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Creating clarity during the energy transition

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      Confused and concerned: what consumers really think about the transition

      While there are of course important roles for industry participants, governments and regulators, successful transition to renewable energy requires the active participation of consumers, as users of energy, to transform the energy future. Consumers are being asked to embrace new models of using energy and new energy technology, while also making significant financial investments of their own to enable the energy transition. Successful energy transition requires consumers to be empowered and enthusiastic to embrace change and to make the best decisions for the future of us all. Consumers need to be clear about what roles they play in transforming the world of today into a sustainable future world that will energise future generations.

      However, the reality is that consumer perspective on energy markets and the energy transition can currently be summarised in two words: confused and concerned.

      In its latest (June 2023) Consumer Sentiment Survey, Energy Consumers Australia found that only one in five households and one in three small businesses believe that the impact of the transition to renewable energy has been clearly communicated by various groups, including innovators of renewable energy technology, their energy retailer, federal government, the media, state governments and energy organisations.

      The survey also found that 52% of households are more concerned about paying their electricity bill than they were a year ago.

      60% of households and 52% of small businesses thought that in the next three years electricity will become more expensive as the network has to pay for upgrades to wires, and new storage requirements to integrate the new generation sources.

      Consumers are concerned about

      • The future of our planet as we are in a climate crisis;
      • Future costs of electricity, with hundreds of millions of dollars being required to fund new investments in renewable energy, storage and transmission;
      • Costs of buying new electricity appliances to replace gas appliances, and electric vehicles to replace vehicles with internal combustion engines;
      • Those who are being left behind, because they cannot afford new investments such as solar PV, storage and electric vehicles; they may be renting energy inefficient properties in which landlords will not invest; they may not have easy access to affordable electric vehicle charging infrastructure;
      • High-profile projects that they will ultimately fund which are being reported to be experiencing significant delay and cost escalation;
      • Future reliability of energy supply, as dispatchable fossil fuel generated electricity is replaced with variable renewable energy that may not be available when it is required.

      There is also confusion, with competing viewpoints vying for consumer attention.

      • Is the proliferation of solar panels a good thing as it increases renewable energy generation, or a bad thing because it causes additional costs to the network and it may be curtailed?
      • Is it environmentally sound to invest in solar panels and batteries that require mining of precious metals and which may not be easily recyclable? Or should consumers not be concerned, because when there are large quantities of materials available for recycling, the market will necessarily be incentivised and inspired to create the technology required to avoid landfill?
      • Are wind farms a welcome source of low-cost renewable energy, or are they a blight on the landscape, a killer of native birds, and a threat to cultural heritage?
      • Is there a future for green hydrogen to replace natural gas, or will existing gas pipelines become obsolete? Who will bear the costs of writing off network assets before the end of their economic life?
      • Should coal fired power stations stay open longer to maintain reliability, or should they be closed earlier to maintain the focus on transition to renewables?
      • Are we trying to transition too fast – trying to do too much in a short time while the rest of the world is doing the same, and we would do better to slow down, wait till there isn’t so much competition for resources, and learn from the experience of others? Or are we acting too slowly, and need to make up for lost time resulting from previous inaction?

      This is just a small selection of the issues causing concern and confusion for Australian consumers. It seems that the energy transition is characterised by “Everything Everywhere All at Once”. All aspects of the energy supply seem to be changing, and many aspects of consumers’ energy use are consequentially in transition. At times like this, consumers need trusted sources of information and advice.

      But levels of trust are not as high as they should be.

      • 47% of households and 50% of small businesses trust companies in the electricity sector to do the right thing by their customers and by Australia as a whole.
      • 35% of households and 46% of small businesses have confidence that energy market is working in long-term interest of consumers.
      • 31% of households and 39% of small businesses have confidence in the energy market supporting the long-term interest of consumers in retard to value for money.

      Much is spoken about social licence to operate, a key element of which is trust. Trust is a pre‑requisite for successful stakeholder engagement. Energy industry participants, market bodies, governments and regulators need to work harder to regain consumer trust, as a key next step to enable successful energy transition. From there can flow information and advice on which consumers can and will rely. Building of trust and consumer engagement needs to be embedded in all processes, at all levels, in all organisations. That requires a proactive consumer-focused mindset, which at the moment is often absent.

      David Prins, Director, Etrog Consulting

      Energy Monthly

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      March 25, 2024 | Sheraton Grand Sydney Hyde Park

      Australian Domestic Gas Outlook 2024

      June 11, 2024 | Melbourne Convention and Exhibition Centre

      Australian Energy Week 2024

      New call-to-action