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AEMO: Politics needs to catch up with falling cost of wind, solar, storage

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The CEO of the Australian Energy Market Operator has called on state and federal energy ministers to cut the politics and endorse the broad raft of reforms outlined in last month’s Finkel Review, so that AEMO and other industry and regulatory bodies can get on with their jobs and start pushing down power prices.

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Speaking at a CEDA Energy Market Outlook event in Melbourne on Monday, AEMO CEO Audrey Zibelman said her organisation and others wanted to “get on with it” and implement some of the much needed reforms in the energy market, including some of those identified in the Finkel Review.

“100 per cent of people I have talked to across the industry are saying ‘we’ve got to get on with it,” she said.

“We’re a Coalition of the willing,” she said in reference to AEMO and the Australian Energy Regulator, headed up by Paula Conboy, and the Australian Energy Market Commission, led by John Pierce.

“Paula and John and I want to get on with it. … we’ve got to make these changes. We don’t want to waste this crisis.”

The call to action comes ahead of Friday’s COAG meeting of energy ministers, also in Melbourne, and two weeks after energy retailers around the country raised customer power prices yet again, this time by up to 20 per cent.

Zibelman told the CEDA luncheon she was looking forward to the meeting, and was optimistic the ministers would unite to endorse the broad recommendations of the energy market review conducted by Australia’s chief scientist, Alan Finkel.

And she noted that there were other factors driving Australia’s – and the world’s – energy market transition that were outside the realm of politics.

“We have to remember that economics is driving all of this. It’s not just about policy,” Zibelman said in comments to reporters after the lunch on Monday.

“This organic growth that I’m talking about – the cost of wind going down, the cost of solar going down the cost of batteries going down, customer preference around rooftop solar – that’s driving all of these changes as much as policy right now, so we just need to deal with it anyway,” she said.

But as Australia has illustrated already, policy remains key to how quickly, or smoothly, these changes come about. And Zibelman was keen to remind state and federal energy and climate ministers that market certainty – and consistency – is always the best policy.

“Certainly, I think it’s going to be very very critical as we move forward that we regain confidence in these markets,” she said.

“If we can have everyone consistent, it’ll make it easier. …There’s no question that if you had a single policy for the NEM, and everyone knew where it was and they knew where it was going to be for the next 20 years, that would make a lot of decisions easier.”

But Zibelman is also realistic – coming from the much more complicated and politically riven US market – and says AEMO will do what it needs to, whatever way the political wind blows.

“I feel in our role what we need to do is provide the best advice on how to create the best outcome for consumers. Policy makers will make policy decisions around energy fuel type, and we will just work with them,” she said on Monday.

“I think that having consistency throughout the economy certainly helps because it then allows for investment certainty and the more you have of investment certainty the lower your investment costs. And that always affects consumers.

“So I think certainly certainty helps. Certainly consistency helps. Certainly a longer outlook helps – these are long-lifed assets. But I’m going to keep coming back to this point, that is for them to decide. I’m just going to operate the system the way it comes at us, and we’re going to look at the best market design to achieve optimal outcomes.

“There’s no way around this but to work through these (key issues), get the market design right, and move on. And I think the faster we can go and the faster we can get it done, the better off we all are.”  

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  • Brunel

    New York shows the way with regards to electricity supply reform.

  • solarguy

    My god you just have love and admire this woman! Integrity, brains and a take no prisoners attitude. Audrey you certainly have my support and admiration. Go girl.

    • John Saint-Smith

      I agree, and expect Abbott and Murdoch will be calling for her dismissal before long.

      • solarguy

        Do the government have the power to do that though? As for Abbott and Murdoch they can go and do what Lemmings do, those idiots don’t call the shots. It’s not like their omnipotent!

        • John Saint-Smith

          They didn’t have the power to get rid of Gillian Triggs either, but that didn’t prevent them from harassing her.

          • solarguy

            I think our girl is tuffer than that.