Chloe Munro wears many hats; each of them allowing her to play a pivotal role in Australia’s energy transformation.
She’s an industry powerhouse with a wealth of energy policy and regulation experience spanning decades.
Chloe Munro’s most prominent roles in Australia have included a stint as chair of the Clean Energy Regulator and a panel member of the Independent Review into the Future of the National Electricity Market, otherwise known as the Finkel Review.
Most recently, she has accepted the role of professorial fellow at Monash University.
Here, she will draw on her extensive experience in the complex energy sector to further advance the university’s interdisciplinary approach to energy research.
She will work across the Monash Business School, Faculty of Law, Monash Energy Materials and Systems Institute (MEMSI) and the Monash Sustainable Development Institute (MSDI) to advance energy policy research, natural resources policy and link research to the needs of industry and government.
Chloe says she is excited to tap into the capabilities of the university to bear some new ways of thinking about how Australia can achieve better outcomes in energy and sustainability.
“The challenges faced by Australia’s energy system today are emblematic of the transformation taking place right across the economy,” she says.
“There’s an urgent need for multidisciplinary collaboration to help decision-makers chart a path forward and optimise social, economic and environmental outcomes.
“So watch this space – it is a fantastic opportunity and I do think our universities have some extraordinary capabilities. It’s always about that chain of connection between those capabilities and outcomes in the real economy that we are all looking for, and I hope to contribute to that.”
Alongside her work with Monash, Chloe operates in an advisory capacity chairing the expert panel for the Australian Energy Market Operator (AEMO), which she says keeps her very much in touch with the industry.
She also acts as chair of the Impact Investment Group (IIG) Solar Income Fund and Solar Assets Fund.
“I really admire the philosophy of impact investors because they are saying, well, we have capital to invest and we’ll do that in a way that doesn’t just give us a return but also creates social and environmental benefits, and so by supporting solar investments, this is a very practical, hands-on way of contributing to the transformation,” she says.
“I feel like I am operating across the whole spectrum – it’s absolutely wonderful.”
The final report of the Finkel Review was handed down in June last year, with the COAG Energy Council swiftly adopting all but one of the 50 recommendations.
With debate surrounding the dumping of the recommended clean energy target, to later be replaced by the national energy guarantee (NEG), Chloe says it is important to stay focused on the 49 equally valuable recommendations that have been implemented.
Praising the COAG Energy Council for its quick action to establish the Energy Security Board with excellent leadership under Dr Kerry Schott and Clare Savage, Chloe says there has been an “intense agenda of implementation”.
She says AEMO has been working behind the scenes as well, changing the way it plans and forecasts for operating the system.
“They are working closely with the bureau of meteorology; they’re marshaling machine intelligence; they have started consultation on integrated system plan; they took some innovative steps to improve reliability for the current summer, which was potentially quite challenging,” she says.
“That all lays the foundations for looking at some longer-term options, which were, again, recommended in the Finkel Review.
“One example is the proposed strategic reserve, which was an early point of focus for AEMO’s Expert Panel. It would give AEMO access to resources not normally available to the market, as an insurance for extreme conditions. The Finkel Review recommended looking at several other enhancements to market design, to deliver better outcomes for consumers in the context of the transformation that is underway.
“New digitally enabled business models are opening up huge opportunities for participation on the demand side. Exploration of these ideas is moving ahead in a way that we really hadn’t seen prior to the Finkel Review.
“There’s an enormous amount of work in progress looking at policies to enable this demand-side transformation and the real challenge is going to be to land them quickly enough. For example, the Finkel Review recommended examining the potential for a day-ahead market to allow these flexible resources to plan ahead for when they could be committed. The whole aim is to improve the efficiency with which we produce and consume energy, thereby lowering costs all round.
“Meanwhile on the supply side, just in the last little while there has been a really tremendous uplift of investment committed to renewables. Fortunately, this means the capacity issues will ease after the 2018-19 summer, and a little bit of time has been bought to fix reliability for the longer term. Flexibility and dispatchability on both sides of the market is the key to increasing the proportion of low cost, emission-free renewables in our energy mix.
“But the renewable energy target will have been reached in 2020 and the associated incentives only run until 2030 so there is a question about what comes after that?”
Chloe says despite some inflammatory headlines, a lot of is collaboration occurring around the COAG table.
“I am pretty optimistic it’s possible to make some quite significant advances,” she says.
On the NEG…
So, what does she think about the NEG?
“From pure policy perspective it is not first-best policy. But, I think everybody wants to be pragmatic about it and if it is the only politically feasible option, then it can be made to work,” she says.
“It is very complex administratively and it doesn’t do everything. The consultation paper the ESB put out acknowledges this right at the beginning. It only does part of the job. This is why I am emphasising all these other steps need to be taken as well., If it is all done in concert than we can get a good outcome.
“The objective of the NEG – to maintain reliability in parallel with emissions reduction – is central to achieving an orderly energy transition.
“I was concerned the original design was excessively cumbersome relative to the benefits it might deliver and could be a barrier to innovation. I’m pleased the ESB responded to industry feedback in their second iteration with a much lighter-handed model.”
However, Chloe says a lot of detail remains to be developed before a final design is presented to COAG Energy Council.
“Without a more ambitious emissions reduction target than the Australian government envisages, the NEG won’t drive much change from the status quo,” she says.
“This highlights the significance of all the other developments under consideration in response to the Finkel Review.
“We will need more than the NEG to reward new business models deploying distributed resources such as storage and demand management for the system services they can provide.”
On the integrated system plan…
The integrated system plan (ISP) was recommended in the Finkel review, and Chloe says it should be a top priority.
“By mid-2018, the Australian Energy Market Operator, supported by transmission network service providers and relevant stakeholders, should develop an integrated grid plan to facilitate the efficient development and connection of renewable energy zones across the National Electricity Market,” recommendation 5.1 from the review said.
AEMO has called it an integrated system plan (ISP), rather than an integrated grid plan, to reflect that over time, the ISP will by necessity consider a wide spectrum of interconnected infrastructure and energy developments including transmission, generation, gas pipelines, and distributed energy resources.
“What it’s looking at is what kind of world we’re likely to be in in the future,” Chloe says.
“If we’re going to take advantage of the resources we have, particularly renewable energy resources – which are located in quite different places to our coal resources that have been so important to our energy system in the past – the network will have to be enhanced in various ways to take advantage of that.
“The aim is to identify the least-regret investments that need to be made to strengthen the whole system, so relatively modest investments can take place, and that’s really the core of it.
“The interactions between generation and network investments in different locations are pretty important. The integrated plan helps address that and it takes a more sophisticated view in terms of looking at the whole range of resources that can be deployed and also, obviously very importantly, what the demand outlook is.
“If we can form a view about where we’re going, we can make some of these low-regret investments, that will remove some of the sources of uncertainty in the system. that will allow investments in a whole range of resources to flow with a bit less risk about whether or not they’ll really be worthwhile.”
She says Australia’s electricity system must operate at much lower emissions intensity in the future.
“That is particularly important because if you get an electricity system operating that way, then you can also start to substitute for other uses of fossil fuels, such as transport” she says.
“I don’t think it is absolutely clear what technologies are going to win out.
“I do think it is clear we will rely a lot more distributed resources. The opportunities we are getting from this incredible digital transformation and the internet of things – all of that is going to be totally embedded in energy system.
“So, it’s going to look quite different and it’s not just going to about large power stations and thick transmission lines. There will be much more diversity in it and that’s an incredibly exciting future.”