Oz energy issues: leading customers out of the dark?
A lack of long-term policy has placed investors in the Australian energy game on the sideline, leading to customers being left in the dark. How will this time be brightened?
On a stormy September evening in South Australia last year, about 1.7 million residents, as well as tens of thousands of businesses, were left without power. Blackouts lasted from three hours to several days.
They were caused by an extreme weather event that damaged infrastructure in a specific area, with the knock-on effects causing the state’s entire power system shut down.
Several months later, as a February heatwave gripped the east coast of Australia, residents of New South Wales and the Australian Capital Territory were warned of a potential ‘rolling blackout’ as the energy network struggled to cope with demand from air conditioning systems.
The Australian energy market is exactly that – a market. It has been designed to look after itself through investment and innovation that matches supply and demand. So what is going wrong?
The current shape of Australian energy
“The market is designed for investment according to market signals so that it always retains security and reliability”, said Matthew Armitage CA, Principal Analyst in Planning & Forecasting for the Australian Energy Market Operator (AEMO).
“In recent years, we have had very volatile conditions in which investors are trying to make decisions. When faced with uncertainty, many have held off making these investment decisions.
“In a basic sense, the excess supply over demand has been reducing and as more and more generators retire, they need to be replaced. But because of the volatile investment environment over the last few years, those big, long-term decisions have not been made.”
Australia’s transition to a lower-emissions economy is increasing the urgency of achieving this solution, given the electricity industry is the nation’s largest source of emissions.
Anne Brown CA holds a senior position in the Australian energy industry. She first came to Australia as a transfer from the Edinburgh office of KPMG then, as a senior IT Audit manager, was offered a secondment to what was known as the Sydney Futures Exchange (SFE).
She remained with the SFE in a variety of executive roles and, following a merger with the Australian Stock Exchange (ASX), was appointed Chief Risk Officer.
Now a Member of the Board of the Clean Energy Regulator, an independent statutory authority that administers schemes legislated by the Federal Government for measuring and managing Australia's carbon emissions, Anne has a unique personal perspective on the nation’s energy challenges.
“I think we're getting close to a tipping point in terms of designing and implementing more robust but flexible electricity network infrastructure that will better integrate a dynamic mix of renewable energy and traditional coal-powered energy and allow them to work effectively and efficiently together.
“Australia’s transition to a lower-emissions economy is increasing the urgency of achieving this solution, given the electricity industry is the nation’s largest source of emissions.
The sheer distances involved bring their own challenges.
“The technical challenge is ensuring the infrastructure remains efficient, reliable and secure and can react quickly and capably to external threats and other disruptive events and technologies.
“The public policy challenge is ensuring the service is provided at an affordable price to consumers within the context of meeting Australia’s emission reduction commitments.”
How will the Finkel Review change things?
“Both business and industry is fast realising that substantive action needs to be taken,” stated Anne.
“The Finkel Review, spearheaded by Australia’s Chief Scientist, Dr Alan Finkel, is currently underway, with the report due in June 2017. I believe that it will help to provide a constructive blueprint for this action.
“Australia's national electricity market is one of the longest, most geographically diverse and complex pieces of energy infrastructure in the world,” explained Anne.
“The sheer distances involved bring their own challenges. They also mean that centralised control and appropriate governance and oversight is even more important. An optimal governance framework is a key focal area of the Finkel Review.”
What is the future?
Our experts say that in the future, Australia will see a greater mix of traditional and renewable generation sources. These sources will be combined with smart technologies, on both the supplier and the customer sides, to aggregate energy offerings and make them available when and where they are required.
One source, for instance, will likely be a mega-battery farm for energy storage and which feeds energy back into the system when other sources are unable to do so.
The technology made headlines when business magnate Elon Musk and South Australian Premier Jay Weatherill tweeted each other about the idea, soon after the South Australia blackout.
How quickly [transformation] happens will depend somewhat on policies but technological innovation is the real driving force behind it now.
But there are also Australian technology businesses who could supply such a solution, added Anne.
“There are an awful lot of very smart, very capable individuals working on Australia’s energy challenges, and momentum is building,” she said.
“The reviews currently being undertaken during 2017 should produce tremendously powerful, evidence-based recommendations to set Australia on a coherent strategic path to address its energy issues.”
Matthew agrees, but refuses to put a timeline on its success. “It is going to take a while, I am sure, for the energy transition to play out,” he said. “How quickly it happens will depend somewhat on policies but technological innovation is the real driving force behind it now.”
About the author
Chris Sheedy is one of Australia’s busiest and most successful freelance writers. He has been published regularly in the Sydney Morning Herald, Virgin Australia Voyeur, The Australian Magazine, GQ, In The Black, Cadillac, Management Today, Men’s Fitness and countless other big-brand publications. He is frequently commissioned to carry out copywriting and corporate writing projects for organisations, including banks, universities, television networks, restaurant chains and major charities, through his business The Hard Word.