Australia’s Energy Transition: Balancing Competing Demands and Consumer Roles

Glen Currie

Australia’s Energy Transition

Balancing Competing Demands and Consumer Roles

1st ed. 2020

Glen Currie

University of Melbourne, Parkville, VIC, Australia

ISBN 978-981-15-6144-3e-ISBN 978-981-15-6145-0

https://doi.org/10.1007/978-981-15-6145-0

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020

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In this excellent book, Dr. Glen Currie, a leading expert in energy, argues in favor of policy that includes customer behavior in the system planning. He reminds us of the increasing complexity in managing electricity systems globally, and shares lessons from Australia. The relevance of Australia is that it has the world’s highest domestic PV concentration, one of the highest concentrations of domestic air-conditioning, and operates on one of the world’s most dispersed electricity grids. This book argues for energy planning to incorporate a broader set of stakeholders and to allow more innovation to counter this complexity. It is likely that there are pertinent lessons herein for electricity planners internationally.

—Professor Abbas Rajabifard is Head of Department of Infrastructure Engineering at The University of Melbourne. He is also Director of the Centre for Spatial Data Infrastructures & Land Administration (CSDILA). He was President of the GSDI Association (2009–2012), Vice Chair of Working Group 3 of the United Nations-supported Permanent Committee on GIS Infrastructure for Asia and the Pacific (PCGIAP), is a member of ICA-Spatial Data Standard Commission, and is a member of Victorian Spatial Council

Australia’s energy transition offers lessons for global energy managers. The high renewable content in Australia and stretched distribution puts pressure on stability of the networks. This book recommends policy options for the customer role in the energy transition. This is one of the more difficult processes in the transition and the discussion here is clear, relevant and urgent!

—Professor Iven Mareels, FTSE and Fellow of IEEE (USA), IFAC (Austria), KVAB (Belgium), EA (Australia), The University of Melbourne

Preface

Electricity systems are technically complicated and are becoming more complex as they accommodate rising social-political demands. The principal aim of this book is to improve understandings of social-political roles in the electricity system to help balance these complex demands. This book goes part of the way to understanding the Energy Transition, which is destabilising electricity systems worldwide. Choices to manage this change are not obvious, and this book is therefore designed to help guide the delicate balancing of technical and social-political demands. Seeking this balance is urgent, and solutions can only be achieved with the active participation of society and politicians.

Chapter 1 introduces the reader to the burning issues and active urgency needed to properly guide the Energy Transition. Chapter 2 explains why Australia is a valid case study of relevance to other countries. The third chapter reviews political dimensions and social dynamics of the Energy Transition. In Chapter 4, an analysis of Australian household PV uptake decisions is undertaken to show the role of modelling in the Energy Transition. Chapter 5 introduces the technology and data options for the Energy Transition. The sixth chapter reviews the use of systems engineering to manage the Energy Transition, and the concluding chapter sums up the findings and outlines implications for future research.

The conclusions of this book are based on a statistical analysis of the 1.6 million PV installations in Australia between 2001 and 2016 and interviews with energy leaders in Australia and Europe. Interviewees included academics, politicians, businesses and consumer advocates. Quantitative and qualitative analysis showed a low level of confidence in Australian energy policy but a high confidence in business solutions.

This book assumes that reliable two-way communication will take some time before adoption, and that local area smart grid technology can quickly improve the operation of the distribution grid without network-wide two-way communication. The Transactive Grid is therefore not the focus of this book, but the focus is on the first stage and calls this the Energy Transition.

This book is written for people concerned with the electricity system and with an interest in finding solutions. It is not for a general audience.

Glen Currie

Parkville, Australia

Acknowledgements

To the people of Palgrave Macmillan, my colleagues at the University of Melbourne and many people in industry and government: thank you for your support, your wisdom, your research experience, your friendship, and your willingness to debate and develop the ideas in this book. Thanks to Professor Robin Evans, Professor Colin Duffield, Professor Iven Mareels, Professor Robin Batterham, Professor Frank Larkins, and Dr. David Wilson.

To my wife Chloe and sons, Angus, Hayden, Max and Lachlan, thank you for supporting me.

Finally, I am indebted to all those whose work I have drawn from and built upon.

Abbreviations and Acronyms

ABM

Agent-Based Modelling

ABS

Australian Bureau of Statistics. Australian Government

ACCC

Australian Competition and Consumer Commission

AEC

Australian Electoral Commission. Australian Government

AEMC

Australian Energy Market Commission. Australian Government

AEMO

Australian Energy Market Operator. Government/Industry body

AER

Australian Energy Regulator. Australian Government

AIC

Akaike Information Criterion, to compare the quality of models

APVI

Australian Photovoltaic Institute

ATA

Alternative Technology Association. Australian lobby group

AusNet

Australian Distribution Business (otherwise known as Ausnet Services)

CEC

Clean Energy Council. Australian lobby group

CER

Clean Energy Regulator. Australian Government

CitiPower

Australian Distribution Business

CoAG

Council of Australian Governments

Community Energy

General Term for Community-Based Energy Systems

Consumer

Households and small businesses

CSIRO

Australian Government research laboratories

DB

Distribution Business

DER

Distributed Energy Resources

DM

Demand Management

DR

Demand Response

ENA

Energy Networks Association. Australian lobby group

Energy Transition

Current phase of transition of the electricity system

Energy-action

Any significant consumer energy action

Ergon and Energex

Queensland Retail and Distribution Businesses

ESB

Energy Security Board. Australian Government

EUAA

Energy Users Association of Australia not for profit

EV

Electric Vehicles

FCAS

Frequency Control Ancillary Services in Australian electricity market

FIT

Feed-In Tariff, Money paid to consumers who export PV electricity

Grid

Electricity system

kW

1000 watts, which is a measure of power. For example, a small domestic heater can draw 1kW

kWh

1000 watts per hour, which is a measure to energy

Mini grid

Mini electricity system with some autonomy from the grid

NEG

National Energy Guarantee. Australian Law under review during 2018

NER

National Energy Rules in Australia, such as Rule 6.1.4 which blocks the system owner from charging for reverse flows of electricity

Ofgem

Office of Gas and Electric Markets. UK regulator

Postcode

Postal Areas

Powercor

Australian Distribution Business

Powershop

Australian Electricity Retail Company

Prosumers

Active Consumers

PV

Photovoltaics. Term for all types of electrical solar systems

PV export

Electricity despatched into the electricity system from a solar system

RIIO

Ofgem UK distribution system regulation (Revenue = Incentives + Innovation + Outputs)

SEIFA

Socio-Economic Indexes for Areas. ABS, Australian Government

Smart Meter

Electricity metre that allows two-way communication

Social licence

Theoretical measure of the level of public support

Solar system

Electrical PV system powered by photovoltaic cells

Standards Australia

Australian Government Standards Authority

Transactive Grid

Theoretical future electricity grid with higher levels of information transfer

United Energy

Australian Distribution Business

Contents

1 Why Should We Learn About the Energy Transition?​ 1

1.​1 Defining the Energy Transition 3

1.​2 Grid Stability and the Energy Transition 4

1.​3 Consumer Roles in the Electricity System 5

1.​4 Why Are Consumers Creating a Problem Now and Not Before?​ 7

1.​5 Grid Problems Caused by PV 8

1.​6 Risks in This Transition?​ 9

1.​7 Who Needs a Voice in the Energy Transition?​ 12

1.​8 What Can We Do Better to Manage the Energy Transition?​ 15

References 16

2 Why Focus on Australia?​ 21

2.​1 Where Does Australia’s Electricity Come from?​ 22

2.​2 Australian Electricity Market Structure 23

2.​3 What Lessons Are Available from Australia?​ 28

References 30

3 Political-Social Dynamic of the Energy Transition 33

3.​1 The Political-Social Dynamic of the Energy Transition 35

3.​2 Will Distribution Businesses Lead the Energy Transition?​ 40

3.​3 Drivers of the Energy Transition?​ 44

3.​4 Social and Legislative Institutions 46

3.​5 Knowledge Management Networks?​ 49

3.​6 What Did We Learn in This Chapter?​ 52

References 52

4 Modelling Consumer Roles in the Electricity System 55

4.​1 Choosing a Dataset to Help Understand Consumer Choices 56

4.​2 Exploratory Modelling 56

4.​3 Finding Influential Variables 58

4.​4 What We Learnt from the Analysing the Solar Data by Postcode 62

4.​5 Temporal Model of Australian PV Adoption 64

4.​6 Method 67

4.​7 ARIMA Modelling Results 70

4.​8 What Did We Learn from the Australian Solar Data?​ 79

References 81

5 Technology and Data for Improved Decision Making 85

5.​1 Limiting PV Export to Reduce Overvoltage Problems 86

5.​2 Smart Devices 87

5.​3 New Inverter Technology 89

5.​4 Remote Control of Consumer Assets 92

5.​5 The Role of Energy Efficiency in the Transition?​ 94

5.​6 Cost Reflective Network Pricing 96

5.​7 Demand Response (DR) and Demand Management (DM) 99

5.​8 Electric Vehicle Charging 101

5.​9 Storage 102

5.​10 Data, Ethics and Social Licence 104

5.​11 What Have We Learnt About Technology and Data for Improved Decision Making?​ 109

References 110

6 The Energy Transition as a System 115

6.​1 What Needs Managing in the Energy Transition?​ 116

6.​2 Framing the Energy Transition as a System 116

6.​3 System Dynamics View of the Energy Transition 118

6.​4 Systems Engineering 120

6.​5 Conclusion 126

References 127

7 Conclusion 129

7.​1 Government Role in Increasing Electricity System Innovation 131

7.​2 Social Licence for the Energy Transition 135

7.​3 Risks of the Energy Transition 137

7.​4 What Next?​ 138

References 139

Appendix A:​ Interview Questionnaire 143

Appendix B:​ Interview Analysis Method 153

Appendix C:​ PV in Australia Analysis 157

References 175

Index 189

List of Figures

Fig. 1.1 Electricity price change since 2003 compared with CPI 2

Fig. 1.2 Main parts of electricity systems (South Australian Government, 2020) 3

Fig. 1.3 Percent of Australian homes with air-conditioning 6

Fig. 1.4 Household average electricity use, Australia (Tustin, Taylor, Lourey, & O’Mullane, 2012) 7

Fig. 2.1 Structure of Australian electricity system regulation 24

Fig. 2.2 Subsidy and PV system $A price per watt and PV installation total by year (APVI & ABS) Note The subsidy was calculated as the first year of feed-in tariff (FIT) income after the purchase of the PV system for a weighted average of the FIT subsidies, and the carbon subsidy is a payment for the reduction of carbon dioxide emissions. The FIT pays the owner per unit of PV electricity 26

Fig. 3.1 A school class with a sleeping schoolmaster, oil on panel painting by Jan Steen, 1672 34

Fig. 3.2 Analysis of the interviews showing the links between the categories 38

Fig. 3.3 Priorities in energy policy (n = 46) 38

Fig. 3.4 Illustrative plot to illustrate Australia may be leading the transition 40

Fig. 4.1 Australian remoteness categorisation 64

Fig. 4.2 NSW major cities area 10, PV per month per 1000 homes 65

Fig. 5.1 Hornsdale wind farm and Tesla battery (Hornsdale Power Reserve) 102

Fig. 6.1 Model of consumer PV sales using flows of electricity, money and power 119

Fig. 6.2 How the subsystems interact in the Australian energy system 123

Fig. 6.3 National electricity transmission lines (Source [adapted from Australian Renewable Energy Mapping Infrastructure, 2020], retrieved from https://​nationalmap.​gov.​au/​renewables/​ on 5 June, 2020) 124

Fig. 7.1 Operational framework for public policy (adapted from Fels, 2019) 130

Fig. A1 Box and whisker plots of the answers Questions 1–4 148

Fig. A2 Box and whisker plots of the answers to Questions 5–8 149

Fig. A3 Box and whisker plots of the answers to Questions 9–12 150

Fig. A4 Box and whisker plots of the answers to Questions 13–14 151

Fig. B1 Analysis of the interviews showing the links between the categories. This grouping was completed using SPSS Modeler 155

Fig. C1 Australian PV Institute (APVI) Solar Map (Source Funded by the Australian Renewable Energy Agency, accessed from pv-map.apvi.org.au on 7 May 2020 Setting up the regression) 161

List of Tables

Table 2.1 Capacity and output by fuel source (Commonwealth of Australia, 2017) 22

Table 2.2 Changes in South East Queensland consumers’ appliance penetration (ENERGEX) 26

Table 2.3 Consumer voltage rules in Australia 28

Table 3.1 Quantitative survey questions mean/standard deviation (Question 1–14) 36

Table 4.1 Correlation between actual PV-system installations and theoretical model 60

Table 4.2 Sample of model comparisons using Pearson correlation 72

Table 4.3 RMSPE and Akaike Information Criterion (AIC)-3 models 75

Table 4.4 Model of PV-system adoption in Australia 77

Table 4.5 Correlation of the model by remoteness geographic classification 78

Table 6.1 Requirements for the energy transition (IEEE P1220) 121

Table 6.2 Functional analysis of the transition of the Australian electricity system 122

Table A1 Questionnaire 144

Table A2 Results for mean and standard deviation by country and employment type 146

Table C1 Variable choice 162

Table C2 Test results—Akaike Information Criterion (AIC) and Schwarz orientation 165

© The Author(s) 2020

G. CurrieAustralia’s Energy Transitionhttps://doi.org/10.1007/978-981-15-6145-0_1

1. Why Should We Learn About the Energy Transition?

Glen Currie¹  

(1)

University of Melbourne, Parkville, VIC, Australia

Glen Currie

Email: glen.currie@unimelb.edu.au

Abstract

Blackouts struck South Australia on the 28 September 2016, then again on the 8 February 2017. The Australian Energy Market Operator (AEMO) Final Report on the South Australian blackouts (AEMO in Black system South Australia 28 September 2016: Final report, 2017a) made 19 recommendations and none refer to managing consumer load. They do however refer to household PV causing a low level of reactive load, and hence contributing to instability. A further shortage of energy in NSW on 10 February 2017, prompted an AEMO Incident Report (AEMO in Incident report NSW 10 February 2017, 2017b) and again made no mention of managing consumer load. Infrastructure Australia was a government body to