All around Australia households are receiving their winter gas and electricity bills, notifying them just how much they owe their power retailers.
In the future, however, Catherine Tanna the CEO of EnergyAustralia, hopes retailers will be able to tell consumers just how much they’ve helped them save when the bill arrives in their inbox.
“At the end of the day, when the energy bills go up it’s our name that’s on the bill,” Tanna told Which-50 during a media roundtable in Sydney last week.
“In the future, I’m hoping that relationship will be quite different when they can see what they save. I do think Australians are very keen to see the transition to a cleaner energy future and they can see what contribution they made to that.”
For now, power prices are continuing to climb higher but industry experts believe new ways of generating power and technologies to monitor and control usage will reduce the cost of running households and businesses. But first, they need to successfully navigate the transition.
Tanna explained the industry is leaving behind an energy system based on large centralised generation for one where power is increasingly coming from wind and sun captured on rooftops.
Already the influx of renewables has created challenges and opportunities for the future of the grid. On Sunday, July 21st renewable generation was running full tilt and electricity was sold in the national market for $0.
While the energy is cheaper, the problem is there’s often a mismatch between renewable supply and user demand.
“We are already thinking of ways of helping our customers use that energy when it’s available, and use less energy when that renewable resource is not available,” said Jess Padman, Strategic Planning Lead, EnergyAustralia.
For example, on a hot summer day, an enormous load is put on the system for a relatively short amount of time when 8 million households get home from work and turn on the air conditioning. That’s around the same time solar is starting to come off for the day.
“We have less available renewable resource and a lot of demand all at the same time,” Padman explained.
“What if we could help our customers utilise the abundant solar resource in the middle of the day to pre-cool their homes and switch on their air-con earlier?”
Padman noted this approach could use more energy overall because the air conditioner is running for longer, but because the energy from solar in the middle of the day is lower cost and lower carbon.
“I think over time this is going to really save people money.”
“We know over the next decade or so, all the changes and transformation that’s happening in this industry is going to throw up a lot more challenges, also going to create a lot of opportunities to help customers. But we also know that organisations that don’t act in the customer’s interest are not going to survive through this period,” Padman said.
The smart home
Falling technology costs are another trend identified by EnergyAustralia that is fuelling disruption in the industry. It’s driving the uptake of solar for households and businesses, as well as batteries and connected devices in the home.
Padman believes these smart appliances will become increasingly important to the energy industry.
“Smart devices mean people have access to a lot more data about how they use energy. That means they can have more control over how they choose to use energy. People can participate in energy in the way they never have been able to before.”
Tanna argued retailers will need to form customer partnerships and be willing to share value with customers.
“Within a decade, maybe less, the Australian energy market will have changed beyond recognition,” she said.
“We’re talking a complete transformation which will require energy companies to enter a new social contract with the community. Families and businesses will expect that, where value is created in a new, modern and cleaner energy system, they’ll have opportunities to share in that value.”
One example of this is demand-side participation, or demand response trials, which reward people to reduce their power usage during peak times. That means the retailer gets a smaller bill from the wholesaler, consumers enjoy discounts and the grid is more secure.
EnergyAustralia is participating in a national demand response trial, so far attracting more than 9,000 customers and 50 MW of load. The trial tests and assesses how customers can move usage during times of peak demand to ease demand on the broader system.
Tanna says they have already seen high engagement and positive feedback from customers who have participated in demand response trials, a sentiment echoed by leaders at Powershop, Mojo Power and Amber Electric.
The retailer of the future
When asked what the role is for retailers when customers start generating their own power, Tanna said the retailer of the future will be a “trusted partner” that can manage and optimise their energy use for them.
For example by automatically pre-cooling their homes when energy is cheap or switching off their pool pump when prices are high.
“I think people are generally time-poor and they don’t want to be spending their day trying to understand what power they should be using, what appliances they should be using. They need to have a trusted partner they can rely on to optimise all of that for them. That’s what I think the future is.”
She also noted customers are not one homogeneous group.
“We have everything from the really early adopters who already have solar and batteries and they’ve got the app and they are looking at it multiple times every single day. To the customer who just wants the lights to go on when they flick the switch. All of the customers are important to us and we’ve got a role to play across the full spectrum.”
Ageing fossil fuel assets
While navigating these market disruptions EnergyAustralia has committed to continuing to invest in its existing generation portfolio “to provide reliable power for customers as the clean energy transition unfolds.”
In her presentation, Padman said coal generation is decreasing over time as coal plants reach the end of their usable engineering lives. She noted coal generates two-thirds of the energy we use in Australia, and while it isn’t dependent on the weather like renewables, there are concerns over its reliability as plants get older.
“In the NEM (National Energy Market) we are seeing a dual complication of having to solve for the availability issues to integrate renewables solar and wind. And on the other hand, trying to manage the reliability issues of ageing fossil fuel plants over time,” she said.
Padman said part of the solution to managing this complexity is flexible capacity (eg storage and demand-side participation) and increased grid interconnectivity, more poles and wires between the different geographical regions, meaning energy can flow between states more easily.
“A more interconnected grid re-risks the renewable availability challenge because if it’s not windy in NSW it makes it easier to import the energy from Queensland or Victoria,” she said.
“It is going to be up to us to work out when the right time is for the right solution to ensure we minimise the overall cost to customers.”
Managing the shift
Tanna says the challenge isn’t technology or engineering – it’s planning to make sure all the pieces fit together. Because it is the customer who will wear the cost of poor decisions.
“The transition to a modern, cleaner energy system has to work for everyone in Australia. So it has to work for people wherever they live and no matter how much they earn,” Tanna said.
“People want the clean energy transition, but many are struggling with rising power bills. Cost, emissions and reliability – it’s the trilemma,” Tanna said.
In Tanna’s view, the community isn’t asking for anything unreasonable.
“All the pieces of the puzzle for a modern, cleaner energy system already exist, and it’s taking shape.”
It’s a system that is underpinned by wind and solar power, and supported by storage such as commercial batteries and pumped hydro, demand response, energy-efficient technology, and flexible generation.