Why Demand for Renewable

Energy hasn’t stopped with

the RET

Andrew Hyland
Executive Manager Commercial and Wholesale Markets 13 June 2019
About Us

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Our Journey

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Renewable Energy
1. Where are we?

2. What did we learn along the way?

3. Where are we going?

4. How do we do things better?

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Where are we?

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The RET is done and dusted…
• Target 33m LGCs – committed supply
40-45m.
• LGC Price is transitioning from $80/LGC
to ~$10/LGC.
• New projects are effectively economic
with $0 subsidy.
• Buy energy, get the “renewable” bit for
nothing.

…and we don’t need it anymore

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What did we learn along the way?

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Boom times are good…
The Good:
• > A$20b of investment
• Lower Costs – PPAs $100 to $50
• A solar industry
• Consumer driven (not mandated)
product.
• Kick-started the energy transition
The Growing Pains:
• Network Constraints
• Connection issues
• System Strength requirements
• MLFs
• Contractor insolvency
• (some) Investor wipe-outs

…and can be bad

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Renewables need policy certainty …
• The RET drove the recent wave of new project
investment.
• For the next wave we have grasped at CPRS, CET, EIS,
NEG
• But new projects continue to be committed – and
developers are still (very) active.
• Have we reached a stage where renewable energy
doesn’t need policy support…?
…but not really
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Renewables don’t need policy….
• The energy transition is underway – and has momentum.
• If the assumption is we will see more renewable energy –
who gives way?
• What does an orderly transition look like?
• What does a disorderly transition look like?
• The balancing item is price - consumers will be the ones
who pay.
…but really “we” do
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Where are we going?

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Where is the energy market going..?
Solar Generation hollowing out the Less reliable thermal generation
demand profile

And doesn’t show any sign of slowing

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Where is the market going…?
Ageing coal generation fleet Electric Vehicle forecasts are increasing

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Where is the market going…?
Aluminium Smelter closures Inter-regional Interconnection
(>1,000MW of baseload demand)

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Where is the market going…?
Snowy 2.0 Regulation

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Where is the market going…?
PROBABILITY
Increasing distributed solar generation Certain
Less reliable thermal generation Probable
Coal retirements Maybe
Electric Vehicle uptake Maybe
More renewable energy generation Near-certain
Network reinforcement Likely
Further inter-connection (eg SA-NSW) Likely
Snowy 2.0 Pumped Hydro Likely
Increased regulation Probable

So if that’s the energy market – what about renewables? 17

Where are renewables going…?
Customers, Customers, Customers…

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Where are renewables going…?
And the big energy users are just getting started…

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Will RE reach 50% by 2030…?
• What will the States do
– VRET, NRET, QRET, CleanCo etc
But
• Corporate PPAs
– Have become more common, likely to further increase repeating
• Pumped Hydro
the same
– The panacea of many market problems (if it works) mistakes
– A challenging investment in an uncertain market won’t
• Hydrogen help
– Compression and transportation challenges
– Dependent on customer market evolving

….Yeah I think so (but we have to be better)

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How do we do things better?

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How do we do things better…?
Renewable Energy Project ownership in the
Become (better) energy
NEM
market participants
• Not just RET-driven investor-generators
• Over 50 entities own RE NEM connected
projects.
• We need to build the capability within our
organisations to understand and
participate in the market.
• Will there be (substantial) consolidation
in the industry?

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How do we do things better…?
Firming, Firming, Firming
• The RET drove investment in
renewable energy.
• What the market needs now to
continue the transition is investment in
firming capacity
• Batteries, Pumped Hydro, Peaking
Generation.
• Capital investment is required – but
uncertain market evolution makes it
difficult.
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How do we do things better…?
Planning, planning, planning
• The energy market transition is on -
now we plan for it.
• AEMO’s ISP is scenario based
modelling.
• Brings together supply, demand, utility
scale and distributed generation
planning.
• Will help guide network investment –
and therefore help guide further
renewable generation.
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 In Summary
• It’s a complicated market today - the future more so
• Customers are going to drive more renewable energy
into the system.
• Renewable energy projects need to be better market
participants.
• Investment in firming is entirely complimentary to
increased renewable energy – but investment is
complex.
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