Chances are you saw headlines recently forecasting half price home energy bills by 2050. Music to the ears of many Australian families as the household budget is squeezed ever tighter. But with the price of just about everything feeling like it’s going up, you’d be forgiven for wondering how this could be possible.
The forecasting from the independent think-tank, The Grattan Institute, assumes by 2050 most Australians will have embraced ‘electrification,’ moving off petrol and gas by having an EV outside, solar panels on their roof, a battery on their wall and fully electric appliances in their homes.
This follows similar research in recent years from the likes of Energy Consumers Australia and the Committee for Sydney. All assume a slight increase in electricity bills ahead of inflation, but a reduction in overall energy spend by transitioning away from also paying the costs of fossil fuels.
But if we’re to make this possible we’ll have to be smart about how we enable all families and businesses to participate. The critical conversation is no longer about emissions targets; it’s about the cost of building the infrastructure needed to get there and ensuring that everyone across society can benefit.
We’ll have to be savvy, doing more with what we already have and using all the tools available to deliver the fastest, cheapest and fairest energy transition possible.
The poles and wires that deliver electricity to homes and businesses are the backbone of the energy system. For decades, they’ve quietly done the heavy lifting, delivering power to consumers, as an efficient shared asset that everyone benefits from.
The focus of the transition conversation has always been on large scale generation (how we replace coal) and what happens inside homes. Australia’s world leading roof-top solar deployment and now the household battery subsidy scheme, explored at the recent AFR Conference, was a case in point.
But the potential of what sits between the home and large-scale generation has been overlooked, that is the sub-transmission lines, local substations and lower-voltage distribution network.
This ‘middle-part’ of the grid can help increase social acceptance of the energy transition for all Australians. That’s why the middle matters, and if we’re smart, it’s where some of our best opportunities lie in the decade ahead.
Distribution networks like Ausgrid can see how significant and vital this opportunity is. We have collaborated with the other two New South Wales networks, Endeavour Energy and Essential Energy, to develop a Distribution System Plan.
It’s a roadmap for the role of distributors in the energy transition, which highlights how much impact they can have, and how much opportunity is currently being left on the table.
The full report will be released in November. We see this as the first of what will hopefully become a regular contribution to the energy transition conversation in NSW and beyond.
In New South Wales alone, existing distribution network infrastructure could enable gigawatts of new renewable generation to be connected without waiting years for new transmission corridors or greenfield builds. These are projects that can be delivered quickly, with greater community support, and at a fraction of the cost.
The Hunter Central Coast Renewable Energy Zone shows what’s possible when networks are empowered to act.
One gigawatt of new renewable hosting capacity has already been planned using existing sub-transmission assets, and will be delivered by 2029. Analysis shows another 3.7 gigawatts could follow across three more phases.
This isn’t about replacing large-scale transmission projects in the long term, which remain essential to linking Australia’s renewable heartlands.
It’s about de-risking them by adding options into the overall planning process now. Distribution-connected solar and wind can make a major contribution by freeing up additional wind capacity across NSW, resulting in less reliance on interconnection and reducing gas consumption in NSW by over 50 TWh to 2050.
Unlocking distribution-connected generation also buys 2-5 extra years for transmission-level REZs to be deployed. This is a much-needed pressure relief on a system undergoing enormous change and experiencing delays to key transmission projects.
The Distribution System Plan also shows the huge potential network benefits that come from batteries connected onto the distribution network. Shared batteries bring many advantages. Critically they are cheaper per kilowatt hour than a household battery; 40 per cent in the case of Ausgrid’s Community Battery program.
In my view, the federal government’s $2.3 billion investment in household batteries is well-intentioned but we must acknowledge that it is narrow and expensive.
Household batteries serve only the homes that can afford them or are able to install them, but they usually can’t deliver power bill savings for everyone else, renters, apartment dwellers and low-income households. Community batteries can, at lower cost, because they’re a shared asset with benefits for many.
This notion of more equity in the transition also applies to kerbside EV charging. Private operators are unlikely to install chargers in suburban streets or small towns where usage is uncertain; it’s often not financially viable.
But networks can help build the base infrastructure that makes those sites attractive because we offer scale economies.
Once the grid connection is in place, the private sector can compete to deliver charging at lowest cost and with greatest convenience. For example, by allowing customers to bundle these services with their home electricity bill.
Together these initiatives, unlocking renewable energy zone capacity, building community batteries and installing kerbside EV chargers, are all examples of ways in which electricity distribution networks can be leveraged to deliver the energy transition we all want faster, at lower cost and with more equity.
By helping create the environment for people to electrify their lives, we are creating the foundation for a healthy market to flourish and enabling households to achieve the overall reduction in energy spend that the analysts are forecasting.
To ignore this is to leave us all exposed. When we rely solely on massive new transmission corridors or on household-level generation, we create inefficiencies and inequities.
At one end, new transmission projects can take a decade or more to build, with escalating costs and communities who feel the burden but see little benefit.
Meanwhile, household solar and batteries remain only in reach of those who can afford them and with the space to build them. Networks can help bridge those divides with assets that serve everyone, not just those who can participate.
Regulators and policymakers should look closely at how network investment rules can evolve. Reviews of the network regulatory framework are an opportunity to embed these ideas and let networks play a more active role in building the connective tissue of the energy economy.
Between competitive markets and government subsidies sit well-regulated distribution networks that can minimise cost increases for society, de-risk and even accelerate existing transition plans, and increase participation in the upside.
The energy transition doesn’t have to be a story of winners and losers. With the right balance of competition, regulation and community partnership, it can be both efficient and fair.
The distribution poles and wires that have quietly served us for decades are the key to powering Australia’s energy future, and if given the opportunity through common sense regulatory changes, we as networks can help meet the moment.
Marc England is CEO of Ausgrid, a distribution network in NSW.
