The document discusses Australia's energy crisis as announced in March 2017 and how the country arrived at this point. It analyzes factors like policy disruption, an energy-only market model, and over-reliance on intermittent renewables that have driven inefficient capital investment. The market is seen as broken due to a lack of coordination between federal policy, state strategies, and energy market structures. Moving forward, the document advocates utilizing existing and new distributed energy resources more efficiently through an open access market that enables competing resources and promotes energy productivity over subsidized capital expenditure.

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Captured By A Broken Market
Ian McLeod
Engineers Australia: Developing Smart Cities in South East Queensland
11th May 2017

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What Happened on the 8th March 2017?

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What Happened on the 8th March 2017?
The Australian Prime Minister, Malcolm Turnbull, announced
that the east coast of Australia was facing an energy crisis with
potential for electricity shortfalls in 2018/19.

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How Did We Get Here?
• A flat and dry continent
• The constitution
• Abundant energy resources – scarcity?
• An energy market – 1998
• Policy disruption – Regulation, Standards, Targets,
Technology
• Technology – disruptor or enabler

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Is the Market Broken?

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Disruption: Policy
Network & Market
Energy Market
Commences
Climate Policy
Disruption
Network Policy Disruption

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Federal Policy &
Strategy
Carbon Reduction
• 5% off 2000 levels by
2020
• 25-28% off 2005 levels by
2030
Renewable Energy
• 33,000 GWH by 2020
• Small Scale Renewable
Energy Scheme
• Large Scale Renewable
Energy Scheme
National Energy
Productivity Pan
• 40% increase by 2030
National Strategy On Energy
Efficiency
50% by 2025
40% by 2025
50% by 2030
• States relying on National Grid
for security to maximise
intermittent renewables
• South Australia and Tasmania
relying on Victoria
• Victoria will become net
importer
• Vertical disaggregation &
renewable policies & subsidies
and deterministic supply
standards drive inefficient
deployment of capital
• Energy only market drives
inefficient use of resources -
Hydro
Disruption: Policy
The Market vs Policy vs Subsidies

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Energy & Infrastructure productivity dropping
Resource Underutilised

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Investment & Energy Productivity?
Today we have:
• Fact vs Alternative Facts
• News vs Fake News
• Bad debt vs good debt
The same is true for investment
• Productive vs Non-productive
• Duplicated
• Shift & flight

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Round 2: The Utility Scale & Battery Race
Will it be a knock out ?
• 35 Utility Scale Projects – 3300MW – Investment $7.4B
currently committed or in progress in 2017
• 4100 jobs – Is this the right measure
• Snowy Hydro Pumped Storage – 2000MW
• Tassie pumped hydro
• South Australia interventions – Gas Turbine, battery & Diesel
• Batteries big and small. Push vs pull

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We Are Unique
• We must define the problem, the opportunities and
objectives before determining the solution
• Oz vs USA
• Oz vs Germany

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Technology – Disruptor or Enabler?
Who said this?
“I don’t think we should disrupt things unless that
disruption is going to result in something
fundamentally better for society. I’m not really a fan
of disruption; I’m a fan of things being better.”

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Who Said This?
It Was Elon Musk @ EEI
Conference in 2015

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How Energy Infrastructure Can Help Drive Innovation
What do these have in common and what is different?

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How Energy Infrastructure Can Help Drive Innovation
What is the Infrastructure?
Assets more than just poles & wires

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Size & ……
Volume
have
increased
Networked resources create opportunities
• 29% of detached houses have solar – Queensland
Highest in the world
• Peak demand is around 2.4GW
• Many batteries already – hot water storage
• Non coincident Distributed Energy Resources (DER)
of 1.7GW of which there is around
– 1GW of distributed generation (bagasse)
– 700MW of load under control tariffs (320,000 customers)
How Energy Infrastructure Can Help Drive Innovation
Being Connected

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New Resources Existing Resources
& Latent Value
How Energy Infrastructure Can Help Drive Innovation
New & Old

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Penetration: % Dwellings with PV
• Queensland highest penetration in the world
• Initial growth fuelled by subsidies
• Mandatory Feed In Tariffs
• Lack of Smart Invertor Control
Source: Australian PV Institute (APVI) Solar Map, funded by the Australian Renewable
Energy Agency, accessed from pv-map.apvi.org.au on 22 July 2016.
Installed PV Generation Capacity
• 5.4 GW of capacity
• Larger scale now accelerating
• RET certificate price increasing
• Crowding out other investment
New Energy Technologies

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• More resources or better utilisation?
• We need to use efficiency & the
lowest cost resources first
• A market approach is required to
ensure an affordable energy future
• Connectivity, control, data, contracts
and tariffs will be key attributes of
the market enabling competing
resources to be deployed
• Open Access will lead to App
Development
Supply Storage
Demand
Market
How Energy Infrastructure Can Help Drive Innovation
Create The Market

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Smart Cities
What Are The Objectives?
• Resilience
• Security
• Control
• Environment
• Differentiation/Brand
• Affordability/Cost out
• Source of funds
• Intelligence

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Data
21
Smart Cities
Digital, Intelligence & Analytics
Fused,
Processed
&
Analytics
Outcomes
Services
Human Resources
Works Program
Built Environment
Condition Spatial
Energy
Assets
Social
CustomerNatural Environment
Improved Risk Management & Insurance costs
Reduced vegetation costs
Improved regulatory outcomesReduced outages
Increased network resilienceImproved customer service
Community & Employee safety Reduced costs
Increased returnExtend Asset Life Cycles

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Smart Cities
Energy Manager & Micro Grids
22DER* - Distributed Energy Resources – i.e. Solar & Battery
Energy Manager Embedded Grid

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Blue Sky Possibilities for Sustainable Energy Use
• Design for success
• Efficient Market – not half pregnant
• Efficiency Standards
• Control and right to control
• Effective deployment of capital
• Embedded and Micro Grids
• Load following Supply

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Blue Sky Possibilities for Sustainable Energy Use
• Brain vs Brawn
• Digital vs Shovel

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It’s An Exciting New World
Thank You