The overwhelming takeaway from industry experts at this year’s AFR Energy & Climate Summit was that while commitment to ambitious clean energy goals remains strong, achieving 82 per cent renewable energy by 2030 is fast becoming unachievable under the existing plan.
The repeated calls for increased support and investment to bring the necessary volume of renewable energy projects online faster mapped closely to recommendations in AEMO’s Electricity Statement of Opportunities (ESOO).
Released six weeks before the Summit, the ESOO made clear what we already knew about Australia’s energy sector: we need to change our approach to the clean energy transition urgently or policy goals will not be met.
Conversation at the summit focused on the need for greater urgency in delivering new generation, storage and transmission, against the backdrop of the ESOO outlining that any further delay will place grid reliability at risk over the coming decade.
The problem is that repeatedly pointing out well-known challenges, and imploring developers to move faster, doesn’t help us make progress towards a solution. Energy projects are falling further and further behind schedule, with social licence, labour shortages, and supply chain constraints pushing 2030 targets out of reach.
Only four renewable energy projects were approved in the last quarter, and the annual clean energy project deployment cadence is sitting at half of where it needs to be.
While an entirely valid sentiment, we need to move beyond expressing our fears for the current state of play – it is clear that the industry has already reached peak awareness. Relying predominantly on new transmission lines as the primary avenue to reach 2030 and 2050 targets is no longer a winning strategy.
While new transmission projects are a critical component of the transition, we need to evolve the strategy and identify complementary solutions that make real advancements towards clean energy goals in the short-term.
Leverage the existing grid to de-risk Australia’s energy transition
As the pace of transmission and renewable energy projects becomes increasingly challenged, the solution is not to revert to a fail-safe approach underpinned by coal. We cannot sit back and rely on the extended lifespan of coal-fired power stations to fill the gap as renewables stagger online.
Not only does it actively counter work already conducted to propel the clean energy transition forward, but alternative solutions are available to ensure the energy mix can diversify without compromising reliability of supply.
The best way to unlock the significant backlog of renewable generation appetite is by looking to alternative methods that can be harnessed immediately. Distributed and consumer energy resources are two viable avenues requiring increased support and investment, but the strategy that presents the most potential with the least constraints to deploy lies in the existing electricity network.
The estimated volume of clean energy required each year is approximately four gigawatts to maintain energy supply and reliability. New South Wales has up to 10 gigawatts of available capacity sitting within the existing grid which could be made available for renewable generation.
That’s as much capacity for near-term utilisation as the capacity to be delivered by HumeLink and Central West Orana, and three times the nameplate capacity of the coal-fired Eraring Power Station.
Optimising the utilisation of the existing network can be pivotal in closing Eraring’s doors in line with its committed retirement date, helping bring renewables into the system faster as we wait for new transmission lines to come online in the back half of the decade. This opportunity can be accessed in short order without significant network augmentation while also having the potential to scale even further with additional network augmentation and analysis.
Acting in unison to propel change
Underpinned by strong network service provider proactivity in New South Wales, the wider industry is beginning to understand the existing grid’s capabilities and is now looking to source and access existing capacity, but this work is happening in silos. To coordinate this momentum and validate the capabilities of technology capable of accelerating the opportunity, we need a government signal in the form of new policy.
Government stewardship is paramount to diversifying the current clean energy transition pathway. We can’t overlook the criticality of new transmission and renewable energy zones, which remain integral components of the clean energy transition solution, but cannot be relied upon as the single point of energy transition success. This is an industry mindset shift that requires the government’s buy-in to trigger movement.
After years of delay, we finally have the convergence of private and public sector support for ambitious energy transition targets. We just don’t have time for the execution of this response to be drawn out for several more years or to remain reliant on back-ended strategies, all while coal retirement date commitments are extended.
We know what we need to achieve and are increasingly aware that we don’t currently have the right tools or technology in place. This is especially evident given we have a solution in the existing network ready for activation.
How do we unlock the opportunity in the existing network?
A government program to access and harness existing capacity within the grid does not need to be overly complex, and if rolled out quickly, could achieve tangible results within 18 months.
Taking New South Wales as a case study in potential effective government stewardship, the strategy could involve the identification of optimal renewable generation locations across the state’s four existing electricity networks. This process would be run in accordance with where networks indicate capacity can be made available.
These locations must also have a direct (or indirect) path to correlating with load, or consumer demand, similar to the process conducted for existing new network renewable energy zones.
Surfacing the output of this exercise to the renewable developer community will be critical to ensuring investment focus can be reset on the existing network. Currently, data ambiguity within the industry is one of the main constraints to renewable deployment acceleration, both from a network availability and speed of accessibility perspective.
Finally, once an initial, optimised view of capacity, generation, and load has been made available to the renewable developer community, the government could run a competitive process for both network and generation funding and approval, separate to the current open access regime.
This process will enable the most viable and cost competitive projects to progress faster than the current renewables backlog, which remains contingent on new network infrastructure being brought online.
Leveraging the existing grid to access available capacity, not only in New South Wales but also nationally, is currently the most overlooked solution relative to the impact it could make on moving the energy transition forward.
With the right governance and shift in market signalling, it could be put into motion almost immediately as a pivotal pillar to de-risking the country’s renewable transition.
Jack Curtis is Chief Commercial Officer at Neara