Paul Graham, Chief Economist at CSIRO Energy Flagship, presented at our seminar entitled 'Securing Australia's Energy Future: The Challenge' on Friday 15 August 2014 in Melbourne. Held as part of our Sustainability Leadership Series, the seminar brought together experts and practitioners from across government, business, academia and civil society, to discuss Australia’s transition to a secure, cleaner and cost-competitive energy future. For more information about this seminar and the UNAA Sustainability Leadership Series please visit www.unaavictoria.org.au/education-advocacy/masterclasses/

1. Highlights from the Future Grid Forum’s
Change and Choice report
ADD BUSINESS UNIT/FLAGSHIP NAME
UNAA Victoria Securing Australia’s Energy Future Seminar
15 August 2014
ENERGY FLAGSHIP

2. Australia’s Future Grid Forum
• Long-term orientation to 2050 to demonstrate
key policy and technology choices not
constrained by near term electoral cycles
• Whole-of-system to provide credible
projections and quantitative analytics
especially of the role of networks
• Industry-led to enable bold and informed
discussion that examines benefits and
drawbacks of different outlooks

3. Participants Stanwell Corporation
Hydro Tasmania
ESAA

4. Trends leading up to the FGF report
Retail prices have risen
Networks have been the
largest source

5. Trends leading up to the FGF report
Electricity consumption and peak
demand have declined in most states

6. Trends leading up to the FGF report
Greenhouse gas emissions have fallen
for a number of reasons
Solar panel uptake has been rapid
> 3TWh p.a.
> 2 million installations

7. Future disruptors

8. Scenario 1: Set and forget
Sustained high retail prices,
heightened awareness about the
issue of peak demand, and new
business and technology
opportunities lead residential,
commercial and industrial
customers to adopt peak demand
management.
The demand management
systems are managed centrally
and designed to be on a ‘set and
forget’ basis after customers have
decided which level of demand
management suits them.

9. Scenario 2: Rise of the prosumer
Continued falling costs of solar
rooftop panels and other on-site
generation technologies, sustained
high retail prices, and increasingly
innovative financing and product
packaging from energy services
companies leads to the widespread
adoption of on-site generation with
almost half of generation on-site.
Residential consumers in particular
are empowered by their choice to
become more actively engaged in
their electricity supply and call
themselves ’prosumers’

10. Scenario 3: Leaving the grid
The continued dominance of volume-
based pricing among residential and
small commercial consumers encourages
energy efficiency without accompanying
reductions in peak demand growth. The
subsequent declining network utilisation
feeds increases in retail prices.
New energy service companies sensing
a market opportunity invite consumers to
leave the grid, offering an initially higher-
cost solution, but one that appeals to a
sense of independence from the grid.
By the late 2030s, with reduced storage
costs, disconnection becomes a
mainstream option with a third of
consumption eventually being removed
from the grid.

11. Hobart Mercury 14th August 2014
CUTTING tariffs paid to
Tasmanians with solar panels
should be considered as a
way to level a system that
penalises people who cannot
afford them, the head of
Tasmania’s newly merged
energy company says.

12. Scenario 4: Renewables thrive
Confidence in the improving costs
of renewable and storage
technologies, achieved by combined
efforts from government and industry
around the world, results in the
introduction of a linearly phased 100
per cent renewable target by 2050
for centralised electricity generation.
Some customers maintain fossil
based on-site power so that overall,
the renewable share, taken as a
share of both centralised and on-site
generation, is 86 per cent by 2050.

13. Higher on-site generation is here to stay
This means lower utilisation for our networks if we don’t manage peak demand

14. Will we switch to more cost-reflective
electricity pricing?
Peak demand governs the
cost of network
(kW)
Electricity is charged on
quarterly volume
(kWh)
Cost reflective pricing essential to manage peak demand
Current regime only encourages demand volume management

15. •Manage peak demand
•Optimise returns from solar panels
•Enable high renewables penetration
•Enable electric vehicles
•Enable full disconnection from the grid
Many possible roles for storage

16. Energy Flagship
Paul Graham
Chief Economist
t +61 2 4960 6061
e paul.graham@csiro.au
w www.csiro.au/energy
ENERGY FLAGSHIP
Thank you