Origin Energy CEO, Frank Calabria, is pitching a policy framework to the incoming Federal Government, which aims to give investors confidence to act and drive Australia’s clean energy future.
According to Mr Calabria, the most pressing energy policy for an incoming federal government, within the broad review of the National Electricity Market (NEM), is a framework that provides clear investment signals to market participants. Here’s his pitch:
The energy transition is a truly staggering task. It requires significant investment in cleaner energy supplies and back-up technologies, including gas-fired generation, to help keep prices stable and affordable for Australian homes and businesses, and deliver secure and reliable supply as our nation’s ageing coal plants progressively retire and we transition towards net zero by 2050.
Why it’s needed
The electricity market in Australia is changing rapidly and the design of the NEM must change with it.
In its early years, the NEM relied on 35GW of generation capacity provided predominantly by a small number of large coal-fired plants. Today, that capacity has grown to 85GW, with coal supply declining and being replaced by renewables, gas and distributed energy resources like rooftop solar. By 2040, it will expand to 224GW, with coal completely gone.
This rapid transformation has strained the market’s ability to maintain secure and affordable energy. Recent events, including the energy crisis of winter 2022 and the wind drought of 2024, underscore the increasing volatility. The market operator’s unprecedented intervention to stabilise the system and prevent blackouts alone reflects the urgent need for reform.
The NEM must evolve to manage the challenges of a variable and decentralised energy landscape, at the lowest cost to consumers and taxpayers. One of the most pressing issues is to value all the services needed for an efficient and resilient energy system and ensuring investment in the right mix of technologies. Gas generation will continue to play a pivotal role in stabilising the energy system and keeping the lights on under all weather and supply scenarios, yet current policies fail to provide any incentive to invest in this technology.
The cost
The cost of establishing a robust, long-term framework is far less than what would be incurred through additional, ad-hoc interventions. Improving investor confidence and certainty will ensure the investment burden to deliver the energy transition is carried predominantly by the private sector, not Australian taxpayers.
We believe this is our best chance to deliver the energy transition at least cost to Australian energy customers, while also achieving long-term benefits of enhanced grid security and reliability, and reduced reliance on emergency interventions.
Embedding a framework that drives investment in the right technologies and services within a redesigned NEM would reduce the need for additional Federal and State government interventions that sit outside the market and add further costs and burden to the energy system – costs ultimately borne by taxpayers and customers.
Getting the framework right today means setting us up for a more secure, sustainable energy future for all Australians.
