Managing the Transition: Balancing Competing Tensions

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This is the first of a series of posts reflecting on Energy Week 2023. Daniel Westerman, Chief Executive Officer of the Australian Energy Market Operator (AEMO), recently delivered a speech at Australian Energy Week 2023 on the theme of managing the tensions inherent in Australia’s energy transition.

Westerman began by outlining AEMO’s view of Australia’s energy transition, which is built on four pillars: low-cost renewable energy like solar and wind; energy storage and firming capacity; new transmission and distribution networks; and power systems able to operate fully on renewable energy. While there is broad acceptance of this vision, Westerman noted several uncertainties including cost of living pressures, supply chain issues and community reactions to large energy projects.

Given these uncertainties, Westerman argued the transition must be carefully managed by balancing three main tensions:

The tension between the energy system of today and the system of tomorrow. This requires continued investment in new renewable generation and transmission to ensure reliable energy supply as coal plants retire, even as the system is modernised. Rooftop solar uptake is growing rapidly but also poses challenges for power system operation that must be addressed.

The tension between individual energy system components and the overall integrated system. The blueprint for navigating this tension is AEMO’s Integrated System Plan, which maps out the investments needed for a reliable, affordable zero-emissions grid. Urgent progress is needed on initiatives like grid-scale storage, grid-forming inverters and modernising AEMO’s own operating systems.

The tension between individual communities and the population as a whole. While the energy transition will benefit all Australians through improved energy security, affordability and sustainability, new infrastructure often impacts local communities. A “false dichotomy” of city versus country has emerged, when in reality there are shared interests. Communities expect open, fair and meaningful engagement on energy projects that affect them. Policy and regulatory changes aim to give communities more say in transmission planning and development.

In concluding, Westerman reiterated that managing these tensions to maximise the benefits of the energy transition for all Australians is challenging but possible with collective action across industry and governments. Collaboration and open communication will be key to addressing community concerns, navigating technical challenges and ensuring continued progress. Overall, Australia’s energy transition represents an opportunity for shared progress if tensions are carefully balanced.

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