Energy industry executives and managers met in Sydney from 17-18 May as part of the Energy Network Associations’ Smart Network Summit. Presentations were given on smart grid strategies, regulatory implications and pricing, technical issues and the customer and vendor perspective. Energy Source & Distribution was there to find out the major issues affecting the industry.
ENA targets NBN and wireless
The Energy Networks Association (ENA) is working to ensure its communications policies will take advantage of the National Broadband Network (NBN) and wireless networks by facilitating information sharing and co-ordination through its National Strategy for Smart Networks report, ENA smart networks director, Tanya Barden said in her opening address at ENAs Smart Networks Summit in May.
“Cost-effective, secure, reliable, ubiquitous communications are an essential component of the smart grid,” Ms Barden said.
“This will enable communications with millions of sensors and devices for highly important network functions, such as distribution monitoring, control and automation, the integration of renewables and distributed technologies, demand management and to provide vital communications with field staff.”
The ENA secured wholesale access for distribution businesses to the NBN earlier this year by lobbying and participating in a senate enquiry into the NBN, Ms Barden said. The ENA intends to follow up with targeted forums on issues relevant to key stakeholders on key issues. As distributors are at different stages in determining their communication needs with differing geographic, population density and business parameters, they will need a mix of technologies to fulfill their diverse needs. This will particularly be the case for rural-base distribution businesses.
“There’s still also a lot of uncertainty around the NBN and its applicability for smart electricity networks communications in the short-to-medium term. It’s an issue that we are still very much interested in continuing to do some work on that issue with the NBN and other stakeholders, particularly with the team from Smart Grid Australia. It’s really an issue a bit more for the longer term,” Ms Barden said.
Wireless networks will be critical due to the large number of devices to be connected to the grid, the broad coverage required and the need for a timely and cost-effective deployment of smart networks. ENA has been working with its membership to prepare a submission for Australian Communications and Media Authority (ACMA) and the government outlying the industry’s needs. The ENA has undertaken a survey of its membership to understand what the function of their communication needs are, the architectural requirements and the technologies under consideration.
“For it to work we need spectrum, whether its licensed or unlicensed. Given the scarcity of spectrum and various ‘reviews’ and license renewal processes that are underway, there’s a need to develop an industry-wide position on what spectrum (we need) for the smart electricity network,” Ms Barden said.
“So that’s a piece of work that we will be seeking approval from the board on in the coming months and we are really looking forward to working with the ACMA and the government to find a solution which is both technically and economically feasible for the industry,” she said.
Facilitating industry information sharing and co-ordination is a critical issue and the ENA and its members have been working with Ausgrid to provide questions they are looking to test as part of the project.
“There’s certain members that have some other activities under way that can link in nicely with some of the work being undertaken with the Smart Grid, Smart City project, so we’re looking to investigate those.
“We’re also making sure there are plenty of opportunities to be able to share the information within the industry.
“It offers some real learnings, not just for Ausgrid, but the idea that it’s really about providing information for a business case study for the broader industry,” Ms Barden said.
One of the projects that ENA has underway at the moment is developing a database of smart networks pilots, trials and deployments.
“This is going to be an ongoing piece of work and what we envision is that we’ll have a wealth of information there and we’ll be able to get some insight into what’s actually happening across the distribution sector,” Ms Barden said.
“We will also be looking to undertake some gap analysis of that sort of information to make sure that all the appropriate trials and pilots are being covered across the industry as a whole.”
Difficult decisions to come
New South Wales Minister for Resources and Energy, The Hon. Chris Hartcher MP called for pragmatic programs and decision-making following the New South Wales Solar Bonus Scheme debacle.
The Minister, a keynote speaker at the ENA Smart Grid Summit, said he was determined to work with the industry to achieve savings in electricity.
“We can achieve what we all want, which is less reliance on fossil fuels and and more reliance on alternative fuels, if we are prepared to accept the fact that not only is this a historical concept, but it can only be achieved if it is done in a sustainable way,” Minister Hartcher said.
The decision to end the New South Wales Solar Bonus Scheme in May was a hard one but the program had become unsustainable, he said.
“The noble concept that underlied the Solar Bonus Scheme estimated that there would be a $355 million cost. That blew out in less than 12 months to $1.9 billion. That’s totally unsustainable,” he said.
“The price blow out would have meant that the tax payer of New South Wales had to take a bill of $759 million or every consumer had to accept an additional loading on their electricity bills of $700 over the life of the scheme, at a time when prices were spiraling upwards in any event.”
Minister Hartcher also said that there needed to be a higher level of debate over nuclear power.
“Sure, we’ve had the concerns about nuclear power, especially highlighted by what happened in Japan recently, but it is an option and it is an option that needs to be considered. You can’t simply rule out these options,” he said.
Minister Hartcher said the NSW Government had setup an enquiry into electricity with broad terms of reference under Justice Bryan Tamberland in May. A draft report will be finalised in a few months to be followed by a final report. The enquiry will look at all aspects of electricity.
“It’s broadly based, it’s got a budget of $10 million to be properly resourced, a proper secretariat,” Minister Hartcher said.
“It won’t just look at that botched sale that took place in that midnight raid back in September, worthy of a Hollywood movie. New directors were called in and sacked and new directors were appointed. It’s something that you only see in those John Grimshaw type novels, but it all happened in real life in New South Wales,” he said in reference to the controversial $5 billion NSW electricity privatisation program that resulted in Energy Australia selling its retail business to TRUenergy and the sale of Integral Energy’s and Country Energy’s retail businesses to Origin Energy.
Price shock to drive industry reform
Ageing asset profiles, a change in peak demand and the cost of capital investment will drive fundamental industry reform, according to ENERGEX CEO and ENA deputy chairman, Terry Effeney.
Providing an overview of smart networks at the summit, the ENA smart networks committee chairman said that distributors and transmitters needed to prove that they were operating using a least-cost model.
“We are facing, as an industry, a price shock issue which I think we are only just getting our heads around now and it’s going to continue to be a major issue for us,” Mr Effeney said.
With the price of energy forecast to return to levels not seen since the 1980s and now a major political and social issue, the test will be how quickly and proactively industry can integrate alternative technologies.
“More reform, whatever that looks like, is on the horizon,” Mr Effeney said.
“The point for us, and it’s a key point of discussion, are we part of the problem or are we part of the solution?”
Mr Effeney discussed how recent natural disasters in Queensland have highlighted the need for improved asset resilience at a reasonable price point, as well as how the energy industry must take responsibility for poorly thought-out government policies that failed to link carbon issues with pricing.
“The issue is that we have to deal with both (carbon and price issues) and they are two sides of the one coin. The things are linked together and separating them out with a number of programs, (such as) micro-solar PVs or residential (PVs), has lead to tears, because we didn’t understand the price issue,” Mr Effeney said.
Recent questioning from the Australian Energy Regulator (AER) indicated it will be “moving hard” on efficiency and prudency and “moving very hard” on national benchmarking. Australia’s low asset utilisation is an opportunity that could be exploited to address the issue and Mr Effeney urged the audience to read AGL chief economist and group head of corporate affairs, Paul Simshauser’s presentation on asset utilisation presented to the Australian Energy Market Commission in April.
“The question is, how do you (utilise assets) in a really smart way with the kind of technologies that we have now to get much better value out of, so you don’t have to continue to spend the same levels of capital for the returns?” he asked.
Distributors and transmitters need to understand their customer’s lifestyle expectations and respond to their needs, but a coherent “story” about electricity had to first be developed.
“I think it’s going to be quite a journey for us to deal with that and we need to tell the whole story… we tend to just tell part of the story,” Mr Effeney said.
“It might be obvious to us how it fits together, but to your average politician, to your average town hall meeting, they really don’t get that and we are not really good at stitching together the whole story. And maybe that’s because we still haven’t as a group got our own mind of what that story is.”
Motivating the consumer
Utilities need to start listening to their customers and find new ways to engage with them, according to a panel representing the ‘voice of the customer’ at the Energy Network Association’s Smart Networks Summit.
The panel was chaired by Accenture managing executive utilities Asia Pacific, Ann Burns. She was joined by Australian Council of Social Service (ACOSS) senior policy officer, Tony Westmore, Consumer Utilities Advocacy Centre (CUAC) executive officer, Jo Benvenuti and Thiess Services smart network manager, Matthew Dodson.
“I firmly believe that our business and our industry, the way that we operate, the way that we interact with each other and the way that we interact with customers, will fundamentally change in the next two-to- three years. We have a perfect storm,” Ms Burns said.
“My fundamental message is, let’s start listening. In the past two-to-three years we have opened our ears and opened our minds to this debate… but I really want us to listen more intently,” she said.
The photovoltaic tariff issue in New South Wales, AMI roll-out in Victoria and rising energy prices are having an impact on consumers, creating an impetus for utilities to listen more to customer’s needs and wants.
“Education needs to be translated into engagement and, most importantly, into motivation,” Ms Burns said.
In her presentation to the utilities, Ms Benvenuti said the cost-benefit case for the roll-out of Victorian smart meters had not been adequately addressed or communicated.
“We had some very formal letters go out from the Minister and then very formal technical-looking packages going out from the distribution businesses and it’s our belief that the disaggregation and distribution and retail functions in Victoria provided added complications as to why the whole information/education campaign failed,” Ms Benvenuti said.
The cost of implementing the smart grid hasn’t been efficient and may be a “problem in search of a problem”, according to Mr Westmore. He also disputed that cost is the number one issue for residents and that reliability is the priority.
“I think for a lot of people if price had made a difference we would have seen some fairly significant changes in consumption over the last five or 10 years and my understanding is that we haven’t. We might have seen some leveling out but we certainly haven’t seen dramatic reductions in the residential sector,” he said.
A number of studies on customer engagement have recently been published, including Smart Grid Australia’s (SGA) Maximising Consumer Benefits, Accenture’s Revealing the Values of the New Energy Consumer and reports from Ecoalign, Oracle and Zypryme Research.
Accenture has spent two years conducting a global research project on consumer behavior around energy efficiency, demand response and conservation, covering 18 countries and 20,000 end-consumers.
Accenture’s Revealing the Values of the New Energy Consumer found that 69 per cent of Australian consumers would consider purchasing electricity and (in the future) smart products from retailers, phone or cable providers and online sites. Sixty-seven per cent of Australian respondents identified loyalty reward programs that can be used in-store for products as increasingly important, but only 20 per cent of Australian respondents trust utilities to inform them about actions they can take to optimise consumption.
“For the energy providers in Australia to really carry the message of energy efficiency and smart metering related capabilities, they have a very strong challenge ahead of them, unless of course they partner with government, with academia, with other organisations that consumers probably have a higher level of trust,” Accenture managing director of utility customer care practice, Greg Guthridge said.
“Now that trust is low, and it’s low in Australia. It’s quite similar to other, very competitive, heavily regulated, retail markets, so it’s not unique to Australia but it’s quite low even here,” he said.
“The reasons it’s so low is primarily the result of a lot of churn and competition and pricing which of course erodes consumers confidence and therefore trust. It’s also the result of a low value interaction and consumer visibility.”
The energy industry has “missed the point” and needs to build consumer trust, Accenture managing executive utilities Asia Pacific, Ann Burns said.
“The magic formula here to build consumer trust and to change behaviour in a sustained, consistent way is actually to combine education with engagement and motivation. The three individual components need to be a part of any program, for example around smart metering, or the adoption of an energy efficiency program. So it’s not just reputation alone that will build this trust.”
A strategic vision for the future
The first day of ENA’s Smart Networks Summit included a panel of distribution and transmission utility executive managers focused on developing smart grid strategies. The panel included Essential Energy infrastructure strategy executive general manager, Col Ussher; SP AusNet smart networks strategy and development division director, John Theunissen; Western Power networks general manager, Mark de Laeter; ETSA Utilities network management general manager, Doug Schmidt; and ENERGEX CEO, Terry Effeney.
The panelists were members of ENA’s smart network committee involved in policy changes and helping ENA at a strategic level to ensure positive smart network outcomes.
ENA smart network director, Tanya Barden drove the panel discussion with questions regarding the utilities long-term strategies, customer engagement initiatives and asset investment decision-making.
Here we take a look at the panel’s views on network reliability and efficient asset utilisation, improving customer engagement and smart grid strategies.
Finding non-network solutions – Col Ussher, Essential Energy
Now is the right time for networks to invest in smart-grid technology with the rising cost of electricity, according to Essential Energy infrastructure strategy executive general manager, Col Ussher. Essential Energy is focused on trying to find non-network services and demand management solutions to solving their peak issues.
“We are trying to capitalise on a smart- metering installation to deliver asset management outcomes and couple programs together that we would have otherwise invested in separately,” Mr Ussher said.
“The second aspect to that is this whole smart grid movement and investment cycle, to me is just about the technology. It provides a platform for looking differently inside of businesses,” he said.
Essential Energy has a comprehensive customer-communication strategy that leverages off their core values, Mr Ussher explained.
“We’re very customer-focused and we don’t intend to leave that behind even if we don’t have a retail market now. We’re very much a part of the community. The launch of that community was a great success but probably because it is hopefully something that we do everyday. So that’s an ongoing piece of work, not just launching the community and leaving it alone, ongoing touch points with the community and key stakeholders.”
Essential Energy has a high-end smart grid strategy and is pushing ahead with observing, monitoring, automation and smart-grid penetration. Reshaping their business in preparation for the future network, their ‘vision 2025’ exercise looks at their asset management aspirations.
“Inside Essential Energy the focus is trying to marry those worlds together. The asset management world and smart grid are really seen as one thing. Demand management is just as much a challenge to our focus as it is to our own guys trying to find a solution. We do have a strategy and we are pressing ahead on that (and) getting our hand dirty,” Mr Ussher said.
Learning from experience – John Theunissen, SP AusNet
SP Ausnet’s smart-grid journey began less from a planned strategy and more from trial by fire. Facing peak demand issues in the mid-2000s, SP AusNet smart networks strategy and development division director, John Theunissen said that the company had plenty to overcome.
“Looking at some of the challenges that we faced, I think that it was the challenges that actually drove the inception of smart grid thinking. I think what we started out with was, ‘you’ve got this set of challenges and, let’s invision a future which is really going to address those challenges, but in a commercial way and also try to deliver what you would classify as optimise the outcomes out of that’,” Mr Theunissen said.
When SP Ausnet’s transmission and distribution “worlds” merged, the company found a number of opportunities for cross-pollination. Having begun to set a formal smart-grid policy in place, the company realised it needed even more strategies.
“You actually need a strong technology foundation on which to build a smart grid and we didn’t have that. We had it in some areas but we didn’t have it across the board. And that sort of transformation doesn’t happen overnight, it’s something that takes years. So in a commercial sense you’ve got an organisation crying out for solutions to problems and we can’t afford to wait too long and on the other hand you know the right strategic way forward is actually to create a proper technology foundation, so you’re in this mix,” he said.
“I think that a lot of the work culminating in our strategy is a mix of what I call strategic thinking and also tactical component planning, which we were able to outgrow fairly quickly in order to move towards a better future.
With the need to improve network reliability as a driver, they put together a distributed automation package solution and moved ahead with component strategies in order to deliver their outcomes. Ageing plants and rising asset risks added to the speed of uptake, furthering their vision and becoming more predictive rather then responsive.
“I think these things culminated in ultimately putting a more proper form of strategy in place in the middle of last year,” he said.
Engaging the customer – Mark de Laeter, Western Power
Western Power has made a renewed effort to position their customers and communities as a major priority, having overcome the reputation of “technical arrogance and bestowing solutions on our customers”, according to Western Power networks general manager, Mark de Laeter.
“We sought to turn that around to respect our customer and to really work hard on identifying and working with customers and other stakeholders identifying those benefits for them and for us, because we are a commercial business and we are required to make prudent and efficient investments, but on behalf of the community,” Mr de Laeter said.
The second theme to their strategy has been one of leveraging off the experience and knowledge of others and the success of trials and pilots in Victoria, California and elsewhere.
“It’s very important as an industry that we do learn and share. Somebody made the comment (at the summit), I think it was Guido (Bartels from IBM), that there was an open approach in Australia to leveraging off each other’s work experiences and recognising the different context.”
Affordability and reliability are cornerstones of Western Power’s current program, with enabling technology acting as a third objective.
“So, from an affordability perspective, if there was a league table for peak demand under load profiles, then I think we would be up there with South Australia, so we’ve got that peak demand challenge which leads to utilisation, so that’s certainly a key driver for us,” he said.
In June Western Power went to its board to seek approval for the next stage of its investment.
Summer peak demand – Doug Schmidt, ETSA Utilities
Peak demand issues are particularly bad for South Australia, with the state taking from Western Australia the “unenviable” target of having the hottest, longest heat wave, with 15 days at more than 35°C and six days over 40°C in 2008.
“We’ve been doing that through director- flow control of air-conditioning,” network management general manager, Doug Schmidt explained.
“You need firm load control because on a 40 degree day it’s pretty exciting to be a network manager. So you need that reduction.”
South Australia’s state regulators have helped put ETSA Utilities on the path of demand management and addressing peak summer demand, Mr Schmidt admitted.
“We’ve been doing these demand management trials that have identified 20-25 per cent potential that we are now expanding at using demand management direct-load control with more technology. So looking at a broader smart-grid package, which is now centred on the foundation of the input from our broad smart-grid strategy. Everybody’s looking 15 or 20 years into the future, so what will the customer of the future require, how will the network of the future service those needs and how’s the (smart grid) support that,” he said.
“So that’s where ETSA currently is, we’re right into that envisioning part, looking at that future strategy, the future operating model and from that encompassing strategy.”
Mr Schmidt is a part of the ENA smart networks committee’s smart metering working group that looks at models for the future vision of how the customer interacts with their energy usage with the distributor, retailer and other third party providers. While this is still being worked through, ETSA is still developing its view of the future smart grid.
“Really, what’s driving us from a smart-grid perspective is the network reliability, operational efficiency – both CAPEX and OPEX – and then finally customer information and some sort of customer inter-relationship, which we really haven’t defined yet. So that’s the bit we’re future visioning and we’re waiting on some information to fill that space on what that’s actually going to look like,” Mr Schmidt said.
Shared visions and interoperability – Terry Effeney, ENERGEX
South east Queensland distributor, ENERGEX has developed its stakeholder engagement policy alongside regional distributor Ergon, creating a shared network vision.
“Because that interaction with the stakeholder is such a critical issue… it is really important to talk as one voice on this, whether you’re talking to government or talking to a whole key range of regulators etc., so we’ve developed a series of joint documents between the two organisations, a network vision which is our outlook to 2030. It’s dual branded,” ENERGEX CEO, Terry Effeney said.
Underneath this 2030 vision is a joint technology strategy as well as a joint technology roadmap, forming three layers progressively driving ENERGEX and Ergon forward.
“Because the organisations are tied to the hip on a whole range of IT investments, we have joint IT back of house (and) we are wanting to do the greenfield investments on this smart network area as joint investment. That allows for much more interoperability, we do interact our workforces quite a bit for emergency response etc.,” he said.
The ability to be able to move staff between utilities is going to become more difficult with increasingly complicated and digital systems, Mr Effeney said.
“(It) is quite an issue that we are trying to address in Queensland to ensure we don’t have an interoperability problem and suddenly guys can’t work in one part of the network or another,” he said.
ENERGEX is currently investing heavily into its demand-management system and has customer trials underway. They are currently funded to work under the Australian Energy Regulator to do a series of customer-related trials aimed at energy conservation demand-management issues jointly with Ergon.
Energex’s Feeder of the Future program will sit beside and complement work that is currently being done out of Smart Grid Smart City activities,
“Not to retest stuff that has already been done there, but to pick up things in addition to that and some additional aspects… and (understand) how you implement that into an area of southern Queensland,” he said.