Energy regulators have been told to junk “overly complicated” proposals on transmission access and adjust to the new federal government’s $20 billion plan for the electricity grid.
Australia’s largest generator and emitter AGL says Labor’s Rewiring the Nation policy will alleviate many of the short-term issues previously identified by regulators.
Who gets priority in the transmission queue and what fees they must pay are part of an Energy Security Board plan to adjust controls and incentives as state governments turn on renewable energy zones to power future industries and communities.
Regulators have a longstanding concern that new projects are displacing existing renewable sources and increasing congestion, rather than adding new clean energy to the system.
But AGL general manager Elizabeth Molyneux said further modelling is needed to determine whether there are still congestion issues that need immediate attention.
Tilt Renewables, the largest owner and operator of wind and solar generation in Australia, backs more work on providing separate revenue streams for energy and congestion relief.
But Tilt’s head of policy Jonathan Upson said wholesale electricity prices are obviously volatile and currently at extremely high levels.
The focus should be to “avoid any rule change or policy that has even the potential of causing wholesale electricity prices to become more volatile or to rise”, he said.
The Australian Aluminium Council representing mining, refining, smelting and processing industries said many design features and complexities are “left unresolved and with minimal detail provided”.
This may further elevate risk or delay investment and won’t necessarily improve the market’s overall efficiency and cost-effectiveness, the council’s CEO Marghanita Johnson said.
Without reform, regulators warn taxpayers may fund unnecessary new transmission assets or be forced to use more expensive power, and Australia may end up with more generators and storage than it needs.
Clean Energy Council director Christiaan Zuur said no model has been sufficiently developed in the ESB policy paper to a point where its market impact can be judged.
Instead, the industry council proposes a “congestion relief market” it says would allow generators and energy storage owners to trade with each other to find the lowest-cost way of using the available network.
Current regulatory uncertainty and lengthy project timelines already create difficulty for many investors.
“We would caution the ESB from further over-complicating an already complicated system by introduction of an investment timescale mechanism,” Mr Zuur said.
The regulators say their proposals will promote investment certainty and channel money into technologies that can get new forms of energy to consumers, and make the power supply more reliable and less expensive.
But AGL says the regulators’ proposal for congestion zones with connection fees and a proposed “transmission queue” would likely result in costs passed on to consumers.
Ms Molyneux said there are many other ESB processes and market rule changes in the works that will improve the energy market.
“AGL believes those should be prioritised over a reform of open access at this time.”
