static image

Ai Group Comment: COAG Energy Ministers' Meeting

"We've been encouraged today to see the Commonwealth and the States working well together and grasping the nettle on some of the tough issues through the COAG Energy Council. However much more is needed, particularly to respond to the extreme electricity price pressures hitting South Australia," Ai Group Chief Executive, Innes Willox, said today.

"Federalism moves slowly, but energy users need swifter action and the progress today needs follow-through. Industry will be keeping pressure on all governments to deliver meaningful reform that builds a fully functioning, affordable, stable and national energy system.

"Tight gas supply and high prices are a serious problem for manufacturing – and worsen price pressures in the electricity sector. We welcome both the market reforms that the Energy Council has agreed, and the agreement by most states to collaborate on better regulation of onshore gas production instead of blanket bans. We hope that Victoria will also get on board. Getting more gas from more suppliers into the domestic market is essential.

"The meeting made more modest progress on the challenge of easing the massive electricity market transition which is hitting South Australia first and hardest.  

  • Incentives are needed on the demand side to allow it to be as flexible as supply. Further work on implementing cost reflective tariffs is positive for this, but the previously-agreed Demand Response Mechanism continues to languish in limbo.
  • Reviewing the test for new interconnectors is valuable, given the critical role they play in stabilizing the market, but the management of existing interconnectors is even more critical and has been lacking at times.
  • Battery storage will be a foundation of our future energy system, and putting stronger procedures in place to support this is smart. It should also be time to accelerate early investment in storage projects to build experience and alleviate crises.

"There is widespread support among energy stakeholders for a fundamental review of the fitness of our energy markets and supporting policies for the transition underway towards more renewable energy and lower emissions.  Ai Group will look for this, and more progress on the crosswinds buffeting South Australia, at the Energy Council’s next meeting in December," Mr Willox said.

Media Inquiries: Tony Melville - 0419 190 347