The Australian Energy Market Commission has published its final stage one report on drivers that impact new investment in generation and electricity transmission networks. It recommends that the review progress to a second stage. This provides an opportunity to identify ways to better coordinate the investment in generation and the transmission network that is required as the generation mix changes, at least cost for consumers.
The report finds that the drivers of transmission and generation investment have changed significantly in recent years.
There is likely to be a large amount of new generation needed. However, the location and technology of this investment is difficult to predict due to uncertainty surrounding government emissions policies. This in turn leads to uncertainty about future transmission investment, as generation technology can influence the location of, and need for, investment in the transmission network. For example, renewable generation like wind and solar farms may potentially locate in areas that are a distance from existing transmission infrastructure.
Also, a reduction in the cost of new technologies has led to increased penetration of distributed energy resources including solar PV, battery storage and ‘smart’ household appliances. These new energy services will potentially affect electricity demand and network requirements.
Stage 2 of the review will consider the issues related to the coordination of transmission and generation investment in more detail. It will assess a number of options that could be implemented to improve the coordination of transmission and generation investment, ultimately providing the best outcomes for consumers in the long-term. This second stage will also be a useful input into addressing the recommendations made by the Finkel Panel Review to support better coordination in transmission planning.