The disruption wrought by the transition to clean energy will challenge distribution networks and set a mighty task for battery-makers, Capgemini’s Anastasia Klingberg tells EcoGeneration.
The energy market in Australia is often compared to a circus, where those who decide policy are the clowns and the ones who get to corral the dangerous animals are the practitioners. But a kinder analogy is the game Newtonian Shift, where players assume roles such as energy supplier, consumer, grid operator, indigenous community, investor and policymaker to condense decades of energy transition into one day.
At the end of it all the made-up country Newtonia is either humming along on renewables and nothing else – or it’s all fallen in a heap.
“It is chaotic, and you have people who want to win – because it’s commercial. But at the end of the day the way you get to the [point] is that everybody works together,” says Anastasia Klingberg, director and practice lead energy and utilities at global consultant Capgemini. “But it takes a while to get there.”
Newtonian Shift may sound like a bit of frivolity for PhDs and MBAs but Klingberg says it’s completely relevant to what’s happening in the energy market in Australia. “There is a lot of chaos at the moment, depending on who you talk to.”
Klingberg’s role in the real energy game is to help her clients think ahead. She offers examples of two sectors facing inevitable change: battery-makers and distribution networks.
Battery-makers know in their bones that as the cost of their technology continues to fall more consumers will decide it is time to invest in a way to store energy. There will be policy upsets along the way that may disturb investment in renewables but it’s fairly safe to assume battery-makers will be busy for a few years to come at least.
It’s a different story for traditional distribution companies, however. How relevant is a distributor to a property development that includes enough solar and storage to be practically self-sufficient? Any trend towards embedded networks would have to be a major concern to networks, the same if metering is taken away from the distributor.
On top of all this is pressure to offer lower prices and improve operational efficiencies. These power utilities were once the “cash cows” that provided reliable, generous income, but it’s not going to the case anymore, says Klingberg. “They will keep being pushed [with users demanding] ‘How efficient are you? We want lower network costs.’”
Many paths to one destination
In the future, the bulk of energy will be generated by renewable resources. I can happen and it will happen. Between now and then, however, there are guaranteed to be a few mishaps. New technologies will make today’s record-breakers redundant and some investments made today will look sorely expensive. State-based targets might also lead to generation being built in suboptimal spots, for example. It makes you wonder if a federal network would be a better approach.
“Honestly and truly if you had one policy across the whole lot [nationally] … we’d be better off,” Klingberg says. “At the moment we’ve got bits and pieces.” Will that ever happen? Possibly not, and therefore we all must suffer some pain during the transition. On the other hand, she says, ambitious state targets could be the catalysts that push the feds along. If it were all left to Canberra, it would likely be a lot slower.
Klingberg was reluctant to comment on the National Energy Guarantee other than to say if the policy provides “one lane forward” and any change of government doesn’t bring a wild alteration in course then things could turn out OK. “Every time there’s a change in government or even prime minister, you get new policy – and that doesn’t help anybody.”
South Australia’s tentative market is a product of disruption and “a streak ahead” in implementing projects to supply intermittent clean energy, where the consequences are very high prices. “Great policy; they were leading everybody. What they didn’t do is think about the consequences of not having a base load,” she says. “Coupled with some bad luck with infrastructure, they moved too quickly in one area without seeing the bigger picture.”
The state’s response to its blackout in September 2016 shows it has the nerve to get back up and handle its own problems. “If you couple renewables with batteries, eventually you’ll get there,” Klingberg says. “But the other thing you need to think about is the interconnector and how you can be able to draw electricity from other states when you have peak demand.”
Do it yourself
Energy users fed up with rising prices are taking matters into their own hands, of course, and installing solar PV solutions to best fit their needs. The tipping point comes when energy bills are so high as to challenge a business’s cash flow or profit expectations. Large commercial customers frustrated by rising costs will desire self-sufficiency and ask themselves, What’s the best investment so we cannot be hit with these prices? “There’s nothing wrong with smoothing your energy price by implementing new technologies, and solar is a new technology,” Klingberg says. “And batteries make it even better.”
Price changes consumers’ behaviour. It also changes suppliers’ behaviour.
Incumbent utilities running fleets of coal-fired generators up to 50 or 60 years old realise they are in a precarious position. For them, there is a tipping point where renewables become the favoured technology. A similar change in favour describes clean energy’s relevance to consumers and suppliers, Klingberg says. Take a consumer faced with the choice of flying in a conventional jet or one fuelled by biofuel. At the moment, she suspects the majority of people would choose the conventional method because it’s, say, $40 cheaper. “There are certain people who are early adopters and other people are hit by price,” she says. “If it were only another $5, maybe more people would choose. A lot of people will wait, and price really changes their behaviour – both companies and individuals.”
As costs drop
Klingberg is a believer in batteries, especially at utility scale. The technology still looks expensive for commercial and residential users but the cost is coming down. “It will get cheaper and cheaper until the payback is not a big problem,” she says. For batteries in the network, however, it’s a different story. In some cases payback is pretty much “straight-away”, she says, citing the Powercor trial of a 2MW storage system in Victoria that could provide an hour’s back-up supply to 3,000 households in Bendigo and Ballarat.
Retailers and distributors who offer residential solar-and-storage packages that include maintenance are a step ahead in staying relevant in a fast-changing market. Another option is housing developments where the infrastructure is owned by residents and profits from trading within it or with the grid are used to finance something new, maybe a café, or to buy groceries using energy credits.
The rise of demand response aggregators will challenge the operations and culture of distribution networks, Klingberg says, as will the automation of back-up systems. “We need to update our systems to be able to cater to all this change,” she says. “A two-way flow of information and lots of different players working on a network is a new way of thinking and working, and it’s going to be a hard journey to change. But with slow, small incremental steps eventually you get there.”
Things are different now
It’s taken people a while to wake up to renewables because electricity is taken so much for granted. “It’s until we get hit in the pocket [that people wake up],” she says. As the technology gets easier to manage, cheaper and more available, take-up will accelerate.
“Everybody likes to see an end state and where we’re going, but we really don’t have an end state. We just know there’s disruption and we’ll end up somewhere down the track where renewables [provide most of the energy we use]. As long as we’re heading in that path … and I think that’s what investment is doing.” An example is AGL’s change of heart about its metering department and subsequent sale to AusGrid after only a few years’ ownership. “You have to be agile enough to invest, check it out and change tack.”
During the swap from coal to wind and solar we are likely to see many cases of new entrants swimming or sinking, but it’s such a momentous and complex transition that everyone knows you won’t have a chance at success unless you are prepared to jump in. “It’s a fine line,” she says. “It’s hard.”
As rebates and subsidies are removed, the incentives change. Major funding is still available via the CEFC and ARENA, but not forever. “As the technology gets cheaper the incentives are not necessarily required.”
It’s all a bit like a game of Newtonian Shift, where a steady state slowly emerges from chaos. “It really depends how much chaos the government wants as to how much it needs to subsidise,” she says. If it doesn’t subsidise renewables it may have to address the networks directly to ensure they operate properly. “[Government] will still have to do something – it’s just a matter of where they focus.”