The Finkel Review, released in June 2017, is a report to the federal government regarding the future of the national electricity market.
Professor Alan Finkel, the Chief Scientist of Australia, was chair of the expert panel who published the report, which was titled Independent Review into the Future Security of the National Electricity Market – Blueprint for the Future.
Most policy debates (such as health, transport, defence, energy and the like) are often removed from the day to day operations and projects of the building and property industries. The debate about energy policy however, could be different.
The fundamental purpose of the Finkel Review was to determine how we can transform the electricity sector to deliver a number of outcomes, including “increased security, future reliability, rewarding consumers, and lower emissions.”
Currently the National Electricity Market and the electricity sector is failing to deliver on these outcomes.
Transitioning to a new system requires national policy (electricity management at the national scale) and certainty. Certainty in this context refers to bipartisan support for long-term policy objectives of the electricity sector. As the majority of the electricity sector in Australia (the generation, poles and wires and retail services) is privatised, there are elements of innovation and transition happening, but it won’t happen until there is a national policy to guide all institutions and companies.
The review produced 50 recommendations, 49 of which have been accepted by the Federal Government, but the jury is still out on one. This one relates to the last objective: generating electricity from low emissions sources.
The recommendation was to adopt a clean energy target. However this appears to be politically impossible for the federal coalition government. The government has recently indicated that it may move away altogether from this target and recommendation.
We may not see change in the property and business sectors given that policy issues often take several years to progress through the bureaucracy and then to industry. New regulations may be years away and there is little point, so early in the policy development process, in industry changing to accommodate a policy so far down the track that may still change anyway.
However, we could see change, and rather quickly, for two reasons. Firstly, the lack of policy certainty has increased retail power prices, which affects the capacity of homeowners and investors to invest in renovations and new purchases. Additionally, in part due to these price rises, we live in a period of rapid innovation and entrepreneurship. Without this policy certainty, developers and residents are now turning to alternatives on the basis that they are able to deliver power at a lower price than the grid. This means the property and building industries are already considering and designing new innovations.
The last significant and immediate implication for the industry is the change in design of roof spaces, walls and basements. Roof space is now valuable real estate in new medium to high density development, and commercial and educational sites Each square metre of space, covered with high performing photovoltaic panels, can generate almost 1kWh of energy per day (this varies depending on where in Australia you are). Design of plant areas and basements now may need to take into consideration space for batteries and potentially for electric car charging points.
We likely still have a lot more debate on energy policy in Australia in the future, but nonetheless I’m optimistic that there will be more certainty in regard to the long-term direction of energy. This will allow designers, property managers, builders and many others, to develop and deliver smart, low cost and low emission energy services that will ultimately benefit home owners and renters.