Future energy policy must match customer expectations on price and security of supply
It’s been a long hot summer and the topic of energy security is front of mind for customers after the heatwave conditions across the country and power blackouts in South Australia. There is also pressure on energy affordability with retail prices rising across all states.
So are our current disjoined energy policies meeting current customer expectations? Certainly not. Whilst the announcements last week by the SA Government and Federal Government on a range of initiatives to provide a level of certainty are a step in the right direction, the subsequent dialogue between political leaders highlights the urgent need for alignment across industry and government in a future national energy policy.
And in that debate, policy makers should not forget the customer is now the centre and driver for the future development of the electricity system. Their views on a pragmatic future energy policy that adequately addresses the tri-lemma of objectives of energy security, affordable energy, and lower carbon emissions over time, should be paramount.
Top of the list is energy security.
While no power system can guarantee to be 100 percent reliable, any proposed policy that results in an unsecure power system will not meet customer expectations. Frequent power cuts will destroy any customer support for policies supporting lower carbon emissions over time.
Second on the list is affordable electricity. Electricity affordability can be achieved two ways: cheaper power or providing customers with the means to reduce their power bills through better energy management. Cheaper power is challenging given the shift to clean energy technologies and additional investment in generation.
So, is enough being done to empower better customer energy management? There are some improvements on the way. Several retailers are already rolling out smart meters ahead of the Power of Choice commencement in December this year. Customers with smart meters are being provided with energy usage apps on their smart phones or access to their data on an internet portal.
Smart meters provide customers with access to time of use tariffs and the critical information to better manage their energy demand and consumption through supporting technologies (e.g. smart thermostats, battery storage, solar PV). Retailers need to continue to educate customers about tools to assess the potential benefit of moving to a time of use tariff.
For those customers without a smart meter, most electricity retailers provide energy usage tips and tools on their websites. Retailers should consider ways to encourage customers to make more use of these tools.
While battery storage has the potential to contribute to customer energy management and energy security, pay back to consumers needs to improve –either through reduced costs or tariff changes. It will be a few years before battery storage becomes cost effective for the majority of customers.
Third on the list is lower carbon emissions over time. Customers want a pace of lower carbon emissions from the electricity sector that does not unduly comprise the electricity security and reliability. This means we need an energy generation mix consistent with a secure power system that avoids a high risk of power blackouts.
We can be confident that Professor Finkel’s review will provide us with the facts we need to develop policies that address these factors to the benefit of the customer. Then, we only have to rely on government’s willingness to implement them.