As one of Australia’s largest energy infrastructure businesses, the eyes of the industry are often on Jemena for guidance and inspiration on the path forward in this brave new energy world. We caught up with Managing Director Frank Tudor to gain an insight into his vision for the business as we grapple with a complex and constantly changing environment.
Frank Tudor is an experienced energy industry leader in Australia, with more than 30 years’ involvement in the international oil, gas, and power industries, and having held various senior executive roles across the sector throughout his career.
Mr Tudor stepped into the Managing Director role at Jemena in October 2018, before which he was the CEO at Horizon Power – Australia’s only vertically-integrated electricity utility which provides energy services to customers across regional Western Australia.
Coming up to 18 months in the role, Mr Tudor sat down with us to take stock of his time since commencing with the business, and to outline his vision for Jemena moving forward.
Mr Tudor says that his impression of Jemena as a business was very positive. He says that business operations in the last five to six years were pragmatic, leaving the company in a strong position.
According to Mr Tudor, it was this strong foundation, fostered by outgoing MD Paul Adams, that made for such a seamless transition of management between the two.
“We both acknowledged that there’d have to be some change, but again, those changes can only be made if you’ve got a good foundation. We certainly had a brilliant foundation.”
Mr Tudor took a collaborative approach to the transition, spending a lot of time analysing the business and discussing it with shareholders. Mr Tudor acknowledged that Jemena’s streamlining of practises across the many businesses had made sense because of the common energy focus across them. He said that Jemena “had excellence” in the way it ran its processes, with common standards and approaches.
To enhance this, Mr Tudor decided that it was time to critically evaluate how the business was meeting customer needs across the Australian energy landscape and how it enacted the company’s ‘Bringing energy to life’ approach. To this end, he introduced market focused streams across the business and said that as technology and regulations change, so too does the competition, and that this approach would allow the business to be more flexible and competitive in the different markets.
“It drives autonomy and, inherently, it drives innovation.”
Mr Tudor has first implemented a separate focus on the different lines of business at an executive level. By appointing executive general managers (each with their own P&L, customer and asset accountability), he believes each segment of the business has someone responsible for delivering on its individual objectives.
This methodology can be seen in the different branches of Jemena’s business, Mr Tudor says. On one end of the scale, Jemena runs a project and services business under the brand of Zinfra. Zinfra has its own independent presence in the market and therefore, requires its own stream of accountability, a “recognition that each one of those segments has got its own set of drivers, its own set of challenges, its own set of opportunities”.
Then in NSW, Jemena has a regulated gas business as well as an extensive unregulated gas business that covers the company’s transmission lines and extends all the way through the Northern Territory. In electricity, Jemena contributes to electricity distribution in Melbourne, which is going through significant changes as renewable energy continues to generate interest. In these large-scale lines of business, Mr Tudor says Jemena leverages a lot of expertise from parent companies State Grid of China and Singapore Power, both of which “understand energy intimately” to advise on best practice.
Embracing renewable opportunities
One of the key areas the business will be investigating moving forward will be renewables, in a variety of formats – solar, batteries, microgrids and possibly pumped hydro, which Jemena is just beginning to explore.
Mr Tudor says that the use of pumped hydro in China and Europe has demonstrated its role in renewable energy storage and reliability. It’s for this reason that Jemena is looking for opportunities in pumped hydro across Australia.
Currently, renewable energy is being complemented by the firming capacity that coal and gas provide, according to Mr Tudor, but reliance on fossil fuels can be reduced if there is an adequate storage solution. While fossil fuels won’t be eradicated entirely any time soon, Mr Tudor says that renewables will need to go hand-in-hand with gas, which is “the cleanest form of fossil fuel and very flexible”.
Lithium batteries offer an important contribution to sustainable storage but, Mr Tudor says, they’re better at managing transient or short-term volatility, rather than load shifts. Cue pumped hydro, which has the sustained capacity to store and generate energy when demand is high, but when the sun and wind are absent. While hydro presents an ideal solution, the key challenge with this form of renewable generation is construction, particularly around the many geological factors to consider.
“You’ve got to have the topography, you’ve got to have the water, and you’ve got to have the proximity to the right part of the grid as well,” notes Mr Tudor.
Mr Tudor says that a lot of pumped hydro project opportunities are already identified and under development, so Jemena is looking at a suite of projects across the country, to see where they could best add value or collaborate with these developers.
Another focus area of the business is microgrids, with Jemena currently working with a range of commercial and industrial customers behind the meter. Mr Tudor describes microgrids as aggregated distributed energy resources which, he suggests, more than half of Australians will be using in some form one day.
“Like it or not, the path that we’re currently on leads us towards a heavily distributed energy resource kind of future… it’s a very important segment of the market.”
Mr Tudor said his time working at Horizon Power in Western Australia, and its significant portfolio of microgrids, gave him a unique perspective on the technology. He says a plan that involves working directly with customers and having a say in state government regulations is paramount in order to maintain stakeholder investment.
Hydrogen – a natural fit
A sense of trust and support from customers is something that’s echoed through in Jemena’s renewable gas ambitions. Jemena is exploring the potential to introduce biomethane into the network, through waste-to-energy technologies and is in consultation with a number of potential partners across New South Wales. In addition, Jemena, in collaboration with the Australian Renewable Energy Agency (ARENA) and is advancing its Western Sydney Green Gas project (WSGG), which will install an electrolyser, produce hydrogen, and blend it into the network. Mr Tudor is confident this project will demonstrate that a blend of 10 per cent hydrogen can be introduced into the gas network without impacting customer’s appliances.
The $15 million WSGG project will explore three significant areas, including renewably produced hydrogen, long term storage options and transportation.
The 500kw electrolyser will be the first of its kind in NSW and will produce enough energy to heat approximately 250 homes and businesses.
Mr Tudor is also optimistic about garnering interest in hydrogen buses and large vehicles, and the potential for hydrogen in the transport sector.
“As we move towards a renewable energy future, renewably sourced gas will become increasingly significant. In addition to its green credentials, hydrogen, biomethane and other alternative fuels will enable current assets to be utilised well into the future. The gas network can support these fuels which could, one day, see our 1.4 million customers in NSW having access to solar and wind generated gas, and enjoy the benefits of renewable energy just as those with roof top solar panels, and without having to build expensive new infrastructure.
“It’s important, I think, to demonstrate that the network can accommodate, that appliances can accommodate, and that customers can trust, renewably sourced gas.”
Price point is an issue for hydrogen, Mr Tudor admits, but in presenting hydrogen’s potential as a real, long-term strategy, the scope will increase, thereby driving costs down.
“We’ve got to actually present it as something that’s a real option so that we can then bring a lot of attention, a lot of ingenuity, a lot of scale to bear,” Mr Tudor said.
Mr Tudor is encouraged by the COAG Energy Council’s National Hydrogen Strategy, published in November 2019. Australia’s Chief Scientist, and COAG Energy Council Hydrogen Working Group Chair, Dr Alan Finkel, wrote in the report, “Clean hydrogen as a fuel is now poised to become a reality.
“Energy is the foundation of civilisation. To meet future demand while avoiding the by-products of our current energy sources we have to find alternatives.
“These will be a mix of primary energy sources such as solar and wind electricity, and secondary energy carriers, of which hydrogen will make an essential contribution as a high-density, zero-emissions fuel.”
Mr Tudor said that this type of national-level strategy is something that Japan has implemented as a five-year energy policy with a goal of de-carbonisation. Japan’s focus on creating a hydrogen industry could result in the subsidisation of the start-up of export from countries like Brunei, Norway and Australia – an opportunity that Mr Tudor thinks will give hydrogen some credibility, and real legs as an industry in Australia.
Managing the transition
Even with these projects on the horizon for Jemena, Mr Tudor admits that the transition journey to renewables will be complex. Mr Tudor says that the Integrated System Plans (ISP) developed by the Australian Energy Market Operator (AEMO) is long overdue and will both strengthen the connections between state and territory-based electricity networks and integrate the development of new transmission lines to connect Renewable Energy Zones into the network.
The concept of concentrated renewable energy zones and a strengthened grid is encouraging to Mr Tudor, and one that he believes will help in the task of managing reliability, affordability and sustainability for the future.
Mr Tudor emphasises that distributed energy resources (DER) are still important as the energy industry establishes processes for integrating large scale renewables into the market. He says that, so far, guidance on where and how renewables are to be developed and how they will operate has been scarce, and that’s come with some consequences – namely a congested grid. By this he means that the grid doesn’t have a buffer because it’s become fully loaded – something that the ISP is seeking to address.
If the hosting of distributed energy is uncontrolled, or overloaded, it can cause major power issues, Mr Tudor explains. As people install their own solar panels or batteries, it creates a bi-directional flow of electricity that is difficult to accommodate given the original systems weren’t designed for this purpose. As hosting capacities increase, investments need to be made in dealing with power quality and protection issues, he says.
Though the magnitude of managing renewable energy transition can be daunting, Mr Tudor says that he can take comfort in the fact that nobody has got it completely figured it out.
“There isn’t a perfect recipe. Nobody has wonderful clarity about what the future’s going to look like.”
One thing that Mr Tudor is clear on is the fact that gas will need to fulfil its natural role as a transition fuel in the swing to renewable energy through the next ten, 15, 20 years.
“We need to get the message out that gas has a significant role to play in the short, medium and long term, and that there are investment opportunities if we can get the landscape right.
“Our industrial customers tell us they want more gas supply and as an industry and business, we are working hard to enable new gas to come to market.”
“We know Australia has vast reserves of gas which if unlocked it can be transported from remote areas to the high demand east coast by an interconnected network of pipelines.
“The Northern Gas Pipeline, from Tennant Creek in the Northern Territory to Mount Isa in Queensland is an important step in creating this network and we are already planning its expansion and extension should the predicted vast reserves of the Beetaloo Basin be realised. There’s enough gas in the Beetaloo to supply gas to the east coast for more than 200 years, although it’s still early in the development process.
“In the meantime, Southern reserves are declining and new, near-term affordable gas supplies are required. But there’s no single solution, no jurisdiction has found the silver bullet. We need to learn from the US and European markets considering imported gas as part of the integrated gas supply system. New gas developments such as Narrabri are required and efficient infrastructure investment is needed to bring this gas to customers at the lowest price.
The customer comes first
Working closely with customers, or a representative group of customers, is at the forefront of Jemena’s plan moving forward in order to establish trust and have a direct line of communication. Mr Tudor says it will also be crucial for the business to utilise its access to leading global companies in the sector through its shareholders.
Mr Tudor says that while in the energy industry we often talk about the three Ds – distribution, decarbonisation and digitisation – Jemena likes to also focus on the ABC of energy – access, balance and coordination and collaboration.
Access obviously refers to customer ability to utilise energy sources; and also has a focus on equity too. Balance refers to things like the right balance of thermal generation versus renewable energy; and innovation with reliability, in order to keep the lights on. Coordination and collaboration meanwhile refer to industry partnerships Jemena has established with the view to providing better outcomes for customers.
A clear example of this is The Energy Charter, which has seen energy businesses across Australia sign up to be publicly accountable for their actions.
Mr Tudor also says that at the heart of Jemena’s operations is an ethos of reliability, affordability and sustainability.
He remains clear though, that whether it is long-term or short-term goals, sunken or future investments, Jemena will need to collaborate with its customers, and the industry to get there.
In a time of immense change within the energy industry, it’s exciting to see where leaders such as Mr Tudor will steer the ships they’re captaining. Jemena has a clear mandate for what it wants to achieve, and a sensible approach to an industry in transition.
After his own period of transition into managing the energy giant that is Jemena, the path has clearly been set: now it’s about moving forward and achieving the goals that have been put in place.