The Power of Connections: Navigating Australia’s Grid Evolution

[Sarah] (0:00 - 1:16)

Welcome to Wired For Good, conversations for a better energy future. The podcast exploring how we can achieve a faster, fairer and more affordable energy transition. Brought to you by Ausgrid, this podcast aims to make the complex energy industry more accessible and address how the energy transition can unlock greater benefits for all Australians.

Join us as we bring together leaders and experts to tackle the big questions on what's needed to achieve an energy future we're proud to leave as a legacy for the next generation. Hello, I'm Sarah Aubrey and welcome to Wired For Good, conversations for a better energy future. Today, we've got a great conversation lined up about the growing importance of grid connections in Australia's energy future.

I'm thrilled to be joined by two incredible leaders with deep insights into this space. Fatima Bazzi, Head of Customer Connections at Ausgrid, who's at the forefront of ensuring our grid adapts to new demands. And Stuart Ayres, CEO of the Urban Development Institute of Australia, New South Wales, who brings a wealth of experience in planning and infrastructure development.

Fatima, Stuart, thank you very much for joining us. Welcome.

[Stuart] (1:17 - 1:18)

It's good to be here.

[Sarah] (1:19 - 2:21)

In today's episode, we're exploring the role of grid connections in supporting Australia's transition to a net zero future. As we electrify more parts of our economy, from transport to our homes and businesses, we're asking, how can we make sure our grid is ready to adapt and connect these new customers? There's a lot to consider like the rising demand for electricity, integrating renewable energy and future technologies like AI and EVs.

So, how do we balance these needs, minimise costs and make sure everything runs smoothly? Let's dig into how planning, innovation and smart connections will shape the future of Australia's energy grid. All right, before we dive into the details, I'd love to hear from both of you on this.

Let's start with big picture, okay? Australia's energy landscape is rapidly transforming. How do you see the role of grid connections evolving? I'll throw it out to both of you.

[Fatima] (2:22 - 3:05)

From my perspective, I think grid connections are the backbone to this transition. We're going to need efficient, timely and dependable connections to meet those net zero targets.

We've seen an unprecedented growth in renewables, EV charging, data centre, battery storage applications. And the grid will need to be set up in a way that it's both reliable and ready for the growth. And so, therefore, connections are foundational to all of these technologies.

We can advance these technologies, but if we don't have the connection to the grid, it's pretty redundant. What about you, Stuart?

[Stuart] (3:06 - 4:02)

I think the big focus has got to shift to the final mile. We hear a lot in the net zero and renewable energy space around the generation of electricity, and often that takes place a long way away from where people will actually utilise that electricity. Then that gets augmented by electricity that's generated very, very close to the source, like a solar panel on someone's roof.

And so you've got to blend these two types of generation into the same grid, and that's going to put a lot of pressure on what happens in the final mile towards someone's house, because ultimately where this demand is going to increase is in households as we move to more things inside the household being electrified. And as other forms of energy users start to get closer to where people live. So I can see more micro grids forming closer to where commerce, industry, and households are all co-located.

[Sarah] (4:02 - 4:06)

When you say micro grid, do you mean community batteries as well?

[Stuart] (4:06 - 4:40)

Yeah, so I think what we see, once again, this concept of where is it generated versus where it's used, and where you can generate energy, say from a renewable source during a period of time where energy is not in high demand, like during the day, and then people come home and then there's large amounts of demand at the household source. So how does a battery get integrated into that? How does rooftop solar fit in?

How does the energy retailer and then the supplier or the grid provider be able to work out when those demands are going to shift and change? And what does that mean for their technology?

[Sarah] (4:41 - 4:57)

So Fatima, grid connections can feel like a behind the scenes process that most people, they just don't think about it until they're affected by delays or costs. What's a common misconception about how grid connections work? And what would you want people to better understand?

[Fatima] (4:58 - 5:58)

I think the biggest misconception is people think connecting to the grid is seamless. So you plug in and you go, similar to an EV charger, but actually a connection to the grid is actually intricate, very technical process. It requires grid stability assessments, capacity analysis, and a lot of the time it requires new infrastructure to be built.

As a network provider, it's really key for us that we ensure reliability, public safety, and that new connections don't negatively impact on the existing customer base. And so when a connection comes through, we're considering all of those facets as we assess that application. What I think consumers and customers need to know is actually that early engagement with your network provider, that collaboration with developers, government bodies is really, really key at the front end to enable a smooth connection to the grid.

[Sarah] (5:59 - 6:10)

So if I was, I mean, previously we've talked about EV charging. You see EV chargers going in, they're being built, they're sitting there for a long time before they get connected. Is that what's happening?

[Fatima] (6:11 - 7:09)

No, this is generally way before they've actually started to build the infrastructure. This is the design phase. So the average design phase is 110 business days.

So Ausgrid's role is to facilitate the process. We have accredited services providers and they all have a part to play in that process. A lot of the time, developers and customers don't recognise that they need to be getting the ASP on very early on in the piece to understand the needs and requirements for their connection type.

So an EV charger will have different requirements to a data centre. A data centre build will take three to five years. While an EV charger, if you do the right things at the right time, it can be quite streamlined or it could take 24 months, depending on how much engagement you've done early on, where you want to locate that charger, what capacity is available on the network.

All of these factors will play in to the role of how quickly you can connect or not.

[Sarah] (7:09 - 7:18)

So Stuart, with solar EVs and AI driven data centres, they're continuing to expand. Where do you see the biggest challenges in planning for the future?

[Stuart] (7:19 - 9:08)

So, I think it's all about the capacity of the infrastructure to be able to supply what consumers are looking for. So, the best way I think to think about electricity is to think of it a bit like a water pipe. So, water is a constrained infrastructure.

If you can't get a pipe big enough to supply water, everyone who's there uses that water until that pipe's fully loaded, then you need another pipe or a bigger pipe to allow more people to come online. Electricity functions the same way. It's just, it's not a resource that you can see in the same way, but the cable has a capacity and you've got to be able to keep expanding the cable or expanding the amount of distribution that can take place in a local location.

So as every household that you might know in your local community, plus every business that you know in your local community, throw in maybe a data centre all come in and more and more of the people in each of those buildings want to use more energy. We have to retrofit the existing grid to account for the upgrading and use of electricity. So that puts a lot of challenges around the existing infrastructure and then the capacity to augment that to allow effectively more supply.

And then as you build more houses, because we know that we've got a chronic under supply of homes in Australia, you've got to be able to design in the way that infrastructure goes into either new communities or increasingly infill development where we're replacing say a small number of homes in a location with a larger number of apartments. That existing infrastructure was built around servicing 10 homes and now on that same location, we want to supply a hundred homes. We've got to be able to upgrade the infrastructure to keep pace.

And most people don't really care how that works. They just want to make sure that when they flick the switch or want to use the internet or access their wifi that the energy supply works.

[Sarah] (9:09 - 9:19)

So as more people get batteries and one third of Australian households has solar, how does that affect the grid in terms of people becoming more energy independent?

[Stuart] (9:19 - 9:59)

So, it's a really good question because a lot of the infrastructure that's built is around charging a cost to the consumer who uses that. So the distribution of that energy down our cable or down our pipe, if less of that is being utilised because more of it's being generated in-house, that disrupts the existing infrastructure. And so that creates some pricing and cost challenges as the different types of generation and distribution get integrated into the network.

So, I think this challenge will continue to exist as we move more to a completely net zero economy where the electrification of everything has some disruption as the different types of generation takes place.

[Sarah] (9:59 - 10:06)

Well, I've become a generator in myself in that I can feed into the grid at a price spike and put it into the grid and help support the grid that way.

[Stuart] (10:06 - 10:41)

Yeah, so households can often be a net generator because if they don't use as much energy as what they're producing, but then there are other users of energy in the economy that don't produce the amount of energy that they need to generate and that needs to be distributed to them. And those two things often coexist in exactly the same community, the same way as your house and your local coffee shop does or your house in an office block or an apartment building in a school. They're all generators of, they're all potential generators of electricity, but they're also users and demanders of it as well.

[Sarah] (10:42 - 11:00)

Sounds wildly complex. Fatima, as we look to the future, Ausgrid is navigating a lot of changes from new forms of generation to the rise of data centres. How are these trends shaping the way you think about connecting customers and what does that mean for the processes involved?

[Fatima] (11:01 - 12:33)

Data centres, data centres. It's a very hot topic at the moment. So we've definitely seen in the last 12 months an unprecedented growth in data centres, renewable generation and battery storage.

What that means for our grid is these types of technologies, they require reliable energy. They require a substantial amount of capacity. So just to give you a bit of an example or a comparison point, a data centre is between 50 to 200 megawatts, while an apartment block is generally 0.5 to 1. So when a data centre application comes in within a geographic area and the data centres, they have geographic hubs, it's not as simple as saying to the data centre developers, well, we have all of this great capacity available in these four areas. They need to be close to the water. They have their own requirements.

So, they have geographic hubs that work for them outside of just requiring the capacity. And so, when you consider all of these factors, these types of technologies require a substantial amount of electricity, uninterrupted energy, not something where we can be dynamic in the approach. When we've looked at this problem that we foresee coming to our network and we looked at other jurisdictions, we've looked at the UK.

The UK has a backlog of connection applications because they simply cannot meet the capacity requirements.

[Sarah] (12:33 - 12:34)

Is it going back?

[Fatima] (12:34 - 13:33)

Absolutely. In some of their hubs, five to 10 years, because they do not have the infrastructure available to support the requirements of these technologies. So at Ausgrid, we're looking at how do we put in place a connection prioritisation approach?

So, from a principal perspective, we've also worked from the perspective of first in, first serve. And we continue to work with that principle. What we are now doing, especially with these bigger technologies and these bigger developments, is we are putting in contractual milestones with these customers where we say to them, if you want to reserve the capacity, because the build of a data centre can take anything between three to five years, is we will provide you that capacity.

We will reserve you that capacity, but we will have specific milestones where we would like to see progress through the life of a project to ensure that you are actually going to connect to the grid. Because for that capacity that we've reserved for you, there's three or four other people who would like it.

[Sarah] (13:33 - 13:50)

I'm still thinking about how much data centre uses compared to an apartment block. That is shocking. Stuart, with electricity, sorry, I'm still dumbfounded by that one.

And I've seen so many of those data centres go up.

[Fatima]

Yep.

[Stuart] (13:51 - 16:10)

Well, it's a downstream impact, right? So we think about how we use energy. We sit on a computer.

We run our air conditioning. We run all of the electrified elements of our house. And increasingly, we're encouraging people to use more of it because we think that we can generate more electricity in more efficient, cheaper and environmentally friendly means.

But at the same time, we're generating and creating more data than we've ever created. And we need to store that data so that we can access it. And so that's changing the way in which we have to wire our grid to ensure that when that data needs to be accessed and can be instantaneously retrieved, we have to be able to access.

So we're not necessarily in a household or a business thinking about where our data is stored or how it's stored or what impact it's having on our life. Because when we access it, it's just there. But someone else has got to work out how the downstream impact of that retention and storage of data is maintained.

And the two big drawdowns that data centres have on infrastructure, as we probably traditionally think about it, is in electricity usage and water. And if you think about a house, a house doesn't really become a home until you can flush the toilet. So you've got to be access to the sewer.

You've got to be able to turn the tap on in your kitchen. So you've got to have access to water and the light switch has got to come on. So when you've got access to sewer, water and electricity, a house really becomes a home.

But the downstream impact of that on the infrastructure that we almost just take for granted is so profound at the moment that it's creating new challenges, particularly around conflicts around land usage, access to infrastructure. So who gets priority access? And then some of the things that Fatima was just talking about then, largely an opportunity cost.

If you're waiting for a high energy user to come online and you've provisioned that, then someone else is being denied access to that as well. So we try to provide the royal we of life. Politicians, government, infrastructure providers, businesses are all trying to provide the infrastructure just in time so the consumer doesn't have to pay for something before it's actually brought online.

[Fatima] (16:10 - 16:54)

Yeah, and I think the, from a totally technical perspective, we want the mix of the data centres and the generation and batteries on our grid. So the data centres, they give that nice stable usage on the grid. So it means that the stability of our grid is really good while people are using their batteries and solar.

And so that creates those peaks and troughs on the grid where you have a part of the grid that is very heavily focused on solar and generation and doesn't have that steady load on the grid. It means the stability is not as high. And so from a network provider perspective, we want that right mix on the grid to ensure that all of the technologies are stable at the same time.

[Sarah] (16:55 - 17:00)

Stuart, are developers thinking differently about energy connections today compared to, say, 10 years ago?

[Stuart] (17:01 - 18:30)

No doubt. And that's because the consumer, the person who's buying the house, the home, if it's an apartment, is thinking differently about how they use energy as well. So a sort of single detached dwelling is going through, well, definitely in New South Wales.

It's got a basic requirement to make sure that the house is as environmentally and energy efficient as possible. People are probably thinking about how they offset the cost of their own electricity consumption. So solar goes into that.

The electrification of vehicles means the way they think about their garage is changing. So that the garage, if they're in a location where they don't have a garage, so maybe they live in an apartment block or they live in a townhouse or a terrace building, then what sort of street side power capacity exists for recharging of electric vehicles? How can those be set up in more communal locations?

Supermarket car parks are now becoming the new refuelling stations. And so you're starting to see those changes. And we're also seeing those changes not just through the lens of our own household, but more from a community perspective, because we don't all need an EV charger in our garage.

That could be supplied through a community lens. It could be supplied through a cooperative arrangement between a developer or a land leaser. So you're starting to see those changes, but they're really driven by consumer behaviour.

[Sarah] (18:31 - 18:58)

And especially when it comes to EV charging, when you look at, as you said, supermarkets, you don't need it to be a big, super fast charger. If you're going to be somewhere for a period of time, you could have, as cars are getting faster and faster, even with their AC charging, we're getting cars with 22 kilowatt AC charging, which means if you were using a 22 kilowatt AC charge, you can add 120 kilometres roughly in just one hour. So that's your weekly top up.

Off you go. Do your shopping. You know, you're done.

[Stuart] (18:58 - 19:02)

I suspect that everything in life just needs to be faster. Like everyone...

[Sarah] (19:02 - 19:14)

I don't know that we need to be living that way, though. I don't know. OK, that's a whole conversation itself, but I don't know that we need to always be living that way.

I actually think driving an EV makes you do the opposite of that, because you do need to stop. You do need to take a bit more time.

[Fatima] (19:15 - 19:18)

But you have to think about your behaviour as well, so I could just stop at the petrol station.

[Sarah] (19:18 - 19:47)

I know, I actually quite like being forced to slow down a bit, take your time, have some food, have a chat. Anyway, that's an entire conversation itself. So planning for the future does sound like a bit of an art.

You want to build enough infrastructure, as you were saying, to enable future growth, but you don't want to overspend on things that might not be needed. So how do we strike the right balance? Stuart, I actually want to ask you how do we ensure we're investing in the right infrastructure without overdoing it?

[Stuart] (19:48 - 21:32)

So I think this is a significant challenge for government. They put some capacity or regulation in place that protects the consumer. Things like the Independent Pricing Regulator in New South Wales, or IPART, if you want to use the acronym, often sits there to ensure that the consumer is not overcharged for infrastructure that they're not going to benefit from.

I think from an electricity perspective, this is managed a little bit better than, say, water, where I find water infrastructure often arrives late and it would almost be better if the existing consumer base carried a little bit more risk on the provision of that infrastructure. But I see that as a bit of a canary in the coal mine for electricity. What we're going to see is higher demand is going to mean that there needs to be more certainty about when infrastructure arrives.

Traditionally, what we've tried to do is protect the consumer from that infrastructure cost and say, don't provide it early, provide it just in time. And that does insulate the consumer. But if it starts to arrive late or you start to have years of backlog, then I think the consumer is going to be a little bit less concerned about whether they're exposed to infrastructure running behind, because almost certainly that won't happen.

They'd be better off just guaranteeing the provision of infrastructure. So I think the consumer is going to have to absorb a little bit more risk in the provision of that infrastructure, because the cost of the pipe, the wire, the tower, whatever that might be, is ultimately being fed into the bill that you pay. And so if that tower got built and there wasn't a new set of customers, then the existing set has to pay that cost.

But I think the likelihood is that customers are going to come on very quickly and we're more likely to get backlogs than have infrastructure arrive early.

[Sarah] (21:33 - 21:40)

Right. It's kind of like going backwards, isn't it? As more people come off the gas network, I guess that becomes more expensive as well.

Is that right?

[Stuart] (21:41 - 22:27)

Well, yeah, as you tend to have as high as demand sits at a high level and you can supply to that demand, then price will regulate. But I suspect what will happen is if we don't provide infrastructure fast enough, then the price for electricity will go up because demand will outstrip supply. So being able to supply more infrastructure.

And so I think it's probably warranted that the consumer takes a little bit of the risk or more of the risk that that infrastructure is going to get built early. I think that's unlikely to happen because I think the demand for that infrastructure is going to exist there straight away. So the likelihood of it having to absorb additional costs for, say, an electricity cable that's not going to get used is highly unlikely.

[Sarah] (22:28 - 22:36)

Well, I hope the data centres are paying lots of money. Fatima, what lessons can we learn from the past to make sure we're building the right things at the right time?

[Fatima] (22:36 - 24:58)

So, this is exactly the point that Stuart's made. So in the past, you know, if we look back 10, 15 years ago, we invested heavily in infrastructure and it didn't necessarily meet the customer needs. So, we built more infrastructure than we needed at that point in time.

That led to higher network costs and higher customer bills. So today's approach is very much demand driven. So we are looking at investing in infrastructure where we know there is a customer need.

So there are a few examples. We've recently gone through a process with the regulator for the Wallumatta substation in Macquarie Park. So, data centres, multiple data centres want to connect into that hub.

There is simply just not enough capacity. We're building a new substation. It's a contingent project.

We've gone to the AER and said, we need this funding released to build these substations. They've asked for the evidence to release the funding. We've provided that evidence via their connection applications and their needs.

And we've made sure that there is a cost reflective tariff. So fully cost reflective tariff, meaning the data centres absorb that cost and it doesn't go out to the mums and dads. So in that instance, we've just run that process to ground.

We're going through the final stages, which is a great outcome for both the data centres and the capacity requirements for that region. We're working with the UDIA at the moment for Lochinvar, which is out in the Hunter region. There's a lot of housing coming out that way.

We're really pushing government to understand what are the planning milestones that they're working towards so we can ensure that the infrastructure is getting built ahead of the developers timelines. What we're seeing happen is because we don't understand those timelines really clearly, we can't start to build something that potentially could or could not happen, because if it doesn't happen, the cost of that infrastructure is just going to spread on the whole customer base and energy bills are obviously quite high at the moment. It's a key concern from a public perspective.

So we're trying to balance that need. So we're working quite closely with the UDIA to...

[Sarah]

What’s the UDIA?

[Stuart]

That's me.

[Fatima]

The UDIA. Sorry, the acronyms that I use.

[Stuart] (24:59 - 26:26)

It's about sequencing, Sarah. So we know that more homes need to be built. It's about identifying where those homes are going to be built and when.

So a lot of the people I represent through the UDIA, the Urban Development Institute of Australia, is at the development industry. So we are the people that build your home or contract the builders to build the homes and allow for greenfield estates to be built or apartment towers to be built. But sitting in behind that is all of the infrastructure that allows that house to become a home.

And that infrastructure is shared by both the home buyer and the person who's actually paying to build that home and then broadly the public. So most infrastructure is co-funded by the end user and then the broad base of the taxpayer. So ensure that that price is fair for both parties or doesn't disincentivise, say, the creation of a house in an environment where we're chronically undersupplied with homes.

We've got to get that sequencing right so that for people like Fatima and Ausgrid or the provision of a local road or a local school or a water pipe is sequenced at a time that makes sense so that that infrastructure can be built and then a house can be constructed and then a family or a person can move into an apartment or a house. And all those things have to line up relatively quickly because if they don't, then someone's going to pay a higher price unnecessarily.

[Fatima] (26:26 - 26:49)

Some of these infrastructure builds, they take 12 to 18 months. When you're building a substation, this is not just a simple we're going to go out and put a pole out on the road. And so I think there is a time lag that people just don't appreciate because people are like, all right, I have my DA, I'm ready to go.

We're like, yep, that's great. And now we need to augment the network and that will take another 12 months before you can plug in.

[Sarah] (26:50 - 27:04)

Wow. All right, I have a final question for you both. If you were to fast forward 10 or 20 years, what do you think will be the biggest difference in how our homes, our businesses and our cities connect to the grid?

I'll start with you, Stuart.

[Stuart] (27:05 - 28:06)

I think we'll see many, many more things that we use in life electrified. I think demand for electricity will be substantially higher, almost somewhat incomprehensible just how quickly we'll go up that curve. And I think that's going to put a lot of demand on the way in which we think about land uses.

So I think there's a land use conflict challenge that we're going to have to get a little bit more realistic about as a community. More of the, whether it be a data centre or the way in which electricity is distributed locally is going to come closer to where people live. And so the way we think about infrastructure in our communities, what it looks like, how it can be designed, how it can minimize its visual impact in a community, but still deliver all the things that we want.

So I see much, much more electricity usage and then a changing shape of the way our local communities look and feel to provision for that infrastructure closer to where we use it.

[Fatima] (28:07 - 28:57)

I think I'll echo that. What I foresee is we will definitely see that true two-way flow. So households, businesses, communities will be both consumers and producers, and they'll be leveraging all of the different technologies to have a true smart grid.

I don't believe our grid is 100% smart yet, and that's the investment we're going to need. And we'll see that through AI, through automation, we'll be able to do better demand management, forecasting, capacity analysis. Once we know, once we have those data points, where we're going to need those data centres to support us, we have better data points, we'll be able to respond much more quickly and ensure that the grid is smarter, which therefore means we'll get better outcomes.

[Sarah] (28:57 - 29:22)

That's great. Thank you so much. That's been really fascinating.

I'm sure our listeners have gained very valuable insights. Honestly, it sounds like a real art form. I take my hat off to you.

So to wrap things up, if you had the power to change just one thing right now to make sure the grid connections supported a more sustainable, reliable and affordable energy future for all, what would it be and why?

[Fatima] (29:25 - 30:28)

One thing, right now, that you could change. I think fundamentally, from my perspective, understanding the big C&I and government roadmaps is going to be...

[Sarah]

What’s C&I?

[Fatima]

Big commercial industrial customers.

Understanding their needs early on will really enable the electrification journey.

Overlay that with a very complex regulatory environment and this Wallamutta substation in Macquarie Park is a really great example of a way where network providers and the regulator are working together to meet that needs and seeing more and more of that. So it is that planning element and working together across the industry to drive the same outcome. If we do that very early on, we'll be able to do everything we need to do.

If we don't, we will continue to have these roadblocks and make the transition much more costly to both our consumers and all these businesses.

[Sarah] (30:28 - 30:29)

What about you, Stuart?

[Stuart] (30:30 - 31:26)

I'll take a very similar theme to Fatima and perhaps put a little bit of the development lens on it. But my one thing is not rezoning land without an infrastructure plan to go along with it. We know that we need to provide more land for housing, but rezoning land before we know how we're going to fund and provide the infrastructure creates an expectation that no one can meet.

And so I think as government looks to rezone more land, it needs to be prepared to plan for how the infrastructure is going to arrive and make sure they know how that's going to be funded. So whether that's going to be funded by the taxpayer or a combination of taxpayer and future customers, but be very, very focused on getting that sequencing right. If you don't do that, pretty much only two things can happen.

Either homes get built without access to infrastructure, which everyone hates, or no homes get built at all.

[Sarah] (31:27 - 32:10)

Well, thank you both, Fatima and Stuart. That's, again, fascinating. And thank you to our listeners for tuning in to Wired for Good, conversations for a better energy future.

It was great. Thanks for tuning in to this episode and for joining us throughout the series. We hope these conversations have sparked new ideas, challenged your thinking and deepened your understanding of Australia's energy transition.

While this marks the end of our current season, the journey to a better energy future is far from over. To keep an eye out for what's next, subscribe to Wired for Good on Spotify or Apple Podcasts. And for more on today's episode, visit wiredforgood.com.au