By Les Hosking, Honorary Professorial Fellow.
Reliable, secure and low cost energy has been one of the cornerstones of Australia’s economic success. In an electricity and gas context, reliability means a low interruption risk, security means continuity of availability relative to demand and sustainability means meeting present needs without compromising future generations to meet their needs.
A significant, diverse supply of approximately 800 years of brown coal and 300 years of black coal, large natural and coal seam gas resources plus wind, hydro, solar and geothermal have so far contributed to Australia having very low cost commercial, industrial and residential electricity and gas prices.
Looking to the future, a number of studies have concluded that investment of around $240 billion in Australia’s electricity and gas generation, transmission and distribution sectors is required between now and 2035 to ensure Australia’s energy security outlook remains positive and robust. Critical to this investment it is essential that there is full co-ordination between future State and Federal regulatory frameworks that will attract capital and facilitate timely investment. It is also essential that the jurisdictions ensure there are adequate contingency plans and emergency response arrangements to mitigate the costs of disruption to energy supplies.
From a business perspective there are now major challenges on several fronts facing the energy sector which are arising from, uncertainty surrounding climate change policy, competing demand for energy resources from overseas industrialising nations, ageing infrastructure, consumer concerns related to the utilisation of various energy sources and various increases and decreases in consumption patterns by consumers in response to technology and price.
Community awareness of changes in the energy sector has occurred through the considerable price rises in recent times which have been in response to the ongoing investment in transmission and distribution networks, installation of new metering technology, increases in the cost of energy fuels such as coal and gas and the adoption of renewable energy technology in response to carbon abatement policies.
Business and community responses to the changes that are occurring combined with the current global economic conditions have resulted in significant challenges in the management of energy supply and demand. Demand-side response measures, energy efficiency technology and reductions in commercial and industrial activity have had the effect of altering energy demand. Historically electricity and gas demand tracked economic growth. This relationship has altered dramatically over recent times. The economy is currently growing at about 3% whereas demand has declined by up to 4%. Advanced metering technologies that use two-way data communication and provide improved control and choice in managing energy use will be deployed across Australia over time. Retailers will seek to utilise smart meter technology as a marketing tool which may have the effect of further reducing demand.
New and remote generation due to the uptake of gas-fired generation and increasing wind and solar generation require extensions to the existing grid. Intermittent generation such as wind and solar have unique impacts on the reliability and security of the electricity system. Significant lack of generator availability due to lack of wind or sun may have flow on impacts on the overall network especially at peak load times. There will be a need in the future to design infrastructure that manages the changes in flow patterns over the network resulting from increases in demand-side response initiatives, increasing embedded generation and changes in demand. Significantly adding to this issue will be the rate of uptake of electric vehicles.
The issues relating directly to the gas industry are equally complex. Investment in Australia’s gas transmission and distribution networks has historically been through long term investment contracts under-pinned by major commercial participants. There is a risk in this process that incremental capacity to facilitate small to medium expansion does not occur in a timely fashion with the subsequent delay in access for business end users and the increasingly important gas fired electricity generators.
Timely construction of gas pipelines requires precise and conclusive infrastructure analysis which will lead to timely planning and approval processes. As part of this process community understanding and acceptance of the necessity for gas infrastructure is a big issue. Gas is expected by Government to transition Australia’s energy needs to a cleaner energy environment. It is essential that critical energy resources, such as coal seam gas and new infrastructure in wells and transmission pipelines are developed safely and efficiently and with sufficient information to ensure community support.
In summary, Australia is facing a number of significant challenges in re-engineering its historically efficient, low cost and reliable energy infrastructure to meet the changing dynamics of energy supply and demand brought about by changes to policy, costs, prices and technology. The UOW SMART Facility has first class research and analysis capacity to make a major contribution to meeting these challenges.