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Aus energy network needs overhauling: AEMO

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July 11, 2017

The Australian Energy Market Operator has called for the overhaul of the electricity system.

Australia's energy crisis is an opportunity to overhaul a 1990s-designed market that technology has overtaken, the country's national market head says.

Australian Energy Market Operator chief executive Audrey Zibelman says the network cannot continue to work like it has been for the past 20 years.

Designed in the 1990s, Australia's market was designed for homogenous, large scale generation using fuels such as coal and gas, which relied on one price signal.

"It all became a question of what resource you should use to get to the next increment of marginal cost. That's not true anymore," she told a business lunch in Melbourne on Tuesday.

Now, Australia is using more renewables than ever before and states such as Victoria and South Australia are exploring battery projects.

"Learning how to innovate and then innovating with the market is going to be important, but doing it in a way that is safe and secure for the system," Ms Zibelman said.

"I think if we were designing the markets today, with the amount of elasticity, we'd be thinking about it from the consumer out, as opposed to the generator in."

But there also needs to be better national planning, with worries about the security of the network this summer.

"We are concerned about the amount of reserve and resources going into the summer, so the battery in South Australia, the gas plant in South Australia, the battery investments that Victoria are looking at are all important parts of our summer plan," she said.

Australia also needs to look at unbundling pricing - similar to what happened with telecommunications, she said.

Ms Zibelman said if Australia gets its solutions to the energy crisis right, it could lead the way for other networks such as those in Africa.

"We have got to make these changes and we don't want to waste this crisis," she said.

The next COAG energy meeting is on Friday.

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