No guarantees – setting Australian Energy Policy for 2040

Abstract

The energy industry is transforming around three fundamental tipping points; in 2021 distributed energy systems will reach cost parity with grid connected energy; in 2025 electric vehicles will reach cost parity with combustion engines; and in 2045 it will be cheaper to produce electricity using decentralised systems than it will be to transport energy around the grid, excluding the costs of production. This new 'System 2.0' will have a number of defining characteristics: it will be heavily reliant on renewables, which will account for between 40% and 50% of generation; it will be characterised by a large build out of regulated architecture to support the new mix of generation, and heavy competition for unregulated connection assets; distribution systems will shift to the paradigm of the DSO, where load is moved around largely peakless networks using decentralised energy technologies; and retailing will have changed dramatically, away from high churn margin based operations to new digital relationships characterised by large scale operations across new technological platforms. With its high proportion of solar installations, system topography and customer willingness to embrace new technologies, Australia is in a position to lead the world in the transformational times ahead. It has never been more important than now for Governments, both State and Federal, to move beyond the politics and to set energy policy with this objective in mind, ensuring that initiatives across generation, transmission, distribution and retailing reflect long term objectives in market design, investment signalling and regulatory compacts.

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