I’d like to begin today by acknowledging the Traditional Custodians of Warrane, the Gadigal people of the Eora Nation.
I pay my respects to their Elders past and present, and to the continuing strength and resilience of First Nations people and cultures.
And I’d also like to acknowledge that, as an industry, energy assets and operations are located on the lands of First Nations people across Australia.
It is on their Country that Australia’s energy is generated, transported and consumed.
So, thank you for inviting me to speak here at AFR Energy and Climate Summit.
Today I would like to take you to the not-too-distant future, perhaps just 10 years away, and what it will be like to operate Australia’s power system without coal in the energy mix.
And I’ll do that in three parts.
First, I’ll start with where the energy mix is today and the goal and challenges to harness high levels of renewable energy.
Second, we’ll jump ahead by roughly a decade, to a time when most, if not all of Australia’s coal generation is likely to have retired, and what it will be like to operate that power system through a typical day.
And, finally, a few thoughts on what’s needed to deliver Australia’s future power system that is secure, reliable and the lowest cost for consumers.
So let’s jump in.
Three years ago when I first spoke at this conference, I highlighted that Australia could see periods of time where enough renewable energy was available to meet 100% of demand as early as 2025.
At the time, the peak renewable contribution for a dispatch interval stood at 61% of generation in the NEM.
That’s climbing steadily, year on year, with the latest record peak being 74% this Spring.
Western Australia’s grid has a record peak of 84% renewable energy, and South Australia is regularly over 90%.
And in terms of renewable potential? Well, 2025 has come early.
The National Electricity Market hit a period where renewable energy could meet over 100% of electricity demand in September this year.
But at the time, renewables were actually meeting 71% of demand.
You see, there can be a gap between the availability of renewable energy and what actually gets dispatched.
The bulk of the difference comes from commercial factors – the decision of renewable generators to curtail their output due to unattractive prices in the market.
This condition frequently exists in the middle of mild sunny days.
Transmission line outages or congestion is a separate factor, relatively minor.
And the third potential reason is the need to keep the main power grid stable and secure.
This is also a very small factor in the grid today, and AEMO’s Engineering Roadmap seeks to eliminate technical barriers so that the market can dispatch the most economic generation mix.
This is important because coal generators are retiring.
The latest Integrated System Plan projects that 90% of coal-fired power could exit the market by 2035 in the most likely scenario.
For those that haven’t retired, owners may decide to disconnect them from the grid for periods of time.
Hours, days, or even months at a time.
And, like old cars, these old power stations are likely to be less reliable despite best efforts on maintenance.
The ISP shows that as coal retires, renewable energy connected with transmission and distribution, firmed with storage and backed up by gas-powered generation is the lowest cost way to supply electricity to homes and businesses as Australia transitions to a net zero economy.
This is the lowest cost pathway to net zero, and it’s a major transformation of Australia’s energy system.
The fact is Australia – the federation of states that we are today – has always had coal in the public grid.
Because it was here in NSW, in Ultimo in 1899 that the first large-scale power station fired up.
Steam powered generators, fired by coal.
Just a few blocks from where we are today.
And ever since, coal has been a feature of the nation’s growing electricity grid.
First as state run grids, then joined up to form the National Electricity Market in 1998.
But soon this coal will be gone.
And Australia is not alone in this energy transition. A grid without coal is reality in Great Britain today.
After 15 years of deliberate policy and planning, the last of their coal-fired power stations, Ratcliffe power station in Nottingham, produced its last megawatt-hour of electricity on September 30, just a few weeks ago.
I was actually in National Grid’s control room, near London, on the day that Ratcliffe powered down and disconnected from the grid.
When I spoke with operators, there was a sense of nostalgia.
That it was the end of an era.
But also a sense of confidence, since this was just one of many steps in the transformation of Britain’s energy system.
In fact, Britain’s first day without coal was in 2017, during the time when I was responsible for operational control of the transmission system across England and Wales.
Zero coal for Britain is both a significant milestone and globally symbolic.
Britain was the birthplace of the industrial revolution over 150 years ago — largely powered by coal.
It’s powered the nation and provided employment for millions of people over that time.
My grandfather was a coal miner just 70 miles north of Ratcliffe.
He spent much of his working life underground.
A physically gruelling job, but one that provided an income for his family, and fuel for the constantly roaring power stations in Yorkshire.
Australia’s system, too, has been built on that same operational paradigm from last century: Baseload coal power for steady consumption, and peaking generation to meet short periods of high demand.
But that formula is no longer fit for modern Australia.
The principle of a security constrained economic dispatch market, is that the lowest cost electricity is dispatched first.
Today that lowest cost energy is renewable energy.
Dependent on the weather, that renewable energy needs firming — the batteries, pumped hydro and flexible gas as the ultimate back-up — to support it when the sun and the wind across Australia are not.
Australia’s operational paradigm is no longer ‘baseload-and-peaking’, but increasingly it’s a paradigm of ‘renewables-and-firming’.
From AEMO’s control rooms, we are already seeing the shape of this new paradigm today, which will be in full flight in a future with less and less coal in the mix.
How is it going to work you ask?
Well that brings me to the second section of my remarks.
While there’s no such thing as a typical day in AEMO’s control rooms, let’s fast forward around a decade to explore what a day could look like.
As the sun begins to rise on the east coast, so too does output from rooftop solar panels on homes around the country, together with grid-scale solar facilities.
Slowly at first, then flooding into the grid. Adding to the morning wind generation.
Towards the middle of the day solar power could potentially meet or exceed all of Australia’s energy needs.
This is already reality at times in South Australia, and Western Australia is getting close.
Batteries are storing that energy for later – some close to that rooftop solar and some further away.
And hydro facilities that can pump water uphill are storing that water for release later in the afternoon and evening.
Australia is running on near-zero marginal cost, decarbonised power.
But with the responsibility of keeping our power system secure and stable, our control rooms need to carefully manage these periods where
self-generation means a very low demand for power from the main grid.
You see, the main grid becomes increasingly unstable when very little power is drawn from it, a bit like the way riding a bike becomes increasingly wobbly the more you slow down.
And just like a bike is designed to be ridden and not to stand still, it’s a similar principle for our main power grids.
Because while consumers may be generating all the energy they need themselves, our main grids must remain stable and resilient to disturbances.
Otherwise a small disturbance could have significant consequences.
Traditionally, that stability has been provided by the big heavy generators spinning at the same frequency as the grid, acting like a pacemaker for the grid to make sure the heartbeat remained stable.
Without coal generators, this stability needs to come from different sources.
We’ll need to manage voltage levels on our long and stringy power system, and ensure that the voltage waveform is always stable for appliances around the country.
We’ll have to maintain sufficient inertia so that frequency remains at a steady 50 hertz, and fault-current to keep the system safe.
We’ll need reserves and ramping capability to meet rapid swings in both supply and demand.
And we’ll need the ability to restore the system in the event of a major incident.
Don’t worry, there won’t be a test on this at the end.
But these are the challenges that our engineers, together with industry, are working through.
Established technologies like synchronous condensers, new or repurposed thermal generators with spinning generators and flywheels can act like pacemakers at strategic locations around the network.
And energy consumers will benefit from new transmission connecting and flowing the least-cost power from renewable energy zones to the cities and towns where they live and work.
So when it’s cloudy in Sydney, people in Paramatta can use sunshine from Adelaide.
But back to our day in the post-coal future.
Between the late afternoon and as the evening arrives in the eastern seaboard, the reverse of the morning pattern will occur.
Solar power will set with the sun and demand for power from the main grid will increase steeply as people arrive home from work and school, heat or cool their homes, and get on with the evening routine of meals, TV, study and other chores.
To meet those energy needs, transmission will be vital to milk the last of Australia’s solar contribution, and to carry the power from wind turbines as the wind strengthens into the evening again.
Batteries that were charged from the sun, now discharge into the grid for the evening peak.
The Californian grid is an example where batteries are already playing a very meaningful role.
In a grid roughly 1.5 times the capacity of the NEM and a similar proportion of renewable energy today, nearly 14 GW of battery storage has been installed over the past few years.
When I was overlooking their control room in Sacremento a few weeks ago, their operations teams shared with me how successful these batteries are already in shifting energy from when the sun is shining to after it’s set., …
… and, the challenges they have in integrating such a vast amount of highly flexible and at times unpredictable resource into their grid.
AEMO’s Integrated System Plan shows that a large amount of storage is needed for our future power system.
Different capacities, duration, locations and technology will be all be important.
And there will be days and weeks when the sun doesn’t shine and the wind doesn’t blow.
This will increasingly be in the winter, when solar output is already low.
These are times when flexible gas generation will provide the ultimate reliability backstop.
It won’t run often, perhaps just 5% of the time, but at those times it will be critical for reliability.
And when they’re not needed for generation, they can provide that steady heartbeat for the grid if this function is specified in design and construction.
This would save consumers the cost of other infrastructure and means these generators can support the grid even when they’re not burning fuel.
So we’ve cooked dinner, done our homework and, finished watching the telly, and Australia heads to bed…
Overnight, the prevailing winds around the country will be turning the blades on hundreds of wind turbines clustered in the renewable energy zones and offshore.
These will cater for nearly all of the overnight demand for electricity from the grid in south-eastern states.
So to the third part of today’s topic, if that’s the future reality, what will ensure the power system is secure, reliable and the lowest cost for consumers?
In a nutshell: investment. Urgent and sustained investment.
In generation. In storage. And in our networks.
To supplement market-based and regulated investments, federal and state governments have asked AEMO to help accelerate investment in energy infrastructure.
In a sense this isn’t new, since AEMO as the system and market operator, is constantly striving to make Australia’s energy sector as investable as possible.
But increasingly federal and state governments have asked AEMO to help implement their energy investment policies.
This is consistent with the experience of system and market operators around the world.
Australia’s new energy age is coming, fast.
We’re on the cusp of an investment cycle in essential infrastructure — the likes of which have not been seen for decades.
AEMO’s Integrated System Plan, Engineering Roadmap, and government roadmaps like the National CER Roadmap help light the road ahead, supported by the insights from AEMO’s other market and technical insights.
And collaboration across industry, governments, market bodies and the community is essential.
There will be headwinds, and unexpected events on this rapid and complex transition.
But I am confident that by working together, Australia can realise the opportunities of this energy transition.
Through collaboration, and a laser-like focus on the interests of our most fundamental stakeholders: The families and businesses that depend on secure, reliable and affordable energy.
Thank you.
[ENDS]