Spotlight On: AEMO’s Audrey Zibelman

Australian Energy Market Operator CEO Audrey Zibelman

Flying into the country to start her role as chief executive officer of the Australian Energy Market Operator in March, Audrey Zibelman’s timing could not have been better.

With Australia’s energy system in the midst of a historic transformation, Audrey Zibelman has seamlessly transitioned into her role and has already made her mark on the nation’s energy sector.

Australia’s newest woman in power certainly packs a punch, bringing with her a raft of experience gained from decades in the sector. Most recently, Audrey was chair of the New York State Public Service Commission (NYPSC), where she responsible for overseeing the regulation and safety of New York’s electricity, gas, telephone, cable, water and steam utilities.

Prior to joining NYPSC, Audrey was the executive vice president and chief operating officer of PJM, the American equivalent of AEMO, responsible for operating the power grid and wholesale power market in 14 eastern US states. Audrey also founded Viridity Energy after more than 25 years of electricity utility industry leadership experience in both the public and private sectors.

Audrey’s first impression of Australia’s energy system is that it has the potential to be world leading – and coming from a pioneer in international electricity sector, that’s really saying something.

“With the reduced cost on renewables, changes in consumer preference, and the opportunities to use information and data better – I think Australia will lead in thinking about how to create a diverse portfolio of resources; how to address consumer choices better; and how to create markets that are not just predicated on the European and US model, where they have very large-scale generation and transmission and passive demand,” she says.

“With the activities I have seen here, and the interest and the recognition of the importance of energy – even though we have some challenges – it’s fantastic. Especially compared to the US where energy is hardly paid attention to and it’s challenging to get changes occurring.”

While even the largest city in Australia is a far cry from the hustle and bustle of the Big Apple, lessons learned in New York can be applied to the challenges facing Australia, Audrey says.

The city that never sleeps must have a power system that does the same. After the deadly and destructive Hurricane Sandy hit the eastern coast of America in 2012, it was vital to establish a plan to keep the lights on in the face of major climatic events.

The hurricane sparked a quest to transform the cities electricity system, and so the internationally recognised Reforming the Energy Vision (REV) plan was developed, with Audrey at the forefront.

“The concern we had was that in a city like New York, having prolonged and repeated outages creates a huge public safety concern,” Audrey explains.

“It’s difficult to build power plants in New York, because land is a premium and transmission is the same thing. So, we needed to maximise the efficiency and productivity of the system, and one way to get there was to make sure we were using distributed energy resources to provide that value.

“But if you have a major climatic event and you have distributed energy resources, then you can have islands where people can not get access to power and, again, in a large city like New York, where you have people living in 45-storey buildings, the ability to get access to power quickly is really critical.

“So, it was a recognition we needed to rechange the orientation of the system and my lesson from New York, and then my lesson previously from PJM, is that frequently its not technology that is the issue, it is market design and regulatory design.

“What’s lacking is making sure the markets and regulation are fit for what’s needed.”

Kicking off her Australian career in March, Audrey arrived just in time for the release of chief scientist Alan Finkel’s Final Report of the Independent Review into the Future Security of the National Electricity Market.

She said the review does a very good job at identifying the challenges and opportunities and the changes the nation must make.

“Ultimately, this is about the consumer and I keep coming back to the fact electricity and gas are non-substitutable products. If we are looking at a low emission future, a low carbon future and even things like adding in electric vehicles, that means more and more electrification of the economy which means that we are going to have to have smarter networks and smarter markets,” she said.

“I think the Finkel review certainly identifies a good path forward. In my view, it’s not a choice. we’ve got to go there.

“The panel has done their work and it is something we need to act on.”

With 49 of the 50 recommendations handed down by Dr Finkel supported by the Federal Government, with tension surrounding the recommendation of a clean energy target and what it might mean for the future of coal.

“One of the things I believe we need to recognise is that the cost of solar and wind are coming down, and consumer preferences are changing around energy, so we have a huge growth of rooftop solar in Australia,” Audrey says.

“Our job at AEMO is to make sure the markets can accommodate these technological changes and then, as the policy get defined, make sure the markets continue to be able to be adapt to deliver value based on those policies. So to me, the clean energy target is really helpful for investors.

“It’s something I think the governments need to think about in terms of, how do you provide certainty around energy policy, so people can invest with confidence?

Nationwide debate has also been sparked regarding electricity prices, coal power station closures and keeping committed to the renewable energy target. The question has been asked among industry leaders and consumers alike – can we have a renewable energy target and deliver affordable electricity at the same time?

“Renewable energy has the advantage of being able to deliver energy at a zero marginal cost, at the same time, renewable energy is not dispatchable like traditional generation. It is dependant on weather conditions, which means we need to have resources in the market that allow us to provide security and the other types of resources that the grid needs,” Audrey says.

“The advantages are that with big data and development of demand-based resources, we have the ability to deliver value where we take the whole complement of resources – which can be renewables and gas and coal and distributed resources – and optimise the system so that we deliver value to consumers.

“From a customer standpoint, people like to be able to turn on their lights without worrying about the effect it has on their overall economics.

“Energy, whether gas or electricity, is an input to the economy, it’s not an output and we need affordable energy in order to provide economic value.

“AEMO, as the market operator, really has to look at how we can drive an economically efficient system, and what things we can do to drive that efficiency because, after all, markets exist for consumers, and when you think about any market or any industry it ultimately comes down to whether is it delivering value to consumers.”

With Australians becoming smarter about the way they use their energy with the help of technology advances, Audrey predicts consumers will play a critical role in the future energy system.

“As a whole, I think we’re going to see more opportunity for customers to put in resources or make decisions about the type of resources they use and more information to control that, much like we see in communication where we have our smart phones that allow us to make a lot more decisions about things,” she says.

“What I perceive will be the most phenomenal change is the type of thing that we are talking about in Australia. The industry is going to be a complement of resources that are large-scale, diverse, distributed and smaller-scale.

“Our role is to optimise what we can do, using the resources on people’s roofs and the resources on the power grid, to make the entire system more productive and therefore more valuable to consumers.”

As heatwaves rolled across the country last summer, power systems crumbled under the pressure of record-high peaks. To prevent similar situations occurring this coming summer, Audrey says AEMO has established a “seven-point game plan”.

“We’re looking at making sure the generators have been maintained and are well positioned to provide service. We’re looking at making sure there is sufficient fuel for the generators; and we’re working with the network providers to make sure any maintenance is done prior to summer and additional work to increase the capability of the networks is completed,” Audrey says.

“We’re also working with the governments and the market to identify both demand-based resources and supply-based resources, and we’ve also identified a number of operational changes that we can make to the market to operate it more securely.

“We are working very hard to make sure we are well positioned well ahead of summer to get through the summer securely.”

Audrey says a transition needs to occur before the changes that the Finkel review contemplates are put into place.

“Efforts that have been made by the government around providing additional supply; the recent announcement by the Prime Minister in terms of gas security; and also charging AEMO to take a look at what the needs are going to be in the near-term and identify how we can get additional resources in if we need it – these are all very critical features.

“I go back to customers, they have a rightful expectation that people in this industry looking after these things are doing their bit to ensure that energy is secure and that it remains, or becomes again, affordable depending on what people’s perceptions are.

“We operate in both those worlds – addressing near-term actions and identifying longer-term things we need to do to make sure we can regain that confidence.”