EnergySupporting the transition to a low carbon energy economy

We need to address three fundamental shifts in the market:

• From fossil fuels to renewable energy – Customers want low or zero carbon solutions and, irrespective of attitudes to climate change, responsible supply chains, ethical raw materials, recyclability of components and other factors. New technologies that enable affordable storage capacity and grid stability will be key factors in this transition, which will happen at different rates of change based on local decisions in the best interests of reliability and affordability for customers. As part of this journey there will be a need for renewal of aging assets to make them more efficient, cost effective and reliable and provide back-up generation as falling costs make renewables more commercial.
• From centralised to distributed generation – Supply should be co-located as near as possible to demand. New business models are likely to emerge that will rapidly and fundamentally change the current competitive landscape for energy retailing. Peer-to-peer (P2P) electricity trading, whereby users and generators can trade energy over local parts of the distribution network may be enabled by blockchain technology.
• From supply-led to demand-driven use – Residential, commercial and industrial customers are driven by an increasing desire for value beyond price alone. Future energy providers will make things simple, predictable, digital and enable customers to use their property assets to generate energy.

The energy industry will need to focus on:

• Aiming to reduce net demand – as a means to more efficient use of capital and reduced costs to consumers, incentivise overall net demand reduction on the system and in particular peak demand through deployment of storage technologies in conjunction with renewables under the target
• Favouring local supply closest to the customer – this is as much about practicality as efficiency. Incentivise commercial and industrial uptake of renewables equally if not more than utility scale.
• Assisting remote communities – prioritise fringe of grid and remote locations to deliver efficient outcomes by lowering line losses and displacing any local liquid fired generation
• Being mindful of stranding assets – this does not just include existing generators, but the fleet of large renewable generators and transmission and related infrastructure that may itself be deployed under a target. Renewables targets, if being implemented should take into account the momentous potential for change in global energy markets with the advent of low cost solar, ever cheaper large scale batteries and, in the transport sector, electric vehicles. In developing economies the opportunities for leapfrogging require constant review.
• Coordinating the policy approach – an effective pathway must see a meeting of industrial, agricultural and climate policy to create a seamless long term plans well into the future beyond the life of existing assets.