, jurisdictions can choose to do so in a way that prioritises and begins with engaging with consumer views, needs and preferences. In this context, there is considerable scope for improvements to traditional consultation methods as part of policy making. Methods that prioritise collaboration and allow consumers to influence and inform policy from the start are still a minority. Addressing this will go a long way towards delivering outcomes that consumers want.
3. All consumers must be included in the energy transition
As the energy transition unfolds, the notion of vulnerability is expanding beyond low-income households. Any consumer who faces barriers to fully participating in the energy market (eg renters, apartment dwellers, people from culturally and linguistically diverse backgrounds) should be explicitly considered when energy policy that potentially impacts them is being made. Increasingly, jurisdictions are beginning to take into account the diverse challenges being faced by consumers. This is a positive first step towards a system that responds to the needs of all consumers but there is still room for improvement.
4. Technology ‘enabling’ policies are a key development in recent policy making
For many years technology neutrality was a key principle of energy system policy making. However, due to the transition that is underway, and the growth of consumer-owned energy assets, this neutral approach is no longer effective at delivering the outcomes policy makers seek to secure. States are now actively looking to support emerging technologies that are aligned to their decarbonisation targets and to facilitate the role of consumers in a market where they are both consumers and producers of energy. This is contributing to divergences from national frameworks, including how energy system infrastructure is valued and approved.
5. Flexibility in the demand of customers should be given due consideration in policy making
The report finds far more policy activity still being directed at supply side solutions and market-owned assets, despite a proliferation in consumer-owned assets that has the potential to help deliver reliable supply and lower bills to consumers, while also supporting the network as it transitions.
Failure to sufficiently unlock demand flexibility could lead to overinvestment in network ad generation assets, leading to higher bills for consumers. There is a gap for jurisdictional policies to further consider how markets can be created to enable consumers to more fully participate in the energy market by being flexible with their demand for energy.
6. What does the current and emerging policy landscape mean for consumers?
It is not always easy to accurately assess who will ultimately pay for policy interventions in the energy market and who will ultimately benefit (and how much). The potential for unintended (or unforeseen) consequences to impact diverse consumers in the form of higher bills or diminished service levels should be carefully considered during the policy-making process so that energy is affordable for all.
How to use this report
The report features a section for each jurisdiction, identifying the policies proposed or enacted in that location and categorising them into a common framework, as well as presenting key statistics, challenges and trends, and key insights.
Policies are categorised in terms of which segment of the energy supply chain they are directed at (wholesale, network or retail) as well as whether the assets they impact are consumer-owned (rooftop solar, EVs, home batteries, household appliances) or market-owned (large-scale generation, storage, transmission and distribution assets).
They are also classified according to the aim of the intervention.
- Learning (finding out more information about a potential challenge or opportunity),
- Enabling (removing a current barrier so the market will address a specific challenge)
- Solving (significant interventions with material market impacts to address a policy concern).