Australia Proposes Rules to Address Energy Security

Fuel tank in white shiny metal finishThe Australian Energy Market Commission (AEMC) has floated several proposed regulations to address the risks associated with an increased reliance on renewable energy.

It remains uncertain at this point whether the rules would affect the supply and price of fuel tankers for sale in Australia. The AEMC announced the proposals to improve the stability of the power grid and prevent cascading blackouts nationwide.

Energy Diversification

AEMC Chairman John Pierce said that the reform package for energy regulations would occur amidst a changing trend in the energy production mix and the launch of new technology generators. Other than stabilising the system, the proposals aim to cap increasing energy prices.

Federal and state governments have launched different initiatives to address these concerns, including restarting gas-fired power plants, as well as funding energy storage and implementing limits for gas exports. The Australian Energy Market Operator, however, said that these efforts would do little to improve supply, particularly on the eastern coast, if extremely hot weather takes place over the next two summers.

Looming Price Hike

Despite expectations of addressing energy prices, residents in South Australia face a looming price hike and increase in their electricity bills in case the proposals turn into law. The AEMC has attempted to limit the financial impact of the proposed rules.

A review of the energy system’s security showed that the changing energy market had the most severe impact in South Australia. The state was unable to recover from sudden failure of power equipment prior to the occurrence of blackouts. The shift to renewable energy sources would require transmission business to meet new benchmarks, which will entail added costs for compliance.

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The AEMC’s plan to stabilise the country’s power grid may help diversify sources of energy, although the plan should be implemented in a way that consumers will not bear the costs arising from the project.