Establishing dialogue between the AEMC and the energy finance community

On 12 August 2021 we will hold the next forum in a new series of quarterly get-togethers for energy sector investors and financial analysts.

This is a relatively new stakeholder event on the AEMC calendar that we started in 2019.

We hope to welcome more members in the New Year – not only from financial institutions but from other market bodies and government as well,

The forum observes the Chatham House rule, and runs for two hours over lunch. To date, we have hosted five forums which have been well-attended, with around 40 participants (in the room or teleconferenced) from more than 20 organisations.

These organisations have collectively provided equity and or debt finance to all the privately-owned generation and transmission network assets in the national electricity market, and include private banks, superannuation and other managed funds, specialist renewables investors, NEM participants, and equity analysts.

The organisations present include:

• National Australia Bank
• Commonwealth Bank of Australia
• Westpac
• Macquarie Bank
• Sumitomo Mitsubishi Banking Corporation
• Clean Energy Finance Corporation
• Queensland Investment Corporation
• Powering Australian Renewables Fund
• Spark Infrastructure
• HRL Morrison & Co
• IFM Investors
• John Laing
• Reserve Bank of Australia
• Infradebt
• Morgan Stanley Equity Research
• Credit Suisse
• Bank of America Merrill Lynch
• Australian Energy Council
• Infigen Energy

In addition, staff from government agencies and energy departments have also been present.

The AEMC is always keen to explore opportunities to supplement our traditional stakeholder engagement channels, rule change and review processes with other stakeholder engagement channels. With this in mind, we established the quarterly investor forum for stakeholders who are not formal participants in electricity and gas markets but who are intimately involved in its health and financial success.

These investors have a key role to play in financing the transition of the electricity sector between now and 2050; some commentators have estimated the funding requirement to be up to $400 billion – to fund investment in renewables, firmed power (e.g. hydro and gas-fired generation), and augmenting transmission and distribution networks – over the next three decades.

Our  forum’s purpose is to establish an ongoing dialogue between the AEMC and the investor community that supplements the traditional communication channels noted above, which are often linked to specific AEMC projects. The forum seeks to provide an opportunity:

• for investors to inform the AEMC about the key challenges and issues they are facing, and the key trends they’re observing, and
• for the AEMC to outline its work program in those areas of relevance to investors.

As the investor forum is not limited to discussion on a specific AEMC project, forum participants get a chance to debate the big issues facing market development and investment opportunities and challenges and learn about a broad range of AEMC work on foot.

About our stakeholder engagement

Stakeholder engagement plays a critical role in shaping and delivering the AEMC’s work program, including rule changes, reviews, the AEMC’s contribution to the Energy Security Board (ESB)'s advice, and the AEMC’s advice to the COAG Energy Council.

Our interactions with individuals and organisations through our various projects build stakeholder awareness and understanding and provide an opportunity for meaningful input to inform our decision-making.

We highly value the contribution of our stakeholders, who include our fellow market bodies (Australian Energy Market Operator (AEMO), Australian Energy Regulator (AER)) and the ESB; governments and regulators (both Commonwealth and State-based); industry and other market bodies participants; and consumer groups.

Forum format

We are looking to expand the forum format to be more inclusive and to drill into issues that forum members regard a priority, or require more deep thinking.

For example, the agenda for a recent forum was as follows:

• A national electricity market update: discussion around increasing key pricing and generation outcomes seen in the wholesale spot market (for example, increased instances of negative spot prices in Queensland, as discussed in a recent AEMC Economists Corner note).
• Co-ordination of generation and transmission investment review: a summary of some of the key issues raised to date in the AEMC’s COGATI review.
• Wholesale demand response mechanism: a presentation on the key discussion points in the AEMC’s draft determination.
• Economic regulatory framework for electricity networks: a discussion of the recently-concluded 2019 review.
• Investor survey: a discussion of an AEMC survey gauging investors views on barriers to entry into the generation sector, and the impacts of barriers to entry on the cost of financing generation projects.
• The implications of growing investment in hydrogen production capabilities for the NEM

Collaboration with the ESB and other market bodies

While to date, the bulk of market bodies’ staff have been from the AEMC, future forums will include staff from the other market bodies, as well as the ESB. The market bodies value engagement with the investor community, and the contribution this community makes to the market bodies’ work programs, and the AEMC forum provides a further engagement channel for the market bodies.

Next steps and opportunity to participate

Feedback on the forum has been very positive, with participants appreciative and supportive of the opportunity to engage with AEMC staff.

If you are interested in attending or learning more about the forum, please contact the forum convenor, Russell Pendlebury.