Analysis of institutional adaptability to redress electricity infrastructure vulnerability due to climate change
This project assessed the adaptive capacity of existing institutional arrangements in the National Electricity Market (NEM) to climate change, and formed a range of recommendations to ease the transformation of the electricity industry to one with greater climate resilience and a low carbon future. Four main factors were found to either hinder or precede adaptation to climate change: 1) fragmentation of the NEM, both politically and economically; 2) accelerated deterioration of the transmission and distribution infrastructure due to deferred deployment of new technologies; 3) lack of mechanisms to develop a diversified portfolio of generation technology and energy sources to reduce supply risk; and 4) failure to model and treat the NEM as a national node-based rather than state-based entity. The first three factors are interrelated; for instance, the fragmentation of the NEM has hindered the deployment of technologies to allow deferment of investment in transmission and distribution. The investment in transmission and distribution is primarily driven by peak demand, which could be mitigated with smart meters, flexible retail tariffs and consumer engagement. On the supply side, the Renewable Energy Targets (RET) scheme has primarily driven onshore wind and solar photo voltaic (PV) uptake to the detriment of a broader portfolio. The onshore wind and solar PV each have their intermittent supply cycles that present a challenge to matching supply and demand. A broader portfolio of generation technology, storage and energy sources could both mitigate the intermittent supply cycles and aid deferment in transmission and distribution investment. However, promoting a broader portfolio of renewable energy would require modifications to the existing policy to incorporate targets for specific technologies and energy resources.
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