The Australian Energy Market Commission today called for submissions on its approach to considering ways to improve the coordination of transmission and generation investment so new supply can be added to the system at the lowest possible cost.

The energy system is transforming. Older generators are retiring, and new lower-emissions generation will be required to meet Australia’s emissions targets. This means 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, in part, 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 is leading to more households and businesses installing distributed energy resources including solar PV, battery storage and ‘smart’ appliances. These new energy services will potentially affect electricity demand and network requirements, although the impact of these new business models on transmission and generation investment is hard to gauge at this time.

Given this uncertainty, the approach paper sets out how we will consider potential changes to the regulatory framework to improve the coordination of generation and transmission investment. This will include looking at transmission charging arrangements, transmission planning arrangements, and generator access arrangements in the national electricity market.

The paper also sets out a number of options that will be considered, including the development of renewable energy zones as raised in the Finkel review. We also welcome stakeholder suggestions of other options that we should consider.

Stakeholder submissions will be a key input into an options paper, to be published in November 2017.  The options paper will narrow down the options under consideration, for consultation with stakeholders.

Submissions on the approach paper are due on 19 September 2017.

This is the start of stage 2 of the review, previously named Reporting on drivers of change that impact transmission frameworks, which is being carried out under Terms of Reference provided by the COAG Energy Council.

Media: Prudence Anderson, Communications Director, 0404 821 935 or DL (02) 8296 7817.