Australia's Energy Markets

Change is accelerating in the deeply interconnected energy sector; linking electricity and gas; spreading technological innovation across new energy services for consumers; and including other policy areas like the environment. The Commission is taking a big picture approach to its work program with consumer interests front and centre as the sector transforms.

Emissions policy has changed the face of Australia’s power system. Recent investment has focussed on wind and solar while significant capacity, mainly coalfired, has permanently or temporarily exited. At the same time households and businesses are becoming active energy shoppers in competitive markets and comprehensively changing the way they use electricity.

The growing range of technologies and energy service options for consumers to choose from is amazing. We have seen storage penetration, microgeneration and smart consumption management emerging as driving forces in the competitive retail market. Of course people still want reliable energy supply and a secure power system at the best possible price. But today they also want reduced carbon emissions. A major theme emerging from Commission conversations with stakeholders for some time has been the importance of environmental and energy policy integration. Environmental policy can directly influence movements in wholesale and retail prices, changes to investment incentives and risk allocation, as well as the level of consumer engagement with the market. So while it is governments’ role to determine required environmental outcomes, such as emissions levels, the mechanism used to achieve them needs to be compatible with how markets operate. The AEMC’s role is to provide advice on those mechanisms and see them implemented in a way that supports the efficient operation of the energy market and the long-term interests of consumers.