The Path to Australia's New Energy Ecosystem
The transition to a renewable future for Australia needs to pursue innovation and engage with the communities that benefit most from affordable, reliable energy in order to create a clean, fair and resilient energy ecosystem.
This was the subject of an inspiring discussion on the transition to renewable and decentralised energy, held on Thursday 17 August as part of the UTSpeaks series of events, presenting a range of contemporary issues facing Australia at the present. UTSpeaks: Australia's New Energy Ecosystem brought together internationally leading energy thinkers to discuss the path to transform Australia's energy network into one that is faster, fairer and more flexible, while also reducing the cost of energy production in the process.
After an introductory address from Prof. Cynthia Mitchell, exploring how the balancing of constraints and innovation within social and political systems is vital to the process of working within sustainability, and the importance of engaging with the communities who experience the issues researchers examine, the evening began with a keynote address from Audrey Zibelman of the Australian Energy Market Operator (AEMO).
Nicki: My name is Nicki Ison. I’m the founding director of an organisation that is part of the new energy ecosystem that we are here to talk about tonight – an organisation called Community Power Agency. Until last year, I worked here at UTS at the Institute for Sustainable Futures, and as an energy nerd I’m very excited about tonight’s line-up, and I hope you are too. For those that are first-time attendees at UTSpeaks, this event is part of the university’s flagship public lecture series, interrogating real-world situations. And I think no issue is more worthy of interrogation at the moment than energy. There’s a lot happening in the energy space here in Australia – it’s pretty much on the front page at least once a week, and we hear a lot pf people saying a lot of things. And the reason that’s happening is not simple. There’s no one reason why we find ourselves in this situation, and the way we did energy of yesteryear is not going to be the way we do energy in the future. And everyone here and across Australia actually has a stake in our energy future, whether you care about climate change or you’re just dreading opening your next power bill. We’re all in this together. And as such, I wold really like to encourage you to participate in tonight’s conversation. If you’ve got a device, we’re going to be talking on Twitter. The hashtag to use is up on your screens – UTS ideas. And I’ll be taking some questions in the panel discussion later from the Twitter feed. But first we’re going to hear from our panel. We’ve got an amazing line-up. We have the CEO of the Australian Energy Market Operator, Audrey Zibelman. We also have two of UTS’s premier experts in the field of energy, Dr Sven Teske and Chris Dunstan, both research principles at the Institute for Sustainable Futures. But before we move to them, I would like to introduce the Institute for Sustainable Futures’ Deputy Director, Professor Cynthia Mitchell, to come up and set the scene. Cynthia is one of ISF’s leading and Australia’s leading researchers and thinkers, with broad experience in future of city planning, policy and assessment, she uses systems thinking and transformative learning to facilitate changes in beliefs and behaviours that are changing the way we work and operate in the world. Professor Mitchell was elected as Fellow of the Australian Academy of Technology and Engineering in 2012, she holds a diploma in business and government, and she was nominated in 2015 as one of the hundred women of influence here in Australia by the Australian Financial Review and Westpac. So without further ado, will you please help me welcome Cynthia Mitchell.
Cynthia Mitchell: Thank you Nicki, and thank you for the lovely introduction. And it moves me to note that actually I followed Nicki – a couple of years before me, Nicki was an earlier nominated as the one hundred women of influence by the AFR and Westpac. So to begin, I too would like to acknowledge the Gadigal people of the Eora nation upon whose ancestral lands we stand. I’d like to pay my respects to their elders, past and present, and given that we’re in a university, I would like to acknowledge the incredible depth and breadth of Indigenous knowledge in this country as well. The Institute for Sustainable Futures is celebrating its 20th birthday this year. That’s a pretty remarkable feat for a self-funding applied research organisation, and as you might imagine, tonight’s event is one in a long series of celebrations over the year, and so we warmly welcome you all to the party. These days, ISF numbers about 70 staff and about 35 postgrad students, and we work across 10 research areas, including energy. And we work everywhere – all over Australia, across our region in international development and indeed the globe, as you’ll see from our researchers tonight. For 20 years, our mission has been to create change towards sustainable futures; in other words, to move towards an ecologically restorative and economically and socially just world. Because we take that mission very much to heart, it has a big impact on what areas we work in, what projects we take on, and the way we go about doing our research. Creating change, at the end of the day, is all about transitions – about helping individuals and organisations work out what they can do differently tomorrow, next week and next year to move their business or their agency or their community group or, indeed, their home, towards better outcomes for all. These days, around the world, most of us live in cities, and cities are mostly unsustainable. And that’s why, since our establishment 20 years ago, ISF has been intimately involved in transitioning towards sustainable futures in all the infrastructures that underpin our cities – in water, in transport, in waste, and of course, the focus of tonight’s conversation: in energy. Let’s be clear: at ISF, we believe energy must be clean and affordable and accessible to all, and delivered with minimal material intensity. Our energy ecosystem is interconnected, and it’s complex. There are many moving parts that needs to be delicately balanced to achieve those ends – supply and demand and consumers and technologies large and small, and all these sit within a complex social and political system. And all of this is bounded by an astonishing and a beautiful biophysical environment. So in this complex energy ecosystem, each element influences, and is influenced, by all the other elements. In energy, like in the water sector where I work, we’re at a giant turning point in Australia and globally. Fundamental and well-planned transformation is desperately needed to replace obsolete systems, to tackle climate change, and to address inequality. Change is underway, and I’m very proud that we’re helping government and industry and communities embrace the transition to energy systems and services that support a high quality of life and empower people and neighbourhoods. What’s clear is that to make progress in tackling the complexity of the challenges that we’ve created for ourselves, we need different ways of thinking, different tools. In fact, we actually need to set out in different directions, and that’s why we adopted a transdisciplinary approach, right from the earliest days, at the Institute for Sustainable Futures. There’s two features that characterise our transdisciplinary. The first is that we seek to bring together insights from the full spectrum of disciplines, and that means we draw respectfully and with integrity from everything from social science to planning and law and geography and economics and engineering and science. You name it, pretty much. The second, and perhaps the most important, is that we actively seek to engage in deep and meaningful ways with those who experience whatever the issue is that we’re working on. Our clients, our collaborators, our communities – their knowledge and lived experience matters, and working closely with them improves our joint capacity to engage with the complexity of the world as it is, because together, we can do a better job of articulating what the issue actually is, and together, we can come up with ways forward that have a better chance of improving the situation. And tonight you’ll see the incredible fruits of those labours from two of our stars, Sven Teske and Chris Dunstan. But first it is my great pleasure to introduce our special guest and keynote speaker. Audrey Zibelman is the CEO of the Australian Energy Market Operator – that’s the independent body responsible for operating Australia’s largest gas and electricity markets and power systems. Audrey has extensive international experience in the public, private and not-for-profit energy sectors. She most recently held the position of Chair of the New York State Public Service Commission where she was responsible for overseeing regulation and safety of New York’s electricity, gas, telephone cable, water and steam utilities. During Audrey’s leadership there, the New York Governor Andrew Cuomo enacted what’s known as the REV Plan – Reforming the Energy Vision. The New York REV Plan has been internationally recognised for successfully developing and implementing 21st century regulatory reform – no mean feat – with a focus on – get this – lowering the cost of energy for consumers whilst building a more resilient and reliable power system. Sounds like something Australia could do with. We here at UTS and ISF have been inspired by Audrey’s leadership to drive a resilient, innovative and sustainable energy future for New York, and we are thrilled – honestly, the level of excitement in the office today was fantastic. So we are thrilled that she’s know heading up AEMO here in Australia, and Audrey, this is your first visit to UTS; we just want to make sure you understand you are very welcome and we hope it’s the first of many. And you know, just noting that you come from New York, we’re kind of thinking that we have Broadway out the front and Central Park across the road and Central Railway Station just up there, so maybe you might feel at home here. Audrey, welcome. We’re very much looking forward to your address. Please join me in welcoming Audrey.
Audrey Zibelman: Thank you. It’s great to be here. What I’m’ really glad about, you have Central Park and Broadway but no demonstrations and no Trump Tower.
So let me – what I was asked to talk a little bit about tonight is about REV. Normally I try to talk about what we’re doing in Australia, but I’ll talk a little bit about REV, how we go there and then some of the applicability that I see, and particularly in my new role. Now it’s a little different, because there I was the regulator and here I’m the market operator, but clearly as the market operator I’m keenly interested in good public policy. Some of you might have heard this story, but the thinking behind REV and what drove us was really Hurricane Sandy. So I worked for Andrew Cuomo when I was there. Andrew Cuomo was the son of Mario Cuomo, who used to be the Governor of New York, and he used to talk about the fact that while he was governor for six years, there’d been three major climatic events in New York and huge storms that knocked out cities for long days, culminating in Sandy, which of course everyone heard about. And his father, who had been governor for eight years, had two storms, neither of which had been major. So for New York, the idea of climate change was a reality. And you know, whether or not you worry about it as climate change or climatic events, if you live in a vertical city like New York and you’re underwater for eight days, you start really worrying about safety of communities, safety of people and then when we were also looking at flooding out our gas system, explosions, things like that. So it was a very major event for New York, and a wake-up call that we had to do things differently. So he asked us, those of us who are in the energy team, we need to rethink this. We can’t continue – we can’t live like this, and the example that I gave, that I often give, because it’s – you know, sometimes it just brings it home to you. There’s an area in Brooklyn that is low income. One of the things that they did in New York after Sandy is the governor ran a number of – we ran contests, so communities can come in, so rather than the governor coming in and saying, ‘This is how we’re going to rebuild your community’, he allowed the community to come together and talk about how they wanted to rebuild themselves. So we would go to these events and these communities would then get awarded money from the state based on the plans they had developed. So it was terrific from the standpoint of community building after a major event, but what shocked me coming into this was how many people who normally wouldn’t think about energy wanted to build micro-grids – they wanted to build back-up resources, and these were not businesses; these were low-income folks in multi-unit housing. And so one of the stories is this woman was talking about how she got involved was her grandmother, who was 83 years old, was living on the 23rd floor of a building and had to walk down every day to get water and bring it up. And they couldn’t get to her. And so it scared her, and she thought, you know, the thought about being in that kind of circumstance and stranded was sort of, was compelling to me about we really do need to think about doing this differently, because we live in a vertical city, and if you think about New York City and the complexity of that and not having electricity, it’s a big deal. So what we talked about was the fact that we needed to change things, and so we had a seven-point element that I would say that really we started to look at. One is, the first principal for us was that technology was not the issue, so this was not about having to encourage technological change, because the technological change was occurring. What we needed to think about, rather, were the regulatory and market arrangements that were impeding progresses to get that innovation into the system. And so it really was more about, from our perspective, largely a regulatory and market problem, although we see a need or an opportunity to invest, and I’ll talk about that. But we really thought about it as that issue. The second thing is we said, well, if we’re really going to do this, there’s the second principle was around the fact that we needed to recognise that there were outcomes we wanted to achieve, and it was our own version, the trifecta, is we wanted the system to be cost effective. New York is a very expensive state, and we didn’t want energy to be one of our highest expenses, and so we wanted to think about how do you make the system more productive and cost effective? Secondly, of course, we were worried about reliability and security, and third was achieving our carbon goals. So New York has an objective and for those of you have been watching this, and why people say it really, you know, a lot of these things in the US happen at the state level rather than the federal level. New York has a goal to be 50 per cent renewables by 2030 and have a 40 per cent reduction at an emissions level from 1995 by 2030 as well. And so we had to – we wanted to meet that target. So it was that piece. The third piece we thought about it is that if you’re going to redesign the system, it really need to be around the customer, and it’s the customer looks at it and they look at not from the terms of how much am I paying for energy and how much I’m paying for networks. It’s what’s my total bill? How do I reduce the total bill? So it was thinking about how do you give people real choice, how do you use demand better, how do you use behind-the-meter resources better, how do you monetise things that we can do on the customer side of the equation to help customers manage cost? The other piece that we looked at was the other major principles around system productivity. So if you think about it, the electric grid was built in a period of time where we assumed that demand was inelastic, and that we wanted to do was be able to build the next resources in the most cost-effective way. What we thought about was that that should be, because they were monopolies at the time, that would be capital, and in the US we didn’t have state-owned utilities; we had really integrated monopolies. What we became worried about is saying, ‘Well, what we really want is a more productive system.’ In other words, we want to use third-party capital, so if we don’t have to build a substation; instead, we can use things on the demand side, we should be able to do that. And so our goal ought to be thinking about how do you make the system more efficient? So here’s the other piece. One of the things we know about electricity, of course, is that it, it’s not easily stored. So the systems that were built in the last century were built with a lot of redundancy so we can meet the system peak on the hottest times of the year, but then a lot of the year these systems just are underutilised, so, and we see that in Australia too. We have a lot of systems that we don’t need a lot of part of the year, but we do need it when it’s the hottest days of the summer. One of the things we saw in New York is that’s very expensive in a state like New York where basically finding property to build a substation or build a generator means that you’re using property that is really not readily available. So what can we do to drive greater system productivity? What can we do to use things behind the meter rather than building a power plant that you’re only going to use a few hours a year? And so, for example, and sort of one example I use a lot, because it’s, I think it resonates, is that we had a situation where in Brooklyn, New York, they were, a lot of people were knocking down brownstones and putting up tall buildings, and so the local utilities said look, we’re going to have to build a substation. It’s going to cost about $2 billion, because taking property in the middle of New York City is a very expensive proposition. So we told them, we said, well, we really would rather you not build a substation, so what can you do if you put batteries and solar and things behind the meter? If you make usage more efficient, and rather than putting in a substation? So they went out and they said well, we need about 125 megawatts of load to be dropped off, and our engineers came back and they looked at it and all they could come back with was 45 megawatts. And I said well, that’s not good enough. What I really want you to do is go out and ask the market and say. ‘Look, you’ve got this 125-megawatt problem; what can you guys do?’ So they went out and did a request for people to come in with solutions, and lo and behold, they had all sorts of innovative people come in who came up with a bunch of different solutions that the engineers hadn’t thought about, and they ended up getting 180 megawatts at a fraction of the cost of building a substation. And not only that, a lot of those megawatts were on low-income housing, so they’re doing things with solar and storage in low-income housing, so you had people who ordinarily wouldn’t have access to those sorts of resources suddenly getting access and being able to contribute to the grid and getting a lot of value. And so it was that – so one of the things that we said with REV was we said really, its’ about productivity, but the other thing that was really important, it’s about the business model and being willing to take risks. So typically this is a very risk-averse industry, and regulators have a tendency to sort of look at what utilities do and say, ‘Oh, that was a bad idea and you’re going to get penalised.’ We said, ‘No, we need to innovate. We need you to be willing to take some small steps and risk and we want you to do that,’ but it’s not about the utility coming up with the solution. It’s about the utility partnering and driving innovation. So one of the major changes we did was in our regulatory structure, saying that rather than just making money by spending capital, what we want the utilities to do is be able to get value out of helping customers save money. And so what we want you to do is monetise the value of efficiency, not just for the customer but for the utilities so that the utilities’ economic interests were aligned with the customer. And when I talk about utilities, just to be clear, it’s what we call the distribution systems here, because we just regulated the distribution utilities. Our generators were also at market. So it was trying to drive that business model around how do you solve issues using third parties, partnering, bringing the innovation in and allowing and ensuring in the value chain that there was no just winners and losers – that everybody won? Because what happens when you have entities doing things like that, you do hit the triple bottom line. We ended up with solutions that were more economic, they were more economic for the system at large but they were also more economic for the individuals who would otherwise not have access. The second pieces is that it was, you had better earnings, because we gave the utilities actually an opportunity to earn more from being able to do things that were more efficient than doing things that were traditional. And the third piece was that we achieved our environmental outcomes. And so one of the big pieces about REV was saying that there’s not an either or proposition – it’s not a question of I need to be environmental or I have to be economic. It was saying if you solve things at the edge of the system, and if you do things around productivity, you often find the economic outcome and the environmental outcome are uniform, and what you need to do is drive your business models and your regulatory models and your market models to get there. So that was sort of that piece, and then the last thing, you know, that we cared about was where does the government invest? And so we were worried about the fact that there were a lot of things around that were really upstream that the government could get engaged in such as codes and things like that – that if the government changed, could actually drive change more efficiently than grants. And then we also looked at things about how do we get things to scale as opposed to how do we simply just give a grant? And so that was a very important piece. The other thing, so if I think about that then in the Australian context, right, what are we struggling with? The first thing we’re struggling with is cost, right? I mean, we’re worried about – we talk about the trilemma: we’re talking about cost, we’re talking about systems security and we’re also talking about reliability. And so those are the things that we want to try to solve in the system. One of the things that I think is important that we’ve started to work on with ARENA is really thinking about how do you animate the demand side of the equation? So to me, as a market operator and a grid operator, my job is really to keep the system in balance. And so what I need to do is, every moment of the day, is make sure that generation and demand equal out. And I can achieve that by doing two things: I can increase the output of generators, or I can reduce the amount that demand is taking from the system. But that doesn’t necessarily mean that the demand is – some people are turning out lights. It may mean that they have solar and storage and they’re combining that and we’re sending them a price signal and we’re saying, ‘These are the good hours that you use to charge your solar plant; these are the bad hours. And if you charge it during the good hours and discharge the storage during the hours we need it, we’ll pay you for it.’ Because as a market operator, [inaudible] responsibility is just to maintain balance – I don’t really care if it’s coming from you saying, ‘Well, what I’ll do is I’ll withdraw my demand during those hours’ or someone else turning on a generator – I want to choose the most efficient element. And so we need to create a market that is two-way. So this year we announced a program with ARENA where we’re really looking at saying, ‘Look, rather than building a generator for just a few hours a year, how can we use things on the demand side?’ And there are some really fascinating things happening in Australia. For example, the utility in Queensland has a program where they’re regulating pool pumps and also sort of, the, um, thermostats. They have 800 megawatts of load that they can turn off or turn off for 15 minutes; you wouldn’t even notice it in your home. That’s two big power plants that they’re avoiding simply by using the system more efficiently. And so if we think about how do we take that to scale and how to pay people for that, because it’s really, what it does, it says to me, would you rather pay your neighbour 50 cents to help them to manage demand, or would you rather us turn on a generator and pay it two dollars? And you might say, ‘Well, I’d rather pay my neighbour a little less money – a little bit of money to make sure they use the resource better.’ So it’s animating. And when I’ talking about neighbours, I’m not talking about you as individuals – it’s really through your aggregators and service providers who can help you really do this in a way that’s transparent, or you’re not even aware of what’s going on. So your refrigerator’s cycling, your air conditioner’s cycling, you don’t know what’s going on, comfort stays the same, but you’re providing a service back to the grid. So those are the types of things where we’re headed. The other piece that I would say is applicable, really, for what I’m excited about at AEMO is really thinking about very intelligently where’s the grid going and what kind of signals that we need to send. So one of the things we’ve learned is with the integration of solar and wind, is the grid has to operate differently, and we need to price out the value of these systems in a very accurate way, so moving the market to a much more sophisticated level, so again, we’re driving productivity but we’re sending the right price signals so people know to invest the right types of things, and we’re actually building the types of systems that we’re going to need for the future. So I think, my cheap takeaways from New York is a few things. One is electricity is pretty much the same anywhere, and really what it comes down to is not so much the difference in how the system works, but it really becomes the regulatory and market models you do. The other thing that we have to do is that we have to assume that innovation isn’t going to happen by accident, but really, we need to be willing to be lean in and push it. So the other thing we’re doing at AEMO, we’ve set up an innovation centre, and the purpose of this centre is that we could do these types of things we did in New York – we called the proof of concepts, or demonstration projects. But they weren’t demonstrating the technology, but it was creating the new business models that we think we’ll have to work in the future. So with AEMO, we’re working with ARENA and to really see how these business models can work, so how we can take them to scale. You know, from my view, this is something to do throughout the value chain of electricity, and we really need to do together. So I think that in the long run, what I think, or in the short run, the other thing I’ve talked about is that the reason I’m here, and so I think that the nature of the system in Australia where we have a lot of urban centres, and we have a system that’s very long, but it’s – you don’t have the same kind of transmission systems we have in Europe and US, we have an ability to actually use demand better, much better than we use anywhere else in the world, and actually show how we can create these distributed networks, because you know, very much in my mind, very much like we saw with cell phones, there’s still 2 billion people or so in the world who have no access to energy, and in order for them to get access, we’re really going to probably look at distributed models, the kinds of things we’re doing in Australia, where we look at how we can use distributed solar, storage, electric vehicles, other resources better, rather than building these huge networks that we see in Europe or the US, and so where Australia can lead is actually understanding how we can use these community-based energy systems in a way to give people access to energy who today just don’t. And so I think that, you know, if I think about the energy economy of the future, I really do think Australia could lead and the reason I’m here is because I wanted to be part of that. So thank you, and I look forward to your questions.
Zibelman draws upon her past experience as the chair of the New York State Public Service Commission within her role as the CEO of the AEMO – the organisation responsible for operating Australia’s largest electricity markets. Her keynote address identified three steps to take on the path to transitioning to sustainable energy systems: the importance of inspiring communities to actively engage with the development of their energy systems, the need to position innovation as an active process through enabling mechanisms designed to facilitate and implement technological and social innovation, and the importance of working to the strengths of an area’s geography in developing solutions to energy constraints.
Zibelman also emphasises that one of the most vital products of considering innovative solutions to energy shortages is more equitable access to renewable energy technology. The process of implementing renewable technologies involved holding community contests to discuss rebuilding facilities in the aftermath of Hurricane Sandy, and taking advantage of limited building space by installing solar panels on high density buildings. By widely engaging with communities, additional opportunities for renewable can be used, and not only do communities typically unable to benefit from renewable investments attain access to these networks, lower income communities actively engage in the development of microgrids and other solutions in an unexpected manner.
Additionally, Zibelman also identifies the need to maintain affordability and reliability in developing energy network solutions, as “energy is an essential service that always needs to run well.” One proposed solution to an energy shortage in New York involving the purchase of property and the construction of a substation was proposed to cost $2 billion, but through encouraging innovation and implementing solutions such as rooftop solar panels and managing peak demand, a more effective response to this shortage was developed at a fraction of the cost.
Nicki: Sven has worked in the energy sector for 20 years. As you will hear from his accent, he’s from Germany. He’s been working around technical analysis of renewable energy systems and how to integrate that into energy markets for a very long time. He has written over 50 special reports, including being the lead author of the IPCC’s special report into renewables in 2011. He’s written five global energy scenarios about how we can get to 100 per cent renewables. He’s written the World Wind Council’s World Wind Outlook, and a whole bunch more besides. He was also, as we were talking about the energy ecosystem, the developer and founder of Germany’s first cooperative utility, Greenpeace’s Energy EG. He’s got a PhD from the University of Flensberg in the integration of renewables into power systems, and he’s one of Australia’s and the world’s leading experts on how to do this. So I’m very excited that we’re working with him here at UTS. Please make him welcome.
Sven Teske: Thanks Nicki. Yeah, I came to Australia three years ago – I consider myself now as a Germaussie, so in the transition from German to Aussie. I’m sort of coming, sort of zooming in from the global side and I’ll provide an overview about the global renewable energy market, power market, and then move to Australia. Um, that should work now. Yep. Very bright. I’ve been told that it’s very bright, but I did not expect it so bright. Anyway, so this very colourful thing here you see is the power plant market, the global power plant market, since 1970. I would not go into all the colours, but you see two things. One is in he last 10-15 years, the overall market for new power plants increased drastically, and that’s due to two factors: one, the old industrialised energy market, the power market, the power plants come to age and they need to be replaced. At the same time, the developing world actually starts to electricity and adds more power plants. That means that the power plant market almost doubled in the last 15 years, and Australia’s actually in a position that we actually need to replace a lot of power plants. The average coal power plant, which provides still the bulk of power in Australia, is about 30, 35 years old. So in the last, since 2005, due to wind first and then solar second, the share of renewable energy generators increased by over 200 per cent. And that’s a good thing. In terms of the market, if we see the last 10 years, the market shares from solar, from the global power plant market, went from one per cent in 2004 to 28 per cent last year. So basically, what we see as solar photovoltaics and wind take a huge share now on new power plants. And that’s due to the fact that after quite a bit of development, the solar photovoltaics and wind are the most cheapest power generators in the world. So it’s cheaper than gas, it’s definitely cheaper than coal – new cola – power plants, and by an order of magnitude, cheaper than nuclear power plants. And you see the red, little slice red, is new nuclear power plants – it remained irrelevant over the last 15 years, and hovering around 1-3 per cent. It was about four per cent last year, and more than half of that was built in China, which were power plants which are already under construction in the last 10 years. So the global coal power plant market also boomed, so here and you probably have heard quite often that every week, China sort of installs a new or connects a new coal power plant to the grid. That was true over the last 10, 15 years; 10, 12 years. That’s not the case anymore, because first the electricity demand increased not as far as predicted – there’s quite a bit of over-capacity in the power market in China; and secondly, China adds a lot of renewables as well. So you see that in 2016, the first bar – the grey bar – there were about 1000 new coal power plants announced, and pre-permitted, and in last year, or the beginning of this year, only 500. Also, if you see the one on hold, [inaudible] from the bottom, almost two-thirds of those power plants are on hold. I’ll give you a specific example: China has about 50,000 megawatts under construction in coal power plants, which will be all on hold, because the capacity factor went from around 70 per cent to less than 50 per cent. Also India’s coal power plant market stalled. There are 50,000 megawatts, so that means 50 coal power plants, under construction; the majority will not come online in time, and will not operate economically, because there’s simply not the demand, and the latest draft of the national electricity plan in India shows that between 2022 and 2027, not a single new coal power plant will be built. That means that the market, the boom of the coal power plant market, is actually over. In terms of renewable capacity, the dark blue bars are all hydro power plants, so hydro power plants are by far the oldest power technology. In fact, for example, my home country Germany started with 100 per cent renewables – only hydro power – until the first coal power plant came into place around 1920, so it’s a very old technology. The average hydro power plant in Europe is about 100 years old. And now the light blue and yellow capacity chips in, and that’s all solar. Very encouraging is that in 2004, there were only two gigawatts, this little red circle there, so 2000 megawatts, which is sort of like two coal power plants install capacity worldwide of solar; 23 years later, we are at 303 gigawatts, which is basically – the capacity of Australia is about 45, so it’s quite substantial. Again, Germany has 45 gigawatts solar photovoltaic installed, which is the install capacity of Australia. And Germany is the size of New South Wales – actually, even smaller. And who invests in renewables? It’s not the industrialised world anymore – it’s actually the developing world. It’s China, it’s also Brazil; increasingly the Asian countries also around India. USA, despite all the rhetoric, is still a very large market for solar and wind, as well as Europe, and Middle East also ticked in over the last few years quite substantially. In terms of the share of the capacity, that increased from around 20 per cent to over 55 per cent over the last 10 years. Again, in terms of the install capacity of the mix, that means that the entire environment for electricity generation will actually change, and I try to explain that with this graph: Right now we have base load, we have some fluctuating variable wind and solar, and when we have this patch [inaudible] power, that’s sort of the green thing. But once you increase the variable power, like solar and wind, and you accept base load as base load – that means base load power plants operate 24/7; you can also think about you have a factory for shoes, and you rely on the capacity, you can sell 1000 pairs of shoes every month, by definition. That’s exactly the same as a base load power plant – a base load power plant just operates, no matter whether the market wants it or not. So if you accept that market model, then you have on peak times more electricity than you need, and then you can either curtail it, or you can store it, or you can try to move the demand a bit. If you do not accept it, like for example, in Denmark or in Spain or in Germany, then you cut into the base load profile, and that means that coal power plants cannot operate 8000 hours, or in China that’s the same situation right now, but only like 5000 hours a year. Everybody knows that a year has 8760 hours, I guess? So we have like from 8000 down to 4000 hours – that means if you calculate with your generation over the year, you might end up around eight or 10 cents per kilowatt hour, for example. If you produce only half of that time, your electricity price actually increases substantially, because you have to share the same amount over overhead cost through less kilowatt hours. So that’s not an option. And then this is sort of the model we favour, and that’s basically you have a base generation, which means all sun, all wind, whatever we have, we take into the system, and we build dispatchable power, including storage and demand site management around that. And that also means that the business model, as Audrey talked about it, is very, very different, but actually far more innovative because there are far more people involved. You can have a business in terms of wind forecast, solar forecast, you can have a business in terms of storage, you can have demand site management – all this so there’s a lot of small and medium-sized businesses involved in that system. Making a little bit of cut towards 100 per cent renewables, my research focus here at UTS ISF is 100 per cent renewables. I model Australia; we did some Kangaroo Island sort of small community and island-based, but I’m currently working on Tanzania on sort of an energy access country. In several other countries, you have a project from [inaudible] or the Philippines, and we always have that question is 100 renewables possible? And we had a research project for the renewable energy network from the 21st century, which has been published, this result, actually in New York this April, and we asked – we basically could have a one-hour presentation about that, but we asked many questions for all these energy experts around the world – there were about 114 energy experts – and we asked them, do you agree that 100 renewable s feasible and realistic on a global level? And 71 per cent said yes, we are. There was some disagreement on when, like is it 2050 or 2060, but there was fairly high agreement that this was possible. Also the people, I think, that the share of global final energy, which means it’s not just electricity, but also heating, cooling, especially transport, will significantly increase. So that’s actually a very good forecast for the market. Jumping to Australia, this is the curve of the wind power market for Australia. Um, it’s for – if you’re a wind park developer, that curve is horrible. That means you have sometimes only 100 megawatt market, which means, like, 15 turbines, which is sort of like two wind farms; sometimes you have like 6 or 700, but you never know. And part of the problem is there’s no real, consistent regulation. The solar market is actually much better; despite the noise, the solar market in Australia is actually really good and very, very stable, around 800-1000 megawatts; 25 per cent of all Australian households already have solar, which is world leading. I think it’s something we can be proud of in Australia, to be actually so advanced, and the cost, and that’s the reason why solar is so successful, is it went down significantly. We had a project about 100 per cent renewables for Australia; don’t have the time to go in it in detail, just a few highlights: we need, in order to arrive there by around 2030, we need a market of stable, around 4000 megawatts of solar, per year. If you look to Germany, Germany had 7500 megawatts a year for four years in a row, and on average is hovering around 2 and 3000 megawatts, so it’s possible. Same for wind – an average market should be 2500 megawatts for wind in Australia; Germany has, since 1999, around 3000 megawatts each year. Again, Germany is so much smaller than Australia, and the wind [inaudible] is actually 50 per cent better than in Germany. Oops. Um, I skipped that – that would be the mix, so basically we have a lot of mix for solar and wind, but also dispatchable renewables, including concentrated solar power, and I’m very, very happy that the announcement of South Australia to build and do concentrated solar power, because that has built-in storage, which is really good, and it’s a very good option for Australia, because not may industrialised countries can actually do it. Like Germany has sort of 800 hours sunshine a year, and Australia has 2000, 2500; one of the reasons why I’m here. And the reason for that is you can actually operate concentrated power plants, which operate with direct sunlight. My time is up. Just wanted to highlight one more thing: this is actually more or less same costs in terms of the system until 2030, because sort of the investment costs are fairly equal, but then it actually pays off, because at the end of the day there are no fuel costs involved, and that makes it in the long run cheaper, and moving to sort of demand site management and energy efficiency, I want to close with that example: Denmark is a very small country, but also has 40 per cent wind. It is interconnected, yes, but still they’re very innovative ideas and one idea I wanted to present is that they actually have communities which are self-sufficient over a few hours, like six, seven, eight, 12 hours, and demand site management from the grid operator in Denmark works as they actually cut off a city of let’s say 200 megawatts for two hours or three hours, so they actually said, okay, now we have 200 megawatts less wind and we just cut off this city and they are self-sufficient over a few hours, and then they bring them back online and the consumer doesn’t really feel anything. It’s a bit science fiction, and they work on it, but I think that has a lot of market opportunities also for communities. And with that, I have to close. Thank you.
ISF’s Dr. Sven Teske then presented on the global state of renewable and non-renewable energy supplies, drawing on his experience working internationally for organisations such as Greenpeace and the Global Wind Energy Council. Dr. Teske’s presentation shows that as the developing world continues to develop their electricity networks, there has been a massive rise in both the development of power plants more generally, and the construction of renewable energy sources more specifically. This reflects the rising cost-effectiveness of wind and solar power over coal, gas and nuclear power, as countries such as China, India and Brazil
Teske also drew on his experiences working in Germany through drawing comparisons between the success of Germany’s renewable energy networks, and the possibilities afforded by Australia’s geography. Teske noted that Germany has developed a solar energy market that produces 7,500MW of power per year, in a country that has 800 annual hours of sunlight. Australia could achieve 100% renewable energy by 2030 through producing solar energy markets of 4,000MW per year, drawing on the 2000-2500 hours of sunlight experienced annually in Australia.
Nicki: Chris Dunstan has been at the Institute for Sustainable Futures for a very long time now. He has over 20 years’ experience in energy policy, strategic management and sustainability. He’s looking – really seriously looking – at how we address the regulatory and market barriers to a more sustainable and decentralised energy future. He’s been instrumental in developing and implementing a number of leading policies: NSW Greenhouse Gas Abatement Scheme, one of the first emissions trading scheme in the world; and the NSW Government’s $200 million energy efficiency fund, which continues to operate to this day. Chris has a Bachelor in Arts from the University of Melbourne and a Masters of Economics from just up the road at University of Sydney. Please make Chris welcome.
Chris Dunstan: Thanks very much Nicki, and thanks to all of you – this is just such a fantastic crowd to see so many people out here on a Thursday night. There’s a lot of things you can do, and we’re really pleased that you can join us. So this issue about energy, Australia’s energy future, the emerging new energy ecosystem, it bears upon a lot of different issues. And I’d like to focus on one of those issues initially; it’s an issue that’s very, has been controversial for many years now; it’s an issue that causes concern and excitement in the community; it’s an issue that a lot of people just wish we could deal with and just move on. And of course, the issue I’m talking about is The Bachelor. And the reason I mention this is a couple of weeks ago, I was sitting there at home with my two teenage daughters, watching the first episode of The Bachelor, and this is Matty J, for those people who don’t know, and of the many beautiful young women that appeared, one was Coby. And she describes herself as a unicorn in a girl’s body, amongst other things. But she’s also a coal plant operator, believe it or not. So as far as I can understand, she basically mines this stuff, and when she came on and they mentioned this, my 15-year-old daughter said, ‘Dad, is she a bit evil?’
I really didn’t quite know what to say to that. She certainly doesn’t seem evil. In fact, she’s actually a bit of a sweetie, unlike Leah, for example, who is evil. Oh my god, Leah.
But it did make me reflect a little bit about on the nature of our energy system. So, no, Coby is not even a little bit evil, as far as I can tell. And I look at this bit of black rock here, and it is black, it is kind of shiny; to be honest, it does look a bit evil, but I don’t regard this as evil either. But Coby says not only is she a coal plant operator, but she regards it as the best job in the world. So if you haven’t caught up with The Bachelor yet, I’m really looking forward to that date where Matty J and Coby get together and she explains why she’s so enamoured of coal and her job. And she might say things like, ‘It’s good for humanity!’, for example. She might say it dragged billions of people out of poverty, and I think that’s probably fair. I mean, coal drove the first industrial revolution, and it had a big role in the second industrial revolution. But in the spirit of – I mean, you might think I’m stretching it here. I mean, can we really draw insights about Australia’s energy future from reality TV? And if you thought that, you’d probably be fairly right, but in the spirit of The Bachelor, I thought I would say on behalf of the Australian community to the coal, that it’s not you; it’s us. We’ve used you, we’ve abused you; it’s been really good a lot of the last 150, 200 years, but seriously, we’re moving on.
We’ve met someone else.
And frankly, I can understand if you feel a little bit burnt.
So, in the light of that, I want to move on and talk about Australia’s new energy ecosystem. I think Sven has already made a pretty good case that this transition is underway and it is unstoppable. We are shifting to a renewable energy system, but as many people have observed, including Sven, the wind doesn’t always blow and the sun doesn’t always shine, so this is an issue we need to deal with as we make this transition. And for a lot of people, the solution is obvious: storage. Batteries. And in this light, I note a quote from the American writer, H.L Menken: ‘For every complex problem, there is an answer that is clear, simple and wrong.’ This one doesn’t quite apply in the case of the electricity sector, because in this case, there are actually several answers that are clear, simple and wrong. The solution for some people is just build lots of batteries. For other people, it’s build lots of gas-fired generations. For others, it’s let’s just build another coal-fired power station. And I’d like to just draw on one other quote here; this was from the political theorist Francis Fukuyama. Shortly after the fall of the Berlin Wall, Francis Fukuyama wrote an article and subsequently a book called The End of History, in which he said, ‘What we may be witnessing is not just the end of the Cold War or the passing of a particular period of post-war history, but the end of history as such. That is, the end point of mankind’s ideological evolution and universalisation of western liberal democracy as the final form of human government.’ Well, you’ve got to admire his optimism. And I feel like it’s a little bit the same in the transition to renewable energy: yes, it will happen in my view; I think the evidence is pretty solid. But that doesn’t mean all our problems are solved. So the question is, how do we deal with this whole range of issues about the energy trilemma, etcetera, that Audrey spoke about? So around this issue of how would we provide 100 per cent renewable energy, Sven mentioned a report that we worked together on with some of the other members of the team at the Institute for Sustainable Futures on Towards 100 per cent Renewable Energy for Kangaroo Island. Now, Kangaroo Island has a population of a bit over 4000; it’s connected to the mainland in South Australia by a cable, and that cable is reaching the end of its life. So the network business in South Australia was looking at well, perhaps we need to build a new cable, and so we were commissioned by the Australian Renewable Energy Agency, ARENA, to investigate well, is it possible, instead of just moving another cable, to shift the island to 100 per cent renewable energy through a range of those technologies listed there? Now, I won’t go through this in great detail, but what this is, is it looks at a whole range of these scenarios that we modelled in that study. And we go from replacing, providing a new cable on the left-hand side there to using diesel-fired generation, which is not particularly clear; using renewable bio-diesel as an alternative; and then there’s the two scenarios, 3A and 3B, a high renewables but not 100 per cent. And these four on the right-hand-side here are all 100 renewable; that’s the 100 per cent RE. And the reason I’m drawing your attention to this one is that one of the scenarios we looked at is what if we provide solar and wind and then we use batteries in order to provide the storage? And you can see there that that is the most expensive option. The good news is that there are other options, by having a range of other renewable energy solutions, including some bio-diesel mixed with wind and solar and batteries, and potentially also using biomass; there’s a lot of hardwood plantations that have been established on the island, sitting there without a market because, well, they planted the plantations but they neglected to put a port in in order to get the timber off the island. Small glitch. So the point here is that we need to think beyond just simple solutions. And one of those solutions I wanted to draw your attention to is illustrated by this graph. This is Australia’s primary energy consumption between 1992 and 2014. I chose 1992, because that was the time of our last recession – we’ve done pretty well in Australia in terms of maintaining economic growth. And over that period, our economy has more than doubled in size – grown by over 100 per cent. And yet, in the same period, our energy use has grown by only 46 per cent. And what we see here is that we’ve created a clear disconnect between the traditional view that if you’re going to grow the economy, you’re going to need more energy at an equivalent rate. Over that period, coal consumption only increased by about five per cent; oil by about 17 per cent, in terms of the contribution to our additional energy needs to provide that doubling to the size of the economy. Natural gas about 18 per cent, and renewables about three per cent of those additional energy needs. But the biggest contribution in meeting our energy needs for that growing economy hasn’t been from any of those sources. It’s been through improvements in energy productivity – getting more economic product for less energy use. It’s really been the quiet achiever in our economic growth, and it’s about time we gave it its due. That’s saving us the equivalent of about $50 billion per annum. What do we mean by that? Here’s an illustration – the sift from lighting from the candle to the incandescent bulb to the compact fluorescent to the LED. And we’re seeing that dramatic improvement in energy efficiency – this is just one example of many that’s driving that energy productivity we’re seeing. In terms of lowest-cost options, this is a graph from the recent Finkel review, and it shows a range of generation types there: coal, wind, solar, gas. But to my mind, there’s something seriously missing from this graph, and that’s this little chap. Energy efficiency. So, by far the cheapest option is none of those generation types but energy efficiency. This is drawing some data from the US on average cost of demand management programs in the US at about $50 per megawatt per year. That looks good, but it gets better. If you do energy efficiency, you also don’t need the network capacity, so it is by far not just the biggest contributor to helping meet our growing energy needs, but by far the cheapest. So, let’s add in there energy efficiency. I’ll mention briefly two others: electric vehicles, and we’re seeing this transition really start to pick up pace now. We’ve got the Netherlands and Norway saying that they’re going to effectively ban internal combustion engines, petrol engines, by 2030, and France and the UK following suit by 2040, so it’s really starting to happen. I just want to give you this comparison though: to get a Tesla Power Wall 2 would cost you at least $10,000 – probably more like $12,000 installed. That’d give you 13 kilowatt hours of storage. On the other hand, if you wait a couple of years for the Tesla Model 3 electric vehicle to come to the market, that’s expected to sell for a bit more – $50,000 – but the amount of battery storage is much greater: it’s 50 kilowatt hours. Now, that’s 350 kilometres range. And so it seems to me that with that sort of capacity there, given the average commute is about 30, 35 kilometres a day, there’s plenty of storage there that we, if we’re smart about how we integrate it with the electricity system, we can make use of. The final element of the ecosystem that I just wanted to bring to your attention is smart technology, and energy management. And I’ll illustrate it by reference to the duck curve: this is, for those who have not seen it before, it’s something emerged from some analysis out of the US; I really look forward to seeing an Australian version of this, so maybe I should be updating it with that. The – what this shows is the change in the forecast demand on a particular day over a 24-hour period, so you see there that that blue line, 2013, which is when this projection was made – now, each year after that, the load goes down. 2014, 2015, 2016, 2017. The reason for that is solar PV – more and more solar being installed on roofs, so the net demand on the system is falling in the middle of the day. But as the sun goes down, the peak demand between about six and eight pm is not just staying high; it’s getting higher. Its air conditioning load and the like is a key driver here. So what do we do about this? We can say, again, the obvious solution: let’s store that solar energy in the middle of the day so we can use it later in the day, or maybe we need to build more gas generation in order to provide that growing peak demand later in the day. Or, how about we use the solar energy in the middle of the day when it’s provided, essentially free to your roof for those quarter of Australian households who already have solar on the roof, to cool the home – essentially free electricity? So that when people come home, instead of turning on the air conditioner and causing problems for Audrey and AEMO in terms of managing peak demand, we’ve got a nice cool home and much less demand on the system at that tricky part of the head of the duck. And there are now companies providing these solutions as a technology you can stick on your wall to remotely control your air conditioner, even an existing one, simply infrared-controlled air conditioner. There’s a couple I’ve mentioned there. It’s worth looking up; they’ve got some funky little videos. So, and in terms of the contribution to managing load, $200 sounds a lot cheaper than the cost of a battery. So, to sum up, then, I’d say let’s not get stuck in the past but let’s also not get stuck in the present. We’ve got an emerging ecosystem here. It’s a really exciting time and it’s important that we don’t get corralled into simple solutions when the range of possibilities are much greater, and again, I guess, coming back to where I started with The Bachelor, if I was going to give advice to the renewable energy sector, I’d say, ‘Look, you’re young, attractive, intelligent technology. Don’t just have your head turned by the first battery that comes along. You know, play the field. There’s a whole bunch of really interesting technologies out there, so make the most of it.’ So with that, I’ll say thank you.
Following on from this, ISF Research Director Chris Dunstan warned against the temptation of taking up a solution that appears to be clear, obvious and simple. Taking inspiration from reality TV series The Bachelor, Dunstan implores the renewable energy sector to “play the field”, as the biggest contributor to meeting Australia’s energy needs may not be more energy storage or more energy producers, but may instead be the quiet achiever of improving energy productivity. Through using energy more efficiently within a constantly growing economy, by effectively managing demand and utilising energy during more effective periods of time, improved energy efficiency saves $50 billion per year, by removing the need for additional power plants and energy storage.
Nicki: Tonight’s theme, as Chris just reminded us, is about the energy ecosystem, which implies all of these diverse ways of delivering and supplying and managing demand around energy. With your wealth of Australian and international experience, what are two of the models – business models, approaches to this new energy ecosystem – that you’re most excited about? To all of the panel – and perhaps I’d ask for an international example, which isn’t getting traction here in Australia yet, but also what’s going gangbusters. What are you most excited about here in Australia? Audrey, do you want to start?
Audrey: Yeah, let me start. So I’m actually most excited about the community energy concepts, so let me give you a couple of examples – one example in particular. So there’s a community in Westchester, New York, actually – there’s also a lot of communities in California and Illinois are doing this – where what happens is we allow for what we call community aggregation, and it’s a local municipality has decided that they would offer a service, actually, to everybody in their area to be able to buy energy almost as a buying group, if you would think, and also plan around putting in distributed energy, whether rooftop solar or battery, so that energy planning at a community level was almost like park planning, street planning, school planning, so it became part of the taxonomy. So the reason why it did that, because you can also add on energy efficiency and things like that, is one of the problems that we have in terms of thinking about how to move things forward is how do we do it in a way that’s most efficient? And so if you get the whole community engaged, what you can do is you can take advantage of different locations and different opportunities in the community. So for example, if there’s a shopping centre with a flat roof that’s really good for solar, you can add that, where you might have homes that can’t do it, you might have residents who are in multi-unit housing, but you might have an unused parking lot where you can actually give them access to solar, so you have what we call solar farms that you can provide access to customers who may live in apartment houses or may have a home that is not used to it or can’t accommodate it. And you can add in other resources, and in the US – not so much here – fuel cells are a big deal, as well as geothermal capabilities. But the idea as a planned community and doing it at that level, I think it helps an awful lot, because one of the things it does is it makes sure you don’t have a have and have not, so that you can ensure that as a community you provide access to everyone. It also makes it cheaper, because it reduces the transaction costs for third parties, because the whole community is engaged, and you can get better outcomes because you can find the right location. So to me, the idea of making of what we call the democratisation of energy part of the tapestry of how energy is actually used, produced and managed – so you have examples like we have in Denmark, is one of the greatest, I think, evolutions or revolutions that we could see moving forward.
Nicki: That’s great. Sven?
Sven: Maybe jump in – I think what the, really confused me most when I came here two years ago was that wind was not really seen as something great, while I’m coming from the north sea coast, and wind electricity was sort of a no-brainer, and all the farmers were really onto it, because that was the way to cross-subsidise their food production and compete on the international market for food production. So they harvested the wind over their fields and put it into electricity and sold it. It was a planning process which was rather clear. The Federal Government in ’97 already said every community needs to come up with one or two per cent of their land as a priority area for wind, and if you can’t agree in your community – and there are 12,000 communities in Germany of this area – we, from Berlin, make the decision ourselves. And nobody wants Berlin to interfere, so they actually said okay, no, we get our shit together and basically they came up with areas, and then the community was very clear – they had 12 months to discuss where to put a wind farm – and them the community benefitted from it, because they were usually investors or the operators or the owners, sometimes all of them, and the wind farms, they had to pay a certain amount of cents per kilowatt hour as a local tax. So this local tax remained in the community for hospitals, for schools, for road services, for something like that, so wind had a very, very good reputation. Then they came here; it’s like, oops, not a good reputation. And I’ve realised that this is actually just because of the policy. So people, if you actually see a wind turbine which is operated by a dentist from some other country, you don’t – you find it ugly. If it’s your wind turbine, every turn is a cent in your pocket and it’s beautiful.
So it’s a matter of how you create, sort of, the market.
Chris: Just a quick one. I think one of the most exciting developments in terms of business models is something that Audrey and AEMO are responsible for in that, for the first time, we’re seeing a really coordinated program to go out there and encourage people to provide what they call demand response, or to reduce demand as an alternative to building more supply infrastructure. It’s something we’ve talked about for a very long time in Australia, but AEMO and ARENA are collectively out there right now offering incentives to help people to reduce demand because it’s much cheaper and cleaner than providing additional supply. So I think that’s a really encouraging development.
Nicki: I’ve got a question from Twitter; maybe just one person can answer this. How can we provide people in apartments with access to solar and encourage landlords to install solar on their investment properties?
Audrey: Well, there’s – I think there’s a big issue for people who are renters, and that’s one of the reasons that we decided to move towards this idea of really what can be called community solar, and it’s been done and, you know, it’s done a lot, is the idea, that if you have, for example, you live in an apartment building in the middle of Sydney and then there’s an area outside of Sydney that wants to put a solar farm in, it becomes a virtual solar farm on your roof, and you get to invest in it, just as if the solar were on your roof. And that can be, a third party can invest in it and you get the credits as if it were on your roof, and it becomes what we call a farm to solar, or a farm to socket movement. You know, the farm to table – we call it the farm to socket. And the idea is that you’re using rural land that may be better for the solar and you’re allowing people in the city who might not otherwise have access the ability to invest and it becomes sort of a virtual solar rooftop.
Nicki: Sidebar: we have a proposal into ARENA at the moment to do just that.
Audrey: Oh good!
Nicki: And there’s an article on news.com.au and the Herald Sun today also just on this. So, moving on to our next question. We hear a lot about this trilemma – energy security, affordability and sustainability – and we also know that our energy system is rapidly changing. It’s not coal; it’s us. What we’ve heard from our speakers is a far cry from what we read in the papers and what we hear many of our politicians say. What do you think our politicians and our audience need to know about how the future energy system is going to deliver that secure, reliable, affordable and sustainable power? Anything else that you didn’t have in your presentations?
Chris: I’m happy to kick off on that one. Um, I think, as I tried to make the point in my presentation, we need to stop simply picking winners on gut feel. We need to take a systematic approach to look at the whole range of options, of technologies, business models and the like, and regulatory reform, in order to meet our future energy needs. And that, we’ve never really done that. I mean, the Finkel Review was trying to do that, and I think it did some really good things, but there’s – the real missing gap is the one that I highlighted around energy efficiency and demand management. But I think there’s a really very encouraging development right now that many of you probably have no ideas is in train, but the Australian energy regulator is very close to issuing what they call the demand management incentive scheme. I showed you that example from Kangaroo Island – part of the reason they decided not to proceed with the local renewable energy solution; there were many reasons, but part of the reason was the network business makes more money out of building cables and infrastructure than assisting local consumers to set up solar farms, wind farms, doing demand response, local generation. This proposed change, the demand management incentive scheme, if it proceeds as it’s expected to, should change that, so that for the first time, it should be a level playing field for our network businesses in Australia to be able to say, ‘Well, sure, I can build more poles, wires, substations, or I can make just as much money out of working with people to help them reduce their bills and reduce their energy.’
Audrey: And let me just add, because I think Chris you had spoken to, and Sven, you did too – I think the issue is, I don’t think it’s a question of convincing the politicians, necessarily. There’s an organic change that’s actually happening in the system – the cost of wind and solar coming down, we’re expecting the cost of storage to come down too. So we’re moving – and customer preferences are also changing, so that also has a big impact on what’s happening. So all these things are happening, so I think the reality is that the system is changing, and now the question really becomes is that everything is changing except for one thing, which is power is still an essential service. And so we need to maintain affordability, and we can’ allow things to be by accident, because it is a very complex ecosystem – I call it the system of systems – and it always needs to run well. And so what we have to do is not necessarily convince the politicians that the outcome where we want to go – what we need to do is demonstrate how we can make the transition in such a way that one, it maintains affordability as well as system security and reliability, so people have confidence; it also maintains the fact that it is an essential good, and so you want to make sure that there’s access. These are, so that’s why – these are a lot of regulatory and market issues, not so much of a technology issue, and we also need to recognise that the resources coming in are very different from the resources we’ve had, so from a market basis, we need to send the right price signals to make sure everything is being valued in a fair and accurate way. So all of these, I think, are efforts that actually the Finkel Review envisioned happening, and I think in a way it’s going to happen anyway. Our job – when I say our job, it’s AEMO’s job, it’s AMC’s job, it’s AER’s job, it’s the networks’ jobs, it’s the [inaudible] job – is to make sure as we’re making this transition, as well as renewables, the new technologies, there is a, we maintain a confidence, because it’s when people lose confidence and they have blackouts or they see high prices, they ask governments to intervene, and a politician really can’t ignore that, and shouldn’t, because it’s a public good. I mean, I’ve always talked about it and it’s very, to me, a very simpler issue: we live in a country where we expect the water to be clean, we expect the schools to be good, we expect the streets to be safe, and we expect the power to be on when we need it. And when those things don’t happen, governments have to intervene. So our job is to make sure we’re solving the problems so they don’t have to.
Sven: To maybe just add two aspects: one is sort of long-term thinking, as I think we can’t just sit there and say, ‘Well, we’ll let the market decide.’ It’s a decision – I can’t say I let the market decide if the commuters from Blacktown go by car, by rail, or by bus into the city; actually, I have to build infrastructure for that, like a light rail or bus lane or something like that, so actual planning, long-term planning, is absolutely vital, not necessarily down to the nitty gritty, like 10 per cent solar PV, 5 per cent wind or whatever, but sort of the general direction: yes, we want to phase out fossil fuels, yes, we want to go to 100 per cent renewables. If its 2045 or 2050 or 2030, that’s a second question, but the general direction is very important. And then also provide information that’s inspiring. For example, the Australian PV Institute, they did the resource [inaudible] of the City of Sydney, just the City of Sydney, for solar PV, and I would – even me, as a great believer in solar – I was really surprised that the peak demand of the City of Sydney is around 400 megawatts, and the potential, the technical potential on facades and on roofs is 380 megawatts, only in the City of Sydney. So you can do a lot, and there are abundant resources here on solar, and actually, in the mid-to-long-term, Australia could remain an energy exporter and export renewable energy in the form of renewable methane, renewable gas, rather than coal. And I think we do have the potential, we do have technologies that can deliver that, but we need the long-term signal.
Nicki: You’ve just answered the latest Twitter question, which is what should we be exporting instead of coal?
Sven: Maybe I add to that with this long-term thing it’s also important that we have a long-term plan for the workers who are currently in the old system, because they are not guilty for sort of being in the wrong system, and we just drop them, and I think a transition plan for the worker is as important because then the resistance from the general public is lower and then we just don’t use the worker as political mass to move them from one side to the other but actually have a transition plan for those workers.
Audrey: I also think we can export the new technologies we’re going to develop and how we’re going to integrate these resources.
Nicki: Anything else we can export, Chris?
Chris: Well, renewable fuels is getting a bit of attention – the idea that we can bottle our sunshine and our wind into ammonia and put it on ships, rather than natural gas. That’s longer term, but it’s a serious issue – it’s a serious opportunity that people are exploring now.
Nicki: So one other question from Twitter was, with this energy transition, how do you see our cities – Cynthia talked quite a bit in her introduction about the role of cities – how do you see cities changing, and what are the roles for people like urban designers and a whole range of other professions?
Audrey: I think it’s, as I was saying, I think thinking about energy as part of city planning and urban planning, just like we think about water and think about roads and things like that – it becomes part of the element of how we’re going to use space differently, how we can use these resources better. You know, one of the issues is how you orient your roofs, and all sorts of various things that we need to be doing to kinda integrate the energy taxonomy into urban planning, as well as access, so if we’re building low-income housing, we build it in such a way that they have full access to the benefits of renewables and things like that that other folks do.
Nicki: I think we’re going to open it up to some non-virtual questions. Ah, I’m going to ask one more question, but if you’ve got an actual question with, that you would like to voice with your words, please signals and our roving microphone will head that way. One quick one: what are some of the environmental costs and impacts of batteries?
Chris: Well, there’s a whole range of different chemicals and metals that need to go into batteries. It depends which batteries, but most importantly it depends on how those batteries are dealt with, particularly at end of life. There are some issues about how the lithium and the whole range of metals and chemicals that go into them are produced, but the key question, particularly as we’re moving to a much greater uptake of batteries, is how do we recycle them? How do we make sure that we capture those resources? And given that Australia has one of the worst recycling rates for batteries right now at about three per cent – it’s not a particular auspicious rate – this is something we need to be onto straight away.
Nicki: I think ISF’s been doing some work on it. We have someone who’s got the microphone – please say your name and your question.
Speaker: Hi, I’m Adam Joseph. I have a question. Two years ago, Professor Stuart White from this university from your institute gave a speech at the Australian Water Association Water Innovation Forum and Expo, and he talked about the dual flush toilet as a water innovation. It’s analogous, I guess, to demand management, looking at energy. When we look at some of the great Australian interventions in clean tech and storage – I’ll give you the examples of floating solar, so solar farms on lakes, dams and reservoirs, of which there are plenty around the world now: Japan, India, China, the UK; and also in storage, the vanadium flow battery, or the redox battery – it’s manufactured and used all around the world for base load power. And yet for both of these innovations, they’re not being manufactured in Australia, partly, I’d suggest, because we have processes by which Elon Musk can come in and bid and yet we still don’t know how much, so my question is: how can government agencies like AEMO or ARENA or others impress on government their need to play with a straight bat and actually give meaning to the ideas boom and the hashtag jobs and growth that should flow? Thank you.
Nicki: How do we do local jobs and growth in the clean tech industry, might be a summary.
Audrey: So as someone who’s been in the country four months, I’m not going to suggest I know the answer, but I do think that getting to the demand and scale and developing the market for both the demand side is going to be a critical piece of it. So to me, the issue is going to be how do we get – how do we scale thing, how do we make this systemic in the system, and so quickly moving from demonstration from ARENA to actually becoming part of the tapestry of what we do? And you know, I would assume the market for dual flush toilets also is, as I suggested, things like codes, requirements, because that kind of upstream pressure actually helps create the downstream market, so it’s those various pieces that I think that’s where manufacturers come.
Sven: I’m sort of a bit longer in the country, but not much. I realise that I’m coming from an engineering country, so it’s sort of new technology is seen as oh, let’s develop that, put a lot of money in it, and maybe someone later on will buy it from us to export it, while Australia is a classical resource country, where there’s sort of the mindset is a bit different, and I think it sort of needs to move to more sort of the technology-driven countries, because Japan is doing the same – they basically invest a lot of money with the hope that afterwards, they actually can sell it worldwide on the international market. And I think that’s a little bit of a cultural thing.
Chris: I might just add: I think one of the most powerful things that governments could do in this space for Australian technology is provide a more stable policy environment and a more stable market.
But again, I would like to pay tribute to ARENA, who I think are doing a remarkable job. They went through a difficult phase not long ago, where there was an attempt to shut them down, but they are doing an extraordinary job in developing Australian technology. And there’s a whole range of start-ups, from [inaudible], Reposit, Green Sink, and these are solar analytics. In fact, that was the smart technology, the app that I showed you before – solar analytics are actually starting this week to start to send signals out to people who’ve got solar to say, ‘Hey, you could save money by putting your air conditioner on now rather than later because you’ve got surplus solar.’
Audrey: I think it’s really good that you – because it is true. I think we’re undercutting what we actually are doing in Australia. The other announcement that was made this week is that an ARENA-funded company has produced a new solar cell that is the cheapest solar cell in the world and likely will lead the world now in terms of solar development and driving that cost down, so I think we should – maybe one thing I would observe of Australians is you don’t give yourselves credit where credit’s due. And there are some really good things going on.
Chris: Can I give ourselves a little bit more credit in light of what Audrey just said. UTS has been instrumental in attracting Energy Lab, which is an accelerator and incubator for start-ups onto campus here, and there’s some really exciting things happening within Energy Lab, and so another good example of things that are happening.
Nicki: Right. So we have the microphone with someone else. Yep?
Speaker: Hi there, Maria Lyons here from Get Up! I’m starting to think that maybe this energy trilemma is misnamed, so the idea that we need clean, we need reliable, we need affordable energy, well clean it, clean, we all know we need more renewables; we need that to be backed up with various forms of storage. If it needs to be reliable, well, we know that a more distributed system is going to be more robust in the face of extreme weather, so we need more distributed clean energy and storage. If we need a more affordable system, well, we need to bring more competition into the market, particularly in places like South Australia where there’s a handful of generators who have far too much market power, so we probably need to bring some different players in like clean energy into the market. So maybe we don’t actually have a trilemma at all. I think probably for the politician who is looking at the state of what is genuinely a broken national energy market, I think right now, where it’s clearly not serving consumers on the wholesale end, on the network end, on the retail end, what their real dilemma is, which should they prioritise? And particularly in this situation of uncertainty. So I’m interested, Audrey, particularly in your view: if you’re a politician and you’re looking at the situation with energy right now and you’re thinking about how you can further this path towards a more reliable and more affordable and the cleanest system, do you go big on, you know, building the big transmission line to Tasmania so it can act as Australia’s battery? Do you go even harder on demand management, you know, pursuing some of the great stuff you guys are doing with ARENA and taking that even further? Do you go the household level and figure out what is needed for households to be bringing more power into the grid at the right time? In a situation where you don’t know whether the assumptions about just how fast like household solar will grow, how fast the battery market will grow, you know, there’s a whole bunch of things that you don’t know, what are the safe bets that a politician with, say, $2 billion up his sleeve might have to actually pursue to deliver on all three of those objectives at the same time?
Audrey: So, great question. I think that the answer is a bit of everything you’ve heard tonight. Si thinking about productivity first is really important, so how do we make the system more efficient? And that can happen on things as energy efficiency, which is really critical, and well as helping manage demand better, and then better planning, because you don’t want this to happen by accident. So, if I were a politician, I would be absolutely saying, and I think this is part of the discussion: ‘This is where we want to end up. We don’t believe it’s a choice that we can say, ‘Look, we worry about affordability and reliability; we’ll have to worry about clean energy later.’ I don’t think you need to make that choice. I think we can do it all the same way if we do it the right way. And I think it is sort of saying – I think it is back to the point, let’s use technology better to make the system more productive, and that means using everything, and then let’s make sure that we’re thinking about where this technology’s going and we use the ability to do planning to set the scenarios and figure out where we need to put the investment so that we can get the greatest outcome for the consumer. So I think my advice to them is, you know, accept the Finkel Review, which they’ve done; let us get on with it; let us continue to examine the regulatory and market hurdles that are barriers to entry; and let’s make sure that we never put ourselves in a position where we have to do another review, but rather we’re continuously improving the market as we go.
Nicki: We’ve got time for just one more.
Speaker: Thank you. [Name] from Autonomous Energy. Sven, I’ve got a question around long-term seasonal storage, so as you, especially if you increase solar penetration on the grid, the difference – the exaggerated dovecote between summer and winter …
Audrey: We call it the emu curve in Australia.
Speaker: Exactly. So that becomes even more exaggerated, so what are the most promising seasonal storage technologies that we could use to get around it?
Sven: It’s probably very boring – it’s a very old technology, and that’s pumped hydro.
Sven: Because actually in Australia, the advantage is the average storage requirement is like around four, five, six weeks, while in my home country, the average season of storage demand is nine months. Because the sunshine, if you have solar, 80 per cent of the solar electricity generation in Germany is between April and September, if you’re lucky, and the rest of the year’s not much, but a lot of wind. So you need seasonal storage of 6-9 months, and that’s why the, the sort of enthusiasm for batteries is here much higher than, for example, in north Europe, where battery, okay, it’s interesting, but it’s not as enthusiastic as here while batteries can do a better job. But I think that the storage option is not only one; we have a cascade of different storage. We have a long-term storage; this is probably pumped hydro. We can have also like seawater pumped hydro – there’s now project development in South Australia, which is great. In the long run, maybe hydrogen or other renewable methane, then we have battery for the mid-term, but we also need minute reserve and second reserve an frequency controls so we have a whole cascade of different technologies, and it’s not one size fits all, just like power generation; there are at least six or seven different technologies, and we all need them, somehow.
Nicki: I think that’s a really good place to end, because it’s an illustration, really, that we are moving rom a monoculture to an ecosystem in our energy supply and our energy demand and in the way our whole energy system or system of systems works. It’s been a fascinating evening – I’ve been inspired and excited; I think what I said at the beginning, that the future looks very different from the past, I’m really excited about the future of our energy system in Australia and I think one of the things that few people have touched on is that all of us are going to be involved. We’ve got a much greater opportunity to democratise our energy systems, so hopefully we’ll see all of you involved in really interesting and innovative and some even just standard, boring projects, like putting solar on your roof, or installing some good draft-proofing and energy efficiency, because we know that’s the first thing to do. Thank you so much for coming tonight. Would you please put your hands together for our panel – Sven Teske, Audrey Zibelman and Chris Dunstan.
Concluding the evening, a panel discussion involving the three speakers and the Community Power Agency’s Nicky Ison debated issues such as introducing new models to Australia, the role energy systems play in the change processes currently undertaken by cities, the costs and impacts of batteries within an energy storage system, and the importance of developing innovation with the aim of exporting technology internationally. This lively discussion showed that no single solution is sufficient to support Australia's new electricity networks. Australia is moving from an electricity monoculture to an energy ecosystem - implementing the right solution for each problem in turn, and taking advantage of the opportunity to democratise Australia's energy system is vital to placing Australia at the forefront of the renewable energy revolution.