Transgrid's Plan for Energy Transformation in Australia

How the transmission system will enable Australia’s energy transformation

05 November 2021

As Australia moves to a Net Zero economy, surging demand for electricity, an influx of geographically diverse renewable energy generation, and an increasingly important role for energy storage will reshape our energy system, requiring a significant expansion of and investment in the transmission network.

Transgrid recently announced its Energy Vision for Australia’s electricity system, using detailed scenario modelling to assess the implications of emerging technologies and trends on the future development of the grid. The six scenarios, developed with independent experts – CSIRO, ClimateWorks Australia, and The Brattle Group – range from a future based on current trends to more optimistic scenarios where Australia hits the Paris Agreement’s aspirational 1.5⁰C decarbonisation target – and one where we become a global, clean energy superpower.

No matter which scenario you look at, the coming years will require wide-scale transformation. Our modelling shows that the role of the transmission system is crucial to enable this transformation, moving 73-95% of all electricity consumed in the NEM in 2050 across the range of future scenarios, including those with exceptionally high rooftop solar uptake.

It also shows the transition towards a clean energy future is unstoppable – in five out of the six scenarios, renewable energy supplies more than 70% of the NEM’s annual energy needs by 2035 and more than 90% by 2050.

What will happen as we transition to renewables?

Our modelling captures the potential evolution of the energy system over the coming three decades:

Decentralisation and a changing generation mix

Under all future scenarios, renewable energy firmed with pumped hydro and battery storage supplies the majority of Australia’s electricity.

An increasingly variable energy system

As the share of renewable energy increases, our electricity system will become more variable and more complicated to manage. Weather conditions (wind and sun) will drive distinct periods of energy over- and under-supply.

Exponential demand for storage

Whether provided by pumped hydro, grid batteries, virtual power plant batteries or vehicle-to-grid batteries, storage will be critical to manage a reliable supply from variable renewable energy. As we pass 90% renewable energy share, the requirement for storage increases exponentially.

Falling daytime electricity prices

The growth in rooftop and grid-scale solar PV is driving down the daytime price of electricity. Energy storage and gas will increasingly become the marginal price setters, with the spread of prices between day and night continuing to grow.

Surging demand for energy

As Australia’s transport, industry and building sectors electrify to reduce emissions, energy demand will surge, growing up to 70% by 2050 from electrification alone. If Australia becomes a ‘Clean energy superpower’ in the production and export of green hydrogen and metals, demand for electricity could increase six times by 2050.

What does this mean for the grid?

As more geographically dispersed renewable energy enters the system and the trajectory of energy demand climbs higher than ever, the NEM’s energy grid must evolve:

An expanded transmission backbone

The coming decades will see a transformation from centrally located coal generators to geographically diverse wind and solar farms. A significant number of renewable energy generators will connect to the electricity grid in regional Australia, in areas where the grid wasn’t designed to transmit bulk power to load centres. To coordinate this generation, five ‘Renewable Energy Zones’ have been announced by the NSW Government, bringing 12GW of renewable generation into NSW in the next eight years. Transmission infrastructure is essential to connect these generators and Renewable Energy Zones and to support energy sharing between states. Over the next 5-10 years, Transgrid will invest more than $11 billion to build the new interstate transmission interconnection needed so states can share low-cost, secure and reliable electricity. Modelling shows that interstate electricity transmission provides $20 billion in benefits to the electricity system by 2050.

Batteries and grid-forming inverters

New technologies, skills and services will be required to manage the electricity system of the future so it can operate securely when there is low or no synchronous generation. Continued innovations and demonstrations of grid-forming inverters could reshape how the electricity system is controlled and operated. Batteries, including ElectraNet’s ESCRI battery, Neoen’s Hornsdale battery, and (soon) Transgrid’s Wallgrove battery, are operating with synthetic inertia capabilities. Research is demonstrating that batteries with grid-forming inverters can actively improve system strength in weak areas of the grid.

Highly coordinated distribution of resources

The grid will need to be able to coordinate the charging and discharging of electric vehicles, requiring charging infrastructure and intelligent controls. As distributed energy resources and smart household devices proliferate, consumers will demand new ‘behind-the-meter energy services’ to help them optimise and manage their own energy supply and demand. People will use new apps to curb energy consumption by better controlling hot water heating, electric vehicle charging, and household devices. These platforms will also enable consumers in individual homes, buildings, or microgrid precincts to form geographic or virtual energy communities that can share and trade electricity. The electricity sector must evolve to meet consumer needs and use new distributed energy resource capabilities to keep the system stable.

Australia’s coming energy transformation will bring new technologies and infrastructure into our homes and our cities. Transgrid is working to build the new transmission infrastructure and services we need to support a smooth transition to renewables while continuing to deliver safe, reliable and cost-effective power to our customers.