What’s the holdup with energy utilities transitioning from coal-fired power to clean energy?
What’s the holdup with energy utilities transitioning from coal-fired power to clean energy?
This episode brings together diverse energy experts, to provide first-hand insights into the issues faced by energy utilities and the initiatives that aim to address those issues, in order to reduce household energy costs and carbon emissions.
Much of the discussion centres around the new RACE (Reliable, Affordable, Clean Energy) for 2030 research centre, which aims to reduce carbon emissions in Australia by 20 mega tonnes by 2030.
This episode is an edited version of a panel recorded as part of Curtin University’s annual Research Rumble event, which showcases university research and innovation. Professor Greg Morrison, who appeared in The Future Of’sClimate Action episode, acts as guest moderator.
Connect with our guests
Professor Greg Morrison is the RACE for Everyone Program Leader anda Professor of Sustainability within the Curtin University Sustainability Policy Institute (CUSP).
He has been involved with the European Union’s Climate-KIC to mobilise cities to implement climate resilient solutions. He has also initiated and run several large-scale societal infrastructure projects in Western Australia that have focused on clean energy, including a two-year trial in Fremantle that saw households share their excess solar energy.
Jonathan Jutsen is the CEO of RACE for 2030. Previously, he was the CEO for the Australian Alliance for Energy Productivity and a member of the New South Wales Climate Council.
Tracy Deveugle-Frink is the Head of Change and Innovation at Western Power, WA’s government-owned energy operator that provides electricity to the Perth metropolitan area and the South West. She has experience in innovation and entrepreneurship consulting.
David Edwards is the Digital Strategy and Innovation Manager at Horizon Power, WA’s government-owned energy operator that provides electricity to residents and businesses in regional and remote areas. He has a background in engineering and energy transformation.
Brian Innes is the Founder and Technical Director of Starling Energy Group, an energy asset management company based in WA. Innes helped set up Starling’s Plico Energy Project, a Virtual Power Plant network of solar panels and power systems located in WA’s South West region. He has experience advising about renewable energy and greenhouse gas emissions.
Rod Hayes is the Group Chairman of the Balance Services Group, a Perth-based company that aims to deliver robust energy solutions in regional areas. He is also an Associate Adjunct Professor at CUSP. Hayes has experience managing in the energy and water industries.
Questions or suggestions for future topics
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Music: OKAY by 13ounce Creative Commons — Attribution-ShareAlike 3.0 Unported — CC BY-SA 3.0 Music promoted by Audio Library.
This is The Future Of, where experts share their vision of the future and how their work is helping shape it for the better.
I'm Jessica Morrison. Like many Australians, you might be wondering how long it will take us to transition to clean energy. This episode of The Future Of is an edited version of a panel discussion by researchers and industry representatives who discussed the energy industry's big challenges and their involvement in a national research centre called RACE for 2030. RACE is an acronym for Reliable, Affordable, Clean Energy.
Recorded in April 2021, the discussion was part of Curtin University's annual Research Rumble, a series of events that showcase university research and innovation. We come into the discussion with moderator Professor Greg Morrison revealing some of the research topics and introducing the first panel speaker, Jon Jutsen, who is the CEO of RACE for 2030.
[00:58] Professor Greg Morrison:
Thank you very much. The work we're doing in RACE with industry is the issues that we have of our time. And we're already starting to deliver some important research for our industry partners. One is about customer trust. We're going to talk a lot about customer-centricity. One is the workforce of the future – what is the workforce that we need to be able to deliver to our industry partners? Electric vehicles in the grid ... as we start the uptake of electric vehicles, what does that imply for the grid and why is that important?
Professor Greg Morrison:
We've also got some rather rapid projects before we do the really big projects. One is on how we retrofit a million homes across Australia to a high standard. And we've got a couple of really exciting PhDs, just starting up. One is looking at hydrogen for the home, green hydrogen of course. At this point, I'd like to introduce Jon Jutsen.
Thanks very much. I'll talk to you a little bit about our Cooperative Research Centre: RACE for 2030. RACE stands for 'Reliable, Affordable, Clean Energy'. We are the CRC for the energy and carbon transition. We've got $350 million of resources to deploy for energy innovation over the next nine years, and for us research is late-stage commercialisation, demonstration and early-stage deployment plus market transformation. We're very applied; we have large energy and carbon savings that we have to achieve. We're not looking at the area of energy that most organisations are, on the large-scale supply. We're focused on the customers, the end users. That means homes, businesses, communities, precincts and the energy distribution to those organisations. We're not looking at transport, except we are interested in the batteries of cars. I'll talk to you about that in a minute. So the focus on end-users and industry-led research are really our key value propositions. We are looking at the generation storage, load flexibility at sites and communities. We're interested in micro-grids, energy productivity, electrification, and digitalisation, and we see a huge opportunity for AI and the Internet of Things for taking energy use to the next generation. We're addressing the big challenges and opportunities for transformative change.
The Queensland government with Powerlink, one of their utilities, came to us to address minimum demand. To them that was the issue of having too much rooftop solar causing instability in the grid. But from the customer's point of view, it's 'How do I get a good return for my solar investment?' Or you could look at another way to 'How do I get sufficient load flexibility to take advantage of the price volatility if I'm a business consumer?' We're also interested in 'How can a car battery be my home battery?', using two-way charging, without the need for investing another $10,000. And that also improves the proposition for electric vehicles. And that might be part of a bigger story itself in terms of what's the most economical form of storage – thermal or electrical – and where in the system should the investment be made and by whom.
We've got great partners in Western Australia. Curtin heads up the RACE for Everyone, one of our major programs. We've got Western Power and Horizon, we've got Starling. And we can see the transition in Western Australia is in some way the fastest in the country and that your isolated networks make the risk, from badly managing this change, greater than other parts of the country. So Australia is watching Western Australia and we want to do some significant projects on the ground in the West. So we're looking to get additional partners in Western Australia, and we have to show a compelling value proposition to the Western Australian government so that they might join four of the other states who are already part of RACE, to collaborate, to both leverage on work that's happening in other states that have got very similar problems, but also to ensure a focus on research that's to be done in the Western Australian market.
Professor Greg Morrison:
Thanks very much, Jon. I'd like to invite up our panel – a really interesting combination of people who are thinking very deeply about where the energy system is going. RACE for 21 does have as one of its guiding ideas, that is about customer-centricity. One of the reasons for that is that we're moving from a centralised fossil-fuel system to a decentralised and renewable system. I'd like to ask the panel why you're working with these issues.
[05:04] Tracy Deveugle-Frink:
Hi everyone. My name is Tracy Deveugle-Frink. I'm the Head of Innovation for Western Power and particularly I'm involved in a lot of our DER [Distributed Energy Resources] orchestration-related trials. I'll be a bit selfish here and say I'm really passionate about solving big, hairy, audacious challenges for the good of our state. And from my point of view, there's probably nothing quite as hairy or audacious as electrification and de-carbonisation of our power system. And I speak holistically about power in the state.
[05:32] David Edwards:
My name is David Edwards. I work for Horizon Power. I'm Manager of Innovation and New Technology in the Future Energy Systems team. I'm responsible for long-term planning of all of our isolated 38 networks. The reason I'm doing it is because I think, like a lot of engineers, that I like solving problems, but what I like to do is pick really difficult problems and then pulling people towards it, reframing it in a way where I can get talented people to thrive in an environment where they feel connected to solving an important issue of our age.
[06:01] Brian Innes:
I'm Brian Innes. I'm the founder of Starling Energy, which has set up the Plico Energy Project that began probably 14 years ago in the energy transition and climate change and making a response. And one of the things that attracted me to RACE 2030, as a concept, is that we saw the rights of the customer. The energy industry for 100 years has been driven by economists and engineers. So from that point of view of a major change required, if you look at all the social or environmental changes that have ever happened, they've all been driven from the bottom up, never from the top down. Why we created the Plico Energy Project was exactly for that. We saw that this is a pathway to get the customers involved and get those decision-making happening at the right part of the journey.
[06:37] Rod Hayes:
Rod Hayes, Balance Services Group. I've just had my 25th anniversary in the Australian energy industry. When I started in the industry, it was about no change. It was about don't be seen, don't be heard, you're doing a great job. What we're now in is this really dynamic period where everything is changing all of the time, from the technology to the expectation, to the way it's delivered. So, it's interesting, it's dynamic and it's extremely challenging. And it's worthwhile.
[07:08] Professor Greg Morrison:
Thanks, Rod, and I actually I share those words. This is such an exciting space to work in. The first question I'll ask is to Tracy ... How can we manage this energy transition while keeping the lights on?
Good question. Because I will say I've had a career in innovation and there are very few words I love as much as I love the word 'disruption' – except in the case of your electricity. The one place nobody wants to be disrupted is when they turn the light switch in their house, or go to plug in their phone to charge it, and discover that's no longer an option. So for those of us who are in the industry and trying to manage the transition from the inside, this is the perennial question: 'How do we accelerate the pace of change while ensuring that safe, reliable, and affordable energy is still continuing to be available?' And I kind of liken it to being inside a 737 on its way to Europe and deciding halfway through that you'd like to use some clean, renewable energy to drive that plane – while the plane is full of passengers who would all like to have paid a lot less for their ticket.
The short answer is ... you do a lot of thinking ahead of time and a lot of planning and you work with other parts of the industry to try to test disparate components of the solution before you put it in. By definition, that means it goes more slowly. And that's why organisations like Western Power rely quite a lot on the startup community, because you guys can be flexible in ways that we can't – you don't have that essential infrastructure hanging over you as a requirement for the state. We have a real advantage in Horizon being in the family, because there are ways to test things on the micro-grids, in our northern components of Western Australia, not connected to the SWIS [South West Interconnected System], in a way where you can control for some of those variables and test before we attempt to roll it out to 1.1 million connections all at once.
So I would suggest that we're looking much more strongly to come partner with Horizon in some of those spaces as well, to simplify the problems so that it's not as scary on the front end, and use that then to deploy it at scale. I'm always open to more suggestions on how we could do that quicker, faster, but we can't test it on the network until we're reasonably certain that it's going to work, but mostly that it's going to be safe. So that's, for me, where RACE 2030 really plays a role – to have partners with us who can use their environments to test in the way that we can is absolutely essential.
[09:11] Professor Greg Morrison:
[David] what do you see as the research opportunities from Horizon Power?
So just a little bit of context. We run 38 isolated networks throughout regional WA, they're non-interconnected and we've been feeling the effects of higher penetrations of renewable energy on those networks for quite a long time. We've been on the cutting-edge for quite a while, trying out things like feed-in management, understanding what hosting capacity is on our networks. And we haven't done that alone; we've leveraged our experience with other universities and other utilities. But we've been running quite cutting-edge and expensive trials on our own. What we've done now is we've flipped our research model into the RACE for 2030, because that gives us an opportunity to share costs, share learning and share experience. But it also opens us up to a wider group of people that we can work with, and more universities as well.
[10:01] Professor Greg Morrison:
The third question I'd like to ask is to Brian. So where do you see the innovation coming in Distribution Energy Resources, DER. Where's the real challenge: in technology or in business models?
Absolutely, I think it's business. I think what we're talking about now is such a fundamental change in the way energy's being delivered. It used to be a system and still it's currently a system where it's a one way flow of both energy and security. Once you start bringing DER into the home and EVs into the home, you end up having the DER and the battery as the first form of energy, and probably your first form of security, the car as your second form and the network actually becomes a third backup. So what really excited us about RACE 2030 is getting all of these players together to really start to workshop this stuff. Because it's the business model, the way we contract and the way we deliver to our customer clean, cheap, reliable energy that they want, is what we need to solve.
[10:46] Professor Greg Morrison:
In a sense that leads on to Rod. I know you talk a lot about self-healing network physics and complex control. How much is that system that you're talking about, which is sort of the middle of the system or between the customer and the grid: what needs to be done there?
What we're facing is the intersection really of some interesting things. Incumbency with all of that implies both good and bad. There's $13 or $14 billion of assets in poles and wires and transformers. There are multiple billions of dollars in large generation. So some of those questions around, we've come to this with 100 years of accumulated assets, means that we are probably very slow to move. We're making the physical problem of how you connect assets into a system – whether it's a small system or a large system – we're making that really complex. And then we have a whole regulatory reform standards piece, which is five years behind, and doing fantastic work trying to keep up, but I'm out there building systems which we know physically work, convincing people over three or four years at the cost of hundreds of thousands of dollars at a time ... that's not inappropriate balance but it is the largest place of inertia.
Do you mind if I build on that a little bit? There is literally no player in the industry anywhere who is incentivised to take risks, when it comes to the energy sector. You'd be hard pressed to find another industry where that's true. There's no huge commercial upside; we're heavily regulated to de-risk ourselves, which means the regulators themselves are incentivised to not take risks; state government – you saw what happened in South Australia when they were taking a bit of a risk on the network, it didn't pay off. And the repercussions associated with that, not only to the state government, but to all the players involved. There's really nothing in the model that is set up to incentivise anyone to take a risk. There's no risk-reward model big enough to consider the risks associated with changing something on the electricity network that you're not entirely 100%, not 90%, 100% sure is going to work. When you're then butting that up against the network that's going to change whether you want it to or not, because the customer is changing all of the time, it really puts you between a rock and a hard place, because you're not incentivised to change, but the network's changing without you anyway.
And I would add to that. The revolution that's happening on people's roofs is being driven by customers. We're being forced into innovating and changing to avoid risk. There is definitely a lot of room for us to be innovating in this space. We're very lucky; we've got a vertically integrated utility with a light-touch regulatory framework, which gives us the opportunity–
Just to be clear that's him. that's not me.
Sorry. Yeah, that's Horizon. And we've got some great KPIs around, no more diesel by 2025; no more customer refusals by 2025; we want to remove hosting capacity restrictions. That puts us in a space where we can innovate towards KPIs, towards creating social value and environmental value, and value for our stakeholders.
I think Tracy's point is great. One of the key things to be thinking about is, how do you incentivise? One of the interesting things, having been the MD of Horizon, is that we're a contingent liability for the government – we weren't an asset. We all own Western Power; and so there's the whole asset-protection piece. Western Power is in this horrible position where it doesn't own big assets; it owns lots of little assets. And until we change the framework it's actually going to be really hard to get over that natural conservatism.
At the moment, the incumbents are finding more comfort in the engineering challenge and maybe the regulatory challenge. They're comfortable in that space, but it's the contracting with the party challenge that's going to come, that we all need to solve and will hopefully solve over the next couple of years. When I look at a network and go: 'There's no real reason why they should own anything. Every substation could be managed by a third party potentially because they'll have the DER footprint, they'll be able to monitor the network with their own devices, which will be cheaper.' So we know the private sector will do it faster, will do it quicker and can be more flexible.
[14:37] Professor Greg Morrison:
So I'd like to go back to you, Tracy. When I was talking to you, it was a little bit about flex services.
Good question. Actually it flows on nicely from what Brian was saying. Certainly we have a technical challenge that we're trying to meet, and certainly there are technical constraints inside of which we must operate. And in our case, that means there are a lot of assets out there that all of you own. Many of you probably have solar panels already, maybe some of you have batteries or electric vehicles as well. In order to manage all of that in a way that's safe to the network, we're faced with buying a whole bunch of little assets that helps us regulate all of that in order to make sure that nothing blows up. That's expensive, as you can imagine, and it just repeats the cycle of owning a bunch of assets that we then can't get rid of because they're sitting on the balance sheet, regardless of how useful their future life is going to be, which in a disrupted environment is very difficult to predict.
A much smarter way is the way every other industry has gone, which is towards this sort of, something as a service, everything is a service model. There's a technical challenge in there, but that's not really where the meat of it is. And flex services was our attempt to try to figure out from a feasibility perspective, where is the complexity in this, because when you say it out loud like that, it sounds really simple, but actually when you start to employ it, the challenge is not in the technical solution, the technology has been around for ages. It's in how you structure a contract around asking you to play a part in the reliability of the network for your neighbour. So, 'Who maintains the asset? Who's responsible if the asset fails? If that puts the frequency out of line and your neighbour's microwave blows up, whose fault is that?' There are all these ramifications around business model, payment, insurance, process, structure, health and safety, monitoring, outages. So there's a lot of complexity in here that our customer-base has been shielded from for a very long time. How you then structure that in a way that's still worth your while and still within our framework that a network operator is willing to pay, turns out to be where the complexity is. And I don't know why I have to learn this every time I do an innovation, but you always think it's going to be the technical part of the feasibility that's difficult and it never is. It's always trying to find a good sweet spot between what a customer is willing to do for you and what you're willing to pay for that, or vice versa. And really, flex was aimed at trying to figure out: 'Park the technological solution, we can always work that out. How do we come to terms?' And then once we're on terms: 'How do we apply a technological solution to make those terms better for both parties?'
Professor Greg Morrison:
David, would you like to say a few words about that?
As we've spoken before, for Horizon and all of us, I mean, PV [photovoltaics] is changing the way that electrical systems are working all around the world. And we can see that we're moving from a predominantly centralised to a predominantly decentralised model. But what we're trying to do at the same time is move away from just allowing our customers to connect to our networks, to actually building them into the way that we do business, so that we can incentivise customers to invest in DER and reward them appropriately for doing so. Now, the technology that's required to pull that off is still in its infancy, but we've run a series of trials using VPPs [Virtual Power Plant] technology from the Eastern states. And so we've started to develop an idea about what we need to make that work, what customers are interested in, what they're willing to pay for, how much elasticity they've got in their use, all those sorts of things. You need to start to develop your ideas about how this is going to play out so that as the technology moves pace and we catch up with it or that we move with it, that we've got those opportunities to implement those opportunities for our customers.
We've all got some really good ideas. I mean, there's no shortage of really good ideas about how we can reward customers for being part of delivering the energy into their community. But we're just in that space where things are a little bit expensive and a little bit awkward. But what I take encouragement from is that there is a time in the history of everything that we take for granted when it didn't work properly, or it was unbelievably expensive. And we're in that space at the moment. Hopefully won't be too many years before we've got the opportunity to start to orchestrate DER, bring costs down, but really put customers at the centre of the opportunity to deliver energy and be part of a solution for their community.
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