This article was written by Odette Adams and Jonathan Beh.
Like many sectors, the energy sector is undergoing a digital evolution, with data playing an increasingly important role.
Last week, the Energy Security Board published a consultation paper seeking submissions from industry on its Data Strategy, which is intended to prepare the energy sector for the transition to a digitalised energy market.
In this alert, we identify the main takeaways from the Data Strategy, describe the major role played by KWM and Galexia in the development of the strategy and highlight the key questions on which the Energy Security Board is seeking feedback through the consultation process.
Two aspects will be of critical interest:
- the four pillars of the Data Strategy; and
- the proposed reforms to the energy data regulatory framework.
1. Why is the Data Strategy needed and what does it include?
Digitalisation has transformed every aspect of the economy and the energy sector is no exception. The 2017 Independent Review into the Future Security of the National Electricity Market (also known as the Finkel Review) recommended that the Energy Security Board develop and implement a data strategy as a key governance requirement, acknowledging that existing data management systems, processes and regulations are no longer fit for purpose in an increasingly digitalised, data-driven market.
The proposed Data Strategy sets out a comprehensive framework to support core agencies and policy makers in driving the digital evolution of the energy market. The goal is to promote market objectives, facilitate effective data management in the National Energy Market and ultimately deliver better consumer outcomes. The framework consists of four pillars:
- Needs today: identify and address priority data gaps, barriers to data access and opportunities to streamline data collection and use;
- New data governance: conduct a legal review of the current energy data regulatory framework and propose reforms to develop a fit-for-purpose data regime in energy regulation (conducted by KWM and Galexia);
- Capability: establish ongoing leadership structures to drive the development and implementation of the Data Strategy, and increase coordination and collaboration across energy sector agencies; and
- Needs tomorrow: embed forward-looking, proactive and adaptive approaches to manage changing data needs in the energy market.
2. KWM and Galexia's role in the development of the Data Strategy
The second pillar of the Data Strategy recognises that the current energy data regulatory environment is a significant barrier to increased data sharing and usage in the energy sector. KWM and data policy specialist Galexia led an in-depth review of energy data management in Australia and internationally, analysing how data and information rights are managed under current regulation and identifying key reforms to facilitate more effective and efficient access to, sharing and use of data.
KWM and Galexia's Preliminary Legal Report consisted of 3 parts:
- a summary of issues faced by energy market bodies attempting to share public sector data under the current regulatory regime (prepared by KWM);
- a preliminary review of the different approaches to facilitate access to data taken in other sectors in Australia and internationally (prepared by Galexia); and
- a summary of potential reform options, ranging from incremental improvements to the current regulatory framework to a complete "overhaul" of that framework, the latter of which involves creating a new, principled, fit-for-purpose public benefit data sharing regime (prepared by KWM). A potential reform pathway is illustrated in the diagram below.
The Energy Security Board considered the findings in KWM and Galexia's report and accepted many of its proposals. In particular, the Data Strategy recommends that:
- Energy Ministers agree on high-level energy data principles to support a paradigm shift away from a default prohibition on data disclosure, to a policy of authorised, controlled data disclosure;
- the energy data regime be overhauled to create a new fit-for-purpose regime to support effective data management in a digitalised energy sector;
- while the overhaul arrangements are being developed, a separate package of incremental reforms be introduced to address specific barriers to data access and usage to provide immediate benefits; and
- a set of common guidelines and consistent policies be developed to support entities working with energy data and to reduce the known costs and risks associated with poor data management.
3. Key recommendations and questions to stakeholders
The consultation paper contains 32 recommendations across the four pillars of the Data Strategy, ranging from greater transparency of retail price monitoring, retail margins and large energy user prices to improving the accessibility of research data and implementing the proposed reforms discussed above.
The Energy Security Board is seeking stakeholder input on the issues and recommendations in the Data Strategy and has included 26 questions for stakeholders to respond to.
4. What does this mean for the energy sector and how can we help?
Submissions to the consultation paper close on 27 November 2020. A public webinar will be held on 11 November 2020, with stakeholders and interested parties able to register here. The Energy Security Board will finalise the Data Strategy after considering stakeholder input and provide recommendations to the Energy Ministers in early 2021 on key reforms, which are expected to be implemented in phases.
Given the dynamic nature of the energy sector's digital transformation, the Data Strategy will be an ongoing framework, expected to evolve over time with input from various stakeholder groups. Industry has an important role to play in shaping the development of the strategies, policies and laws that will underpin the new energy data regulatory framework.