When it comes to our energy future for Australia, it was summed it up quite well last week on ABC’s Lateline – we do not have a vision.

By contrast, we have very strong leadership and vision when it comes to our broadband communications future. While there are a range of views on how the new broadband technology should be deployed, the government has provided an unwavering commitment to deploy a national broadband network – providing funding arrangements and establishing a company (NBN Co) to plan and get the job done.

But this is not the case when it comes to the vision, leadership and execution of a program that will fundamentally transform our electric generation portfolio from its current high emitting coal based dependency to one that meets our future targets for emissions reductions and renewable generation.

As foreshadowed in my articles "Can a carbon tax cut it?” and “Flying Blind on Climate Policy”, a carbon price, at the levels proposed, will not motivate the decommissioning of existing coal power stations nor will it drive new investment in either gas or renewable generation capacity. 

Vastly higher carbon prices might allow these changes to occur in theory, but there are other significant consequences with implementing a carbon price that could have a dire effect on our economy and lifestyle. There is still no guarantee that an orderly transformation of our power arrangements would occur as a result.

It may well be time to put complex theoretical solutions to bed. Rather, it is time to begin the development, funding and building out the transformation to our electric supply portfolio – and do so in a time frame to achieve our targets for 2020 and position us for an ongoing transformation that will competitively meet our energy needs sustainably for decades to come.

Like the NBN, we have done this before. In 1949, this country embarked on one of the most significant electricity generation infrastructure projects ever completed in the world. A government authority, the Snowy Hydro-Electric Scheme developed, constructed and operated one of the world’s largest ever renewable energy power complexes. Indeed, by 1960, Australia boasted a very high proportion of renewable energy in its overall portfolio mix – around 19 per cent of consumption. Today, renewable energy has declined to just 5.2 per cent of energy consumption in Australia and only 1.7 per cent of generation capacity.

The Snowy Hydro Scheme was built without any carbon tax or market mechanisms. Like the vast majority of our electricity supply portfolio, it was built for the long term, because it needed to be done, and balanced economic and engineering sense at the time. Similarly with the Sydney Harbour Bridge, we chose to build it and found a way to finance it. What we didn’t do was raise the ferry prices for a ride across the harbour to a level so high and so expensive that a private operator jumped at the chance of building a bridge – such an approach just doesn’t work.

So how do we do this? Like NBN Co, we need to establish an organisation that is appropriately independent of government and takes charge of the governing of our energy supply assets to develop and implement the plan to transform our generation portfolio for 2020 and beyond. I’ll call it the “Energy Supply Portfolio Company”, or ESP Co, for the purposes of this article.

The ESP Co would include the following responsibilities in its charter:

– Licensing all existing grid connected electricity generating facilities – on term-based and standards-based license conditions;

– Licensing and regulating all high voltage transmission operators;

– Ensuring licensees meet the operational, emissions and maintenance standards that are consistent with the license conditions;

– Developing and implementing a detailed plan for transforming our electricity generation portfolio to meet the 2020 emissions and renewable portfolio standards targets, and do so in such a way that the resulting portfolio will meet ongoing security and balance of supply requirements;

– Incorporating high voltage transmission augmentation and expansion requirements into the plan;

– Providing funding, debt arrangements and other programs to facilitate the new investment required to meet the 2020 plan, as well as for funding the decommissioning of existing assets as called for under the plan;

– Governing and overseeing the execution of the 2020 plan. If necessary, develop and own components of that plan where private enterprise is unable to be sourced to execute such components;

– Taking stewardship of the NEM and SWIS market rules and modify the rules as appropriate to ensure the behaviors of market participants are consistent with an optimally performing portfolio and allow the renewable portfolio targets to be met;

– Developing plans beyond 2020 for the further transformation of the portfolio to meet agreed targets for 2030, 2040 and 2050 portfolio and emissions standards;

– Returning and maintaining certainty to investment in critical electricity generation and transmission infrastructure.

In a nutshell, ESP Co is to deliver on the much needed vision for our energy supply future in a reduced emissions world. It will bring together the 2020-and-beyond generation portfolio plan, develop the programs to achieve those plans, govern and provide the funding for those programs and oversee the transformation of the portfolio.

ESP Co can be funded by a variety of mechanisms. One approach would be to retain a meaningful proportion of any carbon price that is levied on operators in the industry. Another approach (and my preference) is a simple retail levy of, say, one cent per kilowatt hour. Or it could be a combination of these measures plus a license fee paid by operators.

The organisation would be staffed by seasoned and experienced engineers, commercial managers, financiers and economists together with governance from an appropriate skills based board. ESP Co would incorporate the types of roles detailed by the recent Australian Conservation Foundation’s report recommending a Clean Energy Finance Corporation.

Critics will argue that centralised planning and execution never works and things should be left to the “free market”. If that is so, then why do we have NBN Co? There would be no Snowy Mountains Scheme and no Sydney Harbour Bridge without a centralised planning and execution agency. Even today, new toll roads, while sometimes developed, built and managed by private operators, are all part of a properly developed centralised plan for transport infrastructure.

Electricity is not only a major part of our every days lives, it is the essential core of our operating economy and industrial base as well as our position in the world economy. It is time to take back control of this vital asset and transform it sensibly for a sustainable future for our country.

The Snowy Hydro Scheme took 25 years to be completed. The electricity portfolio transformation ahead of us is far more complex in scale and scope.  A typical large-scale power generation project takes around five years to plan, develop finance and construct. To achieve results by 2020 means major decisions on the portfolio need to be taken in the next one to two years. 

Now is the time to act while we have the desire and economic strength to begin. Embarking on this transformational journey is the vision and leadership required to truly take us forward.

Andrew Dyer has worked extensively in the energy and utilities industries in Europe, the US, Asia and Australia.  He is now a Company Director.