The AER has released its State of the Energy Market 2020 report.

The documents outline the rapid evolution of energy sector according to Australian Energy Regulator (AER) chair Clare Savage.

“There’s unprecedented change in the way we generate, distribute and use energy,” she said.

“Consumers have increasing control in how they consume and manage their energy. The pace of technological change in the energy sector presents emerging challenges in traditional market definitions and boundaries.”

Key elements of the energy market evolution identified in this year’s report include:

  • Investment in renewable generation is increasing but more work is needed to support a smoother transition
  • Networks have lower revenue than before and are better at managing their costs while also improving the reliability of their networks and their engagement with consumers
  • Gas production is at its highest ever level while prices are falling internationally and this is carrying through to the domestic market
  • Innovations to support consumer behaviour during the transition are emerging, such as demand response and cost reflective tariffs
  • Decreasing wholesale prices and network costs, as well as new initiatives such as the Default Market Offer (DMO) are putting downward pressure on retail prices, which is good news for consumers

Major policy reforms on access to the pipelines used to transport gas to market and innovative work between energy networks and their consumers on how services should be shaped are also examined in detail in the report.

“These changes free up capacity on gas pipelines which means more gas can be sent more cheaply, resulting in lower prices for consumers when they use their appliances at home,” Ms Savage said.

“Networks are engaging ever more closely with consumers on issues like reliability and access to innovations around how households use and generate their energy. This means better outcomes for both businesses and consumers when the AER makes decisions.”

The emergence of COVID-19 in early 2020 sparked a swift response by the AER as it moved to ensure that energy consumers were protected.

“Our Statement of Expectations released in the wake of COVID-19 encouraged retailers to extend payment plans and not disconnect customers under financial stress. Pleasingly, both networks and retailers quickly adopted these expectations,” Ms Savage said.

“We will continue to monitor the impacts of COVID-19 on the Australian energy market and encourage all parts of the supply chain to work together to support consumers and the industry.”

The full report is accessible in PDF form, here.