Article: Solutions and strategies for a transition in turmoil

By Kirstin Crothers, Conference Director, Australian Energy Week

It is not news that the transition to renewables is faltering under multiple pressures. This year, Australian Energy Week will look at solutions for an increasingly disorderly transition and strategies to get back on track.

In the lead up to the event, here is the latest from some of the many speakers at Energy Week.

National Reconstruction Fund chairman Martijn Wilder said Australia needed a "Marshall Plan" to decarbonise the economy fast, likening the challenge to the reconstruction of Europe after World War II. Energy technology is one of the priorities for the recently formed fund.

Ageing and uneconomic fossil fuel exiting more quickly than anticipated

Australian Energy Market Operator (AEMO) has brought forward the timing for eliminating coal power from the grid by five years to 2038 in the expectation that plant owners will surrender to rising maintenance costs, coal supply shortages and competition from cheap wind and solar.

"The plan maps out urgent investment so that homes and businesses continue to access reliable and affordable electricity, both in the coming decade when 90 per cent of coal generation is expected to retire and beyond to 2050," said AEMO chief executive Daniel Westerman.

After a deal with the Victorian Government ends, EnergyAustralia will close its Yallourn coal power station in 2028, leaving the company with just one additional coal generator.

Chief executive Mark Collette says EnergyAustralia also intends to switch how it uses its last remaining Mt Piper coal power station, where the retailer leaves the generator idle and only fires it up during periods of renewable drought when the sun is not shining, or the wind is not blowing.

Filling the generation gap

Australia's third-largest retailer, EnergyAustralia, plans to spend $5 billion by 2030 on renewable energy generation assets to replace coal. AGL has a $20bn pipeline of 12GW in renewables and storage. When Brookfield was still considering the purchase of Origin, it pledged $20-$30bn to accelerate the transition from fossil fuels.

Mark Collette says, “The energy transition is really big. The targets that Australia has set, 82 per cent renewables by 2030 relative to about 35 per cent, well that level of ambition requires the whole industry to accelerate.”

Batteries supporting intermittent generation

The Queensland Government is investing in local network-connected batteries, allowing Energy Queensland to help develop a local battery industry and provide a proving ground for the technology developing pathways for flow battery inclusion in future battery programs.

Energy Queensland’s chief engineer, Peter Price, said, “with these battery projects we’re aiming for a win-win-win scenario that achieves the energy trifecta for communities throughout the state – affordability, security and sustainability.”

Rik De Buyserie describes ENGIE’s Hazelwood battery as a long-term, reliable asset that will play a key role in the future of Australia’s energy transition.

“With its access to transmission and available space at site, Hazelwood is the perfect location for an asset that can grow in depth and duration, increasing the hosting capacity for renewables.”

Harnessing solar PV

Better management of consumer-owned resources could be crucial in the struggling energy transition. Alinta and other energy companies are working on software to help households get the most out of their solar panels, batteries and electric vehicles by selling energy back to the grid during supply squeezes to avert blackouts. Jeff Dimery, Alinta's chief executive, says, "Having access to an aggregate of a million customers willing to become your supplier is enormously valuable. So, there are commercial drivers for us to want to do it. The fact is we're just not quite there yet, but it is happening."

Australian Energy Market Commission chair Anna Collyer has described Australia’s 3.5 million household solar systems as providing the equivalent of four Snowy Hydros. And with better management, such consumers could be the “heroes on the road to net zero”.

“Consumer energy resources will be at least 20 per cent of our energy solution, but it is not getting 20 per cent of our attention,” she said. “That has to change.”

Reforming policy and regulation

There are twin pressures at work when reform is discussed. On the one hand, investors want stability so they can be confident that the assets they are building will be worthwhile. At the same time, regulations written in the last century are often irrelevant or even damaging to an energy system undergoing enormous change.

AGL's Damien Nicks is keen to see policies to help support a significant increase in customer energy resources (CER) – like rooftop solar, home batteries, electric vehicles and the orchestration services – to take advantage of a decentralised grid will be critical. To date, these policies are mostly managed at a state level. He says, “a co-ordinated national CER policy and working closely across the energy retail sector could help to ensure the expansion, management and benefits of a more decentralised electricity system are experienced across the National Electricity Market.”

Matthew Warren, energy commentator, says the move from the Renewable Energy Target (RET) to Capacity Investment Scheme (CIS) is symptomatic of the failure of regulation to keep pace with the changing needs of the transition. He describes the government’s commitment to reform electricity markets in 2024 as “an admission of a deeper, structural problem.”

Transmission and distribution

Transgrid’s Brett Redman is confident they can accomplish the work required to "keep the lights on" but warns against further delays. Redman says additional capacity and network system security must be ready as early as possible to accommodate a “high velocity” transition.

“We are making good progress, but we need to do more to deliver AEMO’s plan for a rapid energy transformation – and make the NSW government’s Renewable Energy Zones – a reality.”

Redman says that making EnergyConnect, HumeLink and VNI West into “a single procurement program” promises to shave up to two years off delivery times.

Guy Chalkley, chief executive of Endeavour Energy, emphasises that distribution has a completely different model compared to 20 years ago.

“Now you’ve got to be able to take that energy back, you have to make sure you understand what the batteries are storing, you have to take into account the impact electric vehicles will have on your network,” he says.

"Customers are no longer simply customers; they're generators. So it's important to always treat them with the respect they deserve because they're going to be giving us power."

Social license for a just transition

In Western Australia, Stephanie Unwin of Horizon Power is driven by “fair growth”. She says there is a big social license piece in transmission, admitting, "Some people don't want renewables in their backyard, so we need strong planning around where renewables are located."

"This will enable us to ensure we minimise the transmission infrastructure needed so vast tracts of land aren't impacted and we get community and First Nations support on where and how land is developed."

Consumers under financial strain

In October 2023, the Australian Energy Regulator (AER) released its 'State of the Energy Market' report, warning of higher power prices for years to come.

AER chair Clare Savage said while the market had generally enjoyed "better market outcomes this year", challenges continued to compound the delivery of low-cost and reliable energy supply in coming years.

“Work still remains to address energy affordability for consumers, co-ordinate the entry and exit of generation sources and ensure the timely and least-cost delivery of major transmission projects.”

All of the leaders quoted in this article (plus many more!) will be speaking on the first day of Australian Energy Week 2024.

To access the detailed conference program, download the brochure here.

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