Reconsidering our energy landscape to meet our needs after COVID-19

Thinking

Reconsidering our energy landscape to meet our needs through and beyond COVID-19

There is huge disruption for every one of us as we adjust to a life in the COVID-19 disruption.

The way we work and connect with each other has shifted significantly and it’s highlighted how much we rely on electricity and utility infrastructure in our modern society. Electricity plays an indispensable role; in our work, how we connect, heat and cool our homes, refrigerate our food, pump water to our neighbourhoods and operate ventilators and other essential medical equipment.

Aurecon works with clients across the full spectrum of the energy supply chain globally – from generation, transmission and distribution to retail – to help develop and maintain electricity systems to provide society with a comfort to keep us safe and connected.

In recent weeks, we’ve seen the business community flock to online message platforms and video conferencing to continue their work, as employees are sent home and real teams become virtual ones. Schools and universities are moving their lessons and lectures online to ensure that everyone still has unimpeded access to education and learning while physically isolated.

In this thinking paper, we explore the current challenges for the energy sector in its supply and demand for electricity, and even though it’s hard to consider the future right now, we touch on how sustainable and resilient energy systems help us overcome crisis situations.

Without reliable electricity, where would we be today?

The COVID-19 pandemic means our economies will be weaker, private companies’ balance sheets will have them rethinking their appetites for large capital works, and completion of some important energy projects, maintenance and upgrades may be delayed or even cancelled, potentially stressing our infrastructure even further.

But amongst all the doom and gloom, we must remember that the underpinnings of our electricity networks and markets are fundamentally extremely strong, borne off the back of many successive generations of system builders; designers, constructors, economists, engineers, regulators, operators and yes, even lawyers, that have been champions of 'good practice' and stewards of our critical energy infrastructure.

As our economy recovers (hopefully at the sooner end of projections), our energy infrastructure will ramp up to serve as the literal engine room of a powerful resurgence in economic activity. The future is bright, it's just at the end of a dark tunnel right now. In the meantime, we need to continue taking responsible measures to manage the challenges that COVID-19 imposes on our system. Let's take a look at what's happening currently.

Systems, assets, and projects within the Australian energy sector are inherently complex, and decisions made today will have impacts over the next 12 months to 5 years. Here’s what we know.

Development of renewable energy projects

  • Projects in construction phase will be delayed due to the workforce impacted by travel and related COVID-19 restrictions
  • Projects also pending approval and key project milestones such as development approvals, connections agreements and commissioning are likely to be delayed due to internal slow-down at network service providers, the Australian Energy Market Operator (AEMO) and state government planning departments as they all transition to business continuity plans and employees working from home
  • Supply chains for generation projects including manufacturing are also being impacted

Demand for electricity

  • The overall electricity load profile on our grid is unlikely to change significantly (in volume and shape) with commercial and industrial reductions offset by an increase in residential demand as significant numbers of the workforce shift to remote working
  • That load redistribution is more likely to impact distribution networks than transmission networks
  • A decrease in demand in other countries’ markets (~10 per cent) during recent weeks coincides with both COVID-19 timing and variations due to seasonal change. More time is required to ascertain demand load impacts from COVID-19
  • Changing commercial and industrial load could impact customers with power purchase agreement commitments
  • The impact of the financial market could have a flow-on effect to project financing which is likely to be short-term

Supply of electricity

  • Reduction and slow-down of non-emergency planned capital works by network service providers who are enacting contingency plans (e.g. Essential Energy suspending capital works, such as on network upgrades, till mid-April (pending pandemic status)
  • This will cause an underspend during this regulatory period (a financial risk, impacting a regulated utility’s ability to capitalise costs) and potentially impact reliability and network risk profile, considering potential challenges around supply lines for critical spares and long lead-time items like transformers
  • Operations in all parts of the energy value chain will be more ‘brittle’ – that is, small and localised failures or contingencies (e.g. as a result of delayed maintenance) could lead to lengthy outages for generators or networks if supply chains and repair resources dry up
  • Strong measures are being implemented to isolate and protect field workers, operators and support staff, with contingency plans enacted and strict controls in place around the control rooms of generators, network service providers and AEMO
  • The supply of coal and gas are impacted by both fuel supply and operational generation risks, with challenges around securing expertise and workforce to respond to both expected and unexpected plant outages
  • Supply issues on the coal and gas generation side could mean a forced turn-down in renewables to maintain minimum amounts of synchronous generation on the grid
  • Wholesale spot pricing is dependent on the balance between available supply and demand, and is generally expected to reduce on average. The Australian Energy Regulator (AER) has called on retailers to “put customers first” and provide bill relief and other measures for customers in financial distress

Designing our energy future beyond the current crisis

As people are forced to physically isolate, it’s electricity that is enabling us to talk to our families and friends, to keep educating our children, to work within distributed virtual teams to mitigate and overcome our challenges, and carry on some normality in our daily routines. These are the moments to reconsider our energy landscape and how it can serve our community best beyond this current crisis.

It’s hard to consider the future right now, as we’re understandably consumed with our situation today, but a more sustainable, distributed and resilient energy system provides us with the tools to overcome known and unknown future challenges.

Despite federal policy uncertainty in Australia, aets and mechanisms to transform the sector. Queensland is particularly active, with its renewed focus on its 50 per cent target, formation of CleanCo and March’s announcement of CleanCo's stake in the 1,000MW MacIntyre Wind Farm.

No doubt some energy projects will be impacted by a slowdown, but an economic response in the form of fast-tracking and supporting sustainable and resilient energy projects would both stimulate the Australian economy and provide households and businesses with low-cost and reliable electricity.

Any sustainable energy projects during and post the COVID-19 disruption wouldn’t be temporary. They would be making a lasting difference to building a secure and reliable energy system for Australia to overcome known and unknown future challenges.

This thinking paper is part of a collection of insights and expertise from Aurecon as it explores leading through and beyond the COVID-19 disruption. Explore our insights here.


About the author

Recognised as one of Engineers Australia’s Most Innovative Engineers in 2019, Ben McGarry is a forward-thinking innovator in the Australian energy market, having worked in energy strategy, infrastructure advisory, project development, project engineering and technology R&D roles in Australia and the US.

As Aurecon’s Future Energy Capability Leader, he leads a group of future-focused experts that develop strategies, policies and projects to embrace the opportunity and navigate the risks of the global energy transition. He is passionate about bringing diverse thinking and harnessing new technologies to solve challenging problems, particularly in our complex, rapidly-transforming electricity systems.

This article was originally published by Ben McGarry on LinkedIn titled, 'COVID-19: Reconsidering our energy landscape. Here’s what we know'.

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