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A modern energy system based on the principles of fairness and sharing value through partnerships between companies and customers is taking shape in Australia, according to EnergyAustralia.
EnergyAustralia Managing Director Catherine Tanna said the Australian energy industry was transforming in response to three global megatrends: decarbonisation; falling technology costs, and; a focus on fairness. Companies which resist the trends, or rely on incremental change, risk failing, she said.
"Within a decade, maybe less, the Australian energy market will have changed beyond recognition," Catherine said.
"We’re talking a complete transformation which will require energy companies to enter a new social contract with the community. Families and businesses will expect that, where value is created in a new, modern and cleaner energy system, they’ll have opportunities to share in that value."
Research into global megatrends by EnergyAustralia, one of the country’s leading power retailers, identified the three having greatest impact on the energy sector:
- Decarbonisation – the shift from a power system dominated by large, centralised fossil-fuel generation to one based on intermittent, renewable energy.
- Falling technology costs – supporting the growth of consumer generation and storage, such as solar PV systems and batteries, and underpinning the "connected" home.
- Focus on fairness – as trust in institutions is questioned, and digital platforms proliferate, people are looking for a "fair go", making clear their expectations for how energy companies should behave.
Head of Customer Mark Collette said EnergyAustralia was responding to the megatrends by finding ways to partner with customers while investing in renewable energy projects around the country.
Solar PV, battery storage, selling power back into the grid and demand response were becoming increasingly popular services with households and small businesses. Earlier this year EnergyAustralia expanded its offer to industrial and commercial customers with the acquisition of 49 per cent stake in solar and LED lighting company, Echo Group.
Retail products also reflected the trends. In July EnergyAustralia eliminated conditional discounting and introduced a new suite of offers with prices fixed for contract terms. The launch included a plan aimed at providing existing customers with lower rates, effectively sharing savings when churn is reduced.
“Building new, cleaner generation capacity is just one side of the equation,” Mark said. “There’s a new world of products and services out there that can help households and businesses save energy and money – people want help piecing them together into the package that suits them best.
“When there’s value created people expect they’ll get to share in it, whether it’s from the energy they generate themselves or even the energy they don’t use. Demand response is a great example – the cheapest generation is the generation you don’t have to build.”
The Australian Energy Market Operator (AEMO) has put the cost of the physical transition of the country’s energy system between $8 billion and $27 billion between now and 20401.
After a five-year turnaround program EnergyAustralia now has a stable platform from which it can assess new gas and pumped hydro projects with the potential to complement and firm wind and solar generation entering the market. At the same time, EnergyAustralia continues to invest in its existing generation portfolio to provide reliable power for customers as the clean energy transition unfolds.
“People want the clean energy transition, but many are struggling with rising power bills. Cost, emissions and reliability – it’s the trilemma,” Catherine said.
“The community isn’t asking for anything that’s unreasonable or out of reach. All the pieces of the puzzle for a modern, cleaner energy system already exist, and it’s taking shape; it’s a system underpinned by wind and solar power, supported by storage, like commercial batteries and pumped hydro, demand response, energy efficient technology and flexible generation.
“The challenge isn’t technology, or even engineering – it’s planning, to make sure all the pieces fit together,” she said.
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1 Australian Energy Market Operator, Integrated System Plan, July 2018
Notes to editors:
- EnergyAustralia has committed to buying around $3 billion worth of renewable energy under long-term contracts, helping to underpin the development of around 1000 megawatts (MW) of new wind and solar facilities.
- EnergyAustralia’s portfolio of potential, flexible generation projects includes:
o Tallawarra B – Expanding the capacity of EnergyAustralia’s existing gas power station at Tallawarra, near Wollongong, by up to 400 MW.
o Cultana pumped hydro – A proposed seawater pumped hydro power station at the northern tip of the Spencer Gulf in South Australia. The plant would be capable of producing 225 MW of electricity with eight hours of storage.
o Kidston pumped hydro – Working with project developer, Genex, on the potential to turn a disused mine site in Kidston, in northern Queensland, into a 250 MW pumped hydro generator with seven hours of storage.
o Energy Recovery – Assessing a project to convert part of the Mt Piper power station at Lithgow to run on non-recyclable materials such as paper, plastics and linen. The project could effectively produce 27 MWs of electricity, enough to power 40,000 NSW homes without burning more coal.
- EnergyAustralia has signed agreements worth around $50 million to operate two utility-scale battery storage systems at Gannawarra and Ballarat, in Victoria. The batteries represent combined storage of 80 megawatt-hours, giving EnergyAustralia the largest battery trading portfolio in the NEM.
- EnergyAustralia is participating in a national demand response trial, so far attracting more than 9,000 customers and 50 MW of load. The trial tests and assesses how customers can move usage during times of peak demand to ease demand on the broader system.