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A word from Energy Networks Australia

Australia’s transition to renewables is well underway. However, to ensure a timely transition at the least cost to consumers, industry and governments must work together to deliver policy that shapes the future and supports the best outcome for customers – a goal that Energy Networks Australia is focused on for 2024.

In the final quarter of 2023, Energy Networks Australia (ENA) welcomed the Australian Energy Market Operator’s (AEMO) Draft 2024 ISP, which shows that the grid requires significant reconfiguring as it decarbonises over the next decade, due to the rapid pace at which renewable technologies are coming online.

In the first half of 2023, renewable generation accounted for around 40 per cent of the National Electricity Market’s (NEM) delivered energy, reaching a high of 72.1 per cent momentarily on 24 October 2023. ENA CEO, Dominique van den Berg, said there is an obvious and timely need to continue to deliver vital transmission projects to ensure that we are connecting renewable energy and taking it from where it is generated to where it is needed.

“The Draft 2024 ISP shows that this no regrets investment approach will strengthen the backbone of the National Electricity Market (NEM), connect renewable energy zones, enable diversity of resources and help distribution grids manage more household solar, batteries and electric vehicles,” Ms van den Berg said.

“These transmission projects are expected to pay for themselves twice over, delivering $17 billion in net market benefits. Essentially, every dollar spent on transmission projects will be paid back two-fold.” Securing reliable electricity throughout the transition Wind generation is expected to dominate grid scale connections, which will complement consumers’ rooftop solar.

As electricity use increases, a fourfold increase in firming capacity will be needed to meet demand and offset retiring coal generation.

Firming capacity that responds to dispatch signals using utility scale batteries, hydro, coordinated Consumer Energy Resources (CER) and gas fired generation will be crucial to keeping the lights on. CER (like rooftop solar and home batteries) are expected to play an even larger part in the transition, with a fourfold increase in rooftop capacity to 72GW expected by 2050.

Gas, or renewable gas, will be needed for the firming of power supply through the transition. “When it comes to the grid, we are at the cusp of a once in a generation rebuild, which is not without challenges,” Ms van den Berg said. “The role of transmission and distribution networks to facilitate great outcomes for customers through the transition, and well beyond, is critical.

“Our members, Australia’s transmission and distribution networks, are acutely aware of the significance of their role in getting the transition right, and this ISP acknowledges the transformative work they are doing to secure reliable and renewable electricity for customers now, and for future generations.

“The energy transition is well underway, and we need to keep moving forward, to ensure that industry and governments work together to deliver policy that shapes our future and supports a least cost transition for Australia. “We want to see the right policies and decisions being made to match the energy transition at least cost to the consumer.”

Focusing on the best outcome to consumers

ENA is focused in 2024 to policy and levers that drive a whole of system energy transition, at least cost, with best customer outcomes. It is widely understood and accepted that the biggest emissions reduction comes from removing coal from the electricity supply system and replacing it with clean generation at grid scale and behind the meter.

For that to work, new transmission and distribution as well as adequate storage are needed. ENA is focussed on encouraging significant progress in this space, underpinned by good planning and policy to enable investment it needs.

Another major opportunity for emissions reduction is in electric vehicles (EVs). Australia is starting to see this inflection point where EVs are getting to a cost point where more customers are starting to invest in them. But, the challenge is smart charging, where EVs become the opportunity rather than the problem from a grid perspective – which will in turn bring charging costs down for customers.

There is a real opportunity to see big savings in terms of costs as well as emissions by leveraging and using the demand flexibility of EVs to soak up excess renewables. When we think of the whole system transitioning effectively, we also have to consider heavy industry, which has sustained the Australian economy, and how it is going to decarbonise.

We can’t ignore the fact that complete electrification for industry is either impossible or really, really expensive. So now we are looking at how hydrogen and biomethane can work in this space. But this can’t happen without policy support in that space.

These are some of the big focus areas for ENA and its members, as the organisation believes that 2024 and 2025 are going to define the energy transition in this country, and the decisions and learnings we take now, will help set us on the right path for decades to come.

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