Energy Networks Australia’s Welcome to the Grid Edge seminar in Sydney in May included a panel discussion about the possible opportunities which lie in wait for consumers as the electricity grid is transformed into a multi-purpose, peer-to-peer market that also serves generators and distributors.

Panel participants

David Smales, CEO, Energy Queensland

Richard Owens, senior director transmission and distribution networks, Australian Energy Market Commission

Greg Allen, COO, Carnegie Clean Energy

Lawrence Orsini, founder and CEO, LO3 Energy

Audrey Zibelman, CEO, Australian Energy Market Operator

Chaired by Laurie Curro, general manager power system services, Horizon Power

As the energy transition slowly plays out it is the free flow of ideas that will ease the cost-efficient flow of electrons, no matter where in the world you are…

With a panel 40% weighted towards US nationals with current and recent experience of New York’s REV project, the conversation zipped between the prospects for a 20-million-strong metropolis and a sparsely-populated island continent considered by many to be leading the pack in the transition to renewable energy.

Laurie Curro, chair: How different will electricity be in the next 20 years and what are the real game-changers?

Audrey Zibelman, AEMO: I think it’s not necessarily particular technology, because they will all be additive. We’ve been talking about the idea of the smart grid and innovation in the grid for quite some time, but really what I think is going to change minds is to … realise fundamentally what we’re really talking about is keeping the grid in balance.

Historically we always thought the only way to keep it in balance was to make sure generation can follow load. What we’re talking about now is really optimising it on both sides. In many instances when we talk about the duck curve, what we’re really talking about … is that we can use distributed resources so we don’t have these extreme changes, which means load will be following generation. Recognising what that really implies in terms of managing the system is what’s going to drive the innovation on both sides.

Lawrence Orsini of LO3 would like to focus more on energy lost to inefficiencies than energy generated. “If we shift models to focus on that, we’ll see load and generation come closer together,” he says.
Photographs: Mike King, Trick Media Photography.

Lawrence Orsini, LO3 Energy: I would like to see a focus more on the exergy of the system and less on the energy; the idea that we focus on the usable work that comes out of the system, in encouraging a more efficient grid. If we shift models to focus on that, we’ll see load and generation come closer together; we’ll see things become far more transactive; we’ll see location-based pricing models where you pay for the grid elements between you and your generator; we might even see a shift in the way those payments happen – if I’m selling energy to a market and I want customers, I might be the one who wants to pay for grid infrastructure and the delivery fees.

Ultimately it’s how do we make the grid itself more efficient and resilient to adaptive loads, so you can build the internet of the future where you can plug in a new device and [the grid] recognises where it is, what’s around it, who the consumers are, who the producers are, what assets it can work with – and it self-organises.

Richard Owens, AEMC: The future grid will look very, very different to what it looks like today. It’s important to recognise that we actually don’t know what it will look like and that we shouldn’t try to predict the future. That’s why it’s important the regulatory frameworks remain technology-neutral and market-based where they can. They key thing will be issues like, how can we make sure we have efficient price signals for all the new services delivered by new technologies, including those we haven’t thought of.

In the long term consumers’ interests will be better served by a technology-neutral, market-based framework rather than a centrally planned one, where we rely on someone picking the future. The one thing you can guarantee is that forecasts will be wrong, so … who bears the costs or risks when you get those forecasts wrong? Under a more market-based approach those risks will be borne by technology businesses and energy businesses. Under a centrally-planned model … those costs will be borne by consumers.

Greg Allen, Carnegie: Storage will be important. Carnegie, in developing wave energy technology, has been focused on a lot of remote islands. They come to us and say they want wave energy, but we’re finding they are actually after clean energy. The limitations of adding more clean energy to remote islands is their already high levels of penetration of renewable energy. [To solve these problems] we really need to understand microgrids and in particular how to support the grid to enable higher levels of renewables. We don’t see the mainland is that much different, it’s just that we’re at lower levels of [penetration]. Energy storage as a spinning reserve application is going to be vitally important to bring more and more renewables into the system.

From left: David Smales, Richard Owens, Greg Allen, Lawrence Orsini, Audrey Zibelman and Laurie Curro (standing).

David Smales, Energy Queensland: The bit that interests me is around where the power lies. I think it’s moving more and more towards the customer and consumer. I do also think at least part of the population is just not interested; they just want affordable, reliable energy. The answer to that is technology solutions working on a platform basis, which takes the pain away.

Orsini, LO3: Customers haven’t been allowed to care. They haven’t been given the way to care, to have influence. In the future, as customers start to get choice, they can choose to exit the grid.

Curro, chair: Do you believe structural regulatory barriers are delaying the take-up of some of the new business models, and do you think there is enough protection for customers?

Owens, AEMC: Consumer protections for all these new business models is something that’s been concerning us for a while. A lot of this [is covered by] the retail law, which we don’t control. I think there is a need for a first principles review of consumer protections for the energy sector and how they apply to these new business models. At the moment consumers are faced with this situation where the level of protection you receive depends a lot on the business model of your supplier.

We’re also doing a lot of work on microgrids and standalone power systems that are not at all connected to the grid and with those you have no energy specific consumer protection under the national framework, unless you live in Queensland. That patchwork of arrangements I don’t think will serve us well as we start to see new business models taken up in the future. We’re doing a lot of work on consumer protections for microgrids, standalone systems and embedded networks to try to deal with a lot of those issues. And the COAG Energy Council is consulting more broadly on consumer protections for behind-the-meter generation. I think that is a real priority issue.

Zibelman, AEMO: Certainly the consumer protection issues are very important – if we lose consumers because they feel threatened it will be difficult to engage. We’re changing the nature of this industry away from … capital efficiency, which is the way that we’ve regulated electric utilities and monopolies in terms of capital spent and making sure that’s efficient, to efficient productivity of capital; that is, using third-party capital and [understanding] network businesses will be working with third-party DER [distributed energy resources] providers and using those resources better.

Curro, chair: A question to Audrey and Lawrence, what can we learn in Australia from the REV [Reforming the Energy Vision] process in New York?

Zibelman, AEMO: The REV process began with certain clear objectives. For us it was around creating a more resilient, more cost-effective, more efficient system and then modernising the distribution and network model so they saw themselves as a two-way platform so that the economic regulation aligned with the consumer interests. That other thing that will be very important is the concept of collaboration. One of the things we felt we had to change in New York was rather than having an adversarial atmosphere we had to have more collaboration, having more conversation about where we wanted to end up.

The other lesson learned [that should be applied in Australia] is to take concepts that are very valuable learnings and try to make sure they are shared across the board. Things I know [West Australian network] Horizon is doing, things Queensland is doing, we should all know and the technologists should know … In New York, we found once the utilities realised they had safe places they could spend money where the regulators wouldn’t [interfere] they became much more innovative and that creates opportunity.

Orsini, LO3: It was clean slate. I wasn’t a conversation about how does it work today; it was about how should it work. It left a lot of room for people in the process to engage. REV, I think, is one of the most significant evolutions of policy on the planet today. That said, there is a distinct New York tension around REV. Things probably aren’t moving as quickly as they could have.

Australia was the first to reach out to understand what we are doing and propose we do demonstration projects here. Australia has this ‘let’s give it a go’ mentality, where you’re willing to step out on the edge in the way New Yorkers aren’t. There is a significant potential in Australia to leapfrog and get something done in a much shorter timeframe.