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Creating clarity during the energy transition

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      Australian Energy Week 2024

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      Policy & Regulation, Transmission & Distribution — 7 mins read

      The road to faster, cost-effective renewable connections

      The energy sector is very familiar with the saying, “there is no transition without transmission”, but this vital part of the energy transformation is not going smoothly. Delayed connection agreements, resource constraints and reluctant communities make it hard for renewable generators and transmission line operators to get optimum results.

      Panellists at Australian Energy Week agreed that smarter planning and better collaboration are necessary to give key stakeholders the confidence they need to move forward.

      ENGIE Head of Regulation, Compliance and Sustainability Jamie Lowe, Energy Queensland Executive General Manager Engineering Peter Price, Kilara Capital Partner Emma Jenkin and AusNet General Manager Network Infrastructure David Beavers drilled down into the issues.

      Roadblocks to connection

      While a range of rollout challenges impact coal retirement and DER resources, AusNet is working on tangible social value and earlier engagement in affected communities, Beavers said.

      “In many of these transmission projects, it’s important to take a step back, and think how we can best educate the broader community about the need for transmission in their backyards.”

      According to Beavers, delivery is impacted by the lengthy approval process and stringent planning requirements. Decisions made along the way can also be difficult to change down the track.

      “Good collaboration” between developers and transmission operators, on smaller scale projects, is proving effective via shared infrastructure and coordinated timeframes.

      Yet the planning process is also being impacted by another major factor, Beavers thinks. The shift forward in timing for the retirement of coal generators from 2050 to 2035 is having a significant effect on forecasting speed.

      The need for agility as goalposts shift

      There is a widening gap between planning aspirations and the ability of transmission operators to meet them, Lowe said. This reduces stakeholder confidence.

      Things keep shifting as the process unfolds. As procedures, regulations and requirements change, so does the financial model underpinning the project.

      “How can you have confidence in retirement decisions if you don’t have confidence around investment decisions?” he asked.

      The connection process requires more “wriggle room”, he suggested. Being less conservative and giving more certainty to retirement plans can expedite the process.

      “Planners and developers need more dynamic engagement.”

      This would align on-paper expectations and completion of projects, with renewable developers assured that transmission will arrive.

      Digitisation speeding up the process

      Digitisation is having a huge impact in the transmission space, speeding up planning, design and visibility of assets on the grid. Many businesses are adding AI and machine learning to supercharge the process.

      Jenkin explained how digital twins are now used to map out network assets and identify upgrades more efficiently. Landowners can see what transmission will look like on their land, boosting community engagement.

      “Virtual transmission can address transmission challenges, firming renewables as cost comes down. Bringing digitisation and energy storage together also helps fill the gap as we go through the energy transition.”

      According to Jenkin, Origin Energy is now citing VPP as a cost-effective option for both retailers and customers. EV sales are taking off, especially in China. Battery manufacturing capacity is now 100% on track to meet 2030 demand.

      She also points to 30GW hours of flexible demand capacity across two million household hot water units in Australia.

      Clear targets and planning critical

      Digitisation is critical as coal assets reach the end of their life, Price said. If we want to harness resources and control networks, we need to get the most out of a bunch of technologies.

      Challenges include constraints on resources. The relatively small size of Australian transmission makes it hard to be competitive when trying to attract skilled workers from overseas.

      “This means we need crystal-clear plans for resources, and the time it takes to build assets. We will only get there with a clear target, focusing on a limited number of projects to deliver the energy backbone.”

      With state governments now signed up to climate targets, more collaboration between renewable zones can help expedite the process.

      “While we knew the transition was accelerating, back in 2018, I think we failed in the speed of execution and reform of the NEM. We saw it coming but were slow to make the change,” Price said.

      Social licence versus political sensitivities

      While governments want to be associated with big renewable targets, operational imperatives and political narratives don’t always fit neatly together. Clearer leadership could prevent governments being unduly swayed by political considerations.

      According to Beavers, “it comes back to education and government support, to help overcome a lack of trust in transmission operators.”

      Lowe said, “the government is likely to be more conservative, not wanting to alienate voters. We need a better understanding of the public’s thresholds.”

      More investment – and investors - needed

      Price said that “massive investment is required” under a revised model to improve operational efficiency.

      “We need to rethink the paradigms, focus on the lowest cost solution needed to reach targets. Market-based approaches haven’t got us there.”

      According to Jenkin, there’s a huge amount of capital out there for climate investments, particularly in the infrastructure space.

      “Yet big infrastructure capital definitely wants certainty.”

      Summing up

      “Virtual transmission lines and batteries can reduce congestion and relieve constraints in the existing network,” Lowe believes.

      Price said, “improved collaboration in delivery transmission and distribution will make better use of customer energy resources.”

      “Generators and transmission operators should be sharing infrastructure from the planning stage. We need better engagement with local communities,” Beavers said.

      Jenkin is impatient with current lengthy planning and delays. “We need to shift our thinking from incremental change, where we keep testing everything.”

      For Jenkin, it’s time to take more risks.


       

      Wendy Riley, Energy Insights

      Energy Monthly

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      March 25, 2024 | Sheraton Grand Sydney Hyde Park

      Australian Domestic Gas Outlook 2024

      June 11, 2024 | Melbourne Convention and Exhibition Centre

      Australian Energy Week 2024

      New call-to-action