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Can Intelligent Networks Solve Our Energy Challenge?

By John Söderbaum

We’re changing to a two-way network to exchange electricity between participants.

Australia has for many years enjoyed the comparative advantage of relatively low-cost electricity generation, but that advantage has declined in recent years because of emissions-reduction policies, the investment required to meet growing demand, and natural gas prices increasing towards parity.

A major challenge facing countries around the world, including Australia, as they seek to reduce their emissions is how to develop and implement policies that will deliver a transition to a low-emissions energy future while maintaining an adequate, reliable and competitive energy supply.

Market forces and enabling regulatory regimes should be the main mechanisms, but policies, programs and regulatory mechanisms that support the development and deployment of new technologies will also be crucial. Ensuring that those new technologies can be integrated into existing supply chains in a way that minimises disruption is a particularly difficult challenge.

We need supply systems and market measures that deliver reliable, competitive, low-emissions electricity, and electricity market reform to support investment in low-emissions electricity supply capacity appropriate to meeting the reliability, economic, environmental and social needs of consumers, suppliers and governments.

Australia is transitioning from a limited number of large power generation plants to a system that has a larger number of smaller, more technologically diverse electricity generators. This change is driving a gradual evolution of the electricity grid from a network that catered for one-way flows of electricity from large generators to consumers to one that allows for the two-way exchange of electricity between various participants.

This shift is also enabling consumers to change from being passive takers of electricity from the grid to become increasingly important contributors to the electricity system through self-generation and demand-management activities.

There is no doubt that the emerging electricity system will be more complex. Managing the interactions between the increasing number and diversity of participants and facilities, maintaining the reliability of electricity supply and minimising electricity costs will be a real challenge.

“Intelligent” electricity networks supported by enabling policy frameworks will help to ensure that future electricity supply systems can provide efficient, affordable and low-emission energy to the Australian economy.

What will an intelligent network look like?

It is likely to have many elements. The most obvious is the widespread use of smart meters, but other elements are likely to include the means to acquire, store and analyse large sets of data in order to model this more complex network and predict its operation – and to do so increasingly in real time.

Access to affordable and reliable electricity storage will help reduce price volatility, protect against loss of power, enable us to design the electricity generation system more towards meeting average, rather than peak, demand and help to defer the costs associated with upgrading the existing electricity grid.

Affordable and reliable storage will facilitate the widespread integration of electricity generated from intermittent renewable energy and allow these resources to provide a reliable contribution to Australia’s base-load power demand.

As the costs of electricity storage technologies decline we are likely to see an acceleration of the existing shift towards distributed generation. This shift would probably initially be particularly evident among households, but businesses are also likely to seek to benefit from access to affordable and reliable storage technology over time.

This change from a highly centralised generation system to one that is much more distributed will create many challenges, not the least of which will be the impact on the business models of the incumbent players in the electricity system. Careful thought and analysis will be needed to ensure that any transition occurs in a way that is properly managed and ensures the ongoing reliability of the electricity supply.

John Söderbaum FTSE is the Director of Science and Technology at ACIL Allen Consulting and vice chair of the ATSE Energy Forum. The Academy’s recent Action Statement, Intelligent Electricity Networks for the Future, is at