**Check against delivery
Melbourne
17th December 2009
8.00am
Good morning ladies and gentlemen.
I'm pleased to launch two important publications this morning:
- The Gas Statement of Opportunities; and
- The National Transmission Statement
These are challenging times for the Australian energy market.
We are addressing competing demands - the demands of a growing population wanting affordable energy and action to reduce greenhouse gas emissions.
Much of Australia's electricity infrastructure was built in the 1950s and 60s, so greater investment is needed to maintain and replace this ageing capital stock.
Our likely investment needs in the next ten years are in the order of $100 billion in generation and network costs, including renewables.
This is a huge investment challenge when you consider that Australia's existing asset base is $120 billion in power generation, transmission and distribution.
Given the scale of the required investment, energy prices will continue to rise.
We are not alone, of course, on the challenge of energy security.
The International Energy Agency says energy-related investment in excess of $26 trillion is needed globally between now and 2030, with more than 50 percent of that in the power sector.
So, for our part, the Australian Government is committed to crafting the best possible policy framework for meeting the future energy challenges.
Significant investment is needed - both in existing sources of energy and innovative renewable technologies.
Our strategy for investment is three-fold:
- The development of renewable energy
- Ongoing market development to ensure it delivers timely investment responses
- And making sure the market structure expands energy networks where needed.
The Ministerial Council on Energy, of which I am Chair, recognises the importance of this investment for future energy security and reliability.
The MCE has committed to ensuring that the market design delivers necessary investment in a timely manner, especially with the changing policy environment.
That's where the Australian Energy Market Operator comes in.
The MCE has achieved much over the years, including the establishment of AEMO.
Since its creation in July this year, AEMO has been playing a very important role in energy market reform.
AEMO has assumed the functions of six electricity and gas market institutions.
As the electricity and gas markets become more integrated, AEMO's overview of both electricity and gas enables it to play a vital role in identifying investment opportunities and ensuring system security.
In addition to government, AEMO's membership includes industry representatives to improve transparency of operations and enhance accountability to stakeholders.
The two publications I'm launching today give us a better understanding of the scale of the challenges ahead, and highlight the importance of AEMO's role.
The National Transmission Statement
The National Transmission Statement will help us deliver a stronger network to handle the expected growth in electricity demand.
Incorporating intermittent renewable energy is part of that challenge.
So too is the ongoing growth in demand for gas for electricity generation.
The scope of industry change will in turn affect future transmission planning.
AEMO is committed to providing detailed information to stakeholders about the national grid and how it can be improved.
The introduction of climate change policies presents further challenges and opportunities for energy networks:
For example, the expanded Renewable Energy Target is a $20 billion cross-subsidy to promote clean energy.
At the same time, the Australian Government remains clear in its view that a properly designed Carbon Pollution Reduction Scheme is the most effective and responsible way to reduce carbon emissions.
I am also clear in my view that delays and uncertainty over carbon pricing is making it more difficult for investors to make decisions.
AEMO's National Transmission Statement is a key element in efforts to improve the information flow on transmission plans and options.
It is the precursor to the National Transmission Network Development Plan, which AEMO will produce in 2010.
This new intelligence will improve the ability of investors to assess transmission access and decide where, and when, to invest.
Australia's economy is already built on one of the most efficient, reliable and flexible energy markets in the world.
With high-value information like this, we can ensure we continue to attract capital to fund the investment we need.
Gas Statement of Opportunities
Gas has an increasingly important role to play in meeting Australia's energy needs.
Gas is a cleaner-burning alternative for electricity generation.
As LNG, it also makes up an increasing share of Australia's exports.
Our trading partners increasingly see LNG as part of their own solution to the twin challenges of energy security in a carbon-constrained world.
The development of Australia's traditional and coal seam gas resources has the potential to deliver increased prosperity to the benefit of all Australians.
The first Gas Statement of Opportunities provides a 20 year outlook on demand, reserves and production and transmission capacity for eastern and south-eastern Australia.
This is the first time industry has been able to access this type of planning information for gas markets in Australia.
When potential investors have questions, the Gas Statement of Opportunities will provide more comprehensive answers.
Policy-makers will benefit from its insights too.
The Gas Statement of Opportunities also identifies the need for greater co-ordination of planning between the electricity and gas industries.
With greater interdependence between gas and electricity than ever before, and significant investment in gas fired electricity generation anticipated in the coming years, there is no time to lose.
Conclusion
Ladies and gentlemen, planning for our energy future has never been more important.
Put simply, we need more diversity in our energy supply and greater certainty for investors.
AEMO has a vital role to play in the evolving energy sector.These two reports underline that.
They ensure our stakeholders have the best possible information at their fingertips.
I look forward to working with AEMO to ensure that critical planning, operational and development needs of the energy sector continue to be met.
Thank you