The electricity market is a unique complex beast. When we discuss how it must change, it is easy to get drawn into technical issues that rely on detailed knowledge of how the system works. Even inside the system, those across the electrical engineering, the regulation and the financial markets are rare and it is all three of these systems that function in concert.
The insiders to this system use this complexity to their advantage. Energy reform discussions involve the energy companies, the regulators and market operators and the energy policy experts within governments. Outsiders may be consulted but rarely get opportunities to set the agenda and are frequently at a knowledge disadvantage when advocating for changes. The attitude toward the general public can be downright patronising at times.
The situation is not unique to energy – all experts tend to place faith in their ability to see what is needed in terms of a change agenda and implement it in what appears to be the best way from their perspective. Various academic fields of study point to the limitations of an expert and insider led approach to change.
I’ve been thinking about what the ‘change agenda’ in electricity is missing because insiders give little credence to the views and involvement of outsiders. This blog is an attempt to highlight some opportunities that would flow from a different approach.
1. Missing voices – experts are valuable, especially if they come from other disciplines.
At the heart of the story is that the electricity sector doesn’t know what it doesn’t know. How will we use energy in future? What priorities will we place on sustainability, flexibility and ownership? What technology is over the horizon? We don’t have great ways to experiment with the future either in order to learn. One of our challenges is to see a broader set of voices designing our future energy supplies – from industry and economic development, product manufacturers, the cleantech sector and consumers themselves.
2. Reform vs Transform – a paradigm shift relies on an outside perspective
When one is completely surrounded by a context, the context becomes invisible and never challenged. A paradigm shift is more easily imagined from outside the system. If we were to design our electricity system from scratch, it could look completely different with today’s options – especially if we included the entire supply chain from raw materials to the end needs of consumers.
3. Values vs Knowledge – some design questions are about fairness and sovereignty
Our current Government has recognised that ordinary citizens can play an important role by spending time with an issue and moving from a flippant opinion to a deeply considered judgement. This deliberative process allows the Government to understand how citizen values from representatives of different demographics in our community can be applied to the decision at hand. The design of our energy market could change the relative contributions of business and households, of high and low income and of solar owners compared to those who can’t produce their own electricity for whatever reason. The structure of our market could change who owns and profits from electricity supply and where the jobs are generated. Without citizen voice, the electricity sector makes an enormous assumption that they can speak to the priorities of citizens or that the existing balance of values remains suitable.
4. Timeframes – we need a clearer picture of the end destination before focusing on small changes
100% renewable energy can seem an unrealistic goal for someone within the electricity system, steeped in the culture of ensuring the lights don’t go out. 100% renewable energy seems like a necessary and immediate priority for a climate change activist. The ordinary punter sees the debate play out in the media with each side amassing its most convincing evidence that they are right. This is hardly a good platform to explore what our options might really be. In the meantime, energy market reforms inch along delivering greater ‘efficiency’ and fixing hiccups without a clear eye to the future. The decision making chain can only be empowered to set reforms in the longer term context when we create the opportunity to engage the insiders and the outsiders in helping shape and believe in an ambitious low carbon vision.
5. Only the community can determine the goals of the changes
I’ve assumed throughout this piece that the electricity system needs fundamental changes. The biggest reason is climate change. Energy is the biggest contributor to Australia’s carbon emissions and the world is already a decade behind the critical window to act that the IPCC identified in 2007. Renewable electricity may well play a key role in serving our transport and heat needs in addition to electricity. The technology we need is rapidly becoming available at costs that are under the price of fossil fuels. Achieving fundamental systems changes within our energy regime is the key to heralding a new clean energy era in a timely way.
I remember the Total Environment Centre lobbying governments over a decade ago to recognise the need to tackle climate change explicitly in the objectives of the Electricity Act. The proposal was considered unnecessary by the economists in charge of electricity market reform and I have no doubt that we would have seen different outcomes if the sector had stepped up to play a role in reducing Australia’s carbon emissions. Even the renewable energy target, which has been a fundamental driver of changes, is tacked on outside the core design of the electricity market.
I think our energy transition will happen in a more timely way and with better and more transformative outcomes – if we broaden the participants in our energy change agenda.