Pace of Change: Accelerating Renewables Integration

[Eamon Waterford] (1:0 - 1:31)
Thanks for having us.

[Sarah Aubrey] (1:31 - 1:33)
Oh, thank you for coming. Excited for the conversation.

[Junayd Hollis] (1:34 - 1:35)
Thanks, Sarah. Great to be here.

[Sarah Aubrey] (1:36 - 2:29)
Well, first and foremost, today we are exploring the critical question in Australia's energy transition. How can we accelerate the integration of renewable energy into the grid at lightning speed? As we move towards a renewable powered future, the challenge lies in how quickly we can get renewables online without compromising on reliability or cost.

From leveraging local resources to tapping into grid capacity, we'll explore how we can fast track this transition by enabling renewable energy zones and local solutions that bring us closer to the source. So, we'll start broad. And a big question, first and foremost, is are we moving fast enough to achieve the renewable energy targets we've set? And what do you both see as the biggest opportunities or roadblocks to accelerating this process? So, I'm going to start with you, Eamon. Question one.

[Eamon Waterford] (2:29 - 3:58)
Well, simple answer. No, no, we're not on track to meet our decarbonisation targets. The Committee for Sydney, we're a think tank.

We do lots of research. Obviously about Sydney, being the Committee for Sydney, and we did a big piece of research decarbonising Sydney a couple of years ago that looked at the trajectory that we're on. And the answer is we're undershooting the targets that we need to hit.

50% by 2030, we're probably going to hit more like 43%. And then by 2050, when we're wanting to be hitting net zero, we're only about 88% of the way to that. So, there is a gap.

And that's including all of the huge lift that we're doing in terms of investment in large scale renewable projects in regional New South Wales, including all of the different work that we're currently doing. So, there's clearly more that needs to be done if we are to hit a target that we're all committed to, whether you're private sector, public sector or the community. That's a lot.

It is. I mean, I would say I'm an optimist about our ability to do it, but I will say that ingenuity and innovation is going to be required. Like a business-as-usual approach to this is not going to solve the problem.

And I think we often, we sort of forget because we've been talking about climate change for so long, just how massive the transition that we're under. And the opportunities are amazing, but the lift, the shift that needs to happen is huge. And so, you know, the idea that we can just somehow sort of muddle through this with a business-as-usual approach is just not going to work when we're talking about such a massive shift in our economy and our society in such a short period of time.

[Sarah Aubrey] (4:01 - 4:17)
Junayd, conversations about large scale energy projects like offshore wind farms, nuclear power, they seem to dominate the headlines, but what role do households and businesses play in the transition? So, we've been talking about obviously doing a lot, but what role can they play?

[Junayd Hollis] (4:18 - 4:42)
Yeah, well, controversy gets clicks, doesn't it? So, it does, it's hard to drag the conversation back from some of those issues to where you can possibly have a lot more impact, but it's not that exciting. So, but looking across houses and businesses or households, households are doing an enormous amount of the heavy lifting so far in the transition.

[Sarah Aubrey] (4:42 - 4:43)
You're talking about rooftop solar?

[Junayd Hollis] (4:44 - 5:50)
Primarily, yeah. And increasingly batteries. We've seen something like 23 gigawatts of generation capacity go behind the meter so far. And that's really encouraging. It doesn't seem to be slowing down just yet. I imagine it will.

We're going to end up bumping up against harder to shift segments of the housing stock. So, you look in our patch in Sydney, we've got something like 40 percent of customers living in high density housing. And with increasing shift to urban living, that's only going to increase.

And that's just not a credible location for rooftop solar in the traditional sense. So, we've really got to start exploring other models if we're going to break through that ceiling. On the business side of things, that's probably where we've got some of the biggest untapped opportunity in my view.

So, I think just in Ausgrid's patch, we've got something like 25 million square metres of commercial industrial rooftops.

[Sarah Aubrey] (5:50 - 5:50)
Wow.

[Junayd Hollis] (5:51 - 6:37)
I'd say at the moment we're probably using in the order of 5 percent of that with rooftop solar coverage. And the fact is that businesses out there, they might be keen to do something to support this, but the economics just don't stack up. You've got all sorts of issues like a split incentive problem between landlords and operators in some of these commercial and industrial estates. You've also got real and perceived issues with connecting into the grid with sufficient capacity to get that excess generation fed back in. So, something you see in residential is they're oversizing their systems compared to what they want or what they need. So I think, you know, this year we're probably averaging about 11 kilowatts is the average household solar system installed this year.

[Eamon Waterford] (6:37 - 6:39)
That's only six. Clearly, I need to go back and double it.

[Sarah Aubrey] (6:39 - 6:43)
Mine's 4.6.

[Junayd Hollis] (6:43 - 7:26)
You know, 10 years ago it was five or six. And so, it's steadily increasing every year.

And so about 30 percent of the energy from those systems is being spilled back into the grid and shared with everyone else. So that's actually part of the solution for these high-density living. You look at the same stat for CNI, it's something like six or seven percent.

So, they tend to cap out what they're installing based on whatever they're going to use locally at that site and no more. And that's where their incentives sort of run out of steam. So, if we're going to shift that sector and encourage that commercial part of the economy to step in and use that untapped resource, we're going to have to look really closely at the incentives and probably the coordination about what goes where so we minimise the impact on the grid.

[Eamon Waterford] (7:26 - 8:02)
And I think just to add to that, I mean, clearly we've seen the benefit of incentives when it comes to that rooftop solar. You know, people are not making rooftop solar decisions just because they care about the planet or because they want to contribute to the decarbonisation agenda. They're doing it because it's good value for money because it's worth it for them.

So clearly there is a model that can be developed, extrapolated out to your commercial and industrial sites that would create an incentive scheme because we're all benefiting from that increase in rooftop solar. And indeed, given that we are undershooting the targets we need to achieve, we need to be looking at more ways to bring more renewables into the grid. So, it's a huge opportunity, I would suggest.

[Sarah Aubrey] (8:02 - 8:24)
So, Eamon, I get this one quite often in the comments of my social media accounts. Can the grid handle more renewables? How do we ensure grid stability? So, when you look at the grid, because, you know, you're the actual expert, how does it have the capacity to support the integration of more renewable energy and how do we balance the demand for renewables with the existing supply infrastructure?

[Eamon Waterford] (8:24 - 9:22)
Yeah, well, I mean, I think Junayd might be more of an expert on that one than me. But let me, I mean, yes is the short answer on that one. And I won't just give simple answers because these are complex problems.

But yeah, there is capacity, latent capacity to be for Sydney and for the buildings and the economy of Sydney to be doing more of its lifting in terms of decarbonising its own energy grid rather than just relying on those large-scale renewable projects outside of the city. There's a huge opportunity for us to step up and take a larger role. And we've already got a pretty good electricity grid in Sydney, right?

So, there's opportunities there. Yeah. So, I would say that like there is undoubtedly capacity. I mean, I'm nervous about getting social media comments as a basis for making these complex public policy problems. But that would be my initial reaction is, yeah, there's huge, huge sort of latent capacity for us to be thinking cleverly about this. I suspect we have to deal with certain, you know, peak demand challenges, but those are entirely solvable through the ingenuity and innovation that we're already starting to see come through.

[Junayd Hollis] (9:23 - 9:24)
I'll back you in there.

[Eamon Waterford] (9:24 - 9:26)
Phew, passed that one.

[Junayd Hollis] (9:26 - 10:21)
Yeah. I mean, the question of grid capacity, it really is a multifaceted question and you've sort of got to unpack it a bit.

So, at the big end of town, at the transmission end of the grid, you know, there are constraints, and it does actually need to be built out to reach new places where renewable generation is most economic. And that's part of what we're seeing, you know, this play out with the build of renewable energy zones and all that comes with that, you know, the huge social license questions that comes with those sorts of initiatives. So that that does need to happen and it should happen.

And but we've got to recognise that that is going to be slower and more costly than we ever wanted it to be. I think so far since those, you know, there's probably seven or eight big transmission projects going in one way, shape or form across the East Coast of Australia now. Since they were all announced in about 2019, 2020, their costs have grown by a factor of three.

[Sarah Aubrey] (10:22 - 10:22)
Wow.

[Junayd Hollis] (10:23 - 10:55)
And that's not just happening here in Australia. This is a largely a global problem. We've got some local factors, but this is something that we sort of just have to live with. I'm not saying we should slow it down. We should keep pushing on all of those opportunities. But we've really got to unpack the opportunity at the local level as well, because and we made the point, there is capacity at the local level in the distribution networks. Getting access to that in an efficient way and making that accessible to more people is probably the challenge.

[Sarah Aubrey] (10:55 - 11:01)
Is this primarily talking about, I mean, we've really only been talking about solar. Is that what we're mostly covering in this conversation?

[Junayd Hollis] (11:02 - 12:47)
No, not for me. I mean, for me, running a grid, you've really got to look at the load and the generation as part of exactly the same, two sides of the same coin. Without the load, the generation is useless and it's just going to go back up into ultimately the transmission system and cause more problems there.

So that the magic is in getting the load growth to match the generation and balance it at a local level. And then if you do that well, ideally using batteries to fill in some of the gaps, balance at a local level, you can start to take the stress off the transmission system and solve what are fundamentally some massive challenges ahead of us. So AEMO, which is the Australian Energy Market Operator, they released something called the ISP, the Integrated Systems Plan, every two years.

You look at what that's outlining we need from here to 2050. And that's sort of set in order to hit government's targets. And that's effectively saying we need to build seven gigawatts a year from here to 2050 of new capacity.

And put that in context of for the last 20 years or so, say before 2017, when it really started to ramp up, we had, we were sitting on about 50 gigawatts stable for 20 or 30 years. Since then, it's ramped up a little bit, but going forward for the next five years in particular, they're saying we need to build five gigawatts, sorry, 15 gigawatts of new capacity every year from here to 2030 to hit the government goals. And that's why we're saying we're not on track, that that's not the rate at which we're building today. We're building about a third of that.

[Sarah Aubrey] (12:49 - 12:50)
Wow, I didn't realise it was that behind.

[Junayd Hollis] (12:51 - 13:01)
So not to say we can't do it, but we're going to need to pull on every lever we've got. So, all these big, big transmission projects and the big utility scale, solar, wind, storage.

[Sarah Aubrey] (13:01 - 13:08)
Plus, those big projects, there's pushback in local communities to stop that stuff from happening, transmission lines, all that stuff, which is just slowing it down.

[Eamon Waterford] (13:09 - 14:12)
And of course, the other side of that is also where you can kind of reduce demand or think about demand differently as well. So, for us, when we think about decarbonising Sydney, energy is a big part of that. How do we shift to renewables in terms of energy generation and ideally bring it closer to home and think differently about how do we get the energy that the city needs when the sun isn't shining?

Community batteries are probably the most prominent and exciting opportunity in that space. And electric cars, do you think? Electric cars will play a role.

They'll play a role as well in the second part of this, which is reducing our carbon emissions from other spaces. Like when we talk about decarbonisation, of course, we're talking about electricity grid today, but we also want to get internal combustion engine vehicles off the road. And so those electric vehicles play a dual role.

The real opportunity in that electric vehicle space is actually probably with your heavy vehicles, with your buses and your trucks. And if we can electrify some of those, that has huge sort of implications for, yes, decarbonising our vehicle fleet, but also thinking differently about the batteries that are plugged into those vehicles and how they can support the grid.

[Sarah Aubrey] (14:12 - 14:26)
I feel like the conversation often focuses on large scale renewable projects. How do smaller local solutions like rooftop solar compare? What are the pros and cons of both large scale and small-scale generation in terms of impact and scalability?

[Junayd Hollis] (14:27 - 16:23)
Pros and cons. So large scale, typically speaking, it's easier. If you're in a rural or regional sort of context, you've got space, you can build to a point where you're getting access to those economies of scale and you can roll out technologies quite quickly and cheaply in most circumstances, not always.

But the problem you have there obviously is primarily just tyranny of distance. You can get these great economies of scale and simplicity in the generation itself. But getting it back to a major load centre like Sydney is where your challenges really start to ramp up.

So, I don't know, a megawatt of solar might cost a million, a million and a half to build in a regional context like that. Today, the cost of getting the transmission back to the grid is another million and a half per megawatt. So, flip that around, come back into a sort of a local context.

You start losing your economies of scale and when you get right down to a residential level, those economies of scale are very hard to access. But come back up to a commercial, industrial or community scale project, you can get those efficiencies again, not all the way. It's definitely more complex building in an urban environment.

Building on a roof is harder than building in a paddock, but the cost of connecting to the grid there can be 20 or even 40 times cheaper. Not always, there's always going to be places where there's constraints that you have to deal with and you have to invest to augment. But I think what we need to look at is overall, there's going to need to be a mix of all these different technologies and locations and combinations.

Somewhere in that mix, we'll find the optimal pathway and we don't want to spend too long figuring out what the optimal pathway is. We need to get going on all fronts.

[Eamon Waterford] (16:23 - 17:32)
Right. The optimal pathway is all of the pathways all at once, right? I think the other pro to your small-scale urban investments is that you can do lots of them a little bit so you can have a thousand flowers bloom.

I mean, the real interesting story of rooftop solar, aside from the fact that I think we were, well, many of us were quite surprised at how many people took it up and how popular it's been, is that it happens everywhere all at once without a lot of sort of directional governance required. You set the incentives in place and then you let the customer, the consumer and the system work it out as it goes along. Can't really do that with large scale major projects in a regional renewable energy zone where you might only be doing seven really, really big projects.

But the idea of an urban renewable energy zone, instead of being a small number of large projects, is a large number of small projects, is that that governance challenge, that the leadership challenge is a potentially a smaller one. And it's actually easier to set up a system that starts you on that trajectory. And then all of a sudden, before you knew it, it's off and running and everybody's just scrambling to get on board rather than trying to stop it from getting up at the first hurdle.

[Sarah Aubrey] (17:33 - 17:45)
Is that why they're putting renewable projects around old or closing some power plants? Because the transmission is already there. Is that why that's happening?

[Junayd Hollis] (17:45 - 17:50)
Yeah, that's definitely, definitely a popular move, not just here, but in jurisdictions all over the world.

[Sarah Aubrey] (17:51 - 17:51)
Yeah.

[Junayd Hollis] (17:52 - 18:23)
You know, sometimes it's perfectly suitable and ready to go, plug and play. And other times it still needs a bit of a beef up in order to get the same sort of capacity. I mean, shutting down a coal plant, one coal plant of two gigawatts, say, you've got to build quite a bit more in terms of gigawatts of renewables in order to replace the same amount of energy coming into the system. And you've usually got a bit of space around them? Usually, but yeah, the transmission system usually still needs to expand somewhat to mop that all up.

[Eamon Waterford] (18:23 - 19:02)
But there's also the social licence element of it, right? Like clearly one of the other reasons we pick these spots is because people are open to the idea of being part of a large-scale industrial opportunity to drive the energy future of the country. And so, replacing like for like, or at least, you know, similar for similar.

Keep jobs there. Yeah, you keep local jobs and you're showing that there is a sort of a, you know, post-coal future for a bunch of these communities that's really critical. So, the politics of it or the governance of it, depending on how you want to talk about it, is a really important consideration when we are having to just not take a business-as-usual approach to some of this stuff. You've got to think about how you bring people along on a journey because it's moving fast.

[Sarah Aubrey] (19:03 - 19:21)
So, you mentioned before overseas, in terms of the adoption of renewable energy, there are many other countries that are much further ahead of us. What lessons can we take, and this is for both of you, what lessons can we take from their experiences? What strategies or ideas from overseas could we adopt in New South Wales to help us move faster?

[Eamon Waterford] (19:22 - 20:47)
Oh, well, I was going to say, I mean, you know, an interesting one would be California. They're obviously ahead of us in a whole bunch of different ways, but really what I want to sort of take from California, which, you know, you could take a lot of lessons from California in terms of their investment in renewables, but it's that leadership, that the governance that they have put in place to deliver these sorts of projects, that's really interesting to me. I'm not a I'm not an expert on energy or on the electricity grid, but what I would say is what I understand is the way that we get public policy done in this country and seeing the way that you get leadership from all levels of government coordinated on a clear investment trajectory, on a clear public policy trajectory, on a clear public license, social license trajectory.

That's a really important lesson for us to take, because in a way, you know, the battle will be, yes, there is an engineering challenge we've got to grapple with, but I suspect the engineering is actually easier than the politics of some of this stuff. And that, you know, you need laser focus, you need clear messaging, you need clear confidence boosting for the community, for them to get on board with this sort of stuff. And so that leadership role that I think government needs to play in saying we understand that this is perhaps not the way we normally do things, but we're going to dive into it because the scale of need is so great.

And this is how you will benefit from it. This is how you will interface with it as a consumer. This is how it will be experienced by you.

[Sarah Aubrey] (20:47 - 21:24)
I feel like you bring the community with you more when you do that as well. You know, we've seen so much, some astro-turfing, but some serious concerns in areas like the Illawarra or up in the Hunter. And that's just allowed to fester if you don't bring people with you.

And, you know, there was no consultation. There was consultation and I can see people kind of scrambling now to kind of do that. I mean, some people aren't interested. They just don't want it. You know, it's a bit of nimbyism, sure. But I feel like when there is all those levels of government and local government doing those things and going, you know, this is the plan. This is why we need to do it.

[Eamon Waterford] (21:24 - 21:24)
Yeah.

[Sarah Aubrey] (21:25 - 21:27)
I do think that the public comes with you.

[Eamon Waterford] (21:27 - 21:44)
Yeah. And there's also just like we can get to, I guess, in our heads about the technical detail of some of these things and trying to make these marginal judgement calls when actually a piece of leadership is required to say, guys, this needs to happen. I want to work with you to make the best of it. But it is going to happen.

[Sarah Aubrey] (21:44 - 21:48)
It's about communication. You've got to communicate that stuff.

[Eamon Waterford] (21:48 - 21:56)
And being clear and standing up and saying, look, I am willing to front up and have a discussion with you. You know, I mean, not for this, today's topic, but the way that Victoria just said no more gas connections.

[Sarah Aubrey] (21:57 - 21:57)
Yeah, amazing.

[Eamon Waterford] (21:57 - 22:05)
You know, that is a clear thing where you're like, look, there's probably not a cost benefit analysis that informed that decision. You just make that decision because of a whole bunch of things.

[Sarah Aubrey] (22:05 - 22:07)
I think people were shocked that they just went and did it.

[Eamon Waterford] (22:07 - 22:31)
It's just a clear, but it is a clear line in the sand that provides clarity to the community and helps them understand. And then, of course, then the market responds. And when people are going down to Harvey Norman to buy their cooktop, well, there's only electrical, electric cooktops to choose from.

And people are like, oh, well, I can have some consumer choice in this and understand my options without needing to get kind of too confused by the complexities of the engineering challenges of decarbonisation.

[Sarah Aubrey] (22:33 - 22:37)
What about you, Junayd ? What do you think has been happening overseas that we could learn from?

[Junayd Hollis] (22:37 - 22:53)
So much. I mean, we shouldn't lose sight of what we've achieved here in Australia, which is world leading in a number of respects. You know, the adoption of rooftop solar by our residential households is nothing short of, well, it is world leading.

[Sarah Aubrey] (22:54 - 22:57)
Do you know what the percentage of rooftop solar adoption is in Australia?

[Junayd Hollis] (22:58 - 23:21)
NEM-wide in the eastern states, it's something like 35, 36 percent today. So just shy of four million households, I believe. And we've really seen that take off, particularly in Sydney, just in the last sort of few years. We were getting maybe six or seven thousand installs a year. Right now, we're doing about 30,000 installs a year. So, it's really taking off.

[Sarah Aubrey] (23:22 - 23:22)
Wow.

[Eamon Waterford] (23:23 - 23:36)
And if you put that into context, because we often think four million, well, there's 30 million people in Australia, but actually there's a lot less houses in Australia than 30 million. So, there's about 1.7 million houses in Sydney. So, there's about two and a half Sydney's worth of rooftop solar.

[Junayd Hollis] (23:36 - 24:05)
So, we are doing well on those fronts. From a policy perspective, you know, can we be learning from other jurisdictions? Absolutely. I think California is a good one. Who else? UK is probably where I look a lot of the time for some of the more innovative policy solutions that are slightly ahead of the curve for us. The UK has got a different situation. They don't have really big adoption of, you know, small scale, residential scale solar.

[Sarah Aubrey] (24:05 - 24:07)
They've got a lot of wind, though.

[Junayd Hollis] (24:08 - 24:17)
They do. They do have a lot of wind. But broadly speaking, they're seeing a lot more action in the middle sort of voltage levels of the network.

[Sarah Aubrey] (24:17 - 24:18)
What does that mean?

[Junayd Hollis] (24:18 - 24:44)
So, you know, we've been talking a bit about the transmission end of the network. We've been talking a bit about the grid edge, you know, the sort of rooftop solar. There's a whole missing middle in this conversation that we're not really having in Australia.

Whereas in the UK, that's where all of the action is. They've got they've got queues years long for mid-scale solar wind storage projects trying to get into the grid at that what we call the sub transmission level.

[Sarah Aubrey] (24:44 - 24:45)
Right.

[Junayd Hollis] (24:45 - 25:01)
Now, that's really exciting and really daunting for us because it hasn't happened here yet. What I'm really focused on is looking at those jurisdictions and what they're doing there to solve that problem, because I believe that's what's coming here. Well, more importantly, I believe it's what we have to do if we're going to.

[Sarah Aubrey] (25:01 - 25:03)
So, what sort of projects are you talking when you say mid-scale?

[Junayd Hollis] (25:03 - 25:41)
So, you're talking about your, you know, 20, 50, 100 megawatt batteries, similar scale solar farms, which starting to see here and starting to see that interest in those sort of sub-transmission levels. But nothing like the magnitude they're seeing over there and the things they've been doing to get on top of this. They've been they've set up something called a future system operator, which is starting to coordinate where these things need to go to maximise usage of the grid.

You know, it's a bit like playing a game of Tetris. If you just let the market go out and put it where it wants to go, you're not going to get the optimal solution.

[Sarah Aubrey] (25:41 - 25:44)
Are they having problems connecting stuff to the grid, though?

[Junayd Hollis] (25:44 - 26:41)
They are. And that's another thing that we've got to look at. And it's something they've looked at in depth in the UK is a how do you how do you maximise what you build on the grid to enable that those connections to happen quickly and easily?

And how do you operate in such a way that's a bit more flexible so you can take a bit more of a risk aware rather than a risk averse approach to letting these things connect? So right now here, and I'll oversimplify this, but please do if we if we take a connection from a from a solar farm, say, connection application of 100 megawatts. When it's being assessed, and this isn't just us, this is pretty much everyone in the industry, when it's being assessed for the impact it's going to have on the grid and whether or not we need to augment the grid, we'll make an assumption that it is at maximum output on the worst possible day when there is no load to soak it up and see what it does.

[Sarah Aubrey] (26:42 - 26:42)
OK.

[Junayd Hollis] (26:42 - 27:25)
Vice versa, if we've got a battery that's connecting to the grid, we'll assume that it's taking maximum load on the worst possible day when everyone else is taking maximum load. Reality is not like that. And this is what they've been trying to shift in the UK because they've seen all this playing out.

They've seen these connection queues grow out to years, almost 10, 12 years in some cases, while these enormous upgrades to the grid are being planned that probably aren't really needed. And so that's that's what we're watching and watching sort of really closely and seeing how we can adopt some of those same policy shifts here and encourage that flexible behaviour, encourage more of this generation onto the grid faster and really start to utilise our assets more effectively.

[Eamon Waterford] (27:25 - 28:17)
I really like that concept of risk aware rather than risk averse, because I think we are dealing with an investment opportunity here. We are investing in a new energy system that is going to be so exciting, such an amazing opportunity for the country. You know, the long term goal of energy abundance that this potentially unlocks for us just creates whole new industries, whole new economies, whole new job systems and opportunities for Australians to have great lives.

And, you know, no smart, savvy investor is going around saying I need to be hyper averse to risk. Risk is opportunity, right? Risk is where you make gains. Risk is where you create innovation, where you create new opportunities. And so being risk aware rather than risk averse is absolutely the attitude we should be taking to this sort of stuff when we're thinking about a long term investment opportunity.

[Sarah Aubrey] (28:18 - 28:35)
So right now there's a lot of focus on what we don't have, like five thousand kilometres of new transmission infrastructure that we need. Do you think we're missing an opportunity to focus more on what we already have? How do you think distribution networks could play a bigger role in this, Junayd ?

[Junayd Hollis] (28:38 - 29:09)
Yeah, we definitely can play a bigger role. There's a lot to be used there. We've sort of touched on some of that that capacity is there in the grid, depending on which level you're talking about. We think distribution networks are pretty well placed to get access to that capacity more broadly. And why do we think that? A, we are, yes, we're a regulated monopoly, but that means we come with a mature regulatory framework with strong regulatory oversight.

[Sarah Aubrey] (29:10 - 29:21)
So, in terms of that, how can distribution networks play a larger role? So, you're saying that, yes, we're we are a monopoly, but we are regulated. But have you got some specific examples?

[Junayd Hollis] (29:22 - 29:35)
Yeah, well, I believe it really just comes down to our ability to help coordinate where this transition, where investments are made in generation that are more optimal mix than what might otherwise play out.

[Sarah Aubrey] (29:35 - 29:38)
Is that because you can see everything more broadly?

[Junayd Hollis] (29:38 - 29:42)
We can see where the opportunities are in the grid and where the constraints are.

[Sarah Aubrey] (29:42 - 29:42)
Mm hmm.

[Junayd Hollis] (29:43 - 30:48)
We have a very strong regulatory framework, very mature regulatory framework. So that comes with its own safety net and being able to make sure that investments that are being coordinated or in some cases even funded by the network have that sort of scrutiny on costs. And that goes a long way.

So, with regard to the, you know, the optics of this, we do we do get people a bit nervous about the regulated monopoly taking a role in coordinating what has been until recently a market-led contestable space. And that's really not what we're about. We're really keen to just say, OK, there are other models out here that we should trial and test.

Let's learn quickly whether they whether they can provide value. And start to provide a more optimal mix and move on. And if we learn good things from from any trials that we do, let's try and scale it quickly and share it with other jurisdictions.

[Eamon Waterford] (30:49 - 31:53)
One of the things that the energy system is grappling with, the exact same challenge that basically any complex system that we look at in Sydney is grappling with, which is long term challenges, clear costs associated with that challenge and clear data that shows that investing now will long term cost less than waiting till we have to invest later. But with this tension of cost of living, you know, electricity prices right now, it's the same in the water system. It's the same in the housing system.

Basically, every complex system has this same challenge, which is early intervention and prevention is cheaper than waiting till we hit crisis levels. And so, yes, we absolutely need to make sure that we're investing appropriately and that those costs are being passed on only when they absolutely need to be. But the opportunity to invest might increase prices, you know, marginally in the short term, but long term, it delivers much, much better outcomes for the consumer and also for the whole system in terms of our need to respond to critical climate change issues.

[Sarah Aubrey] (31:54 - 31:57)
How much will it cost? How much is the cost if you don't do anything?

[Eamon Waterford] (31:58 - 32:04)
Well, this is this is the challenge, right? Like we already know, you know, there was 12 natural disasters in Greater Sydney in the last four years.

[Sarah Aubrey] (32:04 - 32:04)
Wow.

[Eamon Waterford] (32:05 - 33:02)
You know, you don't think of natural disasters hitting Sydney, but we've had floods, we've had bushfires, we've had storm surges, we've had extreme heat waves. Those are already being proven to be related to climate change. So as climate change increases its impacts on Sydney, we will have more natural disasters.

Now, each one of those 12 natural disasters has an average cost to Sydney of three point five billion dollars. So, you extrapolate that out, we're talking almost about 40 billion dollars of costs just in the last four years from natural disasters. So building resilience, building investment now into systems that build the resilience of our electricity network, our water network, our housing network, basically all of the systems that make for good lives now has all of these spillover benefits in terms of reduced costs, not just in terms of electricity prices, but like, you know, reducing the loss of life, ensuring that a vulnerable older person who lives in a house that's poorly insulated is able to turn on the air conditioning in 20 years' time when there's extreme heat waves coming in every week.

[Junayd Hollis] (33:02 - 35:00)
Yeah, we've got to get better at valuing some of those things because we don't necessarily factor those into the sort of investments we're making in the energy system. But, you know, the plain old boring old cost of living thing is ever present and it really is a concern. And one thing that worries me is a bit of a gap in the overall plan is that I think it's, you know, best part of 30, almost 40 percent of the generation that we assume is going to be built by 2050 is we're assuming it's going to be built behind the meter.

And that's not necessarily something that is costed up in this overall transition plan that we're all sort of trying to meet. But if you map that out in terms of what it is actually going to cost over the next 20 years, it's something like 500 billion dollars. Now, that's just sort of assuming you stand back and let this roll out where it's where it wants to roll out, where it's naturally going to roll out, which is typically going to be low rise residential areas where there's not that much demand.

But that's where it's easy to go. It goes on the rooftops there. That'll come with its own challenges because if it's not matched up with local demand, you'll start to see that excess generation feeding back up into the grid and creating constraints and triggering more investment in the grid.

So, our challenge is really how do we slash that 500 billion dollar price tag in half or even better just by optimising where this can go? And that's what I think the key to this is, because we've got this huge cost to the economy of not acting. We've got this huge cost to the economy of acting.

But if we really take a laser focus on how we optimise that, still do it quickly, but do it sensibly, we can we can probably get a solution that gets us to our shared objective, but at a significantly lower impostor.

[Sarah Aubrey] (35:01 - 35:26)
And I guess we have all this excess energy that we're losing in the middle of the day, right? With solar, the savings associated with actually taking that energy, storing it, using it, does that bring down the cost that we, rather than letting it go to waste? Like, yes, you can build things like wind and you can do those things so that overnight you've got that stuff. But is storage the biggest solution or the biggest part of that?

[Junayd Hollis] (35:26 - 36:22)
It has an important part to play. But I think we've got to get used to the idea that that wasting energy or having energy go to waste is not necessarily the end of the world. If we're pursuing a model of energy abundance, which I totally agree with, by the way, I think we underappreciate what a true energy abundance scenario would do for us as a society. It solves all manner of ills if you get a true low cost, low carbon, energy abundant system. And we should be going after that vision. So, is our batteries going to be part of that mix? Absolutely. But we don't need to. We don't need to try and scrimp and save every electron that ever gets generated into the system. We can find a more optimal path through there that is a bit more pragmatic.

[Sarah Aubrey] (36:23 - 36:39)
So as we wrap up, I'd love to hear from both of you. What do you think is the single most important action Australia can take to accelerate the integration of renewables into the grid, whether it's local solutions or large-scale investments? What is the key to moving faster?

Eamon, I'll start with you.

[Eamon Waterford] (36:40 - 37:30)
Big question. I'm going to cheat and say two. I mean, one is small interventions that catalyse consumer behaviour differently.

Like, how do we do what we did with rooftop solar for household batteries and for organisations like Ausgrid be able to invest in medium scale storage solutions and other sort of innovations? So, you know, regulatory or incentive changes that all of a sudden catalyse things you wouldn't necessarily expect to happen. And then the second, which is related, is like a leadership piece.

The biggest shift is to have a more sort of an abundance of responsibility rather than a shying away from responsibility from different tiers of government to say, actually, let's lean in because we all have a desire to get this done, regardless of political cycle.

[Sarah Aubrey] (37:30 - 37:38)
And a long-term vision with that rather than worrying that it's going to, after another election term, it's going to be ripped out and changed. And this is, yeah, absolutely.

[Eamon Waterford] (37:39 - 37:41)
Yeah. So that's my one and a half, I suppose.

[Sarah Aubrey] (37:41 - 37:41)
That's allowed.

[Junayd Hollis] (37:42 - 38:26)
Thank you. Junayd. For me, it's really, we're going to need to have some courage to try some different things.

And I think you said that there is there's courage to use things like these regulatory sandboxes to trial these different concepts of how do we break out of the cycle that we've been in and see what works and see what doesn't work. That's probably the biggest lever I can think of. And I think making sure that we are, Claire Savage from the AER has been known to wear a T-shirt recently saying, use more network before you build more, or words to that effect.

[Sarah Aubrey] (38:26 - 38:32)
Which also, I've seen it. It was very rock and roll. It was very cool.

She was rocking it with a blazer. It's just great.

[Junayd Hollis] (38:33 - 38:46)
And I couldn't agree with that with that sentiment more. You know, there is capacity there. It does need to be used, getting access to it and getting people lined up to use it in the right way. That's going to be the challenge. And it will take some innovative thinking.

[Sarah Aubrey] (38:47 - 39:02)
And we're not alone. As you said, there are other countries to look to. They're either ahead or behind us, but we're all in this together.

Yeah. Yeah. Well, thank you both for joining us today.

It's been a very insightful conversation. And yeah, once again, I learned lots.

[Junayd Hollis] (39:03 - 39:03)
Thanks very much.

[Sarah Aubrey] (39:04 - 39:29)
Join us next time as we dive into the world of electric vehicles. We'll tackle key topics like home charging and whether our grid is ready for EVs. Plus, explore the wider community benefits of the EV revolution.