Smart Cities Expo World Forum The role of Smart Cities and Homes in the Australian National Energy Market Ian McLeod Smart Cities Expo World Forum 31 August 2017

Introduction: Ian McLeod Director: Smart Energy & Digital Asset Management Global Ambassador – Edison Electric Institute (USA) Chairman – Queensland Futures Institute – Energy Committee Advisory Board Member Technology – Smart Wires & Energy Thought Summit Academic – (Aust) Monash Energy Materials & Systems Institute & James Cook University Engineering Leadership Group: Agenda 2026 (Spatial) Edison Electric Institute 2015 International Edison Award for Innovation (spatial) Climate Alliance’s 2015 Business Innovation Award (Climate Change Response) EPRI Smart Grid Knowledge Transfer Engineers Australia – 2016 Innovation (Battery) Australian Institute of Management 2003 Regional Professional Manager of the Year Former Chief Executive Officer Ergon Energy Corporation Ltd (2007-16) Former Deputy Chairman/Director Energy Supply Association of Australia (2008-15)

Topics The role of Smart Cities and Homes in the Australian National Energy Market Liberating existing resources to fund a cleaner, secure and affordable future Creating an energy market player that is truly customer centric

What Happened on the 8th March 2017?

What Happened on the 8th March 2017? The Australian Prime Minister, Malcolm Turnbull, announced that the east coast of Australia was facing an energy crisis with potential for electricity shortfalls in 2018/19. On the 30th August 2017 Prime Minister gets agreement from retailers to write to 2 million residential customers on standard offers to inform them on availability of better deals

How Did We Get Here? A flat and dry continent The constitution Abundant energy resources – scarcity? An energy market – 1998 Policy disruption – Regulation, Standards, Targets, Technology Technology – disruptor or enabler

Disruption: Policy Network & Market Network Policy Disruption Energy Market Commences Climate Policy Disruption

Federal Policy & Strategy Disruption: Policy The Market vs Policy vs Subsidies Federal Policy & Strategy Carbon Reduction 5% off 2000 levels by 2020 25-28% off 2005 levels by 2030 Renewable Energy 33,000 GWH by 2020 Small Scale Renewable Energy Scheme Large Scale Renewable Energy Scheme National Energy Productivity Pan 40% increase by 2030 National Strategy On Energy Efficiency States relying on National Grid for security to maximise intermittent renewables Victoria will become net importer with Hazelwood closure Victoria legislates Renewable Target Vertical disaggregation & renewable policies & subsidies and deterministic supply standards drive inefficient deployment of capital Energy only market drives inefficient use of resources - Hydro 50% by 2030 50% by 2025 40% by 2025

Energy & Infrastructure productivity dropping Resource Underutilised

Round 2: The Utility Scale & Battery Race Will it be a knock out ? 4000MW of Utility Sale Renewable projects in progress – Investment $8B. Huge pipeline. The race is on but who will be the winner, and who pays Federal: Snowy Hydro Pumped Storage – 2000MW & Base load coal in North Queensland Victoria: $1.5B – Renewable tender South Australia: $550M – Our Energy Plan Queensland: $1.16B - Powering Queensland Plan

Inefficient Deployment Of Capital The Energy Supply Chain GDP? Supply Demand Inefficient & flat to contracting Inefficient & growing? = = Investment Industry disaggregation, lack of planning, broken markets, poor policy & subsidies result in inefficient deployment of capital

Inefficient Deployment Of Capital The Energy Supply Chain GDP? Supply Demand Inefficient & flat to contracting Inefficient & growing? = = storage Investment Industry disaggregation, lack of planning, broken markets, poor policy & subsidies result in inefficient deployment of capital

Customer Fight or Flight The Energy Supply Chain What happened to the economic rationalist Customers trust bank is diminishing Subsidies and substitution Industry not organised to deliver their core product Retail competition primarily on discounts. The real competition is happening in technology. It should “Make Things Better” Flight is increasing

Smart Cities: Liberating Resources

Technology Maturity & Importance Source: 4th Annual Municipal Utility Outlook: Zpryme July 2017 Many of the technologies associated with smart communities and cities are seen as less mature and not important to the industry

Tech Importance & Utility Understanding Source: 4th Annual Municipal Utility Outlook: Zpryme July 2017 Utilities don’t understand Smart City enabling technology well and don’t see it as important to their success

Utility Tech Deployment In Next 3 Years Source: 4th Annual Municipal Utility Outlook: Zpryme July 2017

Liberating existing resources for Smart Cities A working example: Ergon Energy 2010 - 15 Projects such as Townsville Solar Cities, Townsville Energy Sense Communities and Empower Mackay defer or avoid $660M & removed 139KVA off the peak. Spatial Intelligence and Virtual World technology reduced operating costs and improved customer service Regulated to require Demand Management Plans Volume & revenue now separated for all networks Savings from nexus of electricity, water and sewerage

Making Smart Cities Smart Spatial, Digital, Virtual & Augmented Reality & Artificial Intelligence, Predictive Analytics and Automation Spatial Services Works Program Condition Data Assets Energy Social Human Resources Built Environment Natural Environment Customer Fused, Processed & Analytics Green Canopy Energy Map Improved Risk Management & Insurance costs Extend Asset Life Cycles Increased return Outcomes Reduced vegetation costs Improved customer service Increased network resilience Reduced outages Community & Employee safety Improved regulatory outcomes Reduced costs

A Customer Centric Energy Market Participant Leveraging Resources To Monetise and Influence The Energy Market National Electricity Market Smart City Co-operative Energy Manager Townsville Ballarat Newcastle Adelaide Hobart Smart Cities

Thank You