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Ahead of Australian Energy Week, taking place on 9-12 June at the Melbourne Convention and Exhibition Centre, industry leaders scheduled to speak at the anticipated event weigh in on the importance of balancing affordability, reliability and decarbonisation – and what risks Australia is still underestimating as the energy transition accelerates.
This feature includes the perspectives of Marc England, CEO at Ausgrid; Deidre Willmott, Strategic Advisor, Global Sustainability and External Affairs at Fortescue; Adam Watson, CEO at APA Group; and Tarandeep Singh Ahuja, Partner at McKinsey & Company.
Each of the four industry leaders highlight a different pressure point in the energy system, but all agree that policy settings will play a critical role in determining whether Australia can navigate an orderly energy transition.
Over the next 2-3 years, what is most likely to be compromised?
For Marc England, the greatest risk sits at the intersection of affordability and reliability – particularly if the transition pushes costs onto customers too quickly. He argues decarbonisation must be delivered by using existing infrastructure more efficiently, including better use of distribution networks, demand management, and shared infrastructure rather than simply adding new costs to households.
“If customers lose trust because prices rise faster than benefits, the whole transition becomes harder,” England said.
England warns the benefits of the transition too often flow only to households that can afford solar, batteries or EVs (electric vehicles), while renters, apartment dwellers and low-income households risk being left behind.
He pointed to community batteries, kerbside EV charging, and shared power networks as examples of infrastructure that can improve equity while maintaining public support.
Fuel tax in the spotlight
For Deidre Willmott, fossil fuel subsidies remain one of the biggest barriers to affordability and decarbonisation.
She pointed specifically to fuel tax credits, which still support large-scale diesel use despite alternatives now being commercially viable. For Fortescue, that shift is already underway, with the company building a large-scale integrated renewable energy system across its Pilbara operations.
Australia’s continued dependence on imported diesel, she explained. This leaves industry exposed to supply chain shocks and price volatility, while billions in subsidies continue to slow the shift to domestic, lower-cost renewable systems.
“If incentives don’t change, adoption will lag and Australia will miss the opportunity to lead in industrial decarbonisation,” Willmott said.
For Willmott, affordability and decarbonisation are not opposing goals – but failing to align policy with outcomes risks compromising both.
Reliability and domestic supply remain central for APA Group
Adam Watson said domestic gas continues to play a role in reliability and energy security.
“Recent instability in the Middle East highlights the vulnerability of global energy markets and supply chains, underscoring the need to prioritise the continual development of Australia’s abundant gas supplies and deliver the infrastructure required to support long-term energy security and independence,” Watson said.
APA Group recently announced an approximately $500 million investment to expand its East Coast Gas Grid, aimed at preventing forecast supply shortfalls in southern states later this decade.
In Watson’s informed view, well-designed east coast gas reservation scheme would provide certainty for consumers, businesses and investors, while reducing reliance on international markets.
Reliability is becoming harder to maintain
Tarandeep Singh Ahuja has continued to emphasise that all three parts of the trilemma are under pressure at once, making trade-offs increasingly unavoidable.
“Affordability will remain front of mind given persistent cost-of-living pressures, compounded by inflationary dynamics and geopolitical uncertainty. At the same time, we’ve already observed a softening in momentum on decarbonisation in some places as governments and markets respond to near-term energy security concerns,” Ahuja explained.
Australia’s system is undergoing a structural shift as ageing thermal assets retire and renewables take a larger share of generation. At the same time, transmission and new generation capacity are coming online at pace, while demand continues rising through electrification and data centre growth.
“If replacement capacity and enabling infrastructure do not keep pace, the system could face tightening supply margins, making it more complex to maintain reliability,” Ahuja said.
What is the most underappreciated risk right now?
While much of the national debate focuses on large-scale generation and household electrification, England argued that the network in between is still treated as passive – despite its growing importance.
With electricity consumption forecasted to almost double by 2050 by the Ausralian Energy Market Operator, it is clear distribution networks will need to manage millions of solar panels, batteries, EVs, and two-way power flows.
“The most underappreciated risk is the cost of not using the distribution network,” England said.
England added that targeted investment in distribution infrastructure could cut total system costs by billions, but current market and regulatory settings still fail to reflect that value.
Physical grid instability
On this question, Ahuja pointed to a less visible but increasingly serious challenge: Physical grid instability.
While public debate often focuses on generation targets and transmission expansion, he says the system is also losing essential services historically provided by thermal generation; including, inertia, system strength and frequency response.
As more renewables are integrated, utilities face two linked risks: Network constraints in connecting supply and demand where renewable resources are strongest, and rising complexity at the grid edge (where limited real-time management at lower voltage levels can create voltage instability).
Maintaining reliability, Ahuja explained, will depend on a coordinated mix of batteries, pumped hydro, flexible generation, synchronous condensers, demand response, and virtual power plants.
Ahuja further added that three things are needed to avoid these risks materialising: Regulatory frameworks that reduce uncertainty, market mechanisms that properly value essential system services, and sustained investment in grid-stability technologies.
Policy certainty and investment
Watson is in agreement that policy certainty is the critical enabler.
As quoted by Walter Wriston, former CEO at Citibank: “Capital goes where it is welcome and stays where it is well treated.”
This makes it clear that investors need confidence before major infrastructure decisions can proceed.
The Federal Government’s Gas Market Review Final Report gave APA Group enough confidence to move ahead with its recent east coast investment, but Watson argued that implementation is what matters.
“The Federal Government must act quickly to implement an effective domestic gas reservation for the east coast so that we can get on with the job,” Watson said.
He also pointed to Queensland as an example of the right policy balance, where government settings have enabled joint development projects such as the proposed Brigalow Peaking Power Plant with CS Energy.
Watson then exclaimed that gas remains essential as firming capacity to support renewable integration, rather than as an alternative to renewables.
Across all perspectives, one message is clear: The trilemma itself may be unavoidable, but poor policy choices are not. Whether Australia compromises affordability, reliability or decarbonisation may depend less on technology than on how quickly market settings catch up with reality.
For the full agenda at Australian Energy Week, read this article.
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