Audrey Zibelman, the new chief executive of the Australian Energy Market Operator, has been in the job for little over a week, but is already making her mark, signalling the biggest shift in energy management philosophy in a generation.
If Australia’s fossil fuel industry had hoped that last September’s state-wide blackout would lead to a u-turn on the shift to cleaner and decentralised energy system, then the release of the Australian Energy Market Operator’s final report in the event would leave them bitterly disappointed.
And if they had any thoughts that the new CEO of AEMO, Audrey Zibelman, was going to afford them the indulgences that they had gotten used to over the last few decades, then they are going to be disappointed on that too.
Several hundred energy market participants converged on Adelaide’s Hilton Hotel on Wednesday to hear the findings from the final report into the now notorious system black and, more crucially, to hear the first public insights from the new AEMO boss.
“Thank god you’re here,” said the Grattan Institute’s Tony Wood, referring to a former TV program, but echoing the mood of most.
And while many in mainstream media chose to focus on the role of wind farms in South Australia’s “system black,” and wonder why the shuttered Northern coal fired station is not being fired up again, both AEMO and its new boss were looking to the future, and with a sense of urgency.
Zibelman is the former head of New York’s Public Service Commission, charged with implementing that state’s ambitious Reforming the Energy Vision program, and its target of 50 per cent renewable energy by 2030, which is going to focus a lot on decentralised generation.
“When I arrived on the scene in New York, it was just after Hurricane Sandy,” she said in her opening comments on Wednesday.
“After seeing New York city witout electricity for a number of days and people living in 40-storey buildings walking down to get water and cell phones charged – these were not young people, these were grandmas and granddads – it was clear that this industry was going to have to fundamentally change.”
And Australia, she says, is actually going to lead the world on this, both on the breadth and the scale of what she, chief scientist Alan Finkel and many others describes as the inevitable and unstoppable energy transition.
“We built systems in the 20th century around large centralised power plants,” Zibelman said. “That made a lot of sense. Now the industry is changing, cutomer preferences are changing, choices are changing, so we are creating what lot of people are calling the internet of things.
“The idea is that you need to create a very flexible network that can respond in real time, and truly real time, to a lot of different events and a lot different sequences.
“That is going to need a whole different approach … and my excitement about Australia is that, quite frankly, Australian is going to be leading the world on this.”
And just for good measure, she added: “We have a lot of smart people to work together to create a much more productive system that can show the rest of the world that this new technology is not frightening, it actually allows for a more productive, cheaper and cleaner system.”
Get that? A faster, more productive, cheaper and cleaner system. That’s the answer. When Zibelman is talking about speed of response, in real time, she is not talking about the slow, clunky coal and gas fired generators that currently dominate the grid.
She is talking storage, and demand response. And she is not just talking about grid scale, but about households and businesses, and tapping into their own resources of rooftop solar and battery storate, something that SA Power Networks says will be everywhere, thanks to its plunging costs.
“The objective is how we use these technologies better,” Zibelman says.
“If we compensate people who invest in batteries or distributed generation on their side of the meter ,and we really create a two-way system, then we we create a more productive system, meaning you don’t have to invest in generation that you are only going to use a few hours a year, because you can use the load itself as a balancing resource.
“It is that signal that says: ‘Hey there, we don’t really need you,” that’s going to help moderate prices. It’s pure economics applying to them and making demand a much more active portion of the grid.”
Be very clear about this. This marks a fundamental change in thinking about the management of Australia’s grid, which has previously been based around the idea that all grid problems should be solved by shovelling yet more energy down the poles and wires.
Zibelman is signalling an end to this. She is, in effect, signalling an end for the need of those peaking plants that operate for just a few hours of the year, yet conspire to push Australia’s wholesale electricity prices to stratospheric levels.
She is signalling that the business case of the generators – for so long based around getting 30 per cent of their revenue from 30 hours of pricing parties a year – will no longer be valid. Hello battery storage. Hello demand management. Hello a fast and responsive grid.
Quite how the Coalition, and the ideologies in mainstream media are going to respond to this, goodness only knows. But they are going to hear pretty much the same think from Alan Finkel. They have already heard it from the CSIRO and the network owners and many others.
The only ones disputing this vision energy reform are the fossil fuel generators themselves, and their commodity suppliers.
“I’m optimistic quite frankly – we all see the same end game. We want the sytem to work for South Australia, and we want it to work for Victoria and Queensland (both states with high renewable energy targets) and anywhere else.”
Still, Zibelman has some work repairing the strained relations between AEMO and the South Australian government, who blame its poor risk management for many of the issues that have beset the state this year.
She said she met with the premier Jay Weatherill and energy minister Tom Koutsantonis on Tuesday. Maintaining energy security over the coming summer will be her primary focus, she says.
But given her comments on Wednesday, it will be interesting how much she pushes the “smart controls” – load management, battery storage, over the state’s idea of using temporary diesel generators.
Later in a press conference dominated by the extraordinary attempts by the attendant media to get AEMO to blame wind energy for the blackout and recommend a return to coal-fired generation, Zibelman said:
“In the US we had a major blackout in 2003 that was related to coal and gas that dropped off the system. There was an event in Texas a few years ago that people though was around wind generation, but it turns out it wasn’t about wind generation.
“The issue is not about what resource we might have … the issue is that in operating a power grid there are a number of contingencies you will face, and you ought to be able to anticipate when these contingencies happen, and what’s your’s next step.
“And whether you have 30, 40, 50 per cent renewables, you need to ensure you have the control systems in place to manage it. That’s our job in AEMO.”
Still, the media is not buying it. The Coalition is still wondering why coal fired power station are being switched off, and The Australian thundered on Wednesday that “only baseload can provide a foolproof and cost-effective long term back-up for renewable intermittency.” They are just not listening.
Zibelman does not have the regulatory powers that she had in New York, and more’s the pity because AEMO, according to its submission to the Finkel Review, is clearly frustrated by the glacial pace of change in the country’s rule maker, the Australian Energy Market Commission.
“This is an electric system that used to see changes in terms of decades,” Zibelman said. “Now, technologies are evolving so quickly – that you really need to got to think about how to adapt system to those technology changes .
“That is what we seeing in Australia, and that what we saw in New York. We need to make sure we are moving as fast as the market and the technology is.”