Why the Supercharged ISP is set to fail to reach its full potential

Even those who don’t keep much of an eye on energy policy will likely have come across the phrase ‛Supercharged Integrated System Plan (ISP)’ throughout 2023. APGA National Policy Manager Jordan McCollum has deciphered the plan and its grey areas.

The Supercharged Integrated System Plan (ISP) was heralded as the solution to all energy system planning woes, delivering much needed integration of electricity and gas system planning. But the product may in fact be more super-flop than supercharged.

A recently published Energy Ministers’ response to a Department of Climate Change, Energy, the Environment and Water (DCCEEW) review into the ISP shows that the final recommendations around a supercharged ISP fall far short of their potential.

The review into supercharging Australian Energy Market Operator (AEMO) ISP forecasting responsibilities started with much promise for gas customers. The Terms of Reference (ToR) for the review talks about energy, not just electricity, focusing on the ISP as a ‘whole-of-system plan’. The ‘increasing interrelationship between gas and electricity’ is centre to the ToR which noted that ‘there is considerable uncertainty about potential transition pathways’. The ToR went on to state that a ‘Supercharged’ ISP is expected to be an integrated transition plan for the National Electricity Market (NEM) and the East Coast Gas Market (including hydrogen and renewable gases as the industries develop) that considers the generation, storage, transmission and distribution requirements to maintain affordable and reliable energy for all consumers as Australia transitions to net zero emissions.

Statements such as ‘the NEM and the East Coast Gas Market and affordable and reliable energy for all consumers’ implied that a Supercharged ISP would genuinely consider all energy supply chain options – including renewable electricity and renewable gas options – when considering least cost energy supply through the net zero transition for todays’ energy customers, gas and electric alike.

A Supercharged ISP combining analysis of electricity and gas consumption and supply chains would have the potential to drive so much progress for decarbonisation in Australia. Renewable gases could be considered alongside renewable electricity as a viable decarbonisation option for gas customers. Cheaper gas and hydrogen transmission infrastructure could be considered amid the challenges about the costs, delivery timetables and social license of transmission powerline options.

Cheaper gas and hydrogen energy storage options could drastically reduce the burden of higher-cost deep electricity storage development from the ISP – or even remove the burden of costly consumer energy storage, noting that available gas storage dwarfs the quantity of electricity storage the AEMO’s ISP identifies consumers will need to finance themselves to decarbonise their households.

And all this reducing the need for Australia gas customers to pay for more expensive electric appliances during a cost-of-living crisis to decarbonise their households as well.

Alas, this window into a possible Supercharged ISP utopia provided by the ToR was too good to be true.

The first red flags arose through initial industry consultation. Only part way into the review and the white flag had already been raised at even attempting to model gas and electricity customers side by side, walking away from any intent to support gas consumers ‘maintain affordable and reliable energy for all consumers as Australia transitions to net zero emissions’ as stated in the ToR.

This was initially said to be due to the impossibility of modelling electricity and gas customers side by side – something proven possible through the Future Fuels CRC and other analysis. It was later made clearer that AEMO would not be provided any additional federal funding to improve modelling capacity, reframing the “impossibility” more clearly as “impossible without additional funding which will not be provided”.

All focus has instead moved to ensuring that gas supply costs for Gas Power Generation (GPG) are better understood. In a return to DCCEEW’s obsession with optimising gas infrastructure costs (around 1 per cent of GPG generation costs), initial suggestions included AEMO producing a plan for gas infrastructure investments – a suggestion in complete opposition to the contract carriage form of market seen in the gas pipeline industry.

Luckily, this proposal has been scaled back to simply expanding cost analysis to existing and potential pipeline costs. But this is as far as the so-called Supercharged ISP recommendations seem to go.

GPG cost analysis recommendation aside, most recommendations within the ECMC paper come in a benign “consider more analysis here” form. These rarely go beyond the extent of analysis which AEMO could choose to perform today – far from delivering what is required to ‘maintain affordable and reliable energy for all consumers as Australia transitions to net zero emissions’.

Had DCCEEW recommendations delivered to the ISP Review ToR, the Supercharged ISP could have been so much more. Instead, gas customers continue to be left behind by government policy which won’t even attempt to analyse their least cost decarbonisation pathway.

Gas customers simply deserve better. Supercharged ISP? More like super-flop.

This article featured in the May edition of The Australian Pipeliner. 

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