Strategen recently had the opportunity to work with CSIRO, Australia’s national science agency, and Energy Networks Australia, the national industry association representing Australia’s electricity transmission and distribution businesses on Australia’s effort to plan for a radically decarbonized grid in 2050, and I view their effort as being globally unique and a model worth emulating in other parts of the world. The reason: Australia’s range of outcomes in 2050 and least-regrets steps to future-proof the grid all have one thing in common: consumer is king.
Australia is in the throes of a consumer energy revolution that is, in many respects, at the forefront of trends transforming how the world produces and consumes its energy. Australia leads the world in distributed energy resource adoption. With a national average of 15% rooftop solar PV penetration, Australia’s consumers are more than twice as likely to have rooftop solar as the country with the second highest rooftop solar penetration rate (Belgium, 7%). Australia’s electric power industry is therefore likely to require regulatory and business model transformation much earlier than most other regions of the world. However, Australia is fortunate to have national agencies and trade organizations that were foresighted enough to sponsor a very thorough and deliberate process to make sure the grid adapts to these changes in a manner that is fair, minimizes costs to consumers, allows for more choice and control, and enables deep decarbonization.
Future Grid Forum: A crystal ball into Australia’s future grid
In the initial study program, called Future Grid Forum, CSIRO evaluated and debated a wide range of socioeconomic trends, while stress-testing potential grid outcomes through a comprehensive technical and economic modeling effort. The Future Grid Forum ultimately landed on four plausible scenarios with a variety of commonalities amongst them including increased consumer choice, extremely high DER penetration, and under all four scenarios, Australia is remarkably close to or even has fully achieved zero net emissions by 2050. Variables between the scenarios included (amongst other factors) the impact of consumer behavior on the outcomes, cost declines of technology, rate design alternatives, and the impact of a range of potential policy outcomes.
From my standpoint, using 2050 as the starting point for an analysis helped frame the dialogue in a very productive way. In contrast to the “zero sum” policy battles that are so pervasive in the US, stakeholders in Australia were able to more consistently align around the conclusion that the grid would look quite different in 2050 than it does today.
The Electricity Network Transformation Roadmap: Identifying a no-regrets roadmap for Australia
With a widely agreed lens on the plausible future established, CSIRO partnered with Energy Networks Australia to take the next step to develop a comprehensive roadmap identifying no-regrets actions Australia should be taking over the next decade to position its grid to accommodate the range of potential outcomes in 2050. Key issues that need to be addressed in Australia’s grid between now and 2027 include ensuring the system has the ability to accommodate more than 40% of consumers utilizing DER, a 40% system-wide GHG reduction, robust cybersecurity and physical security/safety, efficient market responses, all the while ensuring there are sufficient customer protections for those who need them most. In addition, given that Australia has perhaps the highest average T&D network costs in the developed world, a reduction in per capita network costs is also a key objective.
The key ‘swim lanes’ evaluated in the Electricity Network Transformation Roadmap (ENTR) process included:
- Consumer oriented electricity
- Power system security
- Carbon abatement
- Incentives & network regulation
- Intelligent networks & markets
The analysis, power flow and economic modeling, and stakeholder engagement for each of the swim lanes resulted in a series of concrete recommendations of near term steps (within the next 5 years) and medium term steps (between 2022-2027). Recommendations, which can be found here, covered a wide range of topics including developing a nationally integrated carbon policy framework, facilitating standalone power systems and micro-grids to reduce network costs, developing intelligent distribution-level analytics that can efficiently integrate and communicate with the bulk system, and building distribution platforms that can interact with the vast amount of DER on the grid in order to coordinate their activities and manage the grid more efficiently.
Strategen was particularly involved in providing a very close look at distribution-level markets and more dynamic retail structures designed to enable economic incentives for DER to contribute to network optimization. We’ll look at this in more detail in our next blog post, as we believe capturing the benefits of DER through a dynamic marketplace with peer-to-grid and, potentially even peer-to-peer trading, will go a long way towards helping network operators enable greater consumer choice, improve customer satisfaction, all while creating a more efficient and lower cost grid.