Consumers will play a key role in the clean energy transformation, and EnergyAustralia is working to build a future energy system that works for everyone.
Our energy system is changing fast. What is increasingly clear is that as rooftop solar continues to grow and the uptake of electric vehicles (EVs) and small-scale batteries accelerates, we are rapidly moving to a much more decentralised energy system.
A record 5.9GW of renewable capacity was added to the grid in 2023, compared to 5GW in 2022. Of that 2023 total, 3.1GW was provided by rooftop solar, while 2.8GW came from utility-scale renewable generation.
Renae Gasmier.
Image: EnergyAustralia
The shift is being driven by three factors. First, technology is getting better and cheaper, so more people can generate and store their own energy. Second, virtual power plants (VPPs) are now developing to connect all small individual energy producers into powerful generation networks. Finally, changes in the way we price energy are making it worthwhile for people and businesses to produce and use energy efficiently.
Our strategy at EnergyAustralia recognises this shift. We are thinking differently about the future, with big ideas such as VPPs and how they are supported by consumer assets like our Solar Home Bundle, Battery Ease and Sun-Soaked Water to enable the transition to net zero.
We want to make the energy transition simple for customers by incorporating behind-the-meter solutions into our growing flexible energy portfolio.
In our customer asset business, we’re establishing ourselves to play an orchestration role, supporting good energy choices for our customers and the broader energy system and creating new value for our business alongside our portfolio of flexible assets.
The future is already looking very different to the past. Big generation assets have been the driving force in our industry for decades. Electricity travels a great distance from large power stations through the poles and wires to the customer. At the end of the line, there is the customer who has the same needs as every other household and simply receives a bill.
But as we move to an increasingly decentralised system, we are now fast approaching the point where solar will be a must-have feature for the family home and enable a property to be sold at the best price.
We know that after people buy their first home, their next major purchase is likely to be a new car. Increasingly, this will be an electric car.
In this new ecosystem, consumers will likely look for a different relationship with their energy retailer. That’s because our customers’ homes are, in effect, our generation fleet.
As retailers, we will need to know our customers much better because the term “mass market” simply won’t apply to energy. By putting consumers at the centre and gaining their trust, they will be more willing to share the generation and storage assets in their homes with us. They will in turn be rewarded and see benefits from the relationship.
This will allow us to make decisions in the interests of the customer and the broader community. The big idea is that we can create a VPP for every community by combining thousands of small-scale energy resources.
This will benefit those customers who share their assets, help the community with a more reliable grid, and accelerate our journey to net zero.
The importance of this orchestration model is that Australia needs consumers who can afford home solar, an electric car, or a residential battery to stay on the grid. Without them, many in the community will be left behind and the transition will come at a higher cost.
I’m thinking of households that can’t afford to invest in energy-management systems, solar panels, home batteries or an electric vehicle. Or people who live in an apartment or who rent and cannot physically install these assets.
It was great to see the 2023 announcement in New South Wales that VPPs could participate in the Capacity Investment Scheme, which supports more consumer assets operating alongside large storage. We need more of this type of innovative thinking.
In another great example, the New South Wales Government recently announced it would give households up to $2400 to install a battery to store solar energy and as much as $400 to connect a battery to a VPP. With more than one million homes in the state with solar panels on and eligible for the incentive, it’s a game-changer.
Our purpose at EnergyAustralia is to lead and accelerate the clean energy transformation for all. As consumers choose to take more control, it creates purpose-led business opportunities for us to facilitate the shift toward customer assets and a more decentralised energy system.
This is reflected in our ambition for the customer asset business to power Australia on rooftops and in car parks through VPPs.
It also provides us with new opportunities to bundle products for homes and businesses and create new customer relationships for future growth. For example, we are completing trials for a new product called Sun-Soaked Water, where we are orchestrating the operating times for individual customer hot water systems.
If you think about it, almost everyone has an electric hot water system. It’s basically a water battery sitting inside our home.
These hot water systems traditionally heat up at night, a time when there is no solar and coal base load is supporting the system, and emissions are higher.
Sun-Soaked Water orchestrates the operating time of participating customer hot water systems from night to daytime when it can ‘soak up’ high solar penetration. At scale, the product also delivers broad system benefits and reduces emissions.
We have also launched our new Battery Ease project, which allows us to link individual home solar and batteries to our VPP. This allows us to provide the community with large amounts of surplus electricity from batteries at times of peak demand, keeping the network stable and reducing reliance on fossil fuels.
We are also working with governments and distribution companies to establish community batteries. These are an emerging asset class with significant potential to deliver value to consumers.
Community batteries are medium-sized and can store excess energy from a significant number of nearby homes with rooftop solar panels. The energy is stored for everyone participating in the community battery project to use during times of peak energy demand.
Most recently, we’ve been working with Ausgrid to utilise its new community battery network tariff, which will be the first time the recognition of expensive network augmentation is foregone, providing consumers with more affordable energy.
The important point is that these innovations need all parties – networks and retailers – to work toward the same goal.
Of course, community batteries are more complex than home batteries, so we also need to be clear with consumers about what they can expect from participating in these projects.
We are also working with Ausgrid on another trial that uses a new network tariff involving dynamic two-way pricing, and with South Australian Power Network on the ARENA-funded Energy Masters pilot.
These pilots are providing valuable customer insights about the appetite for new energy products in the home.
We can see a world in which by 2030 our small-scale customer assets aggregated in a VPP could be the size of one of today’s fossil fuel plants.
The size of the transition is enormous – and so is the opportunity. Some estimates suggest that the almost 12 million households in our target market of Queensland, New South Wales, Victoria and South Australia will spend in excess of $50 billion on customer energy assets between now and 2030.
This includes solar and residential battery installations, community batteries, EVs and home electrification.
Electrification provides further upside. The Australian Energy Market Operator has forecast that an additional 7tWh of energy will be required by 2030 to support the growth in EVs and gas replacement.
EnergyAustralia believes consumers will play a key role in shaping our future energy system. Together with the right policy and regulatory settings, we believe rapid growth in customer assets will support a reliable, cheap and clean energy system that works for customers, drives new economic and business opportunities, and accelerates our transition to net zero.
