By Nichola Davies
As the system operator, TransGrid is at a unique vantage point in a transformational moment for the energy sector – what Paul Italiano calls the inevitable shift away from thermal generation to renewable energy. Energy Source & Distribution talks with TransGrid’s CEO to see how the company is preparing for the change while managing the network.
You can usually find Paul Italiano at his desk by 7am with a coffee in hand. More than half of his time is spent managing key relationships with regulators and investors, with TransGrid dealing with multiple regulatory bodies at state and federal levels, as well as a syndicate of around 40 banks and financiers.
But, Paul is well versed in money matters, having spent the early part of his career in accounting and finance, including in advisory and CFO roles. Despite joining the energy sector in 2010 as part of Western Power’s executive team and CEO in 2012, a career in the energy sector is somewhat of a family occupation.
Paul’s dad and grandfather both worked for Western Power, so it was always a part of his life when growing up, and a fascination with energy, and emerging technologies in the energy sector in particular, has been a lifelong affair.
“The opportunity came up to join Western Power at a very pivotal time where we introduced a new strategic direction with a clear focus on the core business drivers of safety, reliability and cost – exactly the same concerns that continue to dominate discussion in the industry today,” Paul says.
After four years in the top job at Western Power, Paul took the chance to head TransGrid as the first CEO of the privatised business, saying he was fortunate when he started the role that he inherited a strong and well-run business with a good reputation.
When it was announced, then Chair Rick Francis said Paul’s proven ability to transform a business in the face of significant challenges made him an excellent choice for the role.
Since starting in the role, the major change for TransGrid has been broadening its horizons and building its ability to successfully chase competitive work.
“That has led to very good growth in the non-prescribed part of the business with a strong emphasis on customer focus, delivery excellence and efficiency,” Paul says.
There are a number of major projects in the pipeline that as the network manager and operator in New South Wales, have significant ramifications for TransGrid.
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“We are focused on meeting the expectations of customers and stakeholders while delivering the major projects in NSW identified as part of AEMO’s Integrated System Plan,” Paul says.
“Those projects are the works associated with Snowy 2.0, expansions of existing interconnection between NSW and Victoria and Queensland, and finally Project EnergyConnect which would link the markets of South Australia and NSW for the first time.
“We’re also in the early stages of delivering Powering Sydney’s Future, a 20km underground cable project to ensure reliability of supply to Sydney’s CBD.
“As an organisation we are striving toward getting those projects into action while maintaining a safe and reliable energy supply while remaining the lowest-cost transmission operator in Australia.”
In such a high-pressure, busy time for the industry Paul says the company’s top priority remains the same: the safety of its workforce.
“We’re empowering staff to put safety ahead of any other pressure, and support for that comes from our board and executive team right through the leadership of company,” he says.
“Seeing the way our workforce has owned safety consciousness and looked to improve outcomes across the organisation.
“The opportunity to interact with our customers is also a highlight for me – I’ve spent quite a bit of my career in retail-focussed organisations, so that opportunity to build those relationships is a very attractive part of the job.”
Paul adds that the worst part of the job is the sense that the company might let down energy consumers and the community TransGrid serves.
“The electricity industry has copped a lot of criticism and with good reason,” he says.
“We all need to work to rectify the situation we are in, and one of the first steps we’ve taken is becoming an inaugural signatory to The Energy Charter, which will help us to demonstrate how we’re improving those customer outcomes.
“We’ve got a long way to go, but we’ve got a starting point and now the work is ahead of us as an industry.”
Energy consumers have made it clear that their preference is for renewable energy. TransGrid has heard it from people at the local level right through to the biggest companies of the new economy with Amazon, Facebook, Google and the like all committing to 100 per cent renewable energy targets in the near future.
“Global capital markets are also clearly favouring renewable energy developments, so the trend is really quite clear on both sides of the equation – the push for decarbonisation is not going to slow, so it’s up to us to manage the transition,” Paul says.
“On the energy demand side, all of our internal data shows that energy consumption is rising across the network.
“We’ve seen that for a number of years and the trend is quite solid now so we are preparing for future scenarios that involve a continued increase in electrification and energy demand.
“As that decarbonisation drive continues the next sector to contribute will be transport, and clean energy can play a major role.
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“One of the things that will play into that in a big way will be electric vehicle uptake through the next 10 to 15 years. If the pace of EV adoption meets even some of the more conservative forecasts then we are going to start experiencing very different demand patterns and levels of consumption.”
A number of different countries around the world are managing this transition successfully, with a number of different models for doing so. Paul says the challenge for Australia is choosing which one we think will work best for us, and then figuring out how we get there from our current position.
“There are definite advantages in having diversity in the system, and one of the biggest advantages that we have in Australia is geographic size,” Paul says.
“As part of the shift toward renewable energy that we’re observing, the physical decentralisation of power supply has posed a few challenges in terms of system strength and capacity, but in the longer-term that decentralised generation fleet will help to make the most of our energy resources and assist with reliability and affordability for consumers.
TransGrid is increasingly active in the demand management space and has established some battery trials with the City of Sydney, UNSW and Woolworths to try and understand how battery storage could work within the network.
“It’s another aspect of the evolution of the future energy market, but we have found it difficult to find demand-side capacity that hasn’t already been contracted, so we are certainly watching developments in that space with a keen interest,” Paul says.
“We are also running an active demand management program as part of our Powering Sydney’s Future, and will continue to do so for the next three years.
“Having visibility of that transition playing out in real-time across the biggest electricity market in the country is fascinating.”