If the federal government is determined to deliver lower electricity prices, it might focus its effort on ensuring that demand is more responsive to short term price signals, and on making up the narrowing shortfall needed to encourage widespread uptake of distributed batteries. Such policies will not be difficult to develop or implement, they will require outlays many times smaller than those needed to build baseload coal plants, and will show results during the term of a government.
Such policies will, however, speed up the nonetheless inevitable decline in many customers’ reliance on the shared power system. Generators and retailers should be expected to adjust without assistance: they operate in a market after all. The shared grid still has a future albeit different to its past and even in a declining market there will be ample opportunity for investment in decarbonising electricity production.
Networks are more difficult. Their excessive asset values reflect historic asset write-ups (when policy makers thought demand was inelastic) and many years of wasteful gold plating. Furthermore technology change (distributed energy resources, and more efficient appliances) is leading to declining use of the shared network. Write-downs to bring the regulatory asset values into line with their economic values is needed. The biggest adjustment is needed where the networks are partially or fully government owned. The challenge is not insurmountable but requires governments to take responsibility for their past mistakes. For the privately owned networks, asset write-downs raise legitimate worries about political expropriation and these would need to be resolved.