Unlocking Australia’s Renewable Energy Future Tony Meehan, Executive Manager, Regulation

All-Energy Australia, 12 October 2017

Backbone of Australia’s Electricity System

Centre of the NEM connecting QLD and VIC

32% of Australia’s population

34% of energy consumed in the NEM

NSW

NSW is the largest region in the

National Electricity Market

TransGrid is the operator and manager

of the NSW transmission network

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Disruption at the source of energy

Existing large generation

Coal 49%

CCGT 5%

OCGT 14%

Gas other 5%

Solar* 0.58%

Wind 9%

Water 17%

Biomass 1%

Other 0.30%

Coal CCGT OCGT Gas other Solar* Wind Water Biomass Other

NEM existing generation capacity mix

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Dramatic change as generation retires

Source: AEC

Unlocking Australia’s Renewable Energy Future

Role of Transmission in the Future Energy System

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1. Transmission networks maintain energy security through core expertise in power system security and

stability, and a thorough understanding of the planning and operation of the power system.

2. Transmission networks deliver affordability for consumers as the platform on which the competitive

wholesale electricity market operates.

3. Transmission networks are integral to reducing emissions in the electricity sector by transporting

energy between areas with abundant renewable resources and areas where electricity is used.

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Significant impact for consumers

Price impact of expanding renewables, and coal-plant

closures

Source: Professor Ross Garnaut 550MW Topaz Solar Farm in California

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Source: Bloomberg New Energy Finance, Paul Maycock, company filings

PV module prices and learning curve calculation The cost of wind turbine continues to fall

Source: Bloomberg New Energy Finance Note: Data by contract signing date

Cost of renewable generation is going down

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A successful transition

Connection of large-scale

renewable generation

Sharing of geographically

diverse resources

New ancillary services to

manage system stability

Regulatory framework to

evolve to support the system

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A trajectory towards 100%

renewable generation is feasible,

and the technical challenges

associated with this

transformation can be met in a

way that is affordable for

consumers.

Connection of large-scale renewable generation in areas with abundant renewable resources could

be enabled by extension of the transmission network to those areas.

The transition to large-scale renewable sources of energy will

be enabled by transmission

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A strategic approach is required

A strategic approach to identifying renewable zones

at lowest cost, with the best renewable resources

and compatible land use is required Finkel recommendation

“By mid-2018, the Australian Energy Market

Operator, supported by transmission network

service providers and relevant stakeholders,

should develop an integrated grid plan to

facilitate the efficient development and

connection of renewable energy zones across

the National Electricity Market.”

(Source: Independent Review into the Future

Security of the National Electricity Market)

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The following criteria were geographically mapped to the study area and used to determine

the suitability of each 50mx50m cell within that area:

Study of new energy zones

• Solar PV resource

• Wind resource

• Site elevation

• Site slope

• Parcel size

• Land tenure

• Land use

• Land cover

• Protected areas

• Prohibited areas

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A significant amount of solar resource exists within

the study area.

In order to provide efficient and effective renewable

zones, solar generation should be located near to

the wind resource.

Approximately 40GW of solar has been identified

between Yass and Balranald and another 20GW

between Balranald and Casterton.

Study of new energy zones – solar resources

Unlocking Australia’s Renewable Energy Future

Reforms to enable the Renewable Energy Future

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TransGrid proposes several reforms that will be essential to a successful transition: 1. Connection of large-scale renewable generation in areas with abundant renewable

resources will be enabled by extension of the transmission network to those areas.

2. An increasing proportion of intermittent generation will be made possible by greater interregional transmission capacity and large-scale energy storage. This will allow sharing of geographically diverse resources and smoothing of the intermittent generation profile to fit the demand profile.

3. As existing synchronous generation is retired, there will be a need for new ancillary services to manage system stability in place of inherent synchronous inertia.

4. The regulatory framework will need to evolve to support the energy system of the future.

Unlocking Australia’s Renewable Energy Future Tony Meehan, Executive Manager, Regulation All-Energy Australia, 12 October 2017

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