The Power of Collaboration: Enabling the Energy Transition
Good afternoon,
I begin by acknowledging the Bunarong, Wadawurrung and Wurundjeri peoples of the Kulin Nation as the traditional custodians of these land and waters and pay my respects to Elders past and present.
Members of the Danish ministerial and business delegation, velkommen til Melbourne.
Distinguished guests, members of governments, Ladies and Gentlemen,
It is terrific to be here to speak on behalf of the Australian Energy Market Operator, AEMO, and I’d like to thank the Royal Danish Embassy for the invitation to join today’s forum.
As we gather here in Melbourne, the operators in AEMO’s control rooms are keeping a watchful eye over Australia’s electricity and gas systems.
Their job – and the systems they monitor – has changed dramatically in recent years.
Today, Australia is operating a secure and reliable grid with one of the highest levels of renewable energy contribution in the world.
Across Australia’s National Electricity Market – the NEM which covers the East Coast - renewable supply has doubled in the past five years, contributing more than forty per cent of all energy through 2025.
At times, the contribution of renewable energy rises to nearly 80% in the NEM and more than 90% in Western Australia’s separate grid.
Those of you who flew into Australia may have noticed that on average, every third house has solar panels on its roof.
That’s more than 4 million homes across the nation that have rooftop solar, and Australians are rapidly adding batteries to store and use that energy, with more than 250,000 consumer batteries installed over the last 9 months alone.
It’s a stunning democratisation of energy, with millions of Australians making individual decisions that are collectively reshaping how energy is produced, stored and used.
And these trends look set to continue, with AEMO’s draft Integrated System Plan projecting that by 2050, almost half of the NEM’s total capacity could come from consumer energy resources including rooftop solar, home batteries and electric vehicles.
A common challenge between Australia and Denmark, indeed around the world, is supporting consumers to allow their devices to respond to market signals, which will enable a lower cost power system for everyone.
That is easier said than done, with several technical challenges still to solve and the critical elements of building trust and a value proposition for consumers.
It’s just one of many challenges AEMO is working on with our partners across the energy transition.
Our brightest minds, working in close collaboration across the industry, across sectors and across borders, is essential to a successful energy transition.
I’m pleased to say there are many examples of Danish companies working hand-in-hand with Australians, showing what cross-country collaboration looks like on the ground and in the grid.
Wind turbine equipment and construction know how from Danish firm Vestas, is already delivering Australia’s next generation of renewable energy infrastructure.
Investment from Copenhagen Infrastructure Partners is unlocking new projects.
European Energy, founded in Denmark, has multiple projects here in Victoria.
I know there are many more examples … and investment flows both ways.
Macquarie Asset Management has acquired Danish firm Ziton, a leading offshore wind operations and maintenance business.
And Australian firm Worley is among other things, providing engineering services to Ørsted’s power generation assets.
AEMO has a unique perspective on these developments because we sit at the heart of Australia’s energy transition and we play several roles that enable investment.
We operate energy markets and systems in real time, and we work with networks, developers and OEMs to connect new generation and storage assets to the grid.
Our last quarterly connection report showed strong progress across every stage of the connection process from application approvals through to projects reaching full output.
In fact, the December quarter saw a record pipeline of 64 gigawatts of new projects working to connect to the NEM.
AEMO also has a role in planning the future of the NEM through our Integrated System Plan, or ISP.
Developed with industry, stakeholders and governments, the ISP is a roadmap for the least cost mix of generation, storage and transmission investments to meet customer needs and government policies out to 2050.
In this roadmap, two-thirds of the remaining coal fleet is expected to close by 2035 to meet government targets.
Investments are needed urgently to replace that energy.
The comprehensive inputs, modelling and consultation that went into the ISP collectively confirm that renewable energy, firmed with storage, backed up by gas and connected with upgraded networks remains the least-cost way forward for Australia.
And it needs significant and sustained investment.
To deliver the least-cost optimal development path by 2050, the NEM is expected to need a total of 120 GW of wind and grid-scale solar, 32 GW of grid-scale batteries, 14 GW of flexible gas and 12 GW of pumped hydro.
And a further 6,000 kilometres of new transmission lines, the backbone of the electricity system, will need to be added to the existing 44,000 kilometre network.
Over on the West Coast, AEMO’s role is a bit different, though we still manage electricity supply and demand in real time, just as we do here in the East.
We run the wholesale electricity market and WA’s capacity market, provide forecasting services and deliver reform.
There are some important differences too … the most significant being that the South West Interconnected System - the SWIS - is one of the most isolated large power systems in the world.
That isolation demands self-reliance and it has driven innovation, particularly evident in the integration of large-scale batteries.
These batteries soak up energy during the day when the daily sunshine hits an abundance of rooftop panels, and release that energy in the evening to help meet the evening peaks.
The SWIS is different from the NEM, and Australia’s energy system is different from Denmark’s.
Australia operates a vast, geographically dispersed system with millions of rooftop solar systems and hundreds of thousands of batteries.
Denmark operates a highly interconnected system over a smaller geography, dominated by wind power with strong links to neighbouring European grids.
So far, so different.
But we share common challenges, especially the technical challenge of operating secure power systems with very high levels of renewable energy.
AEMO works closely with Energinet in Denmark and other international peers to share knowledge, tackle obstacles and examine how to deploy innovations to keep the grid stable and secure so that it operates in the best interests of consumers.
Right now, we are working with Energinet on future tools that will be needed in our control rooms to safely operate a power system with very high levels of variable renewable energy.
It really is collaboration at the cutting-edge of technology, and it’s great for consumers in both countries, because it speeds up the innovation process and reduces costs compared with solving these problems on our own.
There is no escaping the fact that we are navigating the energy transition at a time of heightened global uncertainty.
Recent conflict in the Middle East has disrupted energy markets and reinforced how quickly international events can affect energy flows, prices and supply.
Against this backdrop, whatever the future holds, the challenge remains: to build and operate energy systems that are not only cleaner, but more resilient, and deliver secure and reliable energy at the least cost to consumers.
That is why trusted partnerships, across sectors and across borders, like the strategic partnership between Denmark and Australia, matter so much today.
The discussions this week are essential for building understanding and reinforcing the trusted relationships that will help both countries navigate the energy transition over the years ahead.
Mange tak og god tur.