Research on Australian Gas Market

This research paper provides an overview of the Australian gas market, its governing bodies, and the actions taken by the Australian government to maintain a constant generation of energy. It also discusses AGL's sustainable procurement strategies and future projects.

Running Head: AUSTRALIAN GAS MARKET
Research on Australian Gas Market
Name of the student:
Name of the university:
Author Note:

1AUSTRALIAN GAS MARKET
Answer of Question 1:
Four bodies mainly Australian Energy Market Commission (AEMC), Council of
Australian Governments (COAG), Australian Energy Market Operator (AEMO) and Australian
Energy Regulator (AER) govern the gas market in Australia. Australian Energy Regulator is the
governing body that supervise gas markets in the north, east and west of Australia. To solve the
issues of gas market, the Gas Market Reform Group was established. Additionally the Australian
Energy Market Operator (AEMO) informs the Energy Council about the state of gas market in
Australia (Hülsmann, 2015). The gas price is fluctuating at a high rate in Australia. Therefore,
the Australian government is taking required action to keep the price of gas fixed in the market.
This is done by ensuring that there is no shortage of gas in the domestic market. The government
has the power to stop the export of gases if it is found that this will create shortage in the
domestic market. The decision of whether to export gas lies on the Commonwealth Minister of
Resources in Northern Australia. The Ministers relies on the report provided by AEMO.
To maintain the competitiveness, transparency and long-term security of gas supply the
Australian government has provided $2.5 million in 2018 – 2019 budget along with providing
$90 million in 2017 – 2018 budget (Haslam Mckenzie, 2013). The money will be used by the gas
market in Australia to improve operations in the gas market and maintain a constant generation
of energy.
Business and private customers are being served by AGL services in Australia. The
number of segments in which the company operates are four and they are group operations,
investment segments, wholesale and customer markets. AGL is being significantly affected by
the purchasing power of business and private customers. The decision of AGL to shift to

2AUSTRALIAN GAS MARKET
sustainable procurement process has a positive impact on its customers. Increasing number of
customers are purchasing energy from AGL keeping in mind the adverse effects of
environmental changes that might occur due to the use of non- sustainable procurement
processes. The resources that AGL has been using are non-renewable. However, if they shift to
renewable sources for the production of energy then their customers will change accordingly.
Now their customers and suppliers will deliver them solar energy, wind energy and the other
forms of renewable energy in the future.
Answer of Question 2:
AGL has a special code of conduct that the suppliers maintain while conducting business
with AGL. The Code of Conduct covers various policies like labour policies, risk management,
supply chain policies as well as environmental management and so on. The gas company has
developed a new procurement strategy to ensure that all parts of business that procure goods and
services do so by maintaining sustainable procurement (George et al., 2016). This will help AGL
to manage supplier risks and processes of supplier selection. All AGL suppliers should abide by
the rules and regulations mentioned in the Supplier’s Code of Conduct. The suppliers also need
to complete the questionnaires that are mentioned in the code of conduct. New suppliers those
are identified as risk suppliers are also required to complete the questionnaires and submit the
same to AGL. The information will be required to perform a risk analysis on the suppliers of
AGL, which will help the company to decide the best among the available suppliers. For this
purpose, AGL provides templates to all the new suppliers that engage in some new contract with
them. The risk suppliers are identified and accordingly actions are taken. AGL should follow the
given below sustainable procurement policies:

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 The company should implement sustainable principles and values.
 The suppliers that AGL selects must follow the same values for maintaining
sustainability and commitment.
 AGL should influence its suppliers to reduce impacts of its products and services
provided to AGL on society and environment.
 Long-term collaboration with the suppliers will be given more importance so that the
negative impacts on the products and services are reduced and investments are made on
it.
AGL is working for the improvement of procurement framework and for the adoption of a fixed
supply chain management. Sustainable procurement in AGL is described as performing the
responsibilities towards its customers, stakeholders, community as well as environment properly.
The total number of suppliers that carry out business with AGL are 4,500 (Ford, Steen &
Verreynne, 2014). The suppliers of AGL has a great influence on decisions taken by the
company. The staffs of the company should also be trained to for considering the business
operations sustainably. The risk analysis done on the suppliers will help AGL to determine risk
suppliers. The training that are provided to staff help them improve their knowledge on the
procurement activities.
Answer to Question 3:
AGL have decided to set up new technologies for generation of energy by the suppliers
like the virtual power plant that will be implemented in South Australia to produce 5 MW
energy. The new technology will consist of 1000 Sun verge batteries that will be implemented in
1000 households (Folgado, 2014). AGL is also planning to implement Big Data Analytics and

4AUSTRALIAN GAS MARKET
Auto Grid systems. This will help the company to handle its database properly. The virtual
power plant that is already existing in AGL will be upgraded with new technologies from various
companies like SolarEdge, Tesla and LG Chem. The battery storage technology that is offered by
AGL by Tesla is redefining the gas market in Australia. The above mentioned companies are
selling solar batteries to the public. The participants of innovative activities in the virtual power
plant project will be benefited by upgrading their home battery systems. The General Manager of
AGL has assured this. The solar batteries that are being used by AGL will generate electricity in
a sustainable way (Edensor, 2015). One of the renewable energies that are in trend today is solar
energy. The use of solar energy will eliminate the risk of non-renewable energy exhausting. AGL
provides services to around 6.8 million people across Australia (Ruparathna & Hewage, 2015).
Emerging technologies will affect the supply chain positively.
The future projects that AGL is planning to undertake are as follows:
 A large amount of energy around 350 MW will be generated in Coopers Gap Wing Farm
in Queensland.
 It is also joining hands with the leading US-based energy storage and management
company.
 In South New Wales, around 200 MW energy is estimated to be produced by the
Silverton Wind Farm.
Along with these investments, AGL is also making a great number of divestments in the business
year 2016 (De Almeida, Santos, Paolo & Quicheron, 2014). These divestments are being made
on the risk suppliers that will not be able to maintain sustainable supply chain. AGL will strictly
implement its sustainable business strategies in the future. The suppliers will have to abide by
rules laid down by the company before indulging in any contract with them.

5AUSTRALIAN GAS MARKET
Answer of Question 4:
Section 1: Overview of Integration
1. Purpose of integration: Integration is done for the development of project management plan
that will focus on the sustainable procurement so that the suppliers will shift from the old
practices and adopt the new one.
2. Context of business: Australian Gas and Light Company is abbreviated as AGL. The business
mission of AGL is to provide gas and electricity to a large number of people. To improve the
business strategies management of AGL is trying to implement sustainable procurement
strategies.
3. Scope: AGL lays down certain criteria for its suppliers that they have to follow in order to
change its traditional procurement processes to new sustainable procurement practices. The gas
market will be able to produce electricity sustainably.
Section 2 Plan of Integration
AGL should make a plan of integration so that the suppliers shift from their traditional
procurement practices to sustainable one. The following steps should be adopted by them:
 The suppliers should shift from the use of coal, petroleum and natural gas as a source of
energy to renewable sources like solar energy. The suppliers should remember their
social and environmental responsibilities (Abdelshafy et al., 2015). It should use the
energy resources that will not adversely affect the natural reserve of sources.
 Minimum requirements of the gas suppliers will be identified from the suppliers code of
conduct of AGL.

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 To manage the environmental risks, AGL should move to the use of renewable energy
like wind energy, tidal energy and solar energy (Lukic, 2013). This will not only help
AGL to maintain sustainable procurement supply also to eliminate fossil fuel exhausting.
 To eliminate the environmental and social impacts of the use of fossil fuels, AGL should
engage itself in the process of supplier screening so that it is able to identify the risk
suppliers and take correct actions to eliminate them.
The gas market in Australia previously used non-renewable sources of energy like coal,
petroleum and natural gas. These natural resources take millions of years to form. Once the
reserves are exhausted it will take millions of years to replenish. Therefore, steps should be
taken to shift from non-renewable energy sources to renewable energy sources. The use of
fossil fuel should be reduced so that some reserves are left for the future generations.

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