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Here in Australia, we have all the natural resources necessary to lead a green global economy, but it is what we do now that matters. We have entered a critical decade where decisions today can make or break the success of our transition to a net zero.
Aside from the existential climate crisis, there’s an economic and societal imperative not just to decarbonise, but also to embrace Australia’s incredible potential as a renewable energy superpower.
This country’s economic success story has been built on its position as a world leader in the extraction and export of carbon-intensive natural resources. However, the world’s major economies — and Australia’s biggest export markets — are commiting to mid-century net zero targets. When considered alongside increasing threats to energy supply, there is a clear imperative for the country to rapidly transition to a clean energy export economy by harnessing its abundant solar and wind resources to decarbonise its own power sector. In parallel, we must electrify, as far as possible, the high carbon end-use sectors of transport, buildings and industry.
Globally, an unprecedented level of global capital is flowing toward decarbonisation opportunities and clean energy projects, with businesses’ net-zero commitments driving massive strategic and operational change.
Encouragingly, many sectors and organisations are moving to accelerate this transition. Beyond that shared end goal, though, is a scattered landscape of varying approaches, speeds and priorities. This complexity is exacerbated by two other significant factors: the disaggregated nature of Australia’s utilities value chain, and the complicated operational implications of intermittent renewable energy sources.
Australia has everything we need to become a renewable energy superpower, but for the very consumers who will become “prosumers” — playing a central role in providing critical Demand-side flexibility to the grid – the road ahead is complex and often confusing.
Earlier this year, I led a panel at Enlit Australia 2022, speaking with three energy leaders to learn how different organisations are tackling these challenges. While each had their own unique approach, there were commonalities – and those reveal some useful lessons for the utilities sector, as well as any leader working within a net-zero commitment.
The most foundational — and perhaps most challenging — theme of our discussion was the need to simplify the user experience. Across the energy value chain and end-use sectors, there are both longstanding and altogether new sources of complexity.
All three panellists agreed on the criticality of customer and community trust. Telstra Energy’s James Gerraty noted that, historically, there had been a ‘build it and they will come’ mentality in the energy industry — and that this was changing.
“Those days are over and we’re [becoming] very customer-led.”
Although Australia’s energy transition faces many hurdles, losing social licence could stop it dead.
Ryan Warburton, AGL’s General Manager, Commercial and Industrial Customers, put it simply: “Trust is imperative. How do we make the complex incredibly simple and form deep relationships in a dynamic and rapidly changing environment?”
Unmanaged complexity can lead to inconsistent experiences. And inconsistent experiences are rarely the best way to build trust.
Megan Fisher, CEO at EnergyLab, noted that the fragmented nature of the energy landscape automatically creates big disparities in customer experiences. That can include anything from confusing retail contracts to not knowing who to call when the power goes out. She noted that we can’t change the structure of the market, but we can take control of new opportunities to improve customer experience.
As Ryan pointed out, this opens opportunities for utility providers to drive solutions for customers.
“To [meet net-zero commitments], [C&I] organisations are looking to their energy companies, to both understand their current emissions profile as well as forward planning.”
In March 2022, the US Securities and Exchange Commission (SEC) proposed new rules to enhance and standardise climate-related disclosures for investors. This is a timely reminder that, instead of voluntary sustainability reporting, businesses — across all sectors — will face increasingly mandated ESG reporting standards. These same businesses, of course, are the C&I customers of energy companies, and will be expecting them to act as partners in provision of emissions and scenario planning insight.
The emerging Energy-as-a-Service market highlights a further opportunity for energy companies to move beyond commodity supply to true partnership, helping their customers — both business and residential — reduce capex and operational risk, as well as benefiting from the new revenue opportunities of demand-side flexibility and energy arbitrage.
While trust and simplification are critical for individual relationships, the need extends to broader relationships — namely, relationships with communities.
Whether it’s understanding the impact of Australia’s planned Renewables Energy Zones, or giving coal-dependent regions a roadmap to new green manufacturing opportunities, communities are the arbiters of the social license needed for a renewable transition and decarbonised economy.
Megan described a few examples of what that can look like, as well as what happens when we don’t prioritise community engagement.
“Community engagement… really needs to come from a genuine desire to listen, to learn, to act, to deliver on your promises.”
She pointed to one Victorian community’s objections to the Western Victorian Transmission Network Projects. Conversely, a community in Yackandandah, northeast Victoria, worked with providers and their Member of Parliament to build a community minigrid, resulting in 60% of households benefiting from solar power and energy trading, supported by an energy coaching service to ensure answers to customers’ questions.
Lastly, drawing on his company’s experience as an energy customer, James emphasised that much of this trust-building comes from putting a fair value exchange at the heart of your strategy.
Our discussion reiterated that a successful transition requires putting customers and communities at the centre of organisational strategies and business models
But, practically, what does that mean? And what does it mean when we know that so many organisations are facing different priorities and incentives?
There are no silver bullets to decarbonising an entire economy.Whole-of-system thinking and policy are absolutely critical in achieving broad electrification of end-use sectors. Despite the scale of the challenge, there are a number of concrete tactics for simplifying the complex, for building better experiences at every point in the value chain.
Digitalisation and automation can help to remove some of the manual effort for employees and reduce potentially confusing outcomes for customers. The right digital platforms and solutions can drive simplification and personalisation, helping to track outcomes across all stakeholder groups, and deliver the experiences that cultivate trust.
These capabilities are important for moving quickly, too. Organisations can no longer afford to depend on multi-year cycles or projects.
“Customers don’t wait around when they want something that might take a few years to deliver,” said James.
Platform flexibility is also critical – adding piecemeal or bolt-on applications to a bloated tech stack with siloed data sources only risks further complexity. This goes back to whole-of-system thinking, requiring digital platform architecture, integrated data, and an innovation culture that threads through entire organisations and industries.
There is increasing pressure on businesses across all sectors to be transparent with internal and external stakeholders. With purpose-built industry and carbon management platforms, utilities can rapidly integrate disparate data sources and deliver the insight which customers need for sophisticated decision-making, and accurate,comprehensive reporting to their stakeholders and regulators.
We know there’s a strong drive among businesses to make this transition a reality. We know we have the ingredients for a successful transition. Now’s the time to explore the tools and transformation strategies for getting us there, ones that prioritise trust and embed customer- and data-centricity as cornerstone of the new energy economy.
Looking for more insights within the utilities sector? Check out our Future of Utilities ebook.
