Electricity future connected to a transformed grid

A recently released CSIRO report on the transformation of Australia’s electricity supply system highlights more opportunities than threats for better network services, according to Energy Networks Association (ENA) chief executive officer John Bradley.

The Future Grid Forum report, Change and Choice, provides analysis of Australia’s potential electricity pathways to 2050. The ENA has welcomed the report’s comprehensive evaluation of future energy scenarios, with Mr Bradley saying it captures the “mega-shifts” reshaping Australia’s electricity system, while recognising how diverse trends in technology, consumer choices, government policy and commercial responses influence outcomes for consumers.

“While some mega-shifts are in their infancy, they are ultimately opportunities – not threats – to better service delivery. Embedded generation and battery storage provide options to improve grid service delivery as much as to allow some customers to disconnect,” Mr Bradley said.

“For instance, the report estimates peak demand management is essential to saving customers 2c/kWh by 2020, worth at least $130 per year.

“Network businesses are embracing dynamic change and many of the trends in the report are extensions of the current innovation in demand-side management, advanced metering, embedded generation enabled by Australian network businesses.”

Mr Bradley said an efficient, safe and reliable electricity grid was central in all scenarios, however, flexibility would be required as the grid moved from one-way supply to an exchange network enabling new uses or provided more stand-by services.

“The report highlights the central grid continues to be highly competitive in the long term providing efficient, reliable and safe supply,” Mr Bradley said.

“We’ll certainly see a lower proportion of all electricity flowing through the central grid as embedded generation, demand management and storage play a greater role, but the grid still remains the primary source of supply in all scenarios.

“Even in the ‘leaving the grid’ scenario, a central electricity network still supplies approximately 70 per cent of supply until 2050 and the network infrastructure required is roughly equivalent to the ‘ set and forget’ scenario.”

The report highlighted a need for technology-neutral energy policy and clear regulatory frameworks, so customers can become aware of the real costs and benefits of onsite generation or even disconnecting from the grid.

“The ‘rise of the prosumer’ scenario suggests the biggest risk to annual electricity bills for residential customers is irrational over-investment in onsite generation. In this scenario, which has the highest level of onsite generation residential bills are about 30 per cent higher by 2050”, Mr Bradley said.

“The ‘leaving the grid’ scenario requires an additional $200 billion – or 20 per cent –
of expenditure over the period than the most centralised scenario, ‘set and forget’, so it is vital our regulatory frameworks support investment choices which deliver net benefits.”

Mr Bradley said all four scenarios required network investment of at least $300 billion by 2050, or three times the current asset base, even where high levels of embedded generation and some customer disconnection eventuates.

“To protect electricity customers, Australia will continue to need a stable investment environment and predictable regulatory framework, where investors are confident to invest in long-life infrastructure,” he said.

“Network tariffs need to evolve to meet the future, ensuring fair cost-recovery from all grid customers as the use of the grid changes over time.

“Without tariff reform, there will be distorted incentives for consumers making future energy choices and hidden signals to reduce peak demand, the key driver of network costs.”

The Future Grid Forum report provided useful information for the energy sector, stakeholders, policy makers and regulators, according to Mr Bradley.

“We recognise that none of the scenarios are a prediction and there is uncertainty about the timing and nature of the changes in technology, costs and consumer preferences,” he said.

“The only certainty is change and network businesses will respond to support better outcomes in the long-term interests of customers.”