The world and Australia are fast moving to an era where the generation of electricity will largely be from combinations of various distributed energy resources and innovative systems. At the same time, Australia is locked into an energy regulatory system, designed for the era of centralised supply.
This regulatory system is called the National Electricity Market (NEM), which operates on one of the world’s longest inter-connected power systems. The NEM uses processes that worked well over the past 20 years, but which have limited flexibility to adapt to modern on-line based energy management tools.
Many hours are spent by dedicated Australian regulatory professionals and organisations, who strive for change in the Rules of the Game, in an attempt to “re-boot” the system to NEM 2.0 – but I wonder if it’s not time to boot the NEM and start again?
In 2017, we are not operating our computers with dial-up modems, and most of us don’t rely on landline phones, so why do we live with an energy regulatory system that is essentially from that same era?
Energy supply is moving from central to distributed, yet operating within the current framework designed for central supply. As this move to decentralised systems happens, we will increasingly depend on our local energy resources, urban micro-grids and competitive options to provide security of energy supply, and these smaller grids will require smart systems.
However, many of the innovative services that are now available, such smart energy storage and demand management options, are not properly valued in our centrally planned regulatory system, which was designed in terms of analogue base-load. The current NEM regulatory environment is not one that offers value for the flexibility of smart, fast energy storage systems and energy management. This makes it difficult for energy companies with innovative products and services to compete in Australia.
In the past 20 years, Australians embraced the digital transformation in mobile phones and communications, enabling our industries and businesses to compete on the global stage. We now need an energy regulatory system for Australia to compete in a world where energy is flexible, often produced close to the end user, to provide resiliency and lower cost.
With our vast renewable energy resources and with the innovators of the energy world beating paths to our various state ‘front doors’ to provide world-class energy storage systems, Australia is now on centre stage of the global energy scene.
Let’s not miss this opportunity. Now is the time to fast-track forward to a simpler, 21st century regulatory system, a new NEM that enables innovation and competition, and embraces smarter ways to provide energy security for Australian consumers, businesses and industries.