Key to low prices is investment certainty, research says

low prices
Transformer delivery and installation at Kurnell South zone substation

Targeted investment in electricity networks is essential to affordable electricity prices in the long term, according to new research for Endeavour Energy from Deloitte.

Endeavour Energy’s chief executive officer Tony Narvaez says investment certainty is necessary to connect future generation and support the installation of individualised services to help customers better manage their energy use at the lowest possible costs.

Since being privatised in 2017, Endeavour Energy claims to have passed $60 million worth of savings on to their customers, with network charges to decrease by a further two per cent each year from 2019 to 2024.

However, if the push to reduce prices results in under-investment in electricity networks, customers may end up paying the price in years to come.

Although reducing network investment initially delivered price decreases, Deloitte found that it could result in much higher prices for customers over the next 20 years.

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By 2037, nearly half of the energy supplied in the National Electricity Market is expected to come from wind and solar.

Therefore, retailers need to prepare for customers investing in solar, batteries and electric vehicles, the research says.

“In the future we will need to manage power flows to, from and between customers and the grid, while still maintaining the reliability and stability of power supply for all customers,” said Narvaez.

“This will help optimise customers’ investments in new technology and avoid more expensive network investment in the long term.”

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Mr Narvaez said affordability needed to be considered over the long term, which requires policy and regulatory certainty so investors will commit the capital needed to transform networks.

“Network transformation won’t happen if returns are too low or too uncertain, and will translate into higher prices for customers in the long term,” Mr Narvaez said.

“Investors must have confidence to invest through stable, predictable and transparent energy policy and regulatory settings.”

By Natasya Quinlan