Aussie investors push for energy market changes

A A$70 billion investment pipeline is required to meet future energy needs, says investor group

September 3, 2021

An Australian investor group has called for action to align Australia's energy industry with the wider international market. This comes after a shareholder revolt for one of Australia's major energy companies earlier this year.

The Clean Energy Investor Group (CEIG), which represents 18 domestic and global investors with a combined portfolio value of over A$24 billion (US$17.8 billion), says that a step change is required in the Australian energy market to attract new investments.

The group has launched a series of clean energy principles for the sector. In a statement announcing the 'Clean Energy Investor Principles', the group said that if governments and regulators were to implement the suggested reforms, they would deliver a cost saving of up to A$7 billion within the A$70 billion investment pipeline of new energy generation required by 2042.

This saving would help meet the industry’s estimated contribution to the country's Paris Climate Agreement commitments, the CEIG said.

As well as aligning Australia's electricity market with global standards, the five principles include redesigned governance procedures to allow for broader industry transformation, and improved revenue certainty to attract additional flows of capital.

Additionally, the group has outlined the need to allocate risk more effectively and build markets that are both "investable and innovative".

Simon Corbell, chief executive of the CEIG, said: “Clean energy investors currently face significant risks in the [national energy market], which is holding back the capital needed... Adopting the Clean Energy Investor Principles would address the key risks faced by investors and align Australia’s energy investment landscape with international market expectations, unlocking the low-cost capital required.

“Focusing on reforms which address the need for timely and secure access to the grid, greater revenue certainty, contestability in transmission development and fit for purpose NEM governance will deliver the investment confidence needed - and at a cheaper cost."

Modelling commissioned by CEIG from Rennie Partners found that 51 GW of new renewable energy generation would need to be built before 2042 to meet the country's climate change commitments.