Energy Networks Australia Guide to Australia’s Energy Networks 1 Australia’s Energy Networks What are energy networks? Fast Facts Australia’s energy networks This vital infrastructure is owned and comprise the transmission towers, managed by a mix of private and Gas is delivered to Energy networks manage substations, poles, wires and pipes government-owned organisations customers through more more than 11 million electricity 918,000 than 96,000 km of gas customer connections and which supply gas and electricity which are responsible for the security networks throughout five million gas connections to almost every household and and reliability of Australia’s energy Australia to Australian homes and business in the country. supplies. km businesses The networks of Western Australia and The Australian electricity the Northern Territory are isolated from network extends about 16 the rest of the country, but even so, the 918,000 km and could circle >96,000 the equator 23 times electricity grid on the east coast (which km million forms the National Electricity Market) is one of the largest interconnected electricity networks in the world. About 28,000 energy network employees 99.95% provide essential frontline reliability and supporting services to 6 customers 24 hours a day, billion 365 days a year Energy networks provide customers with an Australia’s gas exceptionally reliable power infrastructure can store the service, adapting in real time same amount of energy to millions of changing 28,000 as 6 billion Powerwall demand and supply signals employees batteries. 2 1 Evolution of energy networks Ownership Structures The National Electricity Market (NEM) Gas networks have a long history of • There are 22 electricity and gas network businesses in Australia with a mix was created following the formal serving Australians. The origins of gas of public and private ownership. adoption by the Council of Australian distribution networks date back some • 100 per cent privately owned electricity networks: Victoria, South Australia Governments of a national competition 150 years to the gas distribution policy in 1995. Full operation started networks of the former South Australian • 100 per cent government owned electricity networks: Tasmania, Western Australia, December 1998. and Brisbane Gas companies, and the Gas Northern Territory and Queensland and Fuel Corporation of Victoria. • In NSW, one electricity network is privately owned, two are 50.4 per cent The previously vertically integrated privately owned and one is fully government owned. The Australian Capital generation, transmission, distribution Australia’s gas distribution networks in Territory’s electricity network is a joint public and privately owned entity. and retail functions were separated. South Australia, Victoria, Western Australia The generation and retail sectors and Queensland were privatised by their • Australia’s gas distribution providers are all privately owned, with the exception of transitioned to competitive markets respective state governments in 1993, the ACT’s, which is half government owned. and the transmission and distribution 1997, 2000 and 2006. businesses became regulated *natural The main gas networks across NSW, monopolies. Tasmania and the ACT were all privately The first electricity privatisations were developed. in Victoria between 1995 and 1997, then South Australia in 1999 and then NSW from 2008. Western Australia and the NT remain separate from the interconnected NEM. Ownership Private Public Mix 2 * Network businesses are natural monopolies because the scale and nature of the infrastructure precludes competitors from 3 replicating it – it wouldn’t make sense for a business to duplicate transmission towers or gas pipes. Electricity transmission and distribution, water and gas pipes generally fall into this category. This is why these businesses are regulated. Network Regulation Network Prices Electricity Transmission Energy networks are natural monopolies Network prices vary between The interstate transmission network As ageing coal-fired generation is retired, subject to strict economic regulation. regions and pay for a vast array of is Australia’s electricity superhighway. it will increasingly be replaced by wind In most cases, they are governed by services designed to ensure the safe It is an essential link between power and solar in different locations. Stronger the National Electricity Rules which are and reliable supply of energy to generators and customers, transporting transmission networks will be needed made by the Australian Energy Market households and businesses. The other high voltage electricity over long to move the power around the system Commission under the National Electricity components of bills are wholesale distances. locally and interstate. Laws. All major Australian gas networks costs, retail charges and The transmission network traditionally Increasing the capacity of existing are governed by National Gas Rules. environmental costs. connected large power generators, such transmission interconnectors or high The revenue most energy networks The services networks provide include as coal, generally located a long way from voltage lines can lead to more customers are allowed to earn (and therefore the maintenance of thousands of kilometres where people live and work, to the lower accessing cheaper and more reliable prices they charge) is governed by the of poles, wires and gas pipes, vegetation voltage distribution networks in our cities electricity. Australian Energy Regulator and is management, emergency response, and towns. The Australian Energy Market set every five years. Western Australia system management to ensure safety, Electricity transmission also directly Operator’s Integrated System Plan has a similar structure regulated by its new connections and integration of solar supplies large industrial customers such advocates a coordinated approach Economic Regulation Authority. and storage into the grid. as mines and paper mills. to the development of transmission This is known as incentive-based Gas and electricity network prices This system has evolved to connect infrastructure to support lower emissions regulation, because if businesses are able have been falling across the country networks between states – Australia’s generation and meet customer demand. to make efficiencies and reduce costs since 2015. Average electricity network east coast now has the longest below their allowed revenue, they can prices are down more than 13 per cent interconnected electricity system in the keep the savings for a period of time. and gas distribution prices fell 10 per world. This allows the National Electricity Consumers benefit from this, because the cent between 2015 and 2017 to make Market (NEM) to operate, increasing the regulator then uses the new information up 35 per cent of an average stability of our energy system and helping gained in one period to set tougher residential gas bill. transport the lowest cost generation to benchmarks and lower allowed revenues customers. for the next. Thus the savings made by the businesses put downward pressure on consumer prices. Australia’s transmission networks National average electricity prices 500kv – Overhead 400kv – Underground 330kv – Underground 330kv – Overhead $94 $95 Environmental 275kv – Underground 7% 7% policies 275kv – Overhead Regulated 220kv – Underground networks and 220kv – Overhead metering 132kv – Underground $552 $610 132kv – Overhead 41% $661 Wholesale $702 45% 110kv – Underground 48% + retail 52% 110kv – Overhead 88kv – Overhead 66kv – Underground 66kv – Overhead 44kv – Overhead 33kv – Overhead 22kv – Overhead Source: AEMC Residential Electricity 11kv – Overhead 2014–15 2018–19 Price Trends – national data Source: Australian Renewable Energy Agency 4 5 The Electricity Transformation Renewable Gas - The Hydrogen Story Australia is in the midst of an energy If properly managed, solar and Natural gas is widely used as an energy Hydrogen can be used to complement revolution – and it’s rapid. What were storage systems can work together source across the economy – from natural gas in the gas network, providing once networks of poles and wires as virtual power plants, reducing the heating Australian homes to domestic reserve energy in the same way battery operating one way electricity supply to need for investment in poles and wires and commercial cooking, transport and technology does, in a carbon-neutral, a customer are evolving into a two-way infrastructure, which will ultimately industrial processes. It is also an essential secure and cost-effective manner. system, where consumers can export save customers money on power input for Australia’s manufacturing Australia’s gas pipeline infrastructure power to the grid via their own mini bills. Following the CSIRO/Energy sector, particularly plastics and fertiliser is immensely valuable not only as a generation systems – rooftop solar and, Networks Australia Electricity Network manufacturing. There are more than five distributor of energy, but as potential increasingly, batteries. Transformation Roadmap, network million gas connections to households and energy storage equal to six billion There has been enormous growth in businesses are developing guidelines and businesses across Australia. Tesla PowerWall batteries. Utilising this household solar. In 2008, there were just working on significant projects to ensure As outlined in the Energy Networks infrastructure and taking advantage the opportunities presented by