Managing the complexity of our evolving power system requires a lift in consistency & coordination

As we look ahead to 2030 and 2050 there is increasingly little daylight in the argument that our electricity supply future will be dominated by wind, solar and various storage technologies plus material contributions from rooftop solar on the demand-side.

Engineers and network planners understand these technologies extremely well, and increasingly are becoming ever more comfortable with how utility-scale renewables will technically deliver bulk volumes of our energy supply reliably, securely and safely. The Climate Change Authority also recently released its independent analysis of Australia’s technological options for realising net zero by 2050, mapping out a range of viable alternatives, if not the delivery path or the policies to realise them.

However, there remains significant complexity in the delivery of this future energy mix. Some of this complexity is homegrown, arising from our mix of federal and state led net zero targets, policies and implementation plans, from our regulatory, grid connection and planning frameworks, from increasing local community and wider stakeholder interest, and also from labour availability.

These homegrown factors combine with external supply chain pressures, cost uncertainty and attracting capital for the delivery of what are highly capital-intensive projects.

Developers of renewable energy projects are working hard to design their assets to fit within the complexity that is emerging and to meet the needs of an expanded number of stakeholders. Ten to fifteen years ago developers assessed their development portfolio largely from the revenue potential of state-based spot prices and proximity to grid, soon to be followed by increasingly negative impacts from localised grid congestion and physical curtailment risks.

Fast forward and developers are facing a wider smorgasbord of challenges and requirements including navigating different jurisdictional state REZ access policies and connection arrangements, assessing their portfolio to optimise risk outcomes across REZ regimes in other states, delivering on wider and more focussed local community interest in their development proposals and generally assessing the relative merits and considering how to best invest their development capital to progress their projects and deliver de-risked portfolio outcomes for their backers.

Likewise, financiers on the other side of these project debt and equity investments are similarly seeking to understand and manage their exposures to the sector while also needing to understand this changing landscape as they develop and grow their investment businesses into the expanding renewables sector.

Where there is complexity and uncertainty in the development landscape for renewables there is likely to be non-optimal cost outcomes for investors and energy consumers.

Two key areas of project risk that impact delay and cost outcomes are planning and connection approvals. While developers of renewable energy projects and thereby the renewable energy targets they deliver may not have the luxury of waiting for streamlined planning approval and connection regimes, the potential for jurisdictions to optimise their REZ programs to coordinate these traditionally separate development areas needs careful attention.

Assuming REZ regimes unlock the consistency and collaboration required to expedite the transition, they will need to aim to resolve community concerns related to transmission and generation, publish and apply consistent multi criteria analyses for the development and approval of renewable energy corridors, address curtailment risks for developers, including by not oversubscribing generation within and downstream of REZs, and introduce innovative coordinated batch generator connection processing.

The level of effort required to achieve these feats is significant but necessary to increase the confidence of developers and financiers for a successful transition.