Disruption in energy industry driving consumer choice

When you’re in an industry that is such an essential service, community and consumers having a choice on how they decide to get their power and gas, is a great thing, Australian Energy Market Operator, Executive General Manager WA, Cameron Parrotte has told a CEDA audience.

Speaking in Perth discussing Western Australia’s energy future, Mr Parrotte discussed how disruption in the energy industry was changing consumer behaviour.

“We know this industry is being disrupted. It is going to change whether or not regulation keeps up with it,” he said.

“There has been an information asymmetry.

“(Customers) now have control, they have choice.

“We need to bring them along the journey, to provide that data to them and to new players…that can come and actually provide a service to the system.

“There are new service models that are out there.

“Some of these things are driven by technology, others are by consumers just making a choice.”

Mr Parrotte said to keep up with the disruption, the industry shouldn’t look too far ahead.

“Supply sources is really the big issue that is driving the change. There’s technology now that’s out there that wasn’t five years ago, and there will be technology in five years’ time that we haven’t dreamed about today,” he said.

“There’s a lot that is unknown. We could sit here today and think what does that future world look like and work every single thing out, and then ten years later…the world has moved on that far that we’ve got to start all over again.

“It’s a matter of going with what you know, looking as forward as you can, taking steps appropriately to deal with that.”

Mr Parrotte said the key challenge for the industry is providing “the investment signals to get the right services at the right time at the right cost.”

WA Legislative Assembly Member for Swan Hills, and Economics and Industry Standing Committee Chair, Jessica Shaw also spoke on the importance of consumers, and the role of microgrids in the WA energy market.

“How can we ensure that our entire community benefits from the value delivered by these new technologies,” she said.

“How do we ensure that value is preserved and returned to the people of WA who have spent entire lifetimes paying for our energy asset base?

“People who are experiencing hardship are far less able to adopt new electricity solutions and energy policy is a growing issue here in WA. Their access is often constrained by tenure in rental property or insufficient access to capital…to invest in energy efficient appliances and technologies to reduce bills such as insulation.

“We can, and we should take the time to develop appropriate energy policy settings. We can undertake our own process of regulatory reform, and we can introduce genuine regulatory innovation.

“This is a particularly exciting time in the evolution of WA’s energy industry. We certainly are in a period of transition.

“We’re moving from a centralised system…pushing energy along linear transmission and distribution systems, delivering to very passive consumers…to now a network that has an increasing level of renewable energy penetration and localised generation, significant advances in ICT infrastructure and battery technology. And we’re seeing bi-directional flows of energy, a much more fluid and complex operating environment.

“All of these developments create the opportunity for micro-grids.

“Microgrids can play a key role…if we get the settings right and if we work together on the reforms that simply need to happen – reforms to accommodate changes that are already underway and reforms that should be above unnecessary politicisation as so much of the energy debate has been in Australia.”

Alinta Energy General Manager – WA, Chris Campbell discussed the benefits of the WA energy market.

“(The) policy roundabout and the pricing and reliability debate in the National Electricity Market (NEM) have meant that in contrast, WA’s energy landscape has been pretty uneventful and we’re pretty thankful for that,” he said.

“If we look from the perspective of the failed policies in the East, and the mechanisms of the last decade we can see that in contrast WA has had a pretty solid platform. This has been achieved through sound, long-term focused energy policy such the capacity credit mechanism and the domestic gas reservation policy.

“This has led, for the most part, to investment in the right low-emissions generation and has set us up for the next stage of investment focused on renewables and the exit of ageing plants.

“Should the advice for WA’s energy future be more of the same please? The answer to that question is mostly yes but with a little evolution too.

“It will be important to continue down the path of opening up the market to competition and we must evolve the energy system and market frame work for the increasing renewables that we see.

“When you get the policy setting right you encourage more investment.

“In terms of investment in the West, the marketplace and policy environment has encouraged both innovative investment and private investment in capacity.

“The capacity and market construct has led to a reduce in carbon footprint, but not at the expense of affordability. Looking to the future we would like to see that mechanism remain, but just with some tweaks to enable us to respond to change in supply and demand dynamics and supporting existing investments. It’s about building on what’s already working.”

Australian Gas Infrastructure Group Chief Executive Officer, Ben Wilson spoke on the WA gas market.

“The gas market works well here. We have a good diversity of producers and consumers and we have a very sensible and reasonable gas price,” he said.

“Gas is increasingly important for power generation and therefore if you want a reasonable electricity price, you need to have a reasonable gas price and in WA we do.

“As we see renewables penetrate deeper into the system, we see more variability in the requirements for gas fired generation. We also see coal frankly playing a lesser role moving forward and we have seen that elsewhere.

“South Australia – renewables came in, in the short term they killed gas because of the higher price…but then they killed coal, because coal can’t run flexibly and turn on and off in the same way to back up renewables. Here we are going to see a similar pattern I think.”

Looking ahead, Mr Wilson highlighted hydrogen or “liquid sunshine” as a new industry to benefit the state in the same way the North West shelf had done previously.