Energy March Edition 2019 by Monkey Media

ISSUE 5 · March 2019 · www.energymagazine.com.au

AN ENERGY wishlist for 2019

THE WOMEN CHANGING THE FACE OF THE INDUSTRY PPAs:

understanding new models for energy retail

Hydrogen: the answer

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ISSUE 5—MARCH 2019 WELCOME

ISSUE 5 · March 2019 · www.energymagazine.com.au

AN ENERGY wishlist for 2019

THE WOMEN CHANGING THE FACE OF THE INDUSTRY PPAs:

understanding new models for energy retail

Hydrogen: the answer

TO THE TRILEMMA

Cover highlights our feature on hydrogen and the potential impact it will have on the energy industry in Australia.

5,867 This publication has been independently audited under the AMAA’s CAB Total Distribution Audit. Audit Period: 1 October 2017 – 31 March 2018

Published by

Monkey Media Enterprises ABN: 36 426 734 954 PO Box 1763 Preston South VIC 3072 P: (03) 9988 4950 F: (03) 8456 6720 monkeymedia.com.au info@monkeymedia.com.au energymagazine.com.au info@energymagazine.com.au ISSN: 2209-0541

Editor Laura Harvey Assistant Editor Elisa Iannunzio Senior Designer Alejandro Molano Designer Aileen Ng Business Development Manager Rima Munafo Marketing Assistant Melissa Charalambous Publisher Chris Bland Operations Manager Kirsty Hutton Digital Marketing Manager Sam Penny

EDITOR’S WELCOME

elcome to the first issue of Energy for 2019. As we stare down the barrel of an upcoming Federal Election, I hope this finds you recharged and ready to tackle what is sure to be another turbulent year for our industry. While the waters may still be somewhat choppy when it comes to energy, what has emerged as a consistent theme in this issue is that women are playing an increasingly important role at the most senior levels of the energy industry. This issue features a range of interviews and contributions from women leading companies and sitting in the executive leadership teams of major players in the industry, and they are all making enormous contributions as we undertake the biggest transformation the sector has ever seen. Perhaps most pleasingly, there was no deliberate effort from myself or the editorial team to seek out women for this issue – we simply looked at the areas we wanted to focus on, and as always, approached the people in the sector we felt were best placed to speak on these topics.

Frequently, it just so happened that these people were women. This may seem like a minor thing, but it absolutely is not. It’s a reflection of the way our industry has evolved and grown in recent years, and for everyone’s absolute benefit, we now have diversity of voice and opinion at the leadership end of the sector. This will only continue to provide benefits for many years to come. In recent months, I’ve heard more and more about the role hydrogen will have to play in our energy future, and this came to a head earlier in the year when Federal Labor announced their $1 billion plan to supercharge this sector of the industry. In this issue, we’ve explored some of the recent developments in the world of hydrogen energy, including taking a closer look at the significant trial program Evoenergy has up and running in Canberra. We’ve also included an energy wishlist for 2019 in this issue, as well as a “birthday” piece which reflects on 20 years of the NEM. I hope you enjoy reading this issue as much as we enjoyed putting it together for you. Laura Harvey Editor

We’re keen to hear your thoughts and feedback on this issue of Energy. Get in touch at info@energymagazine.com.au or feel free to give us a call on (03) 9988 4950.

March 2019 ISSUE 5

CONTENTS NEWS 6

Contractors selected for Snowy Hydro 2.0

10 Carnegie Clean Energy projects powering

Energy-from-waste facility operation contract awarded

10 40MW solar PPAs announced

Second utility-scale solar plant for SA

Energy retailers not responding to disruption

$450 million finance for solar power station

Labor’s $1bn National Hydrogen Plan

forward

EACH ISSUE 1

EDITOR'S WELCOME

CONTRIBUTORS

76 FEATURES SCHEDULE 76 ADVERTISERS’ INDEX

INDUSTRY INSIGHT

CONSUMER AND INDUSTRIAL RETAIL

DOMESTIC GAS OUTLOOK

12 An energy wishlist for 2019

18 Changing the face of energy retail

34 What does the future hold for gas markets?

22 Power purchase agreements: understanding new models for energy retail

36 Mapping out Australia’s future energy direction

14 Happy 20th Birthday National Electricity Market

26 Retailers: service delivery should be a natural instinct 30 Engaging the customer to benefit the network

40 Overcoming barriers to innovation

42 Australia’s energy crisis: it doesn’t have to be this way

33 Using automation to achieve maximum efficiency

March 2019 ISSUE 5

www.energymagazine.com.au

CONTENTS

45 HYDROGEN AND FUTURE FUELS 45 From fuel of the future to mainstream option 48 Hydrogen will be the answer to the energy trilemma

SOLAR

SPATIAL & GIS

52 Exploring the retrofit model and offtake agreements for battery integration

60 A functional approach to dataset searching

55 L arge-scale synchronous condenser for the Kiamal Solar Farm 56 T he price impact of 50 per cent renewables 58 N ew pile driver technology expediting solar project construction

64 SMART NETWORKS 64 Net zero: leading the charge in

energy innovation

68 A new approach to energy innovation

72 Recognising the best in energy networks

www.energymagazine.com.au

March 2019 ISSUE 5

CONTRIBUTORS

Ayesha Razzaq

General Manager Retail, ActewAGL

Ayesha is responsible for ActewAGL's development of markets for electricity, natural gas, water and wastewater services, helping to successfully navigate ActewAGL Retail through a time of significant energy industry change. Ayesha is also responsible for customer acquisition strategies, sales and marketing, wholesale activities and retail regulation. Ayesha holds a Bachelor of Engineering degree with honours. Ayesha also has a passion for the community sector and she serves as a Director on the Lifeline Canberra, Canberra Grammar School and Communities at Work Boards. She is also a member of the Indigenous Marathon Foundation’s Qantas Grant Committee and has also been a part of the judging panel for the ACT Inclusion Awards. Ayesha was honoured to be awarded the 2017 ACT Corporate Telstra Business Women Award.

Chantelle Bramley

General Manager Strategy, Regulation and Transformation

Chantelle has worked on regulatory and strategic energy policy issues for almost 20 years with international experience in high ranking positions in the United Kingdom, Canada and the United States. Chantelle previously held the position of Executive General Manager, Strategy and Economics with the Australian Energy Market Commission and VicePresident, Strategy and Chief of Staff with Direct Energy based in Houston.

Claire Johnson

Chief Executive Officer, Hydrogen Mobility Australia

Claire has extensive experience in policy development and government relations across the private and public sectors, including most recently leading Toyota Australia’s advocacy for the introduction of hydrogen fuel cell electric vehicles to Australia as the manager of Toyota’s government relations function. Prior to this she worked for federal and state governments in areas including manufacturing and trade policy. Claire is passionate about the benefits of hydrogen and fuel cell technologies, and the economic and environmental opportunities for Australia in transitioning to a hydrogen economy.

Amy Childs

Managing Director, Momentum Energy

Amy Childs joined Momentum Energy in 2016 as the General Manager of Sales and Marketing and was charged with building an integrated sales and marketing team from the ground up. In May 2018 she moved into the role of Acting Managing Director, and in October 2018 this role was made permanent. Amy thrives on building challenger brands in highly competitive markets and in leading complex transformations to deliver outstanding business performance. Previously, Amy held senior digital and marketing roles at Medibank, ahm, Red Energy, Meridian Energy and Kiwibank.

March 2019 ISSUE 5

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CONTRIBUTORS

Riley McAuliffe

Acceleration Program Manager, EnergyLab

Riley McAuliffe is the Acceleration Program Manager at EnergyLab, Australia’s leading platform for launching new energy startups. She has a Master of Environment (Climate Change stream) from the University of Melbourne and a Bachelor of Engineering in Environmental Engineering (Hons) from the University of Western Australia. She has professional experience as an environmental engineer at GHD and was the Environment and Sustainability Program Manager at Global Voices, leading delegations of young professionals to five international summits including the 2015 COP21 in Paris. Riley has undertaken leadership development through the Centre for Sustainability Leadership Fellowship and the Commonwealth Youth Leadership Programme in Scotland, as well as in ongoing roles as an Ambassador for 1 Million Women and Director at Fiji Book Drive.

Ben Skinner

General Manager Policy & Research, Australian Energy Council

Ben Skinner was appointed as General Manager, Policy & Research of the Australian Energy Council in October 2017. His role primarily focuses on environmental policy and wholesale market policy in order to promote efficient, secure and competitive outcomes in the Australian energy sector. Prior to this he was Specialist, Market Development at the Australian Energy Market Operator (AEMO) for nine years, primarily liaising with government on environmental policy matters, including secondments to the Garnaut and Climate Change Authority secretariats. Historically, Ben has worked as head of spot trading and then wholesale regulatory management for TRUEnergy (now EnergyAustralia). Ben holds a Bachelor of Electrical Engineering and Diploma of Applied Finance.

Frank Tudor

Managing Director, Jemena

Frank has more than 30 years’ experience in the international oil, gas and power industries, having held various senior executive roles across the sector throughout his career. Before joining Jemena, Frank was CEO at Horizon Power – Australia’s only vertically-integrated electricity utility which provides energy services to customers across regional Western Australia. Frank holds first-class degrees in engineering, economics, and business administration from Curtin University (WA), the London School of Economics (UK) and AGSM (the University of NSW). He has also completed the Advanced Management Program at Harvard Business School and lectured in oil and gas economics and legal frameworks at the University of Western Australia. Frank also serves on the Expert Advisory Panel with the Australian Energy Market Operator (AEMO), is a Board member of Energy Networks Australia (and is Chair of its Asset Management Committee), and is also a former member of the Federal Government’s Australia China Council.

Arron Wood

Deputy Lord Mayor, City of Melbourne

Arron is the Deputy Lord Mayor of the City of Melbourne and a passionate environmental advocate. Arron is an expert in sustainability, and he is the founder of the award-winning education program Kids Teaching Kids, which aims to inspire future environmental leaders. Arron is a graduate of the Australian Institute of Company Directors, and was Chair of the 2017 World Ecocity Summit Advisory Board. He's a former member of the National Council on Education for Sustainability and was selected to complete Al Gore’s Climate Change Leadership Program.

www.energymagazine.com.au

March 2019 ISSUE 5

NEWS

CONTRACTORS SELECTED FOR SNOWY HYDRO 2.0

nowy Hydro has appointed preferred contractors for the Snowy 2.0 project, following extensive competitive tender processes over the last 18 months. The preferred tenderer for the civil works is Future Generation, a partnership between Australian construction and engineering company Clough and global hydropower and tunnelling specialists Salini Impregilo. Voith Hydro is the preferred electrical and mechanical tenderer, and will deliver the latest hydro-generation technology in the new power station. Australian company Leed Engineering has also been awarded the contract for exploratory works pre-construction activities. Contract execution is subject to shareholder approval of the project. This is another important step towards the commencement of the project. Snowy 2.0 is a world-leading pumped-hydro project that, with the existing Snowy Scheme, will underpin the stability of the energy market as more renewable energy enters the system.

ENERGY-FROM-WASTE FACILITY OPERATION CONTRACT AWARDED

he consortium developing the East Rockingham Resource Recovery Facility has awarded the role of waste management partner for the project. SUEZ will operate as waste management partner for the project for a minimum term of 20 years. SUEZ’s entry into the project represents the single largest commitment by a waste management company to the development of the energy-from-waste (EfW) sector in Australia. The consortium, established in 2016, is made up of Hitachi Zosen INOVA (HZI), Tribe Infrastructure Group and New Energy Corporation. The project encompasses the design, construction, financing and operation of a greenfield EfW facility in the Rockingham Industry Zone, 40km south of the Perth Central Business District.

March 2019 ISSUE 5

The new facility will treat approximately 300,000 tonnes per year of residual waste from municipal, commercial and industrial sources and up to 30,000 tonnes per year of biosolids. The EfW facility will generate 29MW of reliable renewable energy, enough to power over 36,000 homes. The start of construction activities is planned to take place in 2019. SUEZ’s role in the consortium touches every aspect of the project, combining SUEZ’s international EfW experience with its marketleading network of assets and infrastructure in Western Australia: »» Waste Supply – SUEZ will supply at least 65,000 tonnes per year of commercial and industrial waste »» Operations and Maintenance – SUEZ will lead the delivery of a 20-year operations and maintenance service to the project in partnership with HZI and New Energy »» Disposal Services – SUEZ will provide bestpractice collection and disposal services for fly ash residue and non-processable waste at its resource recovery facilities in Bibra Lake and North Bannister »» Power Offtake – SUEZ will purchase reliable renewable electricity generated by the project for its operational requirements across its business in the Perth area

www.energymagazine.com.au

NEWS

SECOND UTILITY-SCALE SOLAR PLANT FOR SA

lans have been released for a proposed 500MW (AC) utility-scale solar photovoltaic and battery storage plant near Robertstown in South Australia. Development consultant Energy Projects Solar (EPS) plans to construct the project across a 1800 hectare site approximately 5km north-east of the Robertstown township. Robertstown Solar is to integrate into the National Electricity Market through a 275kV connection to ElectraNetâ&#x20AC;&#x2122;s Robertstown Substation in South Australia. Robertstown Solar will meet approximately one per cent of the Federal Government's objective to achieve an additional 33GW of electricity from renewable sources by 2020 under the Renewable Energy Target.

The project has received Crown Sponsorship for Robertstown Solar. The Robertstown Solar Development Application has been submitted to the State Commission Assessment Panel. The Development Application process includes the opportunity for the community to comment about the project when the State Government exhibits the Development Application. The Project Connection Application through ElectraNet, for connection to the South Australian electricity grid, is running concurrent with the Development Application.

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Clean Energy Engineering

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March 2019 ISSUE 5

NEWS

ENERGY RETAILERS NOT RESPONDING TO DISRUPTION

eloitte has released a report revealing that retail power providers are not responding to the threat of disruption with adequate urgency. The report, underpinned by a focus group of 40 Deloitte power and utilities global specialists, identifies five blind spots in the sector globally. Deloitte Australia Renewable Energy partner, John O’Brien, said utilities around the world face constant disruption – evolving customer habits and expectations, and emerging technologies transforming markets at dizzying speeds. As barriers to entry plummet and new business models emerge, retail power providers face an existential threat. If retail power providers are to survive and compete amid the turbulence, they must innovate. Doblin, a Deloitte business, presents three “ambition levels” for

evaluating a company’s commitment to innovation: core, adjacent and transformational. Deloitte Global Power and Utilities leader, Felipe Requejo, said many retail power providers still focus on core operations — making established products and services better, rather than expanding into adjacent segments or businesses, or inventing brand-new products or services for markets that don’t exist yet. “This narrow approach to innovation can cause retail power companies to overlook both risks and opportunities, leaving them open to potential disruption from new market entrants and new business models from existing competitors,” Mr Requejo said. “To keep pace, retail power providers must focus more heavily on adjacent and transformational innovations, creating new business opportunities and expanding markets.” According to the report, retail power companies remain vulnerable to five blind spots resulting from a narrow approach to innovation: »» Cyber threats: the threat landscape will become even more complicated as the retail power sector increasingly adopts smart technologies, leverages Internet of Things and digitises its back-office systems »» Regulatory environment: retail power providers will increasingly need to see the regulatory environment as an opportunity for collaborative innovation »» Rapid development of battery storage technology: rapid innovation in the battery storage technology space has led to business models that aggregate customer-sited storage to provide a range of services to utilities, grid operators and electricity customers »» Ecosystem convergence: smart cities blend Internet of Things (IoT), microgrids, renewable power, self-driving vehicles, energy management and battery storage, among other technologies. As these ecosystems converge, what is the role of the power provider? »» New market entrants: retail power providers will need to discover new ways of creating value to stand out from the crowd

$450 MILLION FINANCE FOR SOLAR POWER STATION

ore than $450 million in finance has been secured for what will be Australia’s largest solar power station at Darlington Point, near Griffith in New South Wales. Octopus Investments and Edify Energy have secured the finance for the construction of the 333MWDC (275MWAC) Darlington Point Solar Farm. Once operational it will generate 685,000MWh of renewable energy each year – enough to power around 115,000 homes. Generation is expected to start in early 2020. The project will create nearly 400 direct on-site peak jobs and other opportunities for surrounding communities. It has a longterm power purchase agreement (PPA) with Delta Electricity for approximately 55 per cent of output.

Octopus Investments Managing Director, Sam Reynolds, said, “Projects need to stack up economically, not just environmentally, for our investors. Darlington Point ticked the right boxes for us – there’s excellent solar resources in the region, plus it’s right next door to a major existing transmission substation and the site has development approval to accommodate batteries in the future. “Bringing projects like this to life shows how the solar industry has come of age in Australia as a mainstream choice for investors, retailers and consumers of energy.” Renewable energy and storage company Edify Energy developed and structured the Darlington Point Solar Farm and is retaining an equity stake in the project. Edify will work with Octopus through construction and will undertake the long-term asset management service for the solar farm through operations.

NEWS

LABOR’S $1BN NATIONAL HYDROGEN PLAN

he Federal Labor Party has revealed its $1 billion National Hydrogen Plan, which it believes would supercharge a clean hydrogen export industry. As global demand for hydrogen surges to an expected $215 billion by 2022, Australia is uniquely placed to benefit from the development of this new, job-generating industry. Analysis by ACIL Allen projects that hydrogen exports alone could be worth $10 billion in 20 years, and create 16,000 new blue-collar jobs – mainly in regional areas. Under Labor’s plans, Queensland’s Gladstone is set to be the hydrogen capital of Australia. Labor’s six-point plan for hydrogen 1. Allocate $1 billion of funding from the Clean Energy Finance Corporation to support clean hydrogen development, from Labor’s commitment to double CEFC’s capital by $10 billion 2. Invest up to $90 million of unallocated funding from the Australian Renewable Energy Agency (ARENA) to support research, demonstration and pre-commercial deployment of hydrogen technologies 3. Establish a $10 million ARENA funding round for hydrogen refuelling infrastructure around the nation, from within ARENA’s unallocated funding 4. Invest $40 million of unallocated funding from the CEFC Clean Energy Innovation Fund to target hydrogen technologies and businesses that have passed the research and development stage 5. Implement regulatory reforms that will help the industry develop and prosper, including reforms to support the use of existing gas pipelines for hydrogen, reforms to support the shipping of hydrogen, reforms to better support the storage of carbon

dioxide from blue and brown hydrogen production, as well as other reforms to support hydrogen use and production 6. Establish the National Hydrogen Innovation Hub in Gladstone, with an initial investment of $3 million Energy Network Australia CEO, Andrew Dillon, said hydrogen not only had enormous potential as a new Australian export industry, it offered the prospect of zero-emission energy and storage to backup renewable power, utilising existing gas networks. “It can be produced carbon free from excess renewable energy – during sunny and windy days when generation is high and demand is low – making Australia uniquely placed to develop a hydrogen industry with our abundant solar and wind resources,” Mr Dillon said. “While the potential for export is enormous, one of the most exciting properties of hydrogen is its potential to serve as a large-scale battery, utilising existing gas networks.”

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March 2019 ISSUE 5

NEWS

CARNEGIE CLEAN ENERGY PROJECTS POWERING FORWARD

ultiple Carnegie Clean Energy projects have reached new milestones including Northam Solar Farm, the Delamere Microgrid and the wave energy project. The Northam Solar Farm has received Approval to Operate from Western Power. The system began exporting to the grid in November 2018 and has been performing well, producing over 4000MWh. The Delamere Microgrid, built at the Delamere Air Weapons Range in the Northern Territory, is fully operational and has achieved practical completion. EMC was awarded a contract to design, construct and install a Microgrid System at the Delamere Air Weapons Range in a competitive tender process in 2017. This innovative solar, battery and diesel off-grid microgrid system is now supplying high penetration solar power to approximately 200kVA peak load and is delivering reliable, 24/7 power resulting in diesel consumption savings. Under the Collaboration Agreement between Carnegie and Enel Green Power (EGP), Carnegie’s CETO wave energy technology has received $1.6 million in funding for research, development and deployment.

40MW SOLAR PPAS ANNOUNCED

low Power has entered into a ten-year offtake agreement with BayWa r.e. to purchase 48MW from two of Northern Victoria’s largest solar farms. The 112MW Karadoc Solar Farm and 106MW Yatpool Solar Farm, which are owned and developed by BayWa r.e., will provide 20MW and 28MW respectively to power the retailer’s corporate renewable power purchase agreements (PPAs). This offtake agreement will enable a greater number of local businesses to access low-cost wholesale renewable generation over a long-term period through Flow Power’s corporate renewable PPAs. Matthew van der Linden, Managing Director of Flow Power, said, “The demand

for corporate renewable PPAs is only growing. We’re excited to welcome Karadoc and Yatpool Solar Farm to our portfolio and are committed to this evergrowing sector of the energy market. “This agreement with BayWa r.e. brings us one step closer to locking in more low-cost power for businesses across Australia and is a critical step forward for Australia’s energy market. We believe that supporting the integration of Australia’s renewable projects is key to shaping the power market for a better future.” For BayWa r.e., the signing of the PPA agreement is a major milestone in the development of the Yatpool Solar Farm. Parallel to its agreement with Flow Power, BayWa r.e. has signed the EPC contract

with Melbourne-based renewable energy contractor Beon Energy Solutions, which will start construction in early 2019. Daniel Parsons, Director of BayWa r.e. Solar Projects, said, “PPAs are fundamental to the success of solar energy projects of this scale. We’re very pleased to find a partner in Flow Power, who, in a restricted PPA market, will help us to bring renewable energy to businesses of all sizes across Australia.” At over 600 acres, the Yatpool project will be BayWa r.e.’s second largest solar farm in Australia. Expected to be completed in late 2019, it will take its projected renewable energy development close to 240MW within just two years of entering the Australian renewable energy market.

2019

L E A RN DIGITA ABOUT HOW LT C AN IM ECHNOLOGIES P RO YOU DO VE THE WAY BUS I N E SS

21–22 MARCH 2019

PULLMAN HOTEL, ALBERT PARK, MELBOURNE

International

KEYNOTE

Nigel Watson

Terri Benson

Wayne Pales

Geoff Purcell

Fiona Bishop

Group Information Services Director, Northumbrian Water (UK)

Managing Director, South East Water

General Manager Technology Strategy, Australian Energy Market Operator (AEMO)

Chief Technology Officer, Melbourne Water

Executive Manager Change and Innovation, Western Power

Eva Hanly

Mark Paterson

Amanda Finnis

Graham Rix

Ian McKenzie

Executive Manager of Strategy, Innovation and Technology, TransGrid

General Manager Consumer Energy, Horizon Power

Chief Information Officer, Coliban Water

Chief Information Officer, SA Water

General Manager IT Operations and Service Management, Jemena

Maree Mamo

Colin Chapman

Georgina Crundell

Toby Evans

Dr Adam Bumpus

Partner, Management Consulting, KPMG

Innovation, Research and Development Manager, Queensland Urban Utilities

Partner, Cyber Security, EY

Senior Manager Digital Transformation, SA Water

Senior Researcher, Energy Transition Hub

Cate Hilliard

Caroline Hussey

Michelle Grigg

Kate Fuelling

Rita McPhail

Manager IT Capital Portfolio, SA Power Networks

Team Leader Business Enablement, Service Delivery, Melbourne Water

Marketing Manager, Powershop

Digital Excellence Consultant and Author

Manager Customer Engagement and Programs, SA Power Networks

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INDUSTRY INSIGHT

AN ENERGY WISHLIST FOR 2019 by Andrew Dillon, Chief Executive Officer, Energy Networks Australia With a Federal election looming, it is timely to articulate our network ‘wishlist’ for 2019. We hope this year brings the much-needed stability and long-term focused policies and regulation that the industry needs to deliver best outcomes for customers. st y licies in the pa ed energy po energy polic iv in t-l e or at sh is d im e cl an ol ck-a-m A workable y unsuccessful ministerial wha en far too man game of prime r bipartisanship. ou d e an There have be lik y s ilit el out for stab t where it fe in ng yi po cr e is th ry to , st decade licy. The indu an energy po more stable th es d erm outcom all the rules an sed on long-t ation of what m cu m tricity and fo su ec e on el th ti of is la Regu ive, which ion and use ct at je er ob op is gy t, er en en m this objective cient invest The national imperative that eve, seeks effi is hi It s ac s. ie to er lic m um po ai that regulations interest of cons e, or it is likely r the long-term cisions are mad long run. de e ry th to in la t gas services fo gu en re m eater detri ation when gr er er id liv ns de co ill e w im the pr customers t-term gain for that seek shor to m generators riffs of electricity, fro ta w flo and small gy e ay er rg w la en ers Fairer r generato fo erated as a on op rm fo lly at na pl tio ay di estimates that ing a two-w Networks tra ion Roadmap gly are becom at sin m t or ea sf cr in an t Tr bu k It’s not just abou city Networ customers, network tariffs. e city. The Electri re iv tri su ct ec fle en el d r -re ul ei st th co to trade the tariffs ementing co e it. Moreover, saved by impl us of be u w n yo flo ca n n ay he w llio w $16 bi the twoit’s about d benefit from tricity you use, s participate an er how much elec om st cu of ider range that a much w of energy. e modern age th in ty by electrici is set to retire ture entire demand fu ’s e d m SW sa te N e ec of th nn nt in equivale to be built A more co at supplies the ch is unlikely th hi n t w tio n, en ra m tio ne ra cu ne ge do tion Coal with new ge ystem coordina t be replaced is a whole-of-s pport expected P) su (IS 2035 and mus to an t Pl os m em st ed Sy ed ne ed at is gr e te frastructur an actionable spots. The In transmission in the inclusion of t re or he w pp su es tifi AG preferably so which iden to see CO ectricity Rules, El We would like l n. na le tio io ra at N ne e ge future k into th appropriate ru Plan framewor ent, is under an em pm st lo Sy ve ed de at r gr Inte ady unde P, which is alre that the next IS k. mewor governance fra with rooftop urces e on the rise, so ar s re ce ly gy ur er so re en e an increasing stributed Distributed s and other di ems to manag st rie sy tte e ba th r, to la gn si em so st de al sy Rooftop mes. We must es. The optim two million ho ng-term outcom lo their local st n be ai solar now on e nt th ai m e d ork to achiev k businesses tw or ne tw ne ed ut re em planning an st rib he dist erator for sy ork is one w op tw t st ne ke be ar ay at m w th e os interface ation to th manage a tw sses to design ate their inform ne eg si gr . bu ag lly k d ca or lo an tw nstraints networks This allows ne eir network co ion purposes. and manage th s ed market operat ne ay w omers’ twomeet their cust s They have the power system questionable. stand alone un d e le ar rs the edge of to u em st ib Distr e power sy lity for those at bi on al lia d re e an st ov of pr and im The benefits all customers wer prices for potential to lo s, the grid. cing emission including redu lia ra st Au . s r rts fo ga s po ergy im Renewable y opportunitie reliance on en s provides man and reduced e us but the facts tic ly, Renewable ga nt es m ce re do rt markets, abundance po in ex en w be ne ’t tter outcomes g sn be creatin hing that ha y produces et on m rm so ha is y in lic k ty wor Evidence in po s and electrici ture where ga n. io show that a fu at isol uld achieve in than either co ooth. The en less than sm be t s u ha llo ut ning ro llo er ro art meter ent basis, mea Smart met Victoria, the sm trary replacem bi an ar .A th r an life he its on ot d of es le In stat ers instal at the end rrent meter is sees smart met they cu r re ch ei oa he th w pr n s ap he ea nt w ar curre ed basis in smart meter et a t rg ta ge a utors ly on rib on s st s suring di smart meter most customer mbined with en be to replace co ld be is, ou d Th w ul s. co ch ea ls oa ar ency leve netration better appr ltage and frequ eir in high solar pe vo th as t n ec ch ea m nn su ld co ed ly ou are need s could safe meter data, w er t ar om st sm cu to e ss or ce and m have easier ac fer appliances d, ensuring sa ne ai nt ai m r tte be id. solar to the gr March 2019 ISSUE 5 www.energymagazine.com.au

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INDUSTRY INSIGHT

HAPPY 20TH B

NATIONAL ELECTRI by Ben Skinner, General Manager Policy & Research, Australian Energy Council Last December, the National Electricity Market (NEM) turned 20. In this article, Ben Skinner takes a look back at the events that led to the development of a national market for electricity, and the major changes and innovations we’ve seen across the NEM over its 20 years of operation. And while it draws many local criticisms, when viewed as a whole concept, it was a remarkable achievement and remains feted internationally as an excellent model. Let’s take a trip down memory lane.

n 13 December 1998, the National Electricity Market Management Company (NEMMCO) took over the controls of the power system in Queensland, New South Wales, Victoria, South Australia and the Australian Capital Territory; and the National Electricity Code came into force. But this milestone has passed with little recognition. It was not always thus – indeed your author was at NEMMCO when the tenth anniversary was celebrated with embossed gifts. And on the 15th anniversary, the Australian Energy Market Commission (AEMC) and KPMG published an excellent historical account of the NEM’s formation under the title A case study in successful microeconomic reform1. Until very recently, such a title invited no irony. Regardless of whether you subscribe to the current catchphrase of “the NEM is broken”, it inarguably revolutionised our energy industry, and was a major event in this country’s economic development.

Where did we come from? Prior to the 1990s, all electricity supply came from state government-owned, vertically-integrated utilities. Assets were owned by themselves, local governments and private firms fully contracted to the utility. By the late 1980s, many of these utilities were seen as greatly inefficient, and poor planning had committed their states’ treasuries to large unnecessary investments. In 1990 Victoria’s State Electricity Commission (SEC) supplied a maximum demand of about 6000MW with over 20,000 employees. It was known as “Slow, Easy, Comfortable” to its staff, with work practices demarked across over 20 unions. Meanwhile, customers experienced an average of 510 minutes off supply a year as opposed to 140 minutes now2. New South Wales, Victoria and South Australia had interconnected, however these links were only opportunistically used to reduce fuel costs when it suited both parties. States very much looked to develop their own patch. In 1991 the Industry Commission (now the Productivity Commission) strongly criticised the industry’s performance and

recommended3: »» Vertical separation of the competitive and natural monopoly grid elements »» Competition in each of generation and retailing »» Progressive privatisation; and »» Extending the interconnection to Queensland and Tasmania when economic. This direction was very much supported by the 1993 Hilmer competition review4, and the concept of relying on electricity markets rather than central planning was born. It was helped by the lead of the United Kingdom, which was transforming its industry along similar lines, several years ahead of us. But most importantly, it was a time of enthusiastic support for hard microeconomic reforms, thanks to politicians such as Keating, Stockdale, Egan and Lucas who saw benefits that would not be realised until long after their own terms of government. Privatisation was never a requirement of the NEM – many government-owned businesses continue to compete in it today – but an electricity market was seen as a necessary platform by which government could, if it wanted to, exit its financial exposure to the industry. During the 1990s the Victorian and South Australian governments had parlous financial circumstances, which undoubtedly

https://www.aemc.gov.au/sites/default/files/content/The-National-Electricity-Market-A-case-study-in-microeconomic-reform.PDF

https://www.aer.gov.au/networks-pipelines/network-performance

https://www.pc.gov.au/inquiries/completed/energy-generation/11energyv3.pdf

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http://ncp.ncc.gov.au/docs/National%20Competition%20Policy%20Review%20report,%20The%20Hilmer%20Report,%20August%201993.pdf

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BIRTHDAY

ICITY MARKET accounted for some of their enthusiasm. The Victorian energy privatisations of the late 1990s were particularly successful, fundamentally transforming that state’s financial situation and economic confidence, resetting its economy from what had been a rust-belt towards two decades of nationleading prosperity.

Developing the NEM The National Grid Management Council (NGMC), chaired by John Landels and project managed by recently retired AEMC commissioner Neville Henderson, designed a market that provides much of the framework the NEM continues to operate on, with: »» Retail choice »» Non-discriminatory access to the grid »» Equal treatment of new entrants and incumbents »» Equal treatment of intra and inter-state trade In order to reasonably manage the transition, retail choice was introduced progressively, and generators and retailers were allocated “vesting contracts” that declined as retail competition took hold. From the mid-1990s, industry gained experience with these radical concepts firstly with a series of paper trials, then some more serious pre-NEM markets, with names such as “Vicpool”, “ELEX” and “NEM1”. In an example of the wheel turning with nothing new, a key debate held in the mid-1990s was whether to follow the UK

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preference of an energy-only market or the US preference of separate energy and capacity markets. The NGMC followed the UK lead in this and other areas, like applying incentive-based, or “CPI-x”, regulation of monopoly assets with fiveyear price caps. In addition, it also allowed generators to self, rather than centrally, commit their units from day-to-day. The NGMC wrote up the design in the National Electricity Code, which mostly lives on in what we call the NEM rules today. They knew the arrangements would need to evolve, so they created the National Electricity Code Administrator (NECA) to handle rule changes. Transmission regulation was performed by the Australian Competition and Consumer Commission (ACCC), while Distribution and Retail regulation were performed by state regulators. This whole structure was empowered by the National Electricity Law (NEL), legislated in South Australia and reflected into each participating jurisdiction’s Electricity Act. 20 years into the national market, the NEM remains legally a state function. NEMMCO came into being in 1997, and began operating the “Queensland Interim Market” using NEM-style dispatch from early 1998. Unfortunately, this coincided with an unrelated period of load-shedding, and the market had to be briefly suspended and re-started. The NEM itself had a number of missed starts through 1998, caused by IT delays, and although NEMMCO’s trial systems were far from perfect, in November the industry finally agreed to start on 13 December 1998. We held our breath, but the NEM cutover occurred without a hitch and NEMMCO’s IT systems performed well right through that first year. Twelve months later, Y2K was also a fizzer.

Key developments since While much of the fundamental design remains intact, there have of course been countless changes and external events since 1998 that have greatly affected the character of the NEM. Some that are particularly worth mentioning are: »» The ultimate achievement of full retail competition. In 1998 most people would have ridiculed the idea of choosing their own electricity retailer.

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»»

Governance changes: ♦♦ In 2005 the Code became Rules subordinate to the NEL. NECA was abolished and the AEMC created to manage them. ♦♦ The Australian Energy Regulator was created and took over all network and generator regulation, and, in time, retail regulation from NECA, ACCC and the states. ♦♦ In 2009, NEMMCO merged with several gas market operators to become the Australian Energy Market Operator (AEMO). ♦♦ In 2017, the Energy Security Board (ESB) was created to attempt to coordinate the other institutions and recommend expedited changes to governments. Changes to industry structure: ♦♦ Greater roles for the private sector through privatisations and entry. ♦♦ The original structure of distributors being stapled to retailers has all but disappeared, as investors choose to focus on either regulated or competitive business. ♦♦ The “gentailer” model, where some investors prefer to link generation with retailing. A rocky road of federal and state environmental policies, particularly the National Renewable Energy Target (RET), the Queensland gas scheme and a short-lived federal carbon pricing scheme, along with other aborted attempts. The export-linking of the east coast’s gas markets from 2015.

The most significant technical changes worth mentioning are: »» The introduction of frequency control ancillary services (FCAS) markets in 2001. Even now, perhaps no other electricity market has so completely integrated FCAS with energy.

»» »» »» »»

The connection and inclusion of Queensland in 2000 and Tasmania in 2005. The progression of remotely-read interval meters to millions of small customers. Removal of the regional boundary reset rule and snowy region in 2009. Introduction of global, five-minute settlement from 2021.

Reflections The last two years have seen commentators and politicians direct a mountain of scorn at the NEM. In reality, these criticisms are almost entirely about factors unrelated to the market design – lack of environmental policy cohesion being an example. In fact, the NEM’s founders created a remarkably robust underlying design, which, having the same name, is conflated with negative aspects of the industry more broadly. Contemporary politicians and commentators often say the NEM should have a “plan”, oblivious to the selfcontradiction. History reveals why plans are dangerous things. Today, we take for granted the concepts of generator and retail competition, open access and interstate trade, but we often forget they were only possible through remarkable efforts during the 1990s. These efforts created the NEM out of an industry that was once entirely the opposite of these things. They make possible today’s transformation with new technologies and innovations at the up and downstream ends of the industry at a rate that could not happen in the pre-NEM days. If nothing else, you certainly wouldn’t find anyone involved in today’s NEM who would describe it as “Slow, Easy, Comfortable”!

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As an industry, we need to come up with a different approach to how we sell energy.

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CHANGING THE FACE OF ENERGY RETAIL Much has been said about energy retailers and their relationship with customers in the past twelve months. Amy Childs, Managing Director of Momentum Energy, is the first person to put her hand up and acknowledge that the relationship needs to change, and Energy Editor Laura Harvey caught up with her to learn more about what she is doing to improve the way customers see their energy retailers.

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ince taking on the Managing Director role in an acting capacity in May last year, and permanently from October, Amy Childs has been focused on bringing in a suite of changes that she envisions will both grow the customers that Momentum serves; but also help bring about a more transparent and open approach to energy retailing in Australia. The first, and most obvious thing, you notice about the way Amy is leading Momentum Energy is where she sits in her office. Amy and her leadership team have done away with offices, and they’re firmly ensconced on the floor, with their staff. It’s about being open, available, and most importantly, transparent – so it’s no surprise that these are the core values that Amy is aiming to re-establish in the relationship between Momentum and its customers. Changing the face of energy Amy is passionate about the energy industry, and passionate about the change she wants to see in the industry. Prior to taking on the Managing Director role, Amy was Momentum’s General Manager for Sales and Marketing, bringing her total time in the business to three years. According to Amy, in that time, she has interviewed 150 candidates for different roles across the business. “We’ve really changed the profile of the people that work here in senior roles that are able to influence outcomes that are different,” said Amy. Amy strongly believes that we can’t keep replicating the same thing in the energy industry – if we do, nothing will change. While of course many staff in the business do have an energy background, she’s not afraid to recruit from outside the industry for key roles, largely in order to put a different lens on the way things are done at Momentum. “I’ve taken a little bit of a risk, to be honest. I’ve got people that haven’t got energy background experience, and that makes you sometimes feel a bit vulnerable because you might miss something. But I think it’s more important to have people who are passionate about doing the right thing for the customer, and thinking about being part of the energy industry and changing the way it is, with the right mindset. “I’m passionate about this,” said Amy. “There’s so much opportunity to do well, and I am personally really focused on driving change in the energy industry. “It’s going to take time, and I have to manage my energy and my expectations, but I believe we will get there.” Growing an emerging energy retailer Amy believes that being at the helm of a tier two retail business puts her in the perfect position to help bring about change in the energy industry – the size of the business offers a real competitive advantage when it comes to being agile and able to move swiftly to make changes that are required. But of course there are challenges that come with being a tier two operator as well, and according to Amy, probably chief among these is managing churn – when you’re running a business where you’ve already convinced customers to make the switch and move over to you, how do you actually convince them to stay? “It’s really hard, and we have not cracked this one yet,” admits Amy. “The challenging thing about being a tier two player is we’ve actually encouraged a churner to join us. “So what we find is that there’s incumbent retailers who have obviously got a large base that can’t be churned, or they don’t

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know how to. Whereas for us, all of our customers have actually chosen us, so they know what to do. They know how to go and find a good deal. If we don’t live up to their expectations, they’re out of here – and frankly, so they should be.” Churn is a topic that Amy has clearly spent a lot of time thinking about, and she’s come to several conclusions on the subject – one of these being that when it comes to churn, it’s all on retailers. Amy believes it ultimately comes back to making the energy supply experience better for customers, and figuring out what can make the interaction between customer and retailer better, so “that you don’t end up leaving us for $30 or $50 a year”. “It comes down to if you call us, you want to get served quickly. You want to get your issue resolved, and then you just want to be left alone. You actually don’t want to think about your energy too much as a customer,” said Amy. As well as swift interactions with the business, Amy also believes that providing customers with new services – such as educating them about how they can reduce energy consumption – are key. “I spend a lot of time thinking about the things we can bring into market that are useful, that customers are willing to pay for? That’s going to help them reduce their energy bills? That’s ultimately what they want, and that will then endear trust which will make them stay longer, which will reduce churn, and then all of a sudden we’re in a place which is much better than we are today.” Also important to Momentum is their Australian-based call centre, which according to Amy, is something customers really respond to. “Our customers are calling us because they’re confused, or something has gone wrong. So being able to speak to someone here in Australia, who can understand, empathise, be human in the interaction – I think that’s the magic, that’s where we’ve all got to strive to get to.” The next step for Momentum’s call centre team is to achieve single call resolution, which means customers only need to call Momentum once to have their query or energy addressed. “We’re working on that now. We’re trying to avoid the transfer between departments and people that often happens in call centres, and the waiting in queues that can happen. “Now of course we might not be able to solve everything in the first call, but I want to get to the point where one of our people is saying, ‘I’m Amy, I’ll follow this up for you, and I’ll get back to you on it.’ And you know who that person looking after you is. Because some things you can’t solve on the first call, it might involve having to call a network or another third party. “I don’t want to declare victory on that yet, we’re not 100 per cent there, but we are very, very focused on having that done very, very soon.”

Establishing Momentum in a crowded market In a crowded market like energy retail, businesses like Momentum need to establish a clear voice, and brand identity, to cut through the noise in the marketplace. Momentum’s repositioning of its business began in 2017 when it “killed the discount” – the company developed a campaign around positioning itself as the 0 per cent discount retailer. But according to Amy, it was a challenge to get everyone in the business on board with this one. “People worried that customers wouldn’t pay their bills on time without a discount, but it just hasn’t been the case at all,” she said. After a successful launch for the campaign, and positive reception in the marketplace, a number of other retailers followed Momentum with “no discount” offers. To continue its differentiation in the market, Momentum has just launched a “Less Hassle More

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Amy Childs.

Hustle” campaign, in line with the company’s belief that great, no hassle service is the key to retaining and attracting customers. “Before we launched the Less Hassle More Hustle campaign, we conducted a survey that showed that 94 per cent of Australians find it a hassle dealing with their energy retailer. And while Australians are most concerned about affordable pricing, they also want to see simple rates and good customer service. “Energy simply isn’t working the way it should be. Somewhere along the line, this industry lost its way and governments felt the need to step in on behalf of customers. But the level of intervention has been so high that it has distracted us from what should be our number one goal – the customer. “It’s pointless being paralysed by all the change that’s happening in the industry. All we can do is focus on the immediate things we can do to create a better experience for our customers. “Momentum acknowledges we can do better, particularly in areas such as call centre waiting times. We will use the findings of this survey – and other research – to get busy fixing things for our customers and making sure there is less hassle and more hustle when they’re dealing with us. “In any marketing we do, we have to cut through. We do not have big pots of money to spend. We need to be really careful how we invest the marketing dollar because ultimately that’s the cost of running the business, which you need to be very mindful of when you’re thinking about customers and their energy prices.”

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The next challenge Looking ahead for Momentum and Amy, the focus for the future will move beyond acquiring and retaining customers, towards some exciting innovations that will change not just the business, but the energy market more broadly as well. According to Amy, the key upcoming challenge for the sector is working out how retailers play a role in the disruption that’s coming with behind the meter technology. “We’re on that path now, and we’re working out what our role should be. There’s a lot of case studies out in the market of others who have gone before us, and tried and failed, which is useful – it gives us some intelligence on what worked and what didn’t. “We’re using that information now to think about how do we play a role, what does that role look like? How do we help customers? That’s where we want to get to, and we’re working on how we put ourselves into a position where we are that trusted provider that is based out of Australia and can help people with what is a really complex and challenging problem.” At the forefront of these new areas of focus for the business is an ongoing desire to serve as an advocate for energy customers. “We really want to push for change and disruption, and doing the right thing for customers,” said Amy. “It’s not hard, it’s a choice, and we really want to be leading the charge on that. “Expect to see more of that from us – more products and propositions that are living up to what we’re trying to do in the market.”

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POWER PURCHASE AGREEMENTS: UNDERSTANDING NEW MODELS FOR ENERGY RETAIL

In 2017, the City of Melbourne led a group of iconic organisations, local governments, cultural institutions and universities in a project aimed at sourcing and purchasing their own renewable energy direct from the source. The group has since signed an agreement with Pacific Hydro to purchase wind power from its soon-to-be completed Crowlands Wind Farm. This first-of-its-kind agreement has signalled a potential shift in the role retailers will play with large-scale energy users. We spoke to City of Melbourne Deputy Lord Mayor Arron Wood about this innovative new model, and the role retailers can play in future agreements of this type.

s electricity prices continue to rise and consumer trust is on shaky ground, organisations are taking matters into their own hands and are actively seeking their own sources of energy supply outside of the traditional retailer model. In 2017, for the first time in Australia, 14 organisations from different sectors, led by the City of Melbourne, came together to form a consortium and signed a ten-year renewable energy Power Purchase Agreement (PPA) with Pacific Hydro, supplying them with clean, low-cost power. The 14 participants in this exercise, known as the Melbourne Renewable Energy Project (MREP), are the City of Melbourne, Bank Australia, NAB, Australia Post, Citywide, Moreland City Council, City of Yarra, City of Port Phillip, NextDC, RMIT University, The University of Melbourne, Zoos Victoria, the Melbourne Convention and Exhibition Centre and Federation Square. “MREP was inspired by our commitment to contribute to our city’s renewable energy and emission reduction goals, with the ultimate aim to help avoid the worst effects of climate change,” said Arron Wood, City of Melbourne’s Deputy Lord Mayor. “MREP will help increase the speed of Australia’s transition to a renewable energy supplied-grid and play a key role in achieving our zero net emission targets. “We also wanted to develop a replicable model for other large energy users to cost-effectively reduce emissions and to drive new investment in large-scale renewable energy generation.” A closer look at the agreement process The original idea for a group renewable energy PPA was sparked in 2014. Coming from various different industries, most of the MREP participants had limited knowledge about PPAs and how they are developed.

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Because of the unfamiliarity in Australia of this type of agreement, its development within the Australian regulatory framework was also new to many advisors, including legal, procurement, probity and energy market consultants. MREP relied on champions within each organisation to maintain momentum and overcome strategic barriers, and they called on input from communications, procurement and legal staff as the project reached important milestones. Eventually, MREP developed a contract structure that would accommodate different renewable energy purchasing preferences for different customers in the group. The purchasing group made this decision because each organisation had different needs and objectives, however, this did make the tender process especially complex. The MREP tender for the supply of electricity and large-scale generation certificates identified a combination of contracting requirements over a ten-year period, and established five key criteria for assessing tender responses. The most important was price, which was assigned 60 per cent of the weighting. Community and environmental benefits were assigned 12.5 per cent, while retailer service and project delivery risk were both assigned ten per cent. Finally, Victorian local community economic and promotional benefits were weighted at 7.5 per cent.

Constructing the source In November 2017, Pacific Hydro and its retail arm Tango Energy were chosen as the preferred suppliers for the PPA. Pacific Hydro Chief Financial Officer, Rob Spurr, said, “This new approach to power purchasing will help our partners to take control of their costs, reduce their emissions and directly support our work decarbonising the power system. Initiatives such as MREP will be key in driving new renewable energy generation in Australia.” www.energymagazine.com.au

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Construction activity at the Crowlands Wind Farm. Image courtesy Pacific Hydro.

In order to produce the amount of energy required to power the consortium, MREP is supporting the construction of a wind farm at Crowlands, 20km northeast of Ararat in Victoria. The wind farm will consist of 39 turbines and have an 80MW capacity. MREP members have committed to purchase 88GWh per year from the Crowlands Wind Farm as part of the ten-year agreement. The project site was chosen because it has strong, consistent winds and is in close proximity to the electricity grid. The Crowlands Wind Farm will be owned and operated by Pacific Hydro, and the power will be supplied to Tango Energy, who will sell the remainder of the farms output to the grid. The proactive approach that MREP is taking is signalling a shift in the relationships between corporations and retailers. In order for retailers to continue to remain competitive in the energy market, this change needs to be embraced and greeted with an open mind. One of the

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key benefits PPAs can offer the industry is investment into new large-scale renewable projects with the security of long-term purchase commitment. “The customer group’s ten-year commitment to purchase renewable energy from the Crowlands Wind Farm unlocked investment for construction of this large-scale project. In total, MREP leverages around $150 million of electricity spend over ten years, from 14 partners; an amount large enough to give a renewable energy developer certainty to invest and build,” Mr Wood said. “A crucial strategy to the success of the MREP was collaborative engagement of the electricity supply and generation businesses to understand what was viable from all stakeholders. Partnering with an electricity retailer and generator who are as enthusiastic and collaborative as the customers is crucial to making a PPA work. “Pacific Hydro demonstrated that they were prepared to think outside the square and look at flexible contracting options.

Inside City of Melbourne’s Council House 2 building, which is now fully powered by renewable energy. Image courtesy City of Melbourne.

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consumption, and buy an additional 20 per cent through the offset market, such as from renewable energy projects overseas, or from reforestation or savannah land management projects. Buying offsets from projects such as these are cheaper than LGCs. “Renewable energy procurement for MREP involves purchasing LGCs. The MREP Group obtain their electricity from the grid in the normal way, but we purchase LGCs equivalent to our electricity consumption, meaning our electricity is 100 per cent renewable,” Mr Wood said.

The benefits of the PPA The results of this renewable energy PPA are expected to have a number of benefits, including: »» Reducing emissions and delivering on strategic goals in a cost-effective way »» Building a reputation for leadership and innovation »» The opportunity to directly support the local renewable energy industry »» Opportunities for storytelling and creating awareness for customers »» Reduced and stable energy costs »» No repeated internal procurement processes over the duration of the PPA contract

City of Melbourne Deputy Lord Mayor Arron Wood. Image courtesy City of Melbourne.

The fact that Pacific Hydro is the preferred supplier shows that tier two retailers can be more than competitive.” Construction began on the wind farm in March 2018 and completion is anticipated for May 2019. By January 2019, Pacific Hydro had installed 25 of the 39 turbines required and energy has begun flowing into the power grid.

Innovative pricing model Being a new concept to the Australian market, the MREP contract and pricing model was previously untested. Suppliers found the innovative contract structure challenging to understand and was the cause of considerable delay to the negotiation and development of final contracts. Under the final agreement, MREP participants could choose between: »» A contract for the sale of retail electricity supply and provision of Large Scale Generation Certificates (LGCs) »» A contract for the purchase of LGCs only with a specified fixed annual load For those who chose the combined retail electricity supply and LGC contract, an agreed proportion of the retail price is fixed for the ten-year period, based on the cost of production at the renewable energy facility. The remainder of the retail price is based on energy market movements and will be reset every two years under a market indexing and reset provision. The City of Melbourne and a number of other MREP partners decided to purchase LGCs equivalent to their electricity

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There are potential risks involved when entering a PPA, however, these can be mitigated by several key mechanisms and arrangements in the contract. “Corporates interested in PPAs need to understand the fundamental market drivers and their impact in order to mitigate their energy price risks over the long term. With limited future price forecasting the fixed price for electricity over the contract term could be higher than wholesale electricity market trends,” Mr Wood said. “LGC purchase arrangements are exposed to changes in legislation to the Renewable Energy Target which could lead to changes in price.” Other challenges involve the risk of delays associated with construction and connection to the electricity grid when procuring electricity from a new wind or solar farm.

What the future holds for PPAs Building on the success and insights of MREP, the City of Melbourne will be facilitating another power purchase agreement for businesses across the city. A number of large energy users have already expressed interest to join the buying group. Mr Wood said the next corporate group PPA will be able to share the benefits and learnings of MREP, and further contribute to the

municipality's renewable energy and emissions reduction targets. “The next corporate group PPA will help us to engage with the broader community on renewable energy and zero net emissions, drive economic development in the city and create linkages to regional areas in Victoria,” Mr Wood said. “The MREP project team has actively encouraged replication of the model to others through sharing lessons at conferences, industry events and delivering a masterclass series. Since launching the MREP tender process, renewable energy PPAs have been announced by Carlton United Breweries, Telstra, Coca-Cola, ANZ, Monash University, UNSW and Deakin University. A group of councils is currently also looking into entering a group PPA. “Adoption of the MREP model by other organisations has demonstrated the positive impact of the group’s leadership. Together all PPAs will assist to reduce cost for renewable energy and reduce carbon emissions.”

If you are interested in learning more about the group corporate PPA process, contact MREPContact@melbourne. vic.gov.au for more information.

The Crowlands Wind Farm. Image courtesy Pacific Hydro.

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RETAILERS: SERVICE DEL A NATURAL INSTINCT It’s been a challenging period for energy retailers, with price rises, regulatory pressures and increased market scrutiny. According to ActewAGL’s General Manager Retail, Ayesha Razzaq, restoring confidence in our retailers comes back to the simple act of remembering the core function of our businesses – are we in the business of generating bills and complying with regulator reports, or are we here to meet our customers’ needs when it comes to the essential service we provide them?

t might seem obvious to say that energy retailers need to turn all of their focus and attention to meeting the needs of their customers. But in a highly regulated environment, with many compliance obligations that need to be met, it’s actually pretty easy for retailers to lose sight of what their ultimate end goal should be. This is why it’s so important for retailers to have champions in their executive and leadership teams that remind the entire team of where their focus needs to be – and this is exactly the role that Ms Razzaq plays day in day out. According to Ms Razzaq, the formula for meeting customers’ needs isn’t tricky – it simply comes back to delivering what they want in an authentic and genuine way, and being there for them. Looking beyond this basic principle, Ms Razzaq is leading a drive within ActewAGL to simplify, improve and enhance every interaction their customers have with their call centre staff, all of whom are based in Canberra in the same building as the business’s executive team. “Today, we have new data and new ways of working, yet we’re still following the same processes in our customer interactions,” said Ms Razzaq. “We’re a hundred-year-old business and I’m the first to admit we can do things better. “We need to move from focusing on the process to focusing on the customer outcome. How can we make it easier for them to deal with us? How can we improve energy affordability, not just in the prices we charge, but in customer education around energy efficiency?” The advantage that energy retailers have when asking these questions is the fact that they are all users of the product too. According to Ms Razzaq, this makes it easy to identify what the customer is looking for – a reasonable price, simplicity, transparency, and reliability. “Sometimes we overcomplicate things,

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but I think if we can stay focused on those core goals, that’s probably where the future retailers will win,” said Ms Razzaq. For Ms Razzaq, it’s also important to foster an environment where her staff feel empowered when it comes to service delivery. “Service delivery is such a natural instinct, but sometimes in organisations we put a lot of bureaucracies and processes in place that stops that service culture, which is really innate, and it’s really human.” To counteract this, Ms Razzaq encourages her staff to see the customer, and not the process, in order to deliver the best solution. One of the other key elements for ActewAGL when it comes to developing customer trust is being an active part of the community, and really embedding the business as a critical part of the Canberra landscape. ““It’s not just words or money, it’s actions. “We’ve got an employee volunteer program where our staff are out in the community, rolling up their sleeves and showing support. I believe some customers do want a sense of belonging, and a sense of community. “Ultimately, it comes down to getting your employees focused on a really unified sense of purpose, which then manifests itself to a great customer experience.” These steps are part of the overall drive towards customer centricity which is such a critical focus for Ms Razzaq and the business as a whole. “The thing with customer centricity is that everyone talks a good story, but not everyone actually does it. Independent research undertaken by CSBA in December 2018 highlights that ActewAGL has the best customer service compared to any other energy retailer in ACT, based on 30 competency areas. “These results just back-up what we already know, customers want highly skilled, localised customer support.

“We’re very serious about continual improvement to service and customer experience, it’s such a powerful factor for energy retailers, in particular with social media and online reviews.”

Turning threats into opportunities According to Ms Razzaq, it’s this sentiment of putting the customer first that will allow energy retailers to look at threats and turn them into opportunities. For instance, when looking at the challenge of customers – particularly large energy users – banding together and approaching energy producers directly and cutting out the retail middleman, Ms Razzaq takes the pragmatic response of realising that if this is a solution that customers do want, rather than fighting this desire, ActewAGL should look at how they can play a part in facilitating that solution. “It might be the whole value chain that we see retail businesses offering now, but users and providers might need someone to do their billing for them, for example,” said Ms Razzaq. “If we can’t provide the whole tower, we’re happy to look at which of the building blocks we can help with.” Based on Ms Razzaq’s experience with customers in this situation, she realises that often a customer will come back to a traditional retailer for at least some assistance in the process of procuring energy. “When confronted with some of the challenges energy retailing provides at a regulatory level, I’ve seen many businesses come back to traditional retailers. They might not take every service we offer, but they will take some services, and that is the service we can still provide.” Of course this is just one small type of threat the retail industry needs to consider on a daily basis. In any business today, there are constant threats to disruption, and businesses need to constantly think about what – or who – the next potential disruptor could be. www.energymagazine.com.au

CONSUMER AND INDUSTRIAL RETAIL

LIVERY SHOULD BE

Ayesha Razzaq.

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“I think all of us in retail need to carry a healthy sense of paranoia,” said Ms Razzaq. “I’m always thinking about how can I be disrupted; and I always have a few people in my team, often some of the young bright ones who come at the industry with fresh eyes, thinking about how a competitor would disrupt someone like ActewAGL, and about who can come between us and our customers.” Talking about the “uberisation” of energy, and the idea of tech giants entering the retail marketplace, Ms Razzaq acknowledges that these businesses are a threat – but how big of a threat they will be will come down to how existing retailers respond to them. “You’re not going to stop these companies, and they have deep pockets,” said Ms Razzaq. “These companies are all very skilled when it comes to data, so for me, the question is how does this present an opportunity for the greater integrity of the industry, and for the greater good, where we should compete, or where we should collaborate with the likes of Google and Apple?’” Ultimately, Ms Razzaq believes it doesn’t have to be an “us and them” situation – and that there is a real opportunity to take a collaborative view on this. “They’re great tech companies, but we understand the customer, we understand the business, we understand the regulatory changes,” said Ms Razzaq. “I would see Google and Apple as being part of an ecosystem of partners we’d like to work with to help improve the services we offer to our customers. “These opportunities to collaborate are exciting because there’s the potential here for synergies where one plus one equals three. And ultimately, if you can get a better outcome for the customer and be part of the solution, rather than part of the problem, why wouldn’t you?” Of course, when operating in an environment of disruption and change, Ms Razzaq acknowledges that critical to the success of the business is leadership that is prepared to be bold and courageous. “One of my favourite sayings is a turtle only moves forward by sticking its neck out. We need to take a few more risks and stop playing it safe,” said Ms Razzaq. “We also need to create that culture where you encourage and empower your staff to also stick their necks out, while knowing that the business has their backs.” And this need to be bold and courageous doesn’t just apply to ActewAGL – it’s something the entire industry needs to be prepared to do. “As the energy industry is going through

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these unprecedented changes, and they are once-in-a-generation, we need to recognise that we can’t just do things incrementally better. “As Henry Ford said, we can’t just provide our customers with faster horses, we need to think differently. “Our Board recognises that, they know

that we need to adapt to stay relevant. Resisting change won’t get us anywhere. “The businesses who are going to survive in the future are not necessarily those that are the strongest, it’s the ones who are going to be adaptable to change and can think from a very different perspective.”

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can do when it comes to energy prices. “I believe it should be industry-led, because there’s a lot of risk associated with default prices – if we set prices too high on a safety net, it’s not good for the customer; and if we set them too low, it’s going to potentially drive down competition, and so you’ll find a lot of the smaller retailers who are innovative and in that more exciting space won’t be able to comply. If prices are too low, it might also discourage investment into generation, which is critical." Ultimately, Ms Razzaq believes price is just one of the issues we need to tackle when it comes to regaining customer trust. “Price is one thing, but it isn’t a silver bullet,” said Ms Razzaq. “If we can shift the conversation from price to energy affordability and efficiency, that would be a good thing." This ties into a broader passion for Ms Razzaq, which is protecting vulnerable customers from price rises they cannot absorb. “With more new technologies entering the market, I think there’s a responsibility on retailers to take our vulnerable customers – those who can’t afford the solar panels, the batteries, the smart meters – along on the journey, and look at how we can assist them to have equal access to ensure they don’t get left behind. “This is really important for me, because it’s the vulnerable people who I feel need that safety net and that protection. They don’t have the know-how to churn or switch. So if we can protect that segment, that’s a really valuable contribution we can make.”

Managing price impacts Of course along with managing change and disruption, energy retailers also need to manage regulation and compliance requirements, and the latest regulation the Federal Government is looking to introduce relates to the prices retailers can charge their customers.

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The latest round of regulation that the Federal Government is looking to impose on retailers relates to default energy prices. And while this doesn’t affect ActewAGL (in the ACT, retailers are subject to state-based regulation with a price determination that takes them through to 2020), Ms Razzaq acknowledges that there is more retailers

Looking ahead There’s no shortage of challenges to keep Ms Razzaq and her team busy; and in the short to medium term, the key areas that they will continue to focus on will be delivering what the customer needs and wants, and improving the interactions the business has with its customers. For Ms Razzaq, it’s an exciting time to be involved in energy retailing, largely due to the fact that she’s dealing with a product that touches every part of our society. “Everyone uses it every day, and so my work sees me involved with a great many communities where I can influence change and perception about what the future will bring,” said Ms Razzaq. Ultimately, for Ms Razzaq, the way she and her team are confronting the current challenges the retail industry face comes back to their focus on customer service and delivery. “And if you are truly customer-centric you can grow in any market condition, whether it’s good times or turbulent times.”

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ENGAGING THE CUSTOMER TO BENEFIT

THE NETWORK

Through their engagement program, Essential Energy learned more about the keen sense of community felt by their regional customers.

In November 2018, Essential Energy were the unanimous winners of the Energy Networks Australia and Energy Consumers Australia 2018 Consumer Engagement Award. Essential Energy’s work was deemed to be outstanding and industry best practice when it comes to consumer engagement, and we spoke to General Manager Strategy, Regulation and Transformation, Chantelle Bramley, about the extensive process the organisation undertook.

he Consumer Engagement Award related to the work Essential Energy undertook, over a two year period, to gather knowledge and insight from its customers to shape the proposal the organisation ultimately submitted to the Australian Energy Regulator (AER) for building, operating and maintaining its electricity network over the period 2019-2024, and the proposed network charges over the same period.

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The engagement took place in four phases over a two-year period, and involved 20 forums with more than 3000 customers. Ultimately, the program delivered a true understanding of the priorities and expectations of customers. According to Ms Bramley, the seed for developing such a considerable engagement program was planted several years out from when the AER submission was due. There was recognition within the organisation that to make the submission process as smooth as possible, there would need to be significant customer

Chantelle Bramley.

input into the proposal Essential Energy ultimately put to the AER; and there was recognition a number of departments within the organisation would need to be involved in the engagement process. “We recognised early that we needed to get customer input into the way that we were planning to manage and invest in the network,” said Ms Bramley. “That was going to be vital for us, because we are a business

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CONSUMER AND INDUSTRIAL RETAIL it aimed to achieve, it’s pleasing to learn that at a Board level, the business was committed to the process from the outset. “Yes, it was an investment, but there is a much greater awareness, certainly in our Board and our executive team, on the need for network businesses to have a legitimate social license to operate and to invest,” said Ms Bramley. “Particularly given the fact that this business is looking to do things differently, we needed to actually understand where consumers wanted us to go with this. As you can imagine, there are lots of different choices we could make, but unless we have some clear feedback from our customers about what they want us to do, we might actually go in the wrong direction. “The other thing that I think gave the Board confidence was that the feedback wasn’t all about saying no, don’t change anything. Consumers were also saying, ‘We want you to invest here’. So having that feedback from consumers gave us the confidence to push for certain things with the regulator because we’d heard directly from the people that use our services.”

that is looking to change and transform, and we wanted to get customer views on that. So we started to ask our customers some really big questions, like did they think the reliability of the network was good? Would they be prepared to pay for fewer power outages? Should we be investing in new technology to improve reliability? “We identified a number of key, fundamental questions we needed customer input on, and we used multiple formats of engagement, from deliberative forums to interviews to surveys. “And throughout the process we were very open and transparent. We invited consumer groups to come along and observe, and we invited the Australian energy regulator to come and be involved. People really saw that we were very committed to the process.” Given the extent of the consultation, and the significant financial investment required from Essential Energy to deliver on what

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Incorporating feedback into planning The depth of the engagement process required a significant investment in time to coordinate and gather all of the customer feedback involved; but this paled in comparison to the process of compiling and moulding all of the feedback into a strategic vision and plan that will best meet the needs of the majority of Essential Energy’s customers. According to Ms Bramley, the help of external advisors was critical at this stage of the project. While their involvement began at the earlier stages of proceedings, in helping to develop objective, unbiased questions for customers that didn’t lead to particular answers, they also helped to document the feedback in a very coherent way, so that Essential Energy was left with a quality, standalone record of the engagement with their consumers. “Then of course, you go through that document and you can see that people have different perspectives,” said Ms Bramley. “And somewhere in there you’ve got to make a judgment call about what will drive the value for the majority of our customers, and still allow us to operate the network safely and reliably. “But getting to know our customers better, helped us make those decisions, because we had a better feel for what was really important to them. Interestingly enough, there was a lot of consistency across our massive geography on what was important.

“I’m not saying it was all easy, there were periods where we really had to work through and consider if we could make certain changes and still manage the network effectively. “But again, going through the process ultimately gave us the confidence to develop our report for the AER and say actually, this investment’s really important for our customers. Here’s evidence of that.” The process of reviewing all of the compiled feedback also resulted in significant changes to some of the plans Essential Energy had already laid out for the 2019-2024 period, and was one of the key factors the company was commended for in winning the Consumer Engagement Award. “One of the important elements of really effective stakeholder engagement is actually changing your plans in response to that feedback,” said Ms Bramley. “Through the process we undertook, it’s clear that based on the feedback received, we changed our plans from what we originally said we would do. “That was different, and at times, a little bit uncomfortable, as we thought about whether we could actually make some of the changes that were requested. Could we do that cost-effectively? How will that impact the business? “We had to be prepared to work through impacts and assess whether we could still manage the network safely and reliably.”

Unexpected insights Ms Bramley said that of all the learnings that Essential Energy was able to gather from the engagement process, two clear things stood out: the shared sense of community for all of their customers living in remote and regional New South Wales; and the fact that their customers genuinely did have a very keen desire to engage with the process of helping to design what their future energy network will look like. “Our customers have a huge sense of community – not just for their own town or their region, but basically for anyone living outside of Sydney, Newcastle, and Wollongong,” said Ms Bramley. “We would specifically say to people, ‘Look, we’ve got customers that live way out in the bush, and it costs us more to serve them. If we put their prices up, we could lower your prices. Would you be okay with us doing that?’ And on the whole, our customers wanted everybody to have the same level of service at the same cost. “We were also surprised by how strong the desire to engage in the process was.

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“You might think getting 300 people in a room to talk about energy is quite difficult – well actually, people really wanted the discussion. “It’s true people just want the lights to work when they come into their home, but what I certainly took away was that you cannot underestimate the ability of people outside the industry to understand complex issues when you take the time and give them the information they need. Once they’ve got that information, they can actually make really good, informed decisions. “I think we can get a bit lazy in our industry and assume customers won’t understand the trade-off between reliability and affordability. Well actually, they do. As long as you take a bit of time to explain it in clear, easy to understand language, they want to have the conversation. They want to feel involved in decisions affecting their communities.”

Cross-organisational benefits Aside from the obvious benefits the consumer engagement has realised in terms of the network Essential Energy will build for its customers over the next five years, the organisation has experienced a range of additional benefits as a result of the process. “We might have started off this consultation process for a particular purpose, for the regulatory proposal, but it has become so clear that the value of this customer engagement in what it brings to the business is that it will now be an ongoing part of running this organisation. Because it is just so vital to understand what the

needs and aspirations of these communities are, as we become that business of the future that is responsive and is able to live up to their expectations around what a network can deliver for them. “It really has been the start of a whole cultural shift in the organisation. Now our people talk about not just what’s good from an engineering perspective, but also what’s good from a customer perspective. “It’s actually been quite addictive. You go to these sessions and you start hearing this feedback, you hear things you hadn’t thought of, and you want to hear more.” According to Ms Bramley, following such a significant period of getting to know their customers and their needs better, the next 12 months will very much be focused on making sure Essential delivers on its promises. “This is a very tangible business in the sense of the day-to-day impact we have on their homes, their businesses, their farms,” said Ms Bramley. “With that there is a great sense of excitement about the improvements we can make, but of course with that comes great responsibility too. “So 2019 will be all about delivery. We’ll start to make the investments in our IT systems, start working through all the process changes that we need to make, start skilling up our people so that we can really deliver on those savings that we’ve put into our regulatory proposal, and which our customers want to see.”

One of the customer engagement sessions held by Essential Energy.

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USING AUTOMATION

TO ACHIEVE MAXIMUM

EFFICIENCY

The move to five-minute settlement data, commencing 1 July 2021, will generate vast quantities of data — five times more than what is currently being processed — requiring additional resources and creating more potential for human errors. Greater efficiency can be achieved by minimising manual handling processes through the use of automation.

he National Electricity Market (NEM) is an intricate network of communications and transactions between different market participants, including generators, distributors and retailers. It has five trading regions covering New South Wales, the Australian Capital Territory, Victoria, Queensland, South Australia and Tasmania, and operates as a gross pool market, where all electricity delivered to the market is traded 24-hours a day, seven days a week. The Australian Energy Market Operator (AEMO) manages trading in the NEM, according to trading rules governed by the National Electricity Rules. Operating within this market involves a variety of complex processes and interactions, including receiving aseXML messages from AEMO and creating CATS change requests to provide MSATS with up-to-date standing data information. AEMO dispatches electricity every five minutes, so generators are required to bid to supply electricity in five minute blocks. For the past two decades, for the purposes of settlement, this price has been averaged out over 30 minutes – resulting in what is known as the spot price. On 28 November 2017, the Australian Energy Market Commission (AEMC) made a final rule to change the settlement period for the electricity spot price from 30 minutes to five minutes. Eliminating the need for human interaction Automation of the messages exchanged between the market and market participants can dramatically reduce costs and improve efficiency, while ensuring accuracy and compliance – something that will be even more vital when the market moves to five-minute settlement. According to Igor Green, CEO of Utilibill, a cloud-based utility billing software provider, automation enables a reduced cost-toserve while optimising efficiency. “Navigation through AEMO’s systems has traditionally been quite hard and involved a lot of manual processes that can be a bit clunky, which means that anyone using these systems really needs to know the market back-to-front,” Mr Green said.

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“We’ve got the systems and the knowledge required to automate a lot of the processes involved in market systems integration, which takes a lot of the crunch work out of operating in the marketplace. “Instead of several humans sitting around and manually going through all the tasks, we’ve automated many of these tasks through various process flows and robots, meaning less resources are required. We use a modern web-based interface that’s very intuitive so there’s also less training for anyone using our platform. “Any retailer that signs up with us will achieve massive efficiency gains, both in the front and back office.” Featuring a direct import of all NEM data, Utilibill’s software can automate all key processes associated with managing and monitoring Australian energy market transactions. This includes the automation of B2B requests and processes, as well as full automation of responses for CATS requests and B2B processes. Automation ensures the integrity of the data, reducing errors related to billing, invoicing and reconciliation.

Keeping up with market changes In the move to five-minute settlement, the rule change sets out a significant transition period in anticipation that many organisations will need to upgrade their IT systems to cope with the extra volumes of data. Utilibill is not concerned by this, with Mr Green commenting that the platform is more than capable of handling the extra load. “Utilibill’s underlying architecture has been designed and built with high volumes of data in mind. Utilibill supports multidimensional scaling which happens on demand. We have proved this many times over with our rapid customer growth and their data in turn,” Mr Green said. Utilibill aims to offer utilities more out of their e-billing solution, offering a truly cloud-based billing platform, with everything consolidated into a single, self-enabled system. With high-quality, Australian-based customer support available at no extra cost, Utilibill is committed to providing exceptional services in an evolving regulatory and technical landscape.

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DOMESTIC GAS OUTLOOK

WHAT DOES THE FUTURE

HOLD FOR GAS MARKETS? Australia’s domestic gas markets have been a critical focus area for the industry over the past 12 months, as we look to new supply sources for the market. Ahead of the Australian Domestic Gas Outlook Conference, being held in Sydney from 4-7 March 2019, we spoke to some of the leaders in the Australian gas industry to get their perspective on some of the critical issues affecting the sector. We spoke with: »» Phaedra Deckart, General Manager, Energy Supply & Origination, AGL Energy »» Sam Bartholomaeus, Head of Energy, BHP Australia »» Johanna Boothey, Commercial Director, ExxonMobil Australia »» Graeme Bethune, CEO, EnergyQuest »» Jim Snow, Executive Director, Oakley Greenwood and Adjunct Professor, University of Queensland Energy Initiative »» Saul Kavonic, Head of Equities Research, Oil & Gas, Credit Suisse

What do you see as the biggest challenges right now for the domestic gas sector? PD: There’s no silver bullet to solve this complex issue. That’s why we need governments, policy makers, producers, infrastructure providers and buyers working together. The biggest challenge then is achieving this alignment, so we focus on what needs to be done – more exploration and development to bring in new sources of gas and drive down prices for customers. And building the infrastructure to move gas where families and businesses need it most. Of course, that takes time, and in the meantime, we see LNG imports playing a key role in providing a new source of supply to put downward pressure on prices and provide much needed gas supply security in the southern states. SB: The east coast domestic gas market is adjusting to a new paradigm following connection to international energy drivers through Queensland LNG exports. Coupled with the natural decline of traditional supply sources and an evolving electricity supply mix, the market has experienced a period of rapid change. The challenge for the domestic gas sector is how we address this change; as at times it has been adversarial. Opportunities exist for parties to create shared value through transparent communication of value drivers and constraints. BHP acknowledges market concern on energy reliability and affordability, and is actively investing across its Australian petroleum portfolio to bring new supply to the market. JB: The biggest challenge we face is getting our policy settings right. On the east coast we have a flurry of activity right now as many producers – including Esso – compete to fill the forecast supply needs of the market. We need to ensure that our policies validate and confirm the free-market principles that are driving this activity. GB: Finding the next source of gas for the domestic market is the biggest challenge. Exploration needs to increase and be supported. We need to move past popularist government policies, to support the adding of new supply.

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JS: The biggest challenges relate to supply of gas to the east coast market – especially given that in two years BHP ESSO are forecasting a halving of their production output which could see 200PJ less for the east coast, effectively shorting NSW and even forecasting a small deficit for Victoria in 2022. This will occur within a pricing constraint of LNG netback, which will effectively cap prices on the east coast (via the ACCC and relative mechanisms) – it is unclear how the sudden but very large drop in supply (mainly for NSW) will be managed other than more gas from Queensland or via LNG imports. Other new supplies such as NSW CSG will add to market, and the 2018 AEMO Gas SOO was optimistic new reserves would be booked and these supplies could be brought to market – and that is the challenge. Given this challenge, gas prices will remain at LNG netback (and would have gone higher without the regulatory constraints) and we will see more demand reductions. East coast demand could well fall significantly in the next five to ten years in the industrial, commercial and residential sectors. SK: One of the biggest challenges for the east coast gas sector is presented by populist government interventions, and rent seeking behaviour, being prioritised over considered measures to accelerate supply side responses. Only the latter will prove sustainable.

As a result, what priority policy and regulatory steps do you support for addressing the east coast gas “crisis”? PD: I believe the number one priority is policy certainty – that’s what allows clear signals for investment and ultimately leads to lower prices for customers. In addition to that, I think we’d see real benefits from governments and regulators working together to streamline the approval processes. We’d see improvements through removing the repetition and red tape that currently exists and bring in new gas for customers in a much quicker timeframe. Regulation should support the market responding to market signals – through further exploration and development and infrastructure development. SB: A clear, consistent and objective regulatory framework that supports investment and provides clear information for all market participants to make informed decisions. This is enabled through aligned state/federal energy vision and commitment by industry participants to positively support market reform. BHP supports the continued investment in the short-term market hub framework and recent regulatory efforts to enhance pipeline liquidity. The provision of clear demand and supply information is also a key enabler for market evolution, BHP is committed to this endeavour albeit encourages the regulatory apparatus to streamline information gathering/coordination efforts. www.energymagazine.com.au

DOMESTIC GAS OUTLOOK

JB: We need a comprehensive energy policy that promotes alignment and provides a clear roadmap to our agreed destination. This will help establish the stable, consistent investment environment that will attract the huge capital we will need for new resource developments. GB: Long-term consistent policies should be set to support industry risk takers. Australia has extremely remote areas which struggle to find market demand support. Governments can facilitate access to markets, for example buying gas to generate electricity in a way which supports the early stages of gas appraisal and development. Recognise that the timeframe for gas projects and LNG do not always match the manufacturers or gas users preferred timeframes. There will be disconnects from time to time, and policies should be set which smooth these bumps. JS: Get more gas into the market – this will solve the availability and contracting issues – but pricing will not be relieved until we have excess supply across a number of sellers – real competition to off load gas. WA has proven this to be the case. Policies directed at accelerating supply will also only be useful if the costs of that supply is less than the cost of LNG netback or importation. I suspect this will not be the case without major intervention – for example, new supply from NT may be economical or Queensland through its domestic-only gas acreage extensions coupled with new (maybe subsidised) infrastructure. The other critical government role would be to create a far more open market in terms of price discovery and more consistent contractual terms for trades – this will create a derivative market and materially assist with the efficiency of the market for all involved, particularly for investment. There are ways to make this happen but it would likely involve government intervention. SK: The biggest priority for east coast gas policy should be for the government to halt rushed populist policy measures like the ADGSM and return to proper consultative policy development processes. To that extent, the government needs to address the political imperative of saving at risk manufacturing jobs, then targeting at risk manufacturing for direct government support alongside a transition plan to sustainability via gas efficiency/ substitution is likely to be a preferable outcome to distorting the entire gas market via export controls in a blunt attempt to try achieve the same goal.

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What infrastructure developments do you feel would be the most likely to bring long-term gas security? PD: Long-term gas security comes from an increase in supply through domestic gas development and LNG import. SB: BHP supports market-driven solutions. Energy security will be driven in an environment with unconstrained exploration and development opportunities for new indigenous supply and a pipeline network that expands to meet the call of the market. To supplement infrastructure investment is a more dynamic tool box for the market to transact, including a diversity of market services to meet various gas supply time horizons and reliability requirements, a growing pool of intermediaries and the ongoing evolution of domestic and international trading indexes. JB: We already have a vast and expanding pipeline network connecting plants and fields across the eastern seaboard. I believe our long-term security will lie in a multitude of supply sources feeding into this network. Advancing technology is opening up opportunities for new exploration, improved recovery from our discovered fields and it’s reducing the costs associated with LNG imports. GB: LNG import terminals will take some of the pressure off long term gas supply concerns and the political pressures on gas prices being high compared to overseas. There needs to be optimal sharing of infrastructure, particularly in remote areas. However, infrastructure alone does not bring long-term (domestic) gas supply, only exploration does that. JS: Gas security is about supply, not price so LNG importation will work here as would domestically-focused new reserves – and this will require new transmission pipelines I suspect – from Queensland and NT. SK: Gas pipeline expansions, more effective use of gas pipeline and processing infrastructure, and new gas pipeline and processing infrastructure will likely be needed to enable gas supply security over time.

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DOMESTIC GAS OUTLOOK

MAPPING OUT

AUSTRALIA’S

FUTURE ENERGY

DIRECTION By Frank Tudor, Managing Director, Jemena

The Australian energy industry is at an important crossroads. Deciding which direction we take will play a significant role in ensuring our energy future and security.

ising prices, lack of availability, and policy uncertainty are heaping pressure on customers, industry and governments.

And because projects can take five, ten or more years from conception to delivery, any delays in the decision-making process now will negatively impact customers over the long term. Therefore, in order to map out our future, we have to make strong and decisive decisions – and quickly. To support our collective decision making, we should take confidence from recent developments that demonstrate Australian capacity, ingenuity, and appetite to locate, extract and transport gas from remote locations to areas of demand. The Northern Gas Pipeline (NGP) is a good example of how an engineering challenge has become the first step in providing the missing link to alleviating east coast gas issues. The project may have been completed but the opportunity to leverage off its momentum is just starting. Failing to capitalise on this could have dire consequences.

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Northern Gas Pipeline brings commercial value Jemena tendered for the Northern Gas Pipeline project in 2015 when my predecessor Paul Adams, and the Board, had the foresight to recognise an opportunity. It was part of a long-term vision to deliver abundant and affordable gas to the east coast. At 622km, it was an ambitious project for the company, especially as it also included the construction of a gas processing plant and two compressor stations, at Tennant Creek in the Northern Territory and Mount Isa in Queensland. We also took the unusual step of commencing construction with only one third of the capacity contracted. This is unusual in the pipeline infrastructure business where, in the majority of cases, construction only begins when contracts have been guaranteed. However, we were so convinced the pipeline was necessary national infrastructure that we adopted the ‘build it and they will come’ approach. The pipeline was built over a 17-month period and in December last year, we officially celebrated the completion of the construction phase, which was followed shortly afterwards by the commencement of commercial operations.

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DOMESTIC GAS OUTLOOK

Pipe for the NGP strung out during the construction phase.

Two launch events were held just before Christmas, one at Tennant Creek in the Northern Territory and the other at Mount Isa in Queensland. They were attended by members of the Federal, Northern Territory and Queensland governments, Traditional Owners, landowners, stakeholders and media. We were particularly proud the events were also attended by members of the local communities along the route who actively participated in the project. More than 265 contracts, worth in excess of $52 million, were awarded to small business in regional Australia, and more than 1100 jobs were created through the NGP, including nearly 400 roles for people from local communities surrounding the pipeline route. The NGP will deliver approximately 90TJ of gas to industry across Northern Australia, including to Incitec Pivot Limited’s operations at Phosphate Hill and Gibson Island, underpinning around 1500 regional jobs. There’s no doubt that constructing the NGP was a physical challenge. Conditions were tough with hot, dusty weather in the dry season and heavy rains during the wet. Managing the safety of the workforce, logistics and working conditions was not easy, but with good planning, training and sensible work practices we achieved what we set out to do.

A line in the sand As we reflect on the completion of the NGP build, it has also become clear the

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pipeline is more than a feat of engineering, it is also a statement of intent. When Jemena, governments, Traditional Owners and stakeholders agreed to the project, we were also taking a deliberate decision to back gas as a long-term, viable and credible energy source in Australia. Turning the first sod was symbolic, because we quite literally crossed a line in the sand to support domestic natural gas as an answer to the nation’s energy security, and an answer to the energy trilemma of reliability, affordability and sustainability. For us, the NGP is the missing link and now commercial gas is flowing, we are more confident than ever that developing national infrastructure is the way forward, and what’s more, we can see how the next phase of this could shape up. We already have one eye on the future and are planning for the pipeline’s expansion and extension – all the way through to South East Queensland.

Future vision Subject to the successful exploration and production of gas in the Beetaloo Basin in the Northern Territory, Jemena would be well placed to deliver more than 700TJ of reliable, low-carbon, and affordable gas to the east coast – enough to support the domestic gas markets of Sydney, Brisbane and Adelaide combined each day. Not only would this go a long way to solving the east coast gas shortage, but it would also alleviate pressure on other gas markets. By bringing more gas into the system as a whole, we can also free up

additional gas for use across other areas of the domestic market, particularly for those markets in the southern states of Victoria and South Australia. While the upstream gas companies explore for gas, we are getting on with planning and preliminary work to transport it. This includes significant consultation with Traditional Owners, landowners and the community – just as we did across the NGP’s planning and construction phases. We are working on a number of scenarios, depending on when and where fields open up, however a likely next step for us would be connecting the Galilee Gas Basin to the existing hubs in South East Queensland. If this option was to be realised, we envisage the subsequent stages would include extending the pipeline between Mount Isa and the Galilee Basin, as well as expansion of the new Northern Gas Pipeline, in what would be significant national infrastructure across Northern Australia, resulting in a fully integrated network of approximately 1800km.

Domestic gas supply Jemena is a diverse business and in addition to building critical infrastructure, we also deliver gas directly to homes and businesses (among other energy solutions). We own and manage the Jemena Gas Network (JGN) in New South Wales, and at close to 1.4 million customers, it is the largest gas network in Australia – and growing rapidly. A record 62,000 new customers were connected during 2018, which is an www.energymagazine.com.au

DOMESTIC GAS OUTLOOK increase of 15 per cent on the previous twelve months. This gives us confidence that bringing more gas to the east coast market via the NGP and other future pipeline projects will not only support end-user energy needs, but it will also bring prices down for them. For business and industry in the Northern Territory, Queensland and New South Wales, more plentiful gas will lower feedstock and fuel prices leading to more opportunities to create jobs, grow and be more competitive. For homeowners across the JGN, it means cheaper gas to heat homes, and run cooking and hot water appliances. As well as better affordability, we also know customers want greener gas as Australia transitions to a carbon neutral energy system. In line with Gas Vision 2050 and our international commitments to reduce emissions, we are utilising technology to test new ways to drive maximum efficiencies from our gas network and bring customer costs down. In partnership with the Australian Renewable Energy Agency (ARENA), we have commenced a $15 million trial to test our network’s capacity to be repurposed to store hydrogen gas. Hydrogen is carbon neutral and can be sourced from renewable energy. We estimate

Jemena Managing Director Frank Tudor was joined by governments, Traditional Owners, landowners, stakeholders and media at the Mount Isa launch of the NGP.

that in the future, the JGN could store as much energy in the form of hydrogen as eight million Powerwall batteries, without further investment in the network. Our aim is for Sydney homes and businesses to be able to use this green gas in as little as five years for cooking, heating and hot water.

Next steps Recent political and policy discussions have focused on coal and renewables in particular, meaning gas has been put on the backburner, so to speak.

But gas is a viable solution to the energy trilemma, national fuel security, and can help to address rising east coast demand. If we are to maximise our abundant natural reserves, we need to move now. The time for talking is over. We have a good idea where the gas is, so let’s support industry to find and extract this. The sooner we begin, the sooner customers (both small and large) will benefit.

Nhulunbuy

Darwin

Bonaparte Basin Wadeye

Jemena Northern Gas Pipeline Extension Overview

Katherine

Jemena Gas Pipeline

McArthur Basin

DRAFT

Jemena Proposed Pipelines

Beetaloo Basin

Other Gas Pipelines

Cairns

Proposed Pipeline Route Corridor Galilee Energy exploration permits Townsville

N NO OR RT TH HE ER RN N T TE ER RR R II T TO OR RY Y

Tennant Creek

Q QU UE EE EN NS S LL A AN ND D

Northern Gas Pipeline Mount Isa Georgina Basin

Northern Gas Pipeline Extension

Galilee Basin

Glenaras Gas Project

Rockhampton

Alice Springs Amadeus Basin Adavale Basin Cooper Basin

Proposed Pipeline Route Corridor

Gladstone

Bundaberg Bowen Basin

Roma Brisbane

Surat Basin

250

500

750

1,000

Kilometres

S SO OU UT TH H Data sources: Jemena, Geoscience Australia, © State of Queensland (Department of Natural Resources and Mines) A AU US ST TR RA A LL II A A 2016. Geoscientific Data, Sourced May 2017. ESRI BaseMap

Service Layer Credits: Esri, HERE, DeLorme, MapmyIndia, © OpenStreetMap contributors, and the GIS user community

Disclaimer: While every effort was made to ensure the accuracy and currency of the information shown on this map, Jemena does not accept any responsibility for errors or omissions that may have occurred.

Jemena is already considering ways to expand the NGP.

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March 2019 ISSUE 5

DOMESTIC GAS OUTLOOKENERGY PARTNER CONTENT

OVERCOMING

BARRIERS TO INNOVATION

Our energy market is changing; and to keep up with the needs and expectations of customers large and small, Australiaâ&#x20AC;&#x2122;s energy producers are seeking out and embracing new technologies that improve their operating models. But new technologies can be overwhelming for large developers, and one of the best ways to overcome this barrier to innovation is to work with a trusted industry partner.

March 2019 ISSUE 5

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ENERGY PARTNER CONTENT DOMESTIC GAS OUTLOOK

he energy industry has traditionally been very slow compared to other industries when it comes to leveraging the potential of new technologies to innovate and improve operational efficiencies. While in the past, digital innovation in the industry wasn’t feasible due to the sheer volume of data produced that needed analysing, the introduction of cloud storage, big data and more reliable mobile communications has seen digital innovation begin to transform the energy industry. Wade Elofson, founder of business development firm Powered, said, “Accelerating changes to how we work and embracing new technologies are at the heart of the energy industry’s transformation, with new innovations able to improve productivity, increase efficiency and reduce costs. “The art to introducing a new innovation is to identify the issues energy producers are having, and to understand how your new product or service is going to help. Understandably, no one wants to introduce risk, aka a new technology, without getting a very clear picture of how the technology will work and how it will ultimately drive down costs.” Energy industry seeks innovation Last year saw a focus on innovations that helped drive customer satisfaction, support digitisation and lower carbon emissions. For example, Origin Energy, Australia's largest energy retailer, conducted a trial of cloud-based software from a UK-based start-up to predict high price periods for participating customers, and then shift non-critical load into times of the day when prices are lower. Analysis of the trial showed that price was very strongly correlated to carbon intensity, with high pool prices signalling periods when carbon intensive generators are working. Avoiding these periods helped to lower the carbon footprint of these customers, achieving carbon savings of up to 21 per cent on assets where the technology is being used. Origin also received a grant in September 2018 to develop the first virtual power plant in Victoria. Jemena, who recently completed their Northern Gas Pipeline project, is innovating in the hydrogen sector. It’s Power to Gas trial, Project H2GO, will convert solar and wind power into hydrogen gas, via electrolysis, which will then be stored for use across the Jemena Gas Network in New South Wales, the biggest gas distribution network in Australia. And Santos announced in December 2018 that it would convert 56 remote crude oil beam pumps at the Cooper Basin to solar and batteries to reduce emissions from oil production after a successful Australian first pilot installation. Santos Managing Director and CEO, Kevin Gallagher, said this Australian-first idea came from the company’s Energy Solutions team, which is dedicated to finding innovative ways to reduce Santos’ carbon footprint and prepare the business for a lower carbon future. APPEA Chief Executive, Malcolm Roberts, said the project sits alongside a range of other innovations the oil and gas industry is taking across the country to reduce its emissions. “The oil and gas industry already makes a significant contribution to emissions reduction by producing cleaner energy for domestic gas customers and export customers in Asia,” Dr Roberts said. Barriers to innovation Associate Professor of Technology Management and Strategy at Queensland University of Technology, Dr Robert Perrons, said traditionally, there have been a number of barriers to innovation within the oil and gas industry.

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“One of the things that gets in our way is the asset longevity. When we put an asset down in the resource sector, we’re expecting that thing to churn away and make money for us for 30, 35, 40 years. That makes it complicated from a technology-refresh point of view,” Dr Perrons said. “Number two is the consequences of failure. When things go wrong on an oil and gas platform, or at a mining site, people are going to get hurt, there could be horrible environmental damage and billions of dollars of liability.” Dr Perrons also said that the equity structure of assets also precludes innovation as a competitive advantage. “The ownership structure for a platform usually looks like a pie chart, where one company might have 30 per cent, another have 20 per cent, etc. Very rarely does anyone own the whole thing all by themselves. Say one company invents this fancy new widget, the rest of the pie chart can very reasonably ask ‘what’s that new thing you just put on our billion-dollar investment?’” “When you tell them, they think that’s a pretty good idea, and they go home and reverse engineer it for themselves. So you just invested a lot of money into research and development, and now everybody in the tribe gets the benefit of that, but you’re the only one still footing the bill.”

Powered's Wade Elofson discusses potential growth strategies with a client.

Innovation meets collaboration When there are a number of reasons not to invest in a new technology, a trusted industry partner, such as Powered, can act as the perfect conduit between large-scale developers and the smaller innovators that tend to be able to offer the disruptive technologies that can be so beneficial to the industry. Having worked in the energy sector for five years, connecting developers with new technologies, Powered has sold dozens of innovations to major companies operating in the energy sector. Powered leverages its access to companies such as Santos, Origin, Jemena and the APA Group to connect them to new or smaller businesses who might have a new invention, innovation or technology to bring to the market. “At Powered we have introduced several new technologies into the Australian oil and gas market. We have seen firsthand how some new technologies and processes can help reduce the cost of energy production,” Mr Elofson said. “Whether creating new products, new internal processes or entirely new ways of doing business, companies must consistently innovate to survive in today’s ever-changing business climate. “We have the established industry relationships which allow us to communicate this reality clearly to the big players in the industry.”

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DOMESTIC GAS OUTLOOK

AUSTRALIA’S ENERGY CRISIS:

IT DOESN’T HAVE TO BE THIS WAY

As Australia’s energy prices have surged in recent years, energy prices in the United States have fallen significantly – all while moving ahead of Australia when it comes to emissions reductions. A new report released by the United States Studies Centre explores what Australia needs to do to reverse its energy fortunes; and also models some of the potential implications of not taking action to increase supply and reduce costs.

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he United States Studies Centre (USSC) released the report It doesn’t have to be this way: Australia’s energy crisis, America’s energy surplus in December last year, in response to increasing feedback it received from Australian manufacturers and energy users, who were telling the centre they were increasingly looking to the US as the place to grow their businesses over Australia. Authored by Alex Robson, the former chief economist to the Department of Premier and Cabinet, the report involved several months of analysis and sophisticated economic modelling to paint a picture of the energy market in each country; as well as the potential outcomes for Australia if we continue down our current path. Setting the scene Australia and the US have much in common: liberal, democratic institutions; technologically advanced, largely open economies; growing populations; demanding infrastructure; and above all, abundant energy resources. But with respect to energy, Australia and the US are on radically different paths. Australia faces an energy crisis, stressing households and businesses, and threatening the very existence of some of Australia’s large industrial users of energy. Meanwhile, the US is reaping the benefits of an energy boom, delivering inexpensive gas and electricity, driving a renaissance in American manufacturing and economic growth. As a result, Australian manufacturers are now seeing the US as vastly more attractive for investment. In a 2017 study from the USSC, Australian manufacturers indicated that Australia was not a growth market for their businesses, and that the US figured prominently in their plans for growth and success. And why? In a word: energy. The cost of electricity and gas for large, industrial consumers of energy is simply making Australia uncompetitive. Relatively high labour costs are more or less baked into the Australian social compact. But when another critical business input – energy – becomes as expensive as it has, many Australian businesses face existential threats. It’s becoming increasingly clear that Australia’s energy woes go beyond household electricity bills. Australian businesses confront energy costs that threaten jobs and investment and reverberate through the entire economy, raising the prices of goods and services for households. Where did we go wrong? US electricity and gas prices weren’t always cheap. Indeed, Australia and the US have in many ways reversed their energy situations over the past decade. Simply put, over the past decade or so there has been a gas revolution in US energy markets. Since 2005, annual US gas production increased by more than 9100 PJ, thanks to the development of previously unexploitable shale gas fields – and effectively all of this additional production has been used for US domestic consumption. As domestic gas supply has increased, the average real price of gas in the US has declined by about 30 per cent for households, and by more than 50 per cent in real terms for industrial users. Average US household electricity prices have remained fairly steady in real terms over the past decade; and average electricity prices have fallen by more than ten per cent in real terms for US industrial users. As the price of natural gas decreased, more users have turned to gas over coal-fired electricity, allowing the US to reduce its carbon

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DOMESTIC GAS OUTLOOK emissions. Gas consumption in the US has increased to 36 per cent of fossil fuel consumption, from 27 per cent in the previous decade – and as a result, US carbon emissions from electricity generation have declined by more than twice the rate of Australia’s emissions decline. Meanwhile, in Australia, we have seen a decade of energy policy inaction; a significant increase in gas exports from Queensland’s coal seam gas reserves, linking domestic gas prices with the international LNG market; and an unwillingness from state governments (most notably in Victoria and New South Wales) to allow onshore exploration or unconventional drilling techniques, ultimately denying access to the significant onshore gas reserves both of these states have access to. As a result, since 2008, average electricity prices in Australia have increased by around 70 per cent in real terms for both households and businesses. On average, Australian households sourcing electricity from the National Electricity Market (NEM) pay higher retail prices than all but a handful of US jurisdictions (see Figure 1). The price differentials are not small, ranging from double to almost triple the costs when compared to some US states. The same comparison can be made for household gas prices, with similar results. The data in Figure 2 indicates that on average, household gas consumers on Australia’s east coast pay between two or three times the prices that the average US household pays. The situation is no better for Australia’s businesses. As Figures 3 and Figure 4 demonstrate, if Australia was a US state, it would be one of the most uncompetitive jurisdictions in terms of energy prices. To put all of this into perspective: in real terms, Australian-based manufacturers are now paying 47 per cent more for gas than they did ten years ago, while an American competitor is paying 63 per cent less. In summary: on electricity and gas price outcomes, the two economies have taken completely opposite paths.

Impact on economies In order to provide further context to what’s at stake in the energy debate, a sophisticated economic model was employed in the development of the report, providing insight into the anticipated economic effects of large, sustained increases in energy costs in the Australian economy. Two different price scenarios were studied: a ten per cent increase to domestic gas prices, wholesale costs of electricity, and the combination of both; and a 25 per cent increase to domestic gas prices, wholesale costs of electricity, and the combination of both. The modelling showed that: »» A permanent ten per cent increase in wholesale generation results in a permanent 0.3 per cent reduction in GDP, or an annual economic loss of around $5.6 billion »» A permanent ten per cent increase in the domestic price of gas causes a permanent reduction in GDP of 0.19 per cent, which is an annual economic loss of around $3.5 billion »» The combined effect of a ten per cent increase in both gas and electricity is a permanent reduction in GDP of 0.46 per cent – an annual economic loss of $8.5 billion »» A permanent 25 per cent increase in wholesale generation costs leads to a permanent 0.76 per cent reduction in GDP, or an annual economic loss of around $13.9 billion »» A permanent 25 per cent increase in the domestic price of gas causes a permanent reduction in GDP of 0.47 per cent, which is an annual economic loss of around $8.7 billion »» The combination of both scenarios in a 25 per cent increase is a permanent reduction in GDP of 1.15 per cent – an annual economic loss of $21.2 billion The overall economic effect is clear: energy price increases impose significant costs on the Australian economy.

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DOMESTIC GAS OUTLOOK Some clear lessons learned on the pathway forward The very clear lesson from the US experience is this: get the institutional and policy settings right, and the market will transform physical abundance into economic abundance, putting downward pressure on energy prices and emissions. Unfortunately, over the past decade Australia has had almost the exact opposite experience; and the mistakes or unintended consequences of policy have led to higher prices and weaker emissions reductions than the US. If Australia’s energy policy settings do not change, many Australian firms will be forced to either scale back production, investment and employment, relocate to Australian states where energy is cheaper, move overseas, or simply shut down. There are no other options. Increased supply alone will not solve Australia’s energy crisis. Energy market architecture must also be addressed. The design of the National Energy Market – combined with a rapid uptake of renewables – has been a catalyst for recent increases in electricity prices. While renewables and storage capacity continue to grow and become less expensive, they still cannot provide the energy reliability required by industrial consumers of energy that other forms of electricity generation provide. Amidst all of this, there is little policy certainty. Investors want fair, clear, stable and predictable rules. Without it, the investments required for bringing additional supply to market – of the magnitudes required by Australian industry – are unlikely to happen. The US experience underscores the critical role of gas. The US shale revolution – combined with the policy settings and infrastructure facilitating it – has seen the trajectory of US energy prices flatten or turn down, for both homes and businesses. With gas now accounting for 33 per cent of America’s energy needs, the US has already met its Paris Agreement emission reduction targets in the electricity sector. Natural gas is clearly the bridge fuel toward a renewable future, while at the same time providing a less expensive and reliable source of energy for industrial users, and a vital input for many manufacturing processes. With abundant physical reserves, Australia needs to consider policies that will unlock its gas resources, producing similar outcomes to those seen in the US: cheaper energy, a manufacturing and industrial revival, job creation and economic growth, with a smaller emissions footprint.

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Figure 1: Residential gas prices, Australia vs US, 2017. Source: Oakley Greenwood, EIA, IMF, author's calculations

Figure 2: Residential electricity prices (PPP adjusted), Australia vs US, 2017-18. Source: ACCC, EIA, IMF, author's calculations

Figure 3: Industrial gas prices, Australia vs US, 2017. Source: ACCC, EIA, IMF, author's calculations

Figure 4: Industrial electricity prices (PPP adjusted), Australia vs US, 2017-18. Source: ACCC, EIA, IMF, author's calculations

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HYDROGEN AND FUTURE FUELS

FROM FUEL OF THE FUTURE TO MAINSTREAM OPTION by Claire Johnson, Chief Executive Officer, Hydrogen Mobility Australia

Hydrogen has long been touted as a fuel of the future, but Australia is rapidly mobilising a workforce that will bring this technology into the mainstream. "Hydrogen is the fuel of the future – and always will be," goes the joke, and it’s one I’ve heard on a number of occasions in my role as CEO of industry association, Hydrogen Mobility Australia. While a level of cynicism is part and parcel of any emerging space, it’s statements such as this that often lead to one of the most enjoyable parts of my role – that is, engaging with the critics with the intention of turning sceptics into supporters, or at least open to hydrogen’s possibilities. I’ve observed however that my opportunity to go head-to-head with the hydrogen disbelievers are becoming fewer in number of late. There are several reasons why this is the case; the falling cost of renewables, technological advancements in hydrogen production, and commitments from countries such as Japan to a hydrogen future to name just a few. Combined, they mean the economics of hydrogen are stacking up.

Hydrogen is now overcoming a critical juncture, transitioning from its “fuel of the future” status towards mainstream adoption. The ideal conditions for what we call a Hydrogen Society, a model of decarbonisation where hydrogen features predominantly in the global energy mix, are starting to be realised. Hydrogen Mobility Australia was officially launched in early 2018 to fulfil exactly this – a hydrogen society for Australia. Our mission is to accelerate the adoption of hydrogen and fuel cell technologies to support Australia’s decarbonisation and energy security objectives, while creating new jobs, investment and innovation through the most abundant element in the universe. Co-founded by Hyundai and Toyota, who have since been joined by some of Australia’s leading brands including BP, Caltex, Siemens and Woodside, we have united together behind hydrogen in recognition of its potential to support Australia’s clean energy transition.

Certain transport segments will strongly benefit from the hydrogen age, including heavy vehicles such as buses.

HYDROGEN AND FUTURE FUELS

While we are a hydrogen ecosystem advocate, our association has a strategic focus on hydrogen in mobility. To enable the introduction of hydrogenpowered transport to Australia, we are working with our members and governments to facilitate the development of a hydrogen refuelling station network across the country. We are excited by the many benefits that the introduction of hydrogen fuel cell electric vehicles, or FCEVs, will bring to Australia. As the name implies, an FCEV is an electric vehicle, however, unlike a battery electric vehicle (or BEV), which stores its electricity in a battery, an FCEV produces its own electricity on-board and on-demand in a fuel cell. Both technologies are zero emission and can equally play significant roles in the decarbonisation of the Australian transport sector while reducing our dependency on imported fossil fuels. While there are many similarities between BEVs and FCEVs, there are also unique characteristics. FCEVs provide long travel range (the Hyundai NEXO offers up to 800km), fast refuelling time (three to five minutes), and scalability of hydrogen storage and fuel cells, meaning greater suitability for larger vehicles. Certain transport segments will strongly benefit from the hydrogen age, including heavy vehicles (such as buses, trucks and trains), fleet vehicles and autonomous vehicles where features such as the range, minimal downtime for refuelling and heavy payload capability are particularly advantageous. While the price of FCEVs and the availability of infrastructure is often a talking point, CSIRO analysis through their National Hydrogen Roadmap published in 2018 found that FCEVs will reach price parity with the internal combustion engine in 2025. This is the same year that’s being forecast for BEVs. On the infrastructure side, countries around the world have committed to build 2800 hydrogen refuelling stations, also by 2025. This is sufficient to cover the world’s leading markets for FCEVs. As a point of comparison, there are currently around 10,000 Tesla superchargers worldwide. It’s becoming apparent that we’ll need a range of technology solutions to help achieve reduced emissions across the entire transport spectrum – passenger and commercial vehicles, and also marine and aviation. This is why we believe both BEVs and FCEVs should be supported by governments, with the market left to decide which vehicle technology best meets their lifestyle, usage and application area. While our technology has been the underdog in Australia to date, the benefits of hydrogen in transport have recently been recognised by Australia’s Chief Scientist, Dr Alan Finkel, who views hydrogen as playing a key role in decarbonising Australia’s transport fleet, particularly in the heavy vehicle sector. Hydrogen Mobility Australia strongly welcomed the Dr Finkel-led announcement in December 2018

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that Australian governments will develop a National Hydrogen Strategy and outline a pathway for Australia to develop a hydrogen sector, including hydrogen transport. To be developed through COAG, the National Hydrogen Strategy will determine a coordinated way forward to maximise Australia’s competitive advantages, such as our large renewable energy potential, and become a major global hydrogen player. With development throughout 2019 and implementation from 2020, the strategy will focus on policies and measures to enable the domestic use of hydrogen in areas including transport and refuelling infrastructure, injection into the gas supply, interaction with electricity systems, industrial processes as well as the export of hydrogen and its carriers to the world. The opportunity for Australia to create the right environment for hydrogen-powered transport to proliferate will be undertaken as one of the strategy’s three kickstarter projects, alongside enabling hydrogen injection into the natural gas grid, and outreach with major trading partners to secure hydrogen supply opportunities. Specifically, the transport workstream will scope the potential for building hydrogen refuelling stations in every Australian state and territory, including the necessary regulatory changes and implementation of technical standards to enable this. This work will be undertaken in partnership between Australian governments and Hydrogen Mobility Australia in recognition of the importance of industry input in getting the settings right. We are excited to work together with government to lay the foundation for the advent of hydrogen transport in Australia. One particularly pleasing aspect about the strategy and in fact, hydrogen more broadly, is that it enjoys bipartisan support from both major Australia political parties. Being within the politically contentious energy policy space, this makes it a highly unique position. The ALP election platform for instance similarly includes a commitment to develop a national hydrogen strategy, meaning that whatever the outcome of the 2019 federal election, a hydrogen roadmap for Australia will be realised. And so, Australia is embracing hydrogen. By being a first mover, we can gain a competitive advantage over other nations and start building the local capability in areas such as transport, in preparation for large-scale export from 2030 and beyond. The so-called “fuel of the future” has a future that is being realised here and now, and Australia is leading the charge. Together, Hydrogen Mobility Australia and our members are very much looking forward to a world where hydrogen is the solution to a cleaner environment both now and for generations to come.

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HYDROGEN AND FUTURE FUELS

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March 2019 ISSUE 5

HYDROGEN AND FUTURE FUELS

HYDROGEN

WILL BE THE ANSWER TO

THE ENERGY

TRILEMMA

March 2019 ISSUE 5

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HYDROGEN AND FUTURE FUELS

ACT gas distributor Evoenergy and the Canberra Institute of Technology (CIT) have partnered to build a first-of-its-kind hydrogen test facility, which has the aim of transitioning the ACT’s gas network to 100 per cent hydrogen gas. Energy Editor Laura Harvey met with Evoenergy Gas Networks Branch Manager, Will Yeap, to learn more about the facility and the ultimate impact it will have on gas supply in the ACT and around the country.

Will Yeap.

he new test facility, located at CIT’s Fyshwick campus, was launched in December last year, and is the product of more than 12 months of research and planning from Evoenergy and the CIT. While many gas distribution companies are embarking on hydrogen-related projects, the difference with this project is that it will look at testing 100 per cent hydrogen on existing materials, equipment and work practices, in preparation for application to the existing gas distribution network. According to Gas Networks Branch Manager Will Yeap, the test facility will allow Evoenergy to gain a clear understanding of the impact introducing hydrogen will have on existing infrastructure. It will also move Evoenergy closer to rolling out a viable renewable gas source on a large scale. Mr Yeap said it is essential to understand the impact of introducing hydrogen on the existing network, as this will have a major impact on any modifications or replacements that may be required to accommodate its use in the natural gas distribution system. Evoenergy, along with the industry as a whole, has been working towards solutions that solve the energy trilemma – providing energy that is affordable, reliable and clean – and has the added incentive that the ACT Government is working towards a target of 100 per cent renewable energy by 2020. “The energy landscape has been moving very fast, and Evoenergy is looking closely at the decarbonisation of the gas

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network,” said Mr Yeap. “We’re looking very closely at renewable options, but the price has to be affordable and the source has to be reliable. “From our research, we foresee that hydrogen will be the answer to meeting this trilemma,” he added. As an added benefit, the potential applications for hydrogen are twofold: it can be used as a clean energy source; and because it can be stored in our existing gas pipelines until it is required, it essentially turns the network into a giant battery for storing energy.

Exploring the impacts of hydrogen The new facility will be testing three things: 1. Testing existing Australian network components, construction and maintenance practices on 100 per cent hydrogen application 2. Testing hydrogen as a broader energy storage source to support coupling the electricity network to the gas network 3. Appliance testing (e.g. testing hydrogen and mixed gases in existing appliances such as gas continuous hot water systems) The key focus of the test facility will be to examine the impact of hydrogen in the gas network, and in particular, at what percentage hydrogen can be introduced into the current network with no impact at all. According to Mr Yeap, this process will take approximately six months. Once this level is determined, hydrogen can be introduced into the existing network straight away. From here, the vision for March 2019 ISSUE 5

HYDROGEN AND FUTURE FUELS

the ACT Government, and Evoenergy, is to have 100 per cent hydrogen in the network by 2045. The process from moving from a level where there’s no impact on the network – which is expected to be somewhere in the vicinity of 10 to 20 per cent – to 100 per cent hydrogen will be a step-change process. And while it will most likely require some financial support from government, the key for Evoenergy will be ensuring the process of transition is one that is affordable for customers. Crucially, the fact that the existing network will remain in place, will make a significant contribution to keeping costs down. Looking inside the facility, it doesn’t have a huge footprint – measuring approximately 10m by 16m, the tests don’t require a huge amount of space. What is required is a safe location, thanks to the hazards that come with testing fuels. For this reason, the facility is located outside at the CIT. “The facility is about allowing us to understand the network,” said Mr Yeap. “It’s very important that the test facility allows you to mockup the actual network, not just something that might not be there. At the facility we’ll be testing existing meters – not the new meters coming out from the workshop, but we will dig out old meters and then put them in the system and see what the impact is.”

Generating electricity Once a safe level for hydrogen in the network is established, the next step for the test facility will be to investigate the process of actually producing hydrogen. Currently hydrogen is produced through electrolysis, a process of splitting water into hydrogen and oxygen. Some of the crucial next questions that need to be answered include how much water will be required to provide enough hydrogen gas to power the entire ACT gas network? And what sort of water do we need to

The Evoenergy hydrogen test site.

use – can it be normal pipe water, or does it need to go through a purification process before it can be used to create hydrogen? While these questions will be investigated over the next 12 months, Mr Yeap said scientists have estimated that to meet the gas needs of the ACT for 12 months, around 1.5 per cent of the water stored in Corin Dam would be required. So while we’re not talking about a volume of water that’s totally out of the question, the shift to hydrogen does raise questions about where the water required will come from, and it requires further investigation and understanding of what we do with our water when it is a precious resource.

The test facility is conducting leading research already.

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HYDROGEN AND FUTURE FUELS

Mr Yeap checks out some of the equipment on site.

Partnering with industry One of the most exciting things about hydrogen for Evoenergy is the range of different potential applications for the fuel, from storage to hydrogen-powered public transport. According to Mr Yeap, Evoenergy view their exploration of hydrogen’s potential as something that can be done with a range of partners in the industry. “There’s a lot of tests that need to be done, and we’re looking to collaborate with the whole industry,” he said. “The aim of this project is not to build an IP. The aim of the project is to allow us to introduce hydrogen into the network as soon as possible. To do that, we need to work together, because we don’t have all the resources. “Importantly, we all have the same goalposts here, and we’re going to go there together, we’re going to work collaboratively.” Mr Yeap said a key conduit for the kind of industry collaboration we will need to see in order to develop a hydrogen industry is Energy Networks Australia. Members of the gas committee within the organisation will be meeting regularly and talking about what needs to be done to propel hydrogen forward. Now that the test facility has been launched, Evoenergy is keen to organise tours of the facility with industry, fellow utilities and related businesses. This will be the platform to share information and develop partnerships.

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Next steps for hydrogen Both in Australia and overseas, the desire to reduce carbon dioxide emissions has resulted in plans involving the widespread use of hydrogen gas as a replacement for natural gas. Proving the viability of hydrogen as a clean gas energy source will have a profound impact on customers, and of course on the broader energy industry. Mr Yeap said he has a passionate team working on this project, all dedicated to bringing the hydrogen revolution about. Two of his senior engineers have come out of retirement to work on this project, such is the excitement surrounding the project. “Our people are passionate,” said Mr Yeap. “They’ve been in the business for a long time, and it’s been a tough few years for the gas industry. Now, we see hydrogen as a bit of a ‘green’ light at the end of the tunnel, and we’re passionate about bringing this fuel to customers.”

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EXPLORING THE RETROFIT

MODEL AND OFFTAKE AGREEMENTS FOR

BATTERY INTEGRATION by Andrew Stiel, Head of Energy Markets and Offtake, Edify Energy The Gannawarra Energy Storage System (GESS) epitomises the breadth of opportunity that is opening up to the energy sector. Here, Andrew Stiel, Head of Energy Markets and Offtake at Edify Energy, discusses some of the unique aspects of GESS with a focus on the retrofit model and the role that offtake agreements can play in facilitating batteries; two features that will become increasingly important as we continue to usher in a high-penetration renewables future, in large part enabled by storage technologies.

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ESS is a 25MW/50MWh Tesla Powerpack battery that was connected behind the existing point of connection of the 50MW Gannawarra Solar Farm. It was developed, structured and overseen into operation by Edify Energy and is owned in a 50/50 joint venture between Edify Energy and Wirsol Energy. GESS could not have come into existence without the financial support afforded by a $25 million grant from the Victorian Government and the Australian Renewable Energy Agency (ARENA). It is the first solar and battery project in Victoria and among the largest of its kind in the world. The financing of GESS was underpinned by a long-term services agreement with EnergyAustralia. In its own right, GESS has set some interesting commercial precedents for financing batteries that may prove to be a commonplace route-to-market for future battery installations around the country. But it is its integration with the preexisting Gannawarra Solar Farm and its demonstration of how batteries can be

retrofitted to standing renewable assets that makes GESS unique in the National Electricity Market (NEM).

The retrofit model for batteries with renewables As the renewables boom has unfolded over the past few years, so too has the installation of dedicated substations servicing individual projects. In the case of a typical solar farm, a multimillion-dollar substation and other critical network infrastructure may only get used for eight hours of the solar day (or broadly a 25-30 per cent annual capacity factor). These â&#x20AC;&#x2DC;sunk costsâ&#x20AC;&#x2122; represent a material opportunity for battery projects to access underutilised network infrastructure. In doing so, future battery projects may avoid a material cost impost and long lead-time procurement item that otherwise would serve as a drag on battery project economics. There are other potential benefits to the retrofit model. Where renewable projects are subject to systemic curtailment issues, the retrofit model may serve as a means to mitigate this curtailment by capturing

energy behind a network constraint for dispatch at a later time after this constraint has subsided. The rapid response and ramp properties of batteries may also permit genuinely firm dispatch of renewable assets, by operating the battery in a perfectly converse way to the renewable assetâ&#x20AC;&#x2122;s output against a fixed combined setpoint. This model could also be used to manage causer pays ancillary service charges that currently burden many standalone renewable systems in the market. At present, these benefits are technically feasible, but challenging to access from both a regulatory and project structuring standpoint. In a classic example of the pace of technology change outperforming that of regulatory change, the current regulatory model for retrofitting batteries to existing renewable assets is complex and has the potential to introduce risk to the standing asset, particularly where there are adverse implications for generator performance standards that have already been negotiated.

The 25MW/50MWh Gannawarra Energy Storage System and the 50MW Gannawarra Solar Farm which it is connected to.

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Project structuring is also not trivial, with a multitude of issues that arise concerning, but not limited to, differing ownership and capital structures between the battery and renewable asset, the allocation of prudential liabilities, and technical and operational obligations for each asset in the event that the combined output of the two assets is greater than the substation’s export rating. For each of the potential benefits of the retrofit model outlined above, there is at least one existing regulatory or project structuring impediment that needs to be addressed before the market can truly access them in a seamless way. Edify Energy, through its learnings on GESS, is actively engaging with a number of industry bodies to seek to address and overcome these challenges and impediments.

Battery offtake agreements A battery is conceptually a greater market risk proposition than a renewable asset, and one that requires a higher degree of operational sophistication. This is for two reasons: 1. There is not only an outbound (i.e. discharge) market risk exposure, as is the case for a renewable generator, but an inbound (i.e. charge) market exposure too. This may be akin to fuel purchases for thermal generators, which is a hedge consideration less familiar to the growing field of pure-play renewable owners/operators that are taking an interest in battery technologies. 2. There is a constant decision that needs to be taken concerning the opportunity cost of a charge or discharge into energy or ancillary service markets. It is not a case of ‘set-and-forget’ dispatch if the sun is shining or the wind is blowing like standalone renewables. Rather, active management of a battery asset is required to harness its value. In light of this, the route-to-market for deploying batteries is still evolving. Will we see pure merchant battery financings sitting in the hands of relatively high cost of capital owners and overseen by sophisticated asset management parties? Or will the standard investment case for batteries converge toward that of renewable generation assets and be predicated on an offtake agreement of sorts? Ultimately an offtake agreement is just a means for: »» A buying party to gain access to an asset’s products or services at a lower cost of capital than could be achieved by putting its own balance sheet to work; and »» A selling party to appropriate an asset’s risks to whichever party is best placed to manage those risks. As there are many more product and service options existing for batteries than renewable generators, it would be natural to expect that the terms of offtake agreements for battery projects would be far more diverse and complex than those of stand-alone

renewables; being highly dependent on the project’s specific attributes, the proposed use-case for the battery and the counterparties to the contract. However, in structuring an offtake agreement for a battery, care should be taken not to inadvertently limit the flexible operation of the battery and its ability to access its full value. To the greatest extent possible, full operational control of the battery should be held in the hands of a single party. Anything less than this has the potential to apply a constraint on the battery’s operations and limit its flexible operation and full value. This is particularly true as market conditions and potential battery usecases evolve over time. In achieving this outcome, a battery offtake agreement should permit rational departures from physical hedge positions in pursuit of more lucrative market opportunities, without necessarily inciting non-financial default or termination provisions. This flexibility should ultimately be to the benefit of the seller and the buyer, as there is a larger potential pie of commercial value for allocation. The long-term services agreement between GESS and EnergyAustralia achieves these principles. In this case, EnergyAustralia holds rights to charge and dispatch energy from the battery in exchange for making fixed monthly payments to GESS and receiving performance guarantees. Here, EnergyAustralia is best placed to manage market risks, so interfaces with the market and has a fixed payment exposure. Equally GESS is best placed to manage the technical risk and performance obligations of the battery, through its arrangements with its suppliers. In this way, the agreement makes an efficient allocation of risk, thereby achieving an optimal commercial outcome, the lowest cost of capital possible and the greatest gains-to-trade for both parties.

In pursuit of the vision The suite of technological and commercial options becoming available to the energy sector is undeniably exciting. With large-scale solar beginning to cement itself as the source of the cheapest electron, storage technologies will play an increasingly important role in enabling its limitless deployment. As a sector, we need to identify the most efficient physical and commercial solutions to achieve this at lowest cost. Edify Energy will continue to play a market-leading role in pursuit of this vision by liberating its portfolio of renewable and storage projects and bringing more sustainable, reliable and affordable energy to Australian electricity consumers, as it has done to date through the Gannawarra Energy Storage System and Gannawarra Solar Farm, and other assets in its development and operational portfolio.

The Gannawarra Energy Storage System.

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LARGE-SCALE SYNCHRONOUS CONDENSER

FOR THE KIAMAL SOLAR FARM

Expanding and geographically diverse renewable energy generation is creating challenges for grid stability. One engineering solution is dusting off what is considered an old technology via the application of inertive power through synchronous condensers. A large synchronous condenser has not been installed in Australia for many years and this is the challenge VINCI Energies’ Electrix Australia has undertaken.

n partnership with Siemens, mobilisation has now commenced for the engineering and assembly work for the engineering, procurement and construction of the Total Eren Kiamal 256MW Solar Farm, the largest in the state commencing operation in Q3 2019. The project has been developed by Total Eren, a leading French-based renewable energy Independent Power Producer (IPP). Located near Ouyen in north west Victoria, the synchronous condenser will contribute to the protection of the electricity grid connected to the Kiamal Solar Farm. As Australia’s energy mix diversifies so does the importance of this proven

technology to help stabilise our grid with economic and environmental advantages. Tony Croagh, Managing Director, VINCI Energies’ Electrix Australia, said, “This project, which has been very carefully and diligently developed by Total Eren, is of great significance to VINCI Energies in the region as it solidifies its strategic vision of growth for its renewable energy contracting services. “This project highlights the strength of bringing VINCI Energies’ and Siemens’ international expertise as well as local knowledge together to offer world-class solutions to an increasingly international client base in the energy sector in Australia.”

AUSTRALIA’S RENEWABLE ENERGY FUTURE

Michael Vawser, Regional Director for Total Eren, stated, “VINCI Energies and Siemens have worked around the clock to provide Total Eren with this solution - we now look forward to watching it take shape on the ground.” Global climate change poses new challenges for power generation and transmission and VINCI Energies’ Electrix Australia is delighted to be supporting a global leading IPP such as Total Eren with renewable energy projects and contributing to the security of the evolving National Electricity Market in Australia.

With more than 60 years of experience, VINCI Energies’ Electrix is a leading specialist electrical contractor to the electricity supply industry across Australia and New Zealand. We have built a solid reputation based on performance, consistency, capability and innovation. By combining our local knowledge together with our international expertise of our parent company VINCI Energies, we offer world class innovative solutions and services to boost the reliability, safety and efficiency of the energy sector.

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THE PRICE IMPACT OF 50 PER CENT RENEWABLES As the costs to develop new renewable generation continue to tumble, many market analysts predict that Australia will be generating 50 per cent of its electricity needs from renewable sources by 2030. But what will this do to electricity prices? Will they move up, down or sideways? And what sort of impact will this have on global electricity markets? We spoke to David Leitch, Principal at ITK and electricity market guru, to find out more.

r Leitch is one such market observer who believes we will reach 50 per cent renewables by 2030, and his short answer to the question of what impact this will have on prices is that we’ll see a bit of everything – up, down and everything in between. Mr Leitch will be elaborating on his theories when it comes to electricity prices over the next decade when he speaks at the Smart Energy Conference & Exhibition, taking place from 2–3 April 2019 at the International Convention Centre in Sydney. Central to Mr Leitch’s position on prices is that fact that from where we are currently at today, getting to 50 per cent renewables is actually not that difficult a job – it only requires just over 1GW of new wind and solar per year, every year up until 2030. And if you look at what has been added in the past, Mr Leitch said this is a fairly trivial task. According to Mr Leitch, it’s not the adding of renewables that is the difficult task – it’s the balancing of different renewables with things like hydro power and batteries, that will prove to be the challenge. And is ultimately where most of the marginal intellectual property and value can be realised for the industry. But, back to prices – during his presentation, will Mr Leitch be able to pinpoint any further what they will do over the next ten years, beyond a little bit of everything?

“The nature of properly functioning markets is that they are self-correcting,” said Mr Leitch. “Prices go up, and we get more supply and substitution, so that prices will come down.” With the influx of renewables forecast to enter the grid in the coming years, Mr Leitch believes that costs will continue to come down – particularly driven by the learning rate we’re able to achieve when it comes to our deployment of renewables. One of the particularly interesting elements of Mr Leitch’s presentation will be his analysis of Australian electricity prices, as compared to global electricity prices. On this front, Mr Leitch believes that by and large, electricity prices in different international markets are converging more and more. “If you look at fuel costs, for example, coal cost is driven by China, because it imports coal from places like Australia. So a power station in NSW ultimately faces a similar coal cost to a power station in China. And as the input costs become a lot closer, prices are tending to converge to some extent.” According to Mr Leitch, where Australia can really make an inroad in global power markets will be with our energy sources powered by wind and solar, as we have a competitive advantage thanks to our abundant supply of these resources. “From there, the leading sources of supply will be those which can manage the balance price – the price required to make the wind and solar dispatchable in the longer term – best.”

Importantly, any gains we can see in relation to global prices will be of particular importance to our manufacturing sector. Australia is competing globally to provide major industrial power users, such as aluminium smelters and manufacturers, with access to affordable, abundant power. “Anything we can do to keep our power prices low, and keep the big manufacturers here in Australia, is obviously of critical importance to the broader Australian economy,” said Mr Leitch. “Aluminium smelters don’t care what global policy or Australian policy is – they care about what the price of electricity is, as that’s a third of their cost of making aluminium. “We have to compete on the world market. If we don’t, smeleters and other industries – all of which are significant employers in the Australian labour market – will move to where electricity prices are more advantageous.” According to Mr Leitch, the bottom line is pretty simple. “Australia can have a globally competitive power price, and we do expect our wind and solar costs to be lower than global averages – much lower than some of our major trading partners. “And how well we capitalise on this potential will have major impacts for the broader economy. As an industry we need to come together, solve some of the challenges we are currently facing and show the world that we can provide the clean, affordable power we so desperately need.”

David Leitch will elaborate on the price impact renewables will have in Australia at the Smart Energy Conference & Exhibition, taking place from 2-3 April 2019 at the International Convention Centre in Sydney. For more information about the event, head to www.smartenergyexpo.org.au.

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NEW PILE DRIVER TECHNOLOGY EXPEDITING SOLAR PROJECT CONSTRUCTION With the number of new solar farms planned and under construction increasing, there is an opportunity for construction companies to diversify their capabilities into the renewable energy space. CableNet Industries saw this as an opportunity to develop more practical ways of designing and constructing mechanical packages for large-scale solar farms. Key to being able to offer this was procuring reliable and accurate equipment to get the job done on time and on budget.

ableNet Industries was founded in 2002 and is now one of the largest communications infrastructure companies in Victoria, with the capability to offer turnkey installations in-house. It has widespread experience in the telecommunications industry and provides excellence in customer service with a committed workforce. The companyâ&#x20AC;&#x2122;s fleet is made up of horizontal directional drills used for installing communication and electrical conduits; communication carriers for rail and road projects; and vacuum excavators to support the drills and provide non-destructive underground asset location. Over the last two years, the company has expanded its capabilities to service the renewable energy market and has since worked on a number of large solar farm projects.

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Accuracy is the key to efficient installations at Numurkah Luke McDonald, Chief Operations Officer at CableNet Industries, said the company has recently finished working on the construction of the 100MW Numurkah Solar Farm, north of Melbourne, with the Vermeer PD10 Pile Driver playing a significant role in getting the job done quickly and accurately. “We were able to install 8000 piles in eight weeks using six PD10 machines, all equipped with the Carlson GPS system,” Mr McDonald said. “By having the Carlson GPS system integrated with Vermeer’s pile driver, the machine and GPS system are able to talk to each other, allowing greater accuracy and greater repeatability on the piling. It takes out a lot of the need for surveying the piles, and gathering as-built information, because it’s all there with the GPS system. “By using this machine, we’re finding that we’re getting our out-of-tolerance piles below one per cent on the project. This level of accuracy is extremely high, and gives clients a lot of confidence in the products and services that we can offer.” Combined with the Carlson GPS, productivity on site also increased due to the PD10’s inclinometer with auto-plumb and laser-controlled post-depth-control features that correct pile angle to be completely vertical without any manual adjustment by the operator. The PD10 is enabled with Vermeer InSite, a tool that allows the contractor to see vital information from the computer in their office, such as idle time, work time, fuel usage and machine location. CableNet Industries has also used the PD10 Pile Driver on the 110MW Bannerton PV solar farm in north-west Victoria where it provided design, engineering and site management of the mechanical package, installed 46,000 steel piles with help from the Carlson GPS, and provided design and set up of a GPS base station for use by EPC and contractors.

A growing fleet Along with the PD10 Pile Drivers, CableNet Industries have a large fleet of Vermeer equipment that it uses on solar projects, as well as telecommunication and civil construction projects. These include horizontal directional drills and a VSK100-1600DP truck-mounted vacuum excavator unit. It has been the experience of dealing with Vermeer and the reliability of the equipment that has seen the company continue to invest in additional Vermeer equipment such as the pile drivers. “We’ve run Vermeer drills and vacuum units for a number of years, and they’ve been reliable. They’ve also got a big support network for maintenance and parts across Australia,” Mr McDonald said. “I’ve known the Vermeer customer service team for a long time and they are very approachable. If they haven’t got the answer to a problem, they’ll always get back to you with one.”

"To answer the need for quick-working, accurate equipment, Vermeer has partnered with leading providers of positioning and machine control solutions, Position Partners, to develop the robust and productive PD10 pile driver fitted with Carlson GPS machine guidance system. Developed from the ground up for highprecision large-scale solar installation, the Vermeer PD10 featuring native Carlson GPS machine guidance enables outstanding overall tolerance — well within most construction tolerances specifications."

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SPATIAL & GIS

A FUNCTIONAL APPROACH TO

by Darren Mottolini, Business and Research Manager Western Australia, FrontierSI; Ivana Ivanova, Senior Lecturer and Research Fellow Spatial Information Infrastructures, Curtin University and FrontierSI; and Tristan Reed, Research Associate, Curtin University The energy industry has many and varied uses for datasets relating to spatial and geographical information, and traditionally, the process of knowing where to look for the right dataset has been challenging. However, Google recently launched a new online search engine specifically aimed at solving the challenge of finding and accessing the right dataset among the ever growing and increasingly fragmented array of online dataset repositories. And according to researchers from FrontierSI, this is just the tip of the iceberg when it comes to what we can achieve in dataset searches.

here are many thousands of data repositories on the web. Local and national governments around the world publish their data online, which adds to these repositories, meaning we now have access to millions of datasets. We have all experienced searching for a dataset that contains specific elements of information. The time spent searching for a set containing specific elements of data, only to find that you must further process the data to make it fit-for-purpose, costs business and government alike. In September 2018, Google launched Dataset Search, which allows anyone to find datasets wherever they’re hosted, whether it’s a publisher's site, a digital library, or an author's personal web page. Google Dataset Search applies the same principles as Google Search (which are also used for Google Scholar). As long as the right structure of metadata tags is included in the data repositories, it will index the metadata for discovery. The purpose of Google Dataset Search is to improve the discovery of datasets

from sectors such as life sciences, social sciences, civics and government. Google plans to do this by ensuring publishers provide structured metadata, which means each dataset must include support information describing the dataset. The idea of using structured metadata to allow machine-to-machine linkage is an area of research FrontierSI (formerly the CRC for Spatial Information) has been engaged in for the past seven years. While Google Dataset Search is a great advancement, the reality is that this new application is only dipping into the possibilities of what can be achieved through structured metadata and machine linkage. Google’s work is indirectly demonstrating that the research undertaken by FrontierSI has practical merit, while recognising there is still more work to be done. Searching for the right dataset through smarter use of structured metadata is only the low hanging fruit in optimising machineto-machine links. Improving search so that users can use “natural language” phrases such as “what is the grain production output within the Wheatbelt” should not

only get you to the right dataset, but in the future, provide you the right answer to it. We see this as the next level of research that Australia is well positioned to lead. Let’s explore what is standing in our way to not only improve what datasets we search for, but help generate the answers we need.

Structured metadata? Don’t we already have metadata standards? Searching for spatial datasets in the geo-information domain relies on the existence of dedicated catalogues (including metadata catalogues, geoportals or clearinghouses) and complex, standardscompliant metadata, such as ISO 191151. Metadata is a structured collection of information fully describing the spatial resource, and includes information about the creator of the dataset, its spatial and temporal reference system, content, quality and constraints on its use. The ISO standard recommends a minimal metadata set which should serve for data discovery and identification, yet despite having a complex and exhaustive metadata standard, there are persistent and well-known problems with spatial data discovery.

ISO 19115:2014 Geographic information – Metadata – Part 1: Fundamentals, ISO: Geneva, 2014, 167p.

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SPATIAL & GIS

DATASET SEARCHING Spatial metadata is scarce or, if available, not well maintained, which is caused by two major problems: »» The use of standards is not mandatory, and even if mandated (e.g. by national or corporate Spatial Data Infrastructure “SDI” policy), the standard does not specify a minimum metadata requirement. As such, it is frequently up to data producers to decide how much metadata and what information to provide. »» Metadata is provided in specialised jargon, understandable only by geoinformation professionals and often only those from the same specialised area as the producer. To add further difficulty, searching for spatial resources relies on prior knowledge of these dedicated catalogues and where they can be accessed. Currently, attempting to use mainstream search engines requires an intricate and advanced knowledge of crafting search query strings to guide the search engine to a specified data catalogue location. Once there, the search engine further needs to interact with the data catalogues system (such as using an OGC Catalogue Web Service2 request) to identify the right dataset based on the original query string. There were prior attempts to harmonise search for spatial datasets with dedicated catalogues using mainstream search engines – one such example is OpenSearch for GEO3, however, searching for the right dataset that is fit for the user’s desired purpose continues to be a challenge in the geospatial domain. An initiative within INSPIRE, the European

SDI, to align geospatial metadata standards with Data Catalog (DCAT)4 demonstrates the desire to expose currently “invisible” data repositories to the web and aligns with recent developments in mainstream search engines, such as Google Dataset Search. Google has recommended the use of RDF models and DCAT vocabularies to setup and design structured metadata for published data, but what does this mean? RDF stands for Resource Description Framework, a metadata model used as a general method for expressing conceptual descriptions or modelling of information that is implemented in web resources. It is a knowledge management technique that is founded on the idea of describing resources in the form of a triple – consisting of a subject, predicate and object. In Figure 1, the subject is a property, the predicate expresses the relationship “isLocated”, the object in this case being a street. The expression would be “a property is located on a street” – subject, predicate, object. DCAT is an RDF vocabulary designed to facilitate interoperability between data catalogues published on the web. DCAT does not make any assumptions about the

How does it all work? A collection of RDF statements intrinsically represents a directional graph data model that is suited to generating knowledge, from understanding how data is linked, while using machine inference to “fill in the gaps”. Using the concept of a mining haulage machine and the interlinked assets and components related to build such a machine, you can quickly map a graph data model by linking statements, as shown in Figure 2. Once linked, using data analytics software (such as Apache Hadoop) we can then infer other linkages without having to hard code them into applications or build new look up tables. However, in practice, RDF data is often stored in normal relational databases or native representations, providing a mechanism for publishers to start building their own RDF statements and publishing these.

Figure 1. Simple RDF expression demonstrating an inferred link.

http://www.opengeospatial.org/standards/cat

http://www.opengeospatial.org/standards/opensearchgeo

https://joinup.ec.europa.eu/release/geodcat-ap-v10

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format of the datasets contained within a catalogue but provides a standardised method of expressing the structure of a data catalogue and the metadata records of datasets within it.

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Why should the metadata of my dataset be structured this way? When searching for datasets to meet the requirements of a solution, understanding that, for example, in a cadastre a property can be called a lot, a parcel, a land boundary, a property boundary, a title boundary, or several other possible terms, these additional descriptions become important for a search engine. However, in most cases search engines do not consider the fact that one “thing” may be called many different things by other groups of people. As such, if you were to describe a dataset as containing information on “tree canopy”, a user querying the search engine with a more general term such as “vegetation” would not find the dataset and so would not be aware of a dataset that may meet the requirements of their solution as it was described using other terms. Google Dataset Search is currently a leader in this regard. For example, querying “bore hole” and “borehole” yield effectively the same results. This is in contrast with other dataset search engines in use, such as CKAN, which ignores all records containing “borehole” if the search query is “bore hole” and vice-versa. Through expressing metadata in a structured RDF format, vocabularies can be linked to elements of the metadata to “expand” or broaden the content. For example, existing or expertgenerated vocabularies describing alternative representations for “bore hole”, “cadastre” or “tree canopy” could be used to

automatically expand the keywords listed in the metadata records for the cases discussed above. Spatial data also intrinsically contains extra context, be it implied through the geographic extent of where the spatial data itself is or the geographic extent to what the data covers which may be, specifically described in a metadata record. By applying the principles of RDF “triples” to create context in the published metadata, dataset search engine results can be tailored for the end user by looking at the spatial relevance or suitability of a dataset. One example would be describing a dataset’s extent as being “Northam”, a town in the Wheatbelt region of Western Australia. Using RDF compliant vocabularies, a user can query a search engine with a phrase such as “‘in the Wheatbelt” and find said dataset. As such, a user looking to compare data from a set of related geographic areas only needs a single search query, rather than many as is currently required. The Spatial Infrastructures program of FrontierSI has been at the forefront of research in this area for the past several years and new applications, such as Google Dataset Search, show ongoing promise that we are on the right path. For now, FrontierSI is continuing to improve how spatial metadata can better leverage the “web of data”, while supporting Australian data publishers to ready their data for Google Dataset Search.

Figure 2. Represented Graph Data Model.

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NET ZERO: In 2017, Monash University announced its Net Zero Initiative, an ambitious plan to move the built environment at the university’s four Victorian campuses to zero emissions by 2030. The plan involves a number of innovative new developments and technologies, including the Monash microgrid at the University’s Clayton campus, which will help the University control when and how it uses its energy.

onash University is on a mission to research, investigate and lead the way when it comes to energy development, production and use in the 21st century – and their ambitious efforts to date have already seen the University awarded with the United Nations 2018 Momentum for Change Award, an award which recognises the world’s most practical, scalable and replicable examples of what people, businesses, governments and industries are doing to tackle climate change. As Australia’s largest university, with more than 80,000 student enrolment across 10 faculties and over 150 buildings spread across four domestic campuses, Monash is a significant consumer of

energy. However, the University recognises the need to protect the environment by innovating sustainable, new ways to power its campuses. It’s for this reason that Monash is taking ambitious action to completely transform the way it uses energy. The Net Zero Initiative was announced in 2017, but the strategy had its beginnings in 2005, when the university was the first in Australia to set an energy reduction target of 20 per cent. Monash has since embraced its role as a champion for energy change, backed by two main drivers. Firstly, Professor Margaret Gardner AO, the University’s President and Vice-Chancellor, is passionate about a clean energy future and taking a leadership position on achieving net zero emissions; and secondly, the University’s endeavours to research climate change, human activity and its effect on the environment.

Monash is treating its four Australian campuses as city-scale living laboratories, to help develop solutions to pressing energy industry challenges

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SMART NETWORKS

LEADING THE CHARGE IN

ENERGY INNOVATION

“The University recognised that it had a leading role to play in demonstrating how you actually get to net zero emissions. Creating a sustainable future is a strategic priority for the University and is at the heart of our decision making to achieve our ambitions,” said Scott Ferraro, the Program Director for the Net Zero Initiative. “We worked with ClimateWorks Australia to map out how we should actually go about achieving net zero,” said Mr Ferraro. “This involved a full feasibility study, an assessment of the emission reduction opportunities and what the costs and benefits might be. We then set the target for 2030 based on that.” The resulting Net Zero Initiative encompasses five key pillars: »» Energy efficiency measures – LED lighting upgrades to all buildings at all Australian campuses and a Building Optimisation program to tune building mechanical plant »» Campus electrification – replacing inefficient gas boilers with electric heat pumps to more effectively provide heating and cooling for all campuses and electrification of transport through deployment of EV chargers »» Renewable energy – installing solar panels at all Australian campuses; and signing a long-term power purchase agreement with the Murra Warra Wind Farm in Western

»» »»

Victoria to buy rights to both electricity and large-scale renewable energy certificates (RECs) generated by the farm Offsetting – purchasing offsets with Verified Emissions Reductions, either through the Verified Carbon Standard or the Gold Standard The Monash microgrid – which will receive and store energy from various renewable energy sources and allow the University to control when and how it uses energy, reduce demand and strain on the network during peak times, and help stabilise the wider grid, making it more resilient

Together, these five areas all have the ultimate aim of achieving net zero emissions for the University’s built environment by 2030. According to Mr Ferraro, by 2020, approximately seven per cent of the University’s on-site energy needs will be met by the rooftop solar that has been installed; but by 2030, once the full range of energy efficiency measures has been implemented, this number will rise to between 20 and 30 per cent. The power purchase agreement with the Murra Warra Wind Farm will provide the University with the remaining renewable energy required to power its campuses.

Testing in a mini-city environment By student numbers, the University is the largest in Australia, and the energy demands are huge. Over the last decade, its campuses have become thriving community centres, and changing student expectations have meant that libraries, amenities, and public spaces now remain open and accessible for longer than ever before. Putting it into perspective, Monash has 2800 students living on their campuses all year round and numerous libraries that are open seven days a week – that’s a considerable amount of energy consumption. Energy use is currently pushing 682,000GJ per annum, and recent increases in electricity and gas prices have increased total energy spend. “If you think about it, this is the perfect place to test some elements of the Net Zero Initiative,” said Mr Ferraro. “We’re a city full of people who are always learning, and pushing the boundaries, so what better place to test energy solutions than right here? In short, we’re redefining a university’s role in creating a sustainable future for us all. “A strong emphasis is placed on transforming the University’s campuses into smart cities and creating models that can be replicated well beyond the campus boundaries, engaging our communities to help us create a more sustainable future.” The Monash microgrid, which is a key part of the broader Smart Energy City project in partnership with Indra, and funded through ARENA, is a key component of the University’s plan to test technologies and new business models in a mini-city environment. “The microgrid really is us trying to demonstrate what you can do from the demand side to provide services back to the grid and broader energy market to allow for greater penetration of renewables,” said Mr Ferraro. The microgrid will be versatile enough to receive and store energy from various renewable energy sources, and it will allow the University to control when and how it uses energy, meaning it can reduce demand and strain on the network during peak times. www.energymagazine.com.au

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“We’ll be deploying Indra’s control system and developing a transactive energy market working with our academics. This will enable us to take a signal from the external market, and determine which of our assets is best placed to respond. We’ll then be able to pass the value of this service onto the end user– our buildings. “We’re looking to provide a number of services from both an energy and power perspective, to our operations and to the grid and broader energy market. This includes peak demand management, local network services and frequency control ancillary services (FCAS). By doing this, we’re aiming to demonstrate the value proposition that precinct scale smart control of distributed energy resources can have in enabling greater penetration of renewables into the grid.”

Working with Monash For the Net Zero team, one of the key aims of the program is to help the broader energy industry benefit from the work and research that is being carried out. “Yes, doing this for ourselves is good, but doing it in a way that’s replicable and scalable so others can learn from it is a huge part of the Net Zero drive,” said Mr Ferraro. “Through the funding agreements we have with ARENA and with the Victorian Government, we’ve got knowledge sharing arrangements, so we’ll be producing publicly available reports and sharing data from the microgrid work.” Beyond this, engaging with other industry partners is a key focus for the Net Zero Initiative. The team has met with a number of companies to help them understand the process the University has been through, and help them work through the process of setting a net zero target for themselves, and understand the steps that need to be taken in order to achieve the goal. The Clayton campus sits at the heart of the Monash Technology Precinct, which is home to CSIRO and a host of innovative manufacturing enterprises, including some of the world’s most progressive energy brands. This environment provides the critical elements for groundbreaking industry partnerships, research collaborations and the development of technology prototypes that can be locally tested. Along with the surrounding businesses and organisations to collaborate with, the Net Zero team has access to some of the world’s leading researchers and thinkers when it comes to the future of energy on their own campus. Putting Monash’s research

institutes into action, not in a lab or a small test environment, but in a living, breathing, energy-hungry campus environment, is a benefit to the University that cannot be understated. Some of the faculties that have been involved in the Net Zero Initiative include IT, who conducted some of the initial grid feasibility studies; engineering, who with IT are developing the algorithms which will allow for orchestration and control of the Monash microgrid; and then there’s the Microgrid Electricity Market Operator (MEMO) project, which has involved researchers from the faculties of law and business, as well as behavioural economists. The Net Zero team has also worked with government departments who are looking at installing batteries similar to what Monash University has already done; as well as working closely with other universities who have similar energy goals so that each party can learn from one another’s experiences. “We are also engaging with people like AEMO, ARENA, the Energy Efficiency Council and the Clean Energy Council, and members of all of those organisations, to share information and knowledge with those networks,” said Mr Ferraro. Mr Ferraro and the Net Zero team are always keen to bring interested parties into the University to see what they are doing and learn how they could potentially adopt some of the measures already employed. “If people are interested in understanding more about what we’re doing, we welcome hearing from them. But then also if they’ve got solutions or products they want to test, we’re very open to that too,” said Mr Ferraro. “We are a private embedded network, so we can do things that you might not be able to do in the real world. This enables us to test different technologies and business models to show the value they can provide to the broader market, and regulatory changes required to achieve this. “Because we are a university, with a key business driver of enabling world-leading research, we can do these sorts of things and invest in projects if we can get research outcomes from them. So we’re looking for industry partners who are open to research collaboration. “For example, Indra, who we are working with on the Smart Energy City project, have contributed funding and resources to help undertake research, and have also opened up their platform, which we will ultimately both benefit from.” According to Mr Ferraro, while the University obviously has its

Aerial view of the Clayton campus.

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Solar panels installed on roofing at the Clayton campus.

own reasons for undertaking the Net Zero Initiative, unless it has applications in the outside world, it’s missing the point. “We want to be an enterprising university that has impact on the world and is developing real solutions, and that is a key component of what this initiative is trying to achieve,” said Mr Ferraro.

bodies like ClimateWorks, about how we can take our learnings and help others, both locally and internationally, to meet the sustainable development challenges facing Australia, the region and the world. “We’re also looking at how we can take net zero principles to developing countries, where cities are being built

Where to from here? While the Net Zero team has a very clear mandate for where they need to be by 2030, and the steps they need to take in order to get there, Mr Ferraro also sees a range of further applications for the initiative. “Net Zero is really about showcasing how can you get to zero emissions, and answering questions like what’s it going to cost you? How fast can you do it? How can you speed it up? What changes in regulations are needed to make it happen elsewhere?” said Mr Ferraro. “So we’re looking at developing a broader research program and a translation program where we take what we learn here, and help others do the same thing. There are currently conversations underway with Monash’s Sustainable Development Institute and Monash Energy Materials and Systems Institute, as well as

Elements of the Monash microgrid.

from scratch, and provide advice on how this can be done in a way that’s aligned with a net zero approach.” Looking specifically at the Monash microgrid and the Smart Energy City project, the University is looking to build smart control systems, and a transactive energy market at the city-scale level through the Net Zero Initiative – but the next steps will be to set up the operational and business models to teach other organisations about how they can do the same thing. “We want to prove out the concept so others can take it and run with it – test if it’s a profitable business model that other people want to take and deploy,” said Mr Ferraro. With more than a decade on the clock ahead of the Net Zero deadline, teams of dedicated researchers across the University, and a passion for sustainability that’s coming directly from the top, the potential impacts this initiative will have on the wider energy industry are huge. According to Mr Ferraro, the broader purpose of this project – and indeed a university – is to drive change, and through Net Zero, it’s safe to say Monash University is well on the way to achieving this.

KEEN TO WORK WITH MONASH? Monash University and the Net Zero team are constantly on the lookout for new companies, organisations and initiatives to partner with in the journey towards a zero emissions future. If you’re interested in learning about how you could work with Monash, head to the Net Zero website – www.monash.edu/net-zero-initiative – to find out more.

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A NEW APPROACH TO ENERGY INNOVATION As we know, energy is in transition; innovation in the sector is more crucial than ever to help support this change. Creativity and curiosity are the drivers of innovation, and it is when these values are nurtured that innovative ideas and solutions are developed. So how do we nurture those who are creating real solutions that may prove to be essential in the transition into clean energy? We spoke to EnergyLab Acceleration Program Manager, Riley McAuliffe, to shed some light on how they are tackling this question. www.energymagazine.com.au

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Enter the hackathon Hackathons are largely misconceived as events solely for programmers and developers, or hackers. However, energy hackathons have grown to become collaborative events that bring together entrepreneurs from a range of backgrounds who work together to create new, or workshop existing, innovative ideas and solutions to the challenges facing the industry. As energy transitions into its new era of clean and renewable energy, nurturing innovation and promoting collaboration is vital to make the transition as smooth and efficient as possible. EnergyLab is just one of the organisations around Australia that runs hackathons to support new business and technological initiatives that will help the energy industry address some of the challenges it is currently facing. In 2018, EnergyLab ran 50 events and 14 hackathons across Australia and Cambodia. Ms McAuliffe said that supporting young and old entrepreneurs not only helps kickstart innovation, but allows industry

players to get a first-hand look at what’s coming and encourages partnerships with new businesses to achieve their organisation’s goals. “One of the most exciting, and most essential, parts about our hackathons is getting to work with incumbent players to try and create energy innovation together, because that’s where we see the real solutions happening. We see these young startups working together with the energy industry to achieve mutual outcomes.”

Helping to conquer the hurdles Ms McAuliffe outlined three key hurdles new startups face that EnergyLab strives to help them overcome. The first and most crucial is the time involved and complexity of creating and developing new hardware, especially when compared to software companies who can produce a working product relatively quickly. “There’s also particular regulatory barriers that add to the time and effort needed. There are many hurdles that pop up easily, and most of the time early in the

start-up journey. They can be difficult to overcome on your own,” Ms McAuliffe said. “Thirdly, there is the fact that the energy industry has many big, incumbent players that startups are competing against, which is a unique aspect of the energy industry.” EnergyLab’s hackathons and acceleration programs give startups access to industry mentors and coaching, as well as legal and accounting assistance, among the range of services offered. Industry and legal advice coupled with access to valuable mentors and resources reduces the extent of the hurdles that the startups will face. “In the face of these challenges, we see the hackathon as a beautiful way to innovate in energy, and create businesses and technology of the future,” Ms McAuliffe said.

Getting your head around a hackathon EnergyLab’s hackathons are high-energy 24-hour events run over two days that focus on one topic, problem or challenge

Dave Budge, co-founder at Jaunt, giving an introduction to transport and innovation at Melbourne hackathon.

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winner during each hackathon, EnergyLab picks out any of the ideas that it believes could become successful businesses and moves them into their acceleration programs to continue to provide them with support and valuable resources.

The winning team from The Future of Transport in Melbourne Hackathon, Synergize.

for which participants explore and develop a solution. High-quality mentors provide input into the ideas that the teams are developing over the course of the weekend. Participants are either put in to teams or can team up with their friends to workshop a business model and solution based on a given topic. The teams are given access to mentors who can provide advice, knowledge and feedback throughout the hackathon. At the end of the two days the ideas are then pitched to a panel of industry judges who assess the ideas on the merits of its concept and its business potential before a winner is chosen. “What participants can expect is a really fun, passionate, supportive and inspiring event, whether they come with friends, or colleagues, or people they might have met online, or they come on their own and meet new people. They can create new ideas or work on their own ideas they’ve

had before, which in my experience makes participants feel really fulfilled and inspired.”

Serious results EnergyLab’s very first hackathon produced two new startups; FluxPower from Brisbane, that provides a real-time payment network for the energy industry, and Everty in Sydney, which is paving the way for innovation with e-charging stations. “During November last year we ran a transport hackathon out of Melbourne that took a very broad view of energy. From that we have another two start-ups we’re working with now, one being Invicta, which develops exclusive eBikes for the corporate market. The other is Synergize, which is essentially offering solar and battery packs for the tram substation to offset some of their electricity consumption and lower the electricity prices for the tram network.” While there is formally at least one

Getting involved Hackathon participants can expect to not only develop new startups, but are also given the chance to meet like-minded people and the opportunity to be creative and curious. “A lot of people who may be creatively minded, or have a lot of industry experience, may have never considered themselves entrepreneurs and they shy away from that word. An event like a hackathon gives people an easy way for them to test an idea out and to network.” Another way to help support innovation and foster new ideas as an experienced and involved member of the energy industry is to take part in mentoring, presenting or judging. “Getting involved in mentoring or judging allows industry members to see up-andcoming talent and ideas, and it allows them to be the first to put their hands up and get in on the ground floor if it’s something that inspires them. Which is something I know our partners really like,” Ms McAuliffe said. “We’re passionate about providing the opportunity for people to come and develop their curiosity and creativity in a fun and supportive environment. We believe it not only encourages innovation within the industry but also getting young startups working together with the energy industry is a great way to ensure we make it through this transition with the best possible outcome.” To keep up to date on upcoming events visit www.energylab.org.au. To speak to Riley McAuliffe regarding start-up opportunities, mentoring or other ways to get involved, you can contact her directly at riley@enerylab.org.au.

WHAT IS A HACKATHON? An EnergyLab Hackathon is a 24-hour event that sees teams produce, develop and pitch new startup ideas based on a predetermined topic. People can come along individually and be put into teams, or can come as a team, to continue to develop existing ideas or produce something completely new. The overall aim is to produce new startups that EnergyLab can develop into a lucrative business through its acceleration program.

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RECOGNISING

IN ENERGY

The critical role of energy networks in the lives of every Australian cannot be understated; and yet sometimes, outside the industry, it’s a case of out of sight, out of mind. For this reason, it’s so important that representatives from Australia’s energy network businesses gather each year to reflect on the work they do, share their stories and recognise some of the industry’s best people and projects.

very year this gathering of network professionals is facilitated by Energy Networks Australia, the association representing and advocating for network businesses. The gathering takes place in the form of an Annual Dinner and Awards evening, last year staged in Canberra in November at the truly impressive and humbling Australian War Memorial. The evening is a chance to gather and reflect on the year that was, network with colleagues, and make new industry connections. But most importantly, it’s a chance to acknowledge the incredible work that is happening right across the network industry. In total, three awards were handed out – recognising innovation in the sector, outstanding customer engagement, and individual industry contribution. In 2018, the awards were attended by Federal Energy Minister Angus Taylor, along with a host of senior executives working for networks business around Australia. Recognising innovation: the key to industry growth Four finalists were recognised in the Innovation category: »» Essential Energy, for their Quality Assurance Lab »» Evoenergy, for their demand reduction program, incorporating the ACT Virtual Power Plant

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The team from TasNetworks accepting their network innovation award.

»» »»

Jemena, for their demand response trial Power Chargers TasNetworks, for the CONSORT Bruny Island battery trial

After reviewing all of the projects, the judging panel deemed TasNetworks to be the winner of the Innovation Award for 2018. The trial helped 34 customers install solar generation and a battery on their homes to test the ability of distributed generation to be an alternative to a diesel generator during periods of peak holiday demand. “The trial has shown how a modest number of residential PV and battery

systems are able to provide a disproportionately large benefit to the grid,” said Energy Networks Australia Chief Executive Officer Andrew Dillon. “Diesel usage is down by about 30 per cent, but more generally, the project delivers optimisation of distributed energy resources, which increases grid reliability." “This project has demonstrated innovation across many facets of the energy sector,” said TasNetworks Chief Executive Officer Lance Balcombe. “It is a key step in our vision to be trusted by our customers to deliver today and create a better tomorrow.”

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THE BEST

NETWORKS

Jennifer Harris from Powerlink accepts the Industry Contribution Award from Ben Wilson from Australian Gas Networks.

According to TasNetworks, customers were the key to the success of this solution. The project was founded on customer behaviour, which has been central to the project’s design and implementation. In particular the concept of customer choice, overlaid with the technical requirements to manage a network problem, are embodied in the Network Aware Coordination (NAC) algorithm. This algorithm works in conjunction with the Reposit system to automatically and optimally coordinate the large number of batteries involved in the project. The NAC algorithm, while developed prior to Energy Networks Australia’s Open Energy Networks consultation, actually foresaw many of the issues discussed in this paper, and in this way, the CONSORT Bruny Island Battery Trial is a ‘living laboratory’ to test these concepts. Runner-up for the Industry Innovation Award was Jemena, for it Power Chargers demand response trial.

www.energymagazine.com.au

Engaging customers: mission critical In a time where consumer trust towards the energy industry is lagging, it’s never been more important to actively engage with customers. Five projects were named as finalists for the Energy Networks Australia and Energy Consumers Australia 2018 Consumer Engagement Award: »» Essential Energy, for their customer engagement regulatory proposal »» SA Power Networks, for their deep dive workshop program regarding their regulatory proposal »» TransGrid, for their Powering Sydney’s Future proposal »» The joint Victorian distribution businesses (CitiPower, Powercor, United Energy, Jemena and AusNet Services), for their joint consultation on Network Pricing Design, under which they committed to a joint approach to pricing for residential and small business customers until at least 2025 »» Western Power, for their community engagement during the evaluation and development of a microgrid for Kalbarri Energy Consumers Australia CEO Rosemary Sinclair said the projects provided a snapshot of an industry sector that was increasingly recognising the value of engaging with consumers as partners to solve big challenges around affordability, trust and transformation. Ultimately, the unanimous choice of the judging panel for the Consumer Engagement Award was Essential Energy. Prior to submitting its proposal to the Australian Energy Regulator for building, operating and maintaining the electricity network over the period 2019-2024, and the proposed network charges, Essential Energy conducted an extensive customer and stakeholder engagement program, to share and gather information, insights and feedback and ensure that they could be confident their proposal reflected customer needs and expectations. The engagement took place in four phases over more than two years, and ultimately delivered a true understanding of the priorities and expectations of customers. “Rebuilding trust with consumers in the energy sector will take time and must come from the top,” said Ms Sinclair. “The leading businesses are entering into a new dialogue with consumers and taking responsibility for the issues they’re raising to deliver more affordable outcomes. “Essential Energy showed they had proactively engaged with their consumers to better reflect their views and priorities and allow that to shape services,” she added.

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Attendees from a session of Essential Energy’s award-winning customer and stakeholder engagement program.

The judges for the consumer engagement award compiled a report after the process and congratulated all businesses who had made an application for the award. “We congratulate the changemakers - the businesses who have entered this year - and encourage these businesses to continue to be leaders.” Western Power received a highly commended from the judges for its Kalbarri Microgrid project.

Representatives from Essential Energy accept the Consumer Engagement award from Rosemary Sinclair.

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The path forward The awards evening also provided the opportunity to recognise an individual for their personal, and substantial, contribution to the industry over several years. In 2018, the Industry Contribution Award went to Powerlink’s General Manager Network Regulation, Jennifer Harris. “This award recognises Jenny’s significant contribution to our industry and her clear focus on the customer driven transformation of our networks,” said Mr Dillon. All three award winners gave attendees plenty to think about in terms of their own current and future contributions to the network industry; along with plenty of inspiration for how their businesses might be able to achieve innovation and customer excellence in 2019 and beyond. www.energymagazine.com.au

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