Energy White Paper 2014 –
Issues Paper submission template
Details of person making the submission
First Name
Richard
Surname
Wilson
Country (if not Australia)
State
Western Australia (Headquarters in Victoria)
Company or Organisation (if relevant)
EnerNOC Pty Ltd
Position in Organisation (if relevant)
Director - Government Affairs, Australia and New
Zealand
Type of Organisation. Please choose from the
dropdown list right
Company – Services
Sector. Please choose from the dropdown list
right
Electricity, Gas, Water and Waste Services
Email. Please provide an email address if you
would like to receive updates from the Energy
White Paper Taskforce
richard.wilson@enernoc.com
Confidentiality
Submissions may be published on the Department of Industry website.
If you do not wish to have your submission made public, please tick the box.
Issues for comment are listed against each of the Chapter Headings. In making your submission, you
are welcome to make comment against some or all of issues in the fields provided. A field for general
comments is provided at the end of the template.
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1. The Security of Energy Supplies
The Government seeks comment on:

ways community expectations can be better understood and reflected in reliability standards;

the value of developing fuel reserves to meet Australia’s international oil security obligations, and augment
domestic security;

ways to increase new gas sources to meet demand and measures to enhance transparency in market
conditions; and

issues relating to the regulation of energy infrastructure.
Please provide any comments on The Security of Energy Supplies below:
EnerNOC supports policy settings which result in an a highly reliable, efficient energy sector.
Removing market barriers that prevent innovations which achieve these aims should be the principal
aim of any government policy.
It is obvious the advent of cheap, point-of-use generation technologies will pose a threat to the
traditional business models of electricity network providers, centralised generators and energy
retailers. They will continue to carry large costs while overall demand for centralised generation will
fall, and these costs will be passed on to existing customers, further incentivising consumers to shift
towards point-of-use generation. The impulse of policymakers and regulators will be to protect these
traditional businesses. Such temptations must be resisted if the gains from the last twenty years of
electricity market liberalisation are to be realised.
Demand side management is part of the solution to these challenges. Poorly managed growth in peak
demand is a major cause of rapidly increasing electricity prices, as it drives over- investment in peaking
generation which in turn forces costly upgrades to network infrastructure.
This new generation lies idle except during a few hours of extreme peaks of electricity demand each
year, typically driven by increased use of energy intensive airconditioners during heat waves.
Constructing generation plants to deal with these uncommon periods of peak demand is a very
expensive, inefficient way to ensure an adequate supply of electricity – the costs of which are ultimately
borne by electricity consumers.
In contrast, demand response is a cheaper, more efficient way to deal with extreme peaks as it flattens
out spikes in demand by reducing electricity consumption within the system, therefore putting
downward pressure on both energy costs and network charges.
2. Regulatory Reform and Role of Government
The Government seeks comment on:

priority issues, barriers or gaps within the COAG energy market reform agenda;

possible approaches and impacts of review of tariff structures including fixed network costs, further time-ofuse based electricity tariffs and the use of smart meters;

possible measures to promote greater price transparency in gas markets; and

areas where further privatisation of government-owned assets would contribute to more effective regulatory
frameworks and better outcomes for consumers.
Please provide any comments on Regulatory Reform and Role of Government below:
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EnerNOC supports policy settings which result in competitive electricity markets. Truly competitive
markets do not erect barriers to entry, instead allowing new products and services to address
challenges of increasing energy infrastructure costs that traditional, centralised generators or
networks find difficult to meet.
The success of these new products and services can be measured by their uptake in the market, with a
wide scale adoption indicating customers regard them as superior to traditional electricity
technologies. In this way, the risk is placed on market participants and the resulting benefits (of lower
prices and greater efficiency) flow through to consumers.
The removal of market barriers in Australian electricity markets will yield increased energy efficiency
and place downward pressure on energy infrastructure costs. This will translate into increased
productivity, higher levels of economic growth, lower unemployment, and an improved quality of life for
Australians.
3. Growth and Investment
The Government seeks comment on:

commercial or market initiatives that could enhance growth and investment in the energy and resources
sectors;

areas where approvals processes could be further streamlined while maintaining proper environmental and
social safeguards;

further ways that regulatory burdens could be reduced while maintaining appropriate levels of disclosure and
transparency in energy markets; and

the impacts of variable land access policy and ways the community could be better informed and engaged on
development in the energy sector.
Please provide any comments on Growth and Investment below:
Reducing regulatory burden should be pursued if only to ensure the advent of competitive markets
which allocate resources efficiently. To a large extent, providers of new technlogies such as demand
response are deterred from entering Australia's electricity markets by regulations which favour more
expensive, less efficient, environmentally unfriendly incumbent technologies.
Continuing to favour these incumbent rechnologies costs consumers, governments and industry, and
hurts the whole economy.
4. Trade and International Relations
The Government seeks comment on:

how to grow the export of value-added energy products and services;

ways to remove unnecessary barriers to continued foreign investment in Australia’s energy sector;

ways to strengthen support for access to export markets; and
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
ways to support business to maximise export opportunities for Australia's energy commodities, products,
technologies and services, including the value of Australia’s participation in the variety of international forums.
Please provide any comments on Trade and International Relations below:
EnerNOC supports open markets both domestically and internationally. Policy settings which facilitate
free movement of capital encourage investment in and adoption of innovative products and services
that lower prices for consumers, increasing their ability to make choices which maximise their own
personal welfare. This both grows the economy and increases efficiency.
5. Workforce Productivity
The Government seeks comment on:

the nature of any current skills shortages being experienced and how these could be addressed by and with
industry;

the capacity of industry and education sector-led programs to meet long-term training and skills development
needs of the energy and resources sectors; and

specific long-term training and skills development needs for alternative transport fuel, renewable energy,
energy management and other clean energy industries.
Please provide any comments on Workforce Productivity below:
Investing in skills which allows Australia to seize opportunities created by the end of the resources
boom and take advantage of new, highly specialised industies that will become the bedrock of Australia's
future economic growth should be a priority for policymakers.
By developing a skills base which encourages expertise in energy efficiency, positive spillovers will see
the Australian economy will become more productive.
6. Driving Energy Productivity
The Government seeks comment on:

the current suite of energy efficiency measures, ways these could be enhanced to provide greater energy
efficiency or possible new measures that would enhance energy productivity;

the use of demand-side participation measures to encourage energy productivity and reduce peak energy
use; and

measures to increase energy use efficiency in the transport sector.
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Please provide any comments on Driving Energy Productivity below:
Numerous reports and reviews have consistently recommended policymakers and regulators create an
environment which allows demand side solutions to compete in a competitive electricity market.
Unfortunately, both the regulatory regime for networks and the design of the electricity markets in
Australia both strongly favour supply-side investment over demand-side solutions. Despite regular
strong recommendations for demand-side reform since the 2002 Parer report, the National Electricity
Market remains supply-side dominated, both in the wholesale market and in the regulated network
sector.
The evidence of this is the lack of activity on the demand side. When comparing electricity markets, the
more extreme the peaks in underlying demand, the more demand-side activity you would expect to see.
On this basis, there should be a thriving market in demand-side services to satisfy network needs and
provide a high level of demand elasticity in the wholesale market. In reality, there is only a minimal
amount of such activity — less than a quarter of the level seen in other (less peaky) markets.
Continuing with the status quo will lead to an electricity system which is much more expensive and less
resilient than it should be. Australian electricity users will pay dearly for this, and it will undermine the
nation’s competitiveness. The last decade of inaction is largely due to successful efforts by the
incumbent generators, and the retailers they own, to preserve the status quo: facing less competition,
they are more profitable. Reform processes already underway — the Australian Energy Market
Commission’s made a number of recommendations in the Power of Choice report and the Australian
Energy Regulator’s Better Regulation programme canvasses demand side options. These represent
essential steps toward improving the balance. The implementation of these recommended, long overdue
reforms is not yet complete. They should be pursued with vigour.
Although these reforms are necessary, in many areas they don’t go far enough, so further reforms may
be needed to obtain the full benefits of a vigorous demand side.
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7. Alternative and Emerging Energy Sources and Technology
The Government seeks comment on:

ways to encourage a lower emissions energy supply that avoids market distortion or causes increased energy
prices;

the need to review existing network tariff structures in the face of rapidly growing deployment of grid-backedup distributed energy systems, to ensure proper distribution of costs;

additional cost-effective means, beyond current mandatory targets and grants, to encourage further
development of renewable and other alternative energy sources and their effective integration within the wider
energy market;

how the uptake of high efficiency low emissions intensity electricity generation can be progressed;

any barriers to increased uptake of LPG in private and commercial vehicles and CNG and LNG in the heavy
vehicle fleet; and

any barriers to the increased uptake of electric vehicles and advanced biofuels.
Please provide any comments on Alternative and Emerging Energy Sources and Technology below:
As stated, policymakers should open up electricity markets to new innovations and technologies, such
as demand response.
Demand response works where electricity consumers agree to reduce their loads during extreme peaks
in electricity demand, either by load curtailment or by time shifting, with these customers being
compensated for doing so.
The recent arrival of sophisticated metering and communications technology has allowed load
management to be increasingly localised and tailored depending on customer and market needs.
Demand response has a number of distinct advantages over peaking generation. These include:
1. Demand response is more reliable than traditional generation because it is unlikely to suffer largescale forced outages that deprives the market of hundreds of megawatts of supply. Contrary to large
generation plants which break down, require offline maintenance and only run when they have enough
fuel, demand response is the aggregation of supply from smaller customers, meaning even if a few
customers are not able to make their capacity available to the market demand response can still deliver
a high proportion of the required quantity of supply.
2. Demand response significantly reduces electricity losses encountered during transmission and
distribution. As demand response is providing capacity by reducing existing load, it causes losses
encountered during transmission and distribution to fall. This contrasts with additional centralised
generation, which increases losses.
3. Demand response is a “smart grid” application, available today, with new communications and
metering equipment allowing it to be used for ancillary services such as frequency control, spinning
and non-spinning reserves, and wind-firming services. These services are extremely costly for
traditional generators to provide.
4. Demand response is proven. Recent events such as the polar vortex in the United States, cyclones in
the Indian Ocean, and a shortage of domestic gas supplies has seen demand response consistently
deliver supply to the market. In 2012, EnerNOC dispatched 331 demand response events delivering
106% of their contracted capacity across the many markets in which they operate.
Despite these advantages and successive reviews recommending reforms to energy markets which
allow greater focus on demand side solutions, uptake in Australian energy markets has been
comparatively slow because regulations favouring incumbent generators have been retained. This
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needs to change.
General Comments
Any further comments?
In preparing the Green Paper, the Energy White Paper team would be well advised to look at the way
other electricity markets work around the world. EnerNOC has experience in many of these markets
and would be willing to offer its expertise in future correspondence, meetings or formal hearings.
Please do not hesitate to contact us if we can provide more detailed information. We look forward to
providing detailed information regarding electricity market design in the weeks leading up to the
publication of the Government's Green Paper.
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