Energy Network Transformation Dr. Stuart Johnston Executive Director, Assets and Network Transformation
Overview • ENA – scope and current focus • Disruptive change driven by customers and technology • Network businesses are responding • Network Transformation Roadmap project
ENA Members The peak national body representing gas distribution and electricity transmission and distribution businesses throughout Australia. Twenty-six electricity distribution and transmission and gas distribution network companies are members of ENA.
Energy Networks Association • Energy networks are the lower pressure gas pipes and low, medium and high voltage electricity lines that transmit and distribute gas and electricity from energy transmission systems directly to the doorsteps of energy customers. • More than $100 billion in assets and almost 15 million customer connections nationally • Total line length of distribution infrastructure is more than 900 000 km • Key focus areas include: – the national and state government policy and regulatory environments – key technical issues such as network safety and security of supply, skills and training, reliability and power quality and energy efficiency .
The traditional energy supply chain … Source : AEMC Transport Generation Consumption
Technology is disrupting the traditional Energy business model In many aspects the pace of change in Australia is ahead of other countries Australian Energy businesses must act now
Upending our Energy System • AEMO: Solar PV capacity to increase 500% to 2035 - Output ranging from 9.3% (NSW) to 28% (SA) of Energy - Shifting peak to 7.30pm in SA and Qld • Within 10 years, Solar PV output could exceed minimum demand in South Australia
Expected costs of solar panels and storage continues to drop The key transformation drivers – competitive on-site generation and storage – have each strengthened their competitive position since 2013 by about 20% 3000 600 Solar 2013 estimate Solar 2015 update 2500 500 Batteries 2013 estimate (right axis) Batteries 2015 update (right axis) 2000 400 2015 $/kWh 2015 $/kW 1500 300 1000 200 500 100 0 0 2015 2020 2025 2030 2035 2040 2045 2050
Converging costs of centralised generation technologies SOURCE: Australian Power Generation Technology Cost Study 2015
Australia leads the world in Germany has the highest solar the penetration of generation per capita (0.47kW). household solar PV Only 3.72% of dwellings have rooftop solar. By contrast, Australia places 6th on the solar generation per capita league table (0.19kW); and has the highest penetration of household PV. Australia has significant untapped potential for grid scale PV.
Areas of Focus – Network Transformation Roadmap Stage 1 (2015) Stage 2 (2016)
3. Simplified map of NTR inclusions Program-wide Modelling Pricing & Behavioural (WP5) Customer Value (WP2) New Market Regulatory Operation & Pro Frameworks Automation (WP4) (WP9) Business Models (WP3) Technological Enablers (WP6-8) Stage 1 Stage 2
Future Grid Forum modelling update Set and forget Leaving the grid Rise of the ‘Prosumer’ Renewables thrive
Electricity consumption will be flat to rising • To project consumption, we start with AEMO and IMO’s projection, and adjust for each scenario’s on-site generation and electric vehicle adoption
Peak demand growth will also be subdued • To project peak demand, we start with AEMO and IMO’s projection, and adjust for each scenario’s battery storage and other demand management adoption
Grid under-utilisation is still a risk • Declining utilisation remains a risk but these results are around 5-10 percentage points better than in the 2013 modelling in the three worst cases, due to improved outlook for demand management
The outlook for networks costs is improved • The improved outlook for utilisation means that the outlook for network costs has improved, with long term costs 3-10c/kWh lower across the scenarios
Cumulative system expenditure shares are diverse
Updated Future Grid Forum scenario analysis Fourth key finding • The updated scenarios continue to reflect electricity networks performing an evolving range of critical roles by 2050 supporting diverse energy use and services for customers Networks roles Networks grow range from modestly under leading to all scenarios enabling Urban grid disconnection A wider range remains of customer needs are met uneconomic until late 2030s
Customer-orientation of Networks • Future electricity customers may: – be increasingly heterogeneous in their expectations – be diverse across a broad vulnerable—engaged— empowered spectrum of market segments. – continue to value solutions that provide secure and reliable electricity for an increasingly digitized and automated lifestyle and the expanding role of electric vehicles; and – In some cases be willing to trade-off aspects of services that were traditionally standardised in return for a financial benefit.
Prospective 2025 Market Segments - Residential Empowered Engaged Vulnerable Segment Hands on Be my agent Service Autonomous Tech focused (Active) (Passive) dependent Independent: Empowered: Active: Pushes for Passive: Desires Dependent: Needs Descriptor desires and needs Desires complete Affinity with more information ease and affordable network control and highly technology and and options to convenience from services granular cost high desire to be in reduce cost and energy services, May also include management control – cost is enhance levels of reduced cost and customers who are important and control – control some access to Can sometimes unable to choose to customer needs to leads to cost data/information be motivated by adopt new services see return on savings cost or reliability Will invest in cost or products investment reasons saving measures if because of Able to interact easy agency/split In many cases with market and incentive barriers – may leave the A portion value buy/sell energy for example grid time and renters, or those convenience over with a lack of cost access to capital
Prospective 2025 Market Segments – Comm & Ind Autonomous Active Passive Vulnerable Focus on High Medium/High Low High/Medium energy Ability to act High Medium Medium Low Descriptor I want to act and I can I don’t need to act I need to act but can’t Highly empowered set In Control: Highly Extremely busy Service dependent of business customers engaged and customers and have customers who are who will be very motivated to little time to highly dependent on interested in how maximise savings understand their grid supply to keep technology can reduce and efficiency by energy costs or their business running their costs, improve engaging more with needs Need help because their green image or the energy system. Any extra complexity they are unable to improve operational This group is likely to is a challenge for engage with new efficiency be large these end-users, who technologies or offers Heavily focused on Willing to invest in are busy maintaining and will have a high innovation and technologies and or growing their level of cost sensitivity environment. They will accept a higher level business Want to concentrate seek highly configured of complexity, so long Require a simple set on running their and customised as they can offset the of solutions that take business and keeping solutions and will additional time and the worry and effort solvent, and spend more effort in (potentially) (time to manage, risk increased energy research/engaging with investment with a of interruption, costs or complexity complicated price positive return on potential cost savings are a barrier structures or solutions their investment, or loss) out of energy reflected either in Like residential – will remain largely ongoing cost savings passive to the energy and/or a positive system environmental impact
Customer-orientation of Networks • Future market segments are not perfect ‘predictions’ of customers in 2025 but do enable future strategic options to be explored in detail • An increasingly competitive operating environment means that a strong customer orientation will be vital for network businesses and their ‘value-network’ partners to: – Comprehend and anticipate changing customer expectations; – Optimise existing services to foster social license , trust and loyalty ; and, – Innovate new electricity solutions and business models , often in concert with value network partners.
Challenges and Opportunities of Distributed Energy Resources Integration of Distributed Energy Resources requires a careful operational response to challenges such as voltage management, frequency regulation and network stability. However, well-integrated DERs can also provide solutions for addressing these network challenges and improving network efficiency. This is likely to require: • New regulatory frameworks; • Enhanced standards; and • Commercial responses which unlock the potential of energy storage, demand response services and power electronics solutions.
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