New laws boost Australian offshore as network productivity improves overall

As the Australian government introduces new legislation to support the offshore energy sector, the Australian Energy Regulator (AER) reports overall improvements in distribution network growth and efficiency.

The latest news, from both the federal government and the country’s energy regulator, is good news for Australia’s electricity industry as it drives for greater efficiency and integration of renewable energy.

Offshore boost

The regulatory framework for offshore renewable energy was passed by Australia’s Federal Government ahead of the New Year and comprised three Offshore Electricity Infrastructure Bills – the main 2021 Bill as well as a Regulatory Levies and Consequential Amendments Bill.

The government states the legislation supports its “objective to deliver a reliable, secure and affordable energy system”.  It adds that the infrastructure framework will:

  • Help to grow new sources of energy supply.
  • Provide clean and efficient technology.
  • Ensure the energy sector is well regulated.
  • Ensure the energy sector is well regulated.

Commenting on the new Bill, Australia’s Minister for Industry, Energy and Emissions Reduction, Angus Taylor, said: “The Morrison Government’s offshore electricity infrastructure package will unlock development of a new industry that will create thousands of skilled regional jobs, strengthen our economy, and support a more affordable and secure energy system.

“Importantly, this framework enables the development of these new energy projects while safeguarding the environment, securing the health and safety of workers and protecting other maritime stakeholders.”

He noted that the new laws will help speed up development of a number of major offshore projects, including the Star of the South, Sun Cable and Marinus Link transmission line with an estimated value of AS$10bn (£5.3bn) and the potential to create some 10k direct and indirect employment opportunities.

Greater efficiency all round

The legislation boost is further good news for Australia’s electricity sector after national regulator AER revealed the results of its annual benchmarking report.  The reports, established in 2006, provide a ‘state of the nation’ view of the productivity growth and efficiency of the country’s Distribution and Transmission Network Service Providers (DNSPs/TNSPs) and are visible to both providers and consumers.  

The key findings for 2020 showed:

  • Distribution industry productivity increased by 1.2 per cent, with transmission industry productivity up by 1.7 per cent, consistent with the trend of increased productivity since 2016.
  • Of the 13 DNSPs, nine became more productive in 2020, primarily due to reductions in operating expenditure.
  • Since 2006, there has been some convergence in the productivity levels of DNSPs and from 2012 the New South Wales and Australian Capital Territory DNSPs have been among the most improved in the NEM.
  • Of the five TNSPs, three became more productive in 2020. This was primarily due to improved network reliability, with other contributing factors being reductions in operating expenditure and overhead line capacity.

According to the AER, the productivity increases in 2020 were particularly noteworthy given a backdrop of productivity reductions in the overall utilities sector and the wider Australian economy, noting that this has been the trend since 2015.

The report comes at the end of a busy year for the AER.  As well as announcing a consultation directly relating to the reports — to assess the different ways costs are allocated (capitalisation) and their impact on the distribution benchmarking results — the AER also joined international regulators to form a global regulatory energy transition ‘Accelerator’.

The organisation, which includes representation from New Zealand, Fiji, UK, USA , France, South Africa and Brazil, is set to share knowledge and development best practice to support national and international carbon emissions targets. The International Energy and Renewable Energy Agencies, along with the World Bank, are set to support the Accelerator.