Meet the Grid
The intricate system of transmission towers, substations, transformers, poles, wires and smart technology, along with all the people who maintain and manage the infrastructure, come together to create what’s known as ‘The Grid’, and it provides an important service to the community – and is likely to be the vital gateway to a smart and clean energy future. It supplies energy to virtually every household and business in Australia through over 917,676 kms of transmission and distribution lines.
Transmission networks are the high-voltage towers and lines that connect large power generators to the distribution network, or large-energy customers.
The distribution networks are the low-voltage power lines that supply electricity to homes and businesses. You will see their ‘poles and wires’ in your neighbourhood – or they may be underground.
Australia has a National Electricity Market which connects all States and Territories except Northern Territory and Western Australia. They operate as monopoly business regulated by the Australian Energy Regulator and the Australian Energy Market Commission.
Most electricity networks operate on a state by state basis. You can find the electricity networks in your state here.
The electricity system
The Australian electricity system is made up of electricity generators, transmission and distribution networks and retailers.
Traditionally, electricity has been created by gas or a coal-fired generators, which was then transported to homes and businesses via the electricity grid. Today, these generators include hydro-power, wind farms and large scale commercial solar farms. You might also be generating your own power through solar panels on your roof. New forms of renewable generation will also come on line in the future, including wave power.
Electricity is transported from where it is generated then sent to customers via a sophisticated network of transmission and distribution lines combined with smart technology and substations.
Electricity retailers manage your electricity contract and billing for the supply of electricity. They do this by purchasing electricity from generators, and paying usage fees to the network combined with their own fees. How much electricity a customer uses will determine their final bill.
Why is the electricity grid important for me?
Electricity is an essential service in our modern society supporting our economy and jobs, our health and wellbeing, and our education standards. Access to safe, reliable, affordable electricity is usually a key indicator of the living standards and economic well being of a country.
The electricity grid is sometimes called the world’s largest machine, operating to serve 10 million customers across Australia and managing electricity generation and delivery in real time.
For most of us, our electricity use is like breathing – we don’t need to think about it. However you will be interacting with the electricity grid every day. As the grid gets smarter and as our society reduces carbon emissions, the Grid is likely to be more important to the way we live, but you might not even notice.
Smart grids help network operators to remotely recognise and respond to problems so repair crews can respond to power outages faster.
New technologies and smart meters can help you manage your appliances remotely and give you access to near real-time information about their energy consumption therefore, being able to understand and control it better.
It will also support more and more distributed and renewable generation, which is good for the environment and good for customers as well.
In Australia grid provides high levels of network reliability (99.95%) across all networks. The transmission network is built with backup to avoid outages, except for rare extreme weather events. For example for the entire year (in 2012-13) outages on the transmission network across different states ranged from less than two minutes to a high of 21 minutes.
Most outages occur infrequently (less than 2 per customer per year on average) on the distribution network. In 2012-13 outages on the distribution network across the NEM averaged 200 -250 minutes, with significant differences between states
For some people this is critical as it is essential to their health that they have access to electricity. People with health conditions requiring continuous power supply for medical equipment rely heavily on the grid – and it’s important they let their retailer and network provider know about their needs.
Is energy from the Grid bad for the environment?
The Grid operates independently of the source of electricity generation and generation companies are not able to own or operate network infrastructure.
The Grid moves electricity from one point to another as efficiently, reliably, and safely as it can whether comes from coal, gas, wind, solar or hydro systems, or the electricity that is generated from solar panels on homes.
That’s why the electricity network has an important role to play in the transition to a clean energy future.
Total renewable energy production has increased 6% a year over the five years to 2012-13, with a 123% percent increase in solar electricity production and 18% growth in wind energy1. As more electricity is generated from renewables sources, the grid becomes more important by helping to manage the variation in output from weather-dependent sources like wind and solar.
1 Energy in Australia 2014 p59
What difference does my energy use make to the cost of the Grid?
It is not our smart phones that use the most electricity. It is the big things that matter – your air conditioner, refrigerator, washing machine, and even lightbulbs.
By using less energy at peak times and avoiding using lots of appliances at once, we can help reduce the need for new network infrastructure – and reduce electricity bills. There are also several schemes that offer rebates and loans to help finance such upgrades or install smarter appliances on specially designed tariffs.1
The choices you make when purchasing appliances can be good for your wallet and for the environment, as appliances get ‘smarter’ and become more efficient.
Increasingly, customers can take advantage of off-peak rates or controlled load tariffs, such as those available for customers with hot water systems, pumps and in floor heating. For instance, it has been estimated that switching from the standard tariff to the hot water tariff in Queensland could reduce a customer’s bill by 15 per cent.
This doesn’t just save you money in the short term, but the long-term too. A customer switching or reducing their load at peak times means that networks avoid having to build additional capacity to manage peak demand – and that means lower electricity bills.
What is peak demand?
The peak times of use on the network take place when more households are using electricity at the same time, in the same area. The demand for electricity is usually at its highest on weekday afternoons and evenings – when people arrive home and switch on their household appliances.
The peak demand for the year occurs when the demand for electricity spikes significantly in a particular area. This usually happens in unusually hot or cold weather, and only takes place a few times a year. Australian households are estimated to contribute the most to peak demand, with nearly 75% of households now using air-conditioning.
Blackouts have an enormous cost to our industry, businesses and community. In order to make sure electricity is available at these extreme peaks, network infrastructure is built to meet this capacity – even though it won’t always be needed.
Do Networks ‘gold plate’ poles and wires as a way to make money?
Rather than widespread over-building (or ‘gold plating’), Australian networks substantially underspent the capital investment allowances approved by the regulator.
Electricity networks are required to be built to supply electricity to households and businesses reliably at the times when it is needed most, usually when the temperatures are at their extremes. This forecast peak demand is a key factor that guides network investment in the poles and wires. The growth of solar panels, new building efficiency standards and home energy saving makes electricity demand forecasting challenging.
What energy network operators spend is carefully reviewed for efficiency by independent regulators such as the Australian Energy Regulator (part of the ACCC) through public, evidence-based, process that can take more than a year to finalise. Networks that overspend face a financial penalty, rather than making any financial gains.
The independent AEMC’s price trends report, which is released in December every year, recently found that residential electricity prices are generally flat or falling around Australia. The report confirmed this was expected to continue, reflecting substantially lower network spending.
Can electricity networks do what they want?
Network businesses are amongst the most strictly regulated businesses in the Australian economy – operating under rules managed by the Australian Energy Regulator and the Australian Energy Market Commission.
Every aspect of their service delivery is regulated to promote safe, reliable and efficient operation of networks for the long term interests of consumers.
The regulators that set allowed regulated revenues, and who approve the prices that networks can charge for regulated services, are legally obliged to ensure their decisions promote the long-term interests of consumer.
Will we need the Grid in the future if there is solar and batteries?
While there will be significant changes in technology and consumer choices, long term analysis by the CSIRO’s Future Grid Forum tells us that the Grid will continue to be important in providing efficient, reliable and safe supply.
The CSIRO–led report on the transformation of Australia’s electricity supply system to 2050, highlighted more opportunities for better network services to improve outcomes for customers.
What the Future Grid Forum told us is that in the centrally delivered electricity will continue to play a major role in the future. While a lower proportion of all electricity flows through the central grid as embedded generation, demand management and storage play a greater role, the grid still remains the primary source of supply in all scenarios. The Grid, which currently supplies just over 90% of supply, continues to supply over 80% of electricity until 2025. Even in the “Leaving the Grid” Scenario, a central electricity network still supplies approximately 70% of supply until 2050 and the network infrastructure required is roughly equivalent to the “Set and Forget” scenario.
As new technology and new markets provide a wider range of supply choices to consumers, the Grid will play a vital enabling role. In most cases in the Future Grid Forum report, even where customers have their own onsite generation and make use of storage, they still rely on the Grid for backup supply and other services. There is also likely to be the need for significant enabling and coordination functions in the ‘smart grid’ to support new customer services and new markets.
So while we will be using electricity differently and using different technology, energy networks will enable customer choices and support the safe and reliable supply of energy to the community.
How are electricity networks planning for the future
Australia’s energy networks are embracing the future – both in their own operations and in the services and support they provide their customers.
That’s why Energy Networks Australia has partnered with the CSIRO to continue the work of the Future Grid Forum, through the Electricity Network Transformation Roadmap. This will identify the transition pathway required to support better customer outcomes under a change of potential energy scenarios.
By doing this, electricity networks are seeking to position the electricity Grid and the whole supply chain for the future, to support the evolving needs of customers, innovate and develop new services that customers value.
Even while that takes place, the change is happening now. Electricity networks are pioneering the deployment of new technology onto the grid – including partnerships and research on battery use on the Grid. You can find out more at The Great Energy Quest: Case studies in Australian Electricity Storage
What are energy networks doing to support a clean energy future?
Australia’s energy networks are embracing renewable resources both in the direct support of network operations and through the connection of customer initiated embedded generation on the electricity distribution system.
The grid is rapidly connecting renewables and they are committed to enabling our integrated energy future. Australia leads the world in the uptake of grid-connected solar panels, with over 1.4 million solar panels installed on homes. Because our Grid is interconnected, there are important operational issues that have to be managed when connecting new technologies like solar panels and batteries to ensure they don’t increase costs or risk to other users.
Electricity network operators are also actively deploying electricity storage across the grid, and trialing solutions for the future – you can find out more at The Great Energy Quest: Case studies in Australian Electricity Storage
Energy networks also play a vital role in connecting large scale renewables to Australian homes. For example, Electranet in South Australia, is the largest connector of wind generation in Australia transporting renewables to South Australian and Victorian electricity customers. Transgrid in NSW has commenced consultation to progress the development of renewable energy hubs across New South Wales. In Western Australia Carnegie Wave Energy and Western Power have partnered to deliver the first microgrid project in the world that combines wave energy, solar (photovoltaic) energy, a desalination plant and energy storage and connects to a large electricity network.
Why are some electricity networks changing their tariffs?
The way we pay for electricity in Australia usually bears little relationship to the cost of the service. As our electricity use now varies a lot more in the number of appliances, when we use energy and if we have solar, this has created unfair and inefficient cross subsidies. The Australian Energy Market Commission estimates a customer using air-conditioning at peak times may unintentionally receive a cross subsidy of $700 per year paid for by other customers. Some solar customers may receive a cross subsidy of $120 per year.
Electricity Networks are introducing changes to the way in which residential and small business customers are charged for their electricity use, so that prices are fairer for all users and to signal the costs of meeting peak demand. The changes in tariffs will be revenue neutral for the network companies, this means they do not change the allowed revenue approved by the Australian Energy Regulator under the revenue cap arrangements.
The electricity network’s capacity may remain idle for most of the time, only being used on the hottest days or the coldest nights.
The changes to tariffs will ensure that consumers are charged based on the costs of their energy choices. This way, consumers that use more electricity outside of peak times will pay less.
In the longer term, consumers will respond to the price signals by reducing or shifting their load, and result in peak demand being lower than it would otherwise be.
How can I understand my electricity bill?
Most consumers can find information on their retail tariff on their electricity bill, however the detail of the network tariff are not usually shown on the customers bill.
Independent information to help consumers understand retail tariffs is provided on a range of government and authority websites including the Australian Government’sEnergy made Easy website Victorian Energy Compare.
Do energy networks care about energy efficiency?
Energy efficiency is important for the nation and for energy affordability.
Energy costs are an important factor in Australian businesses’ ability to compete internationally and in improving national productivity.
Addressing energy efficiency is also a critical factor in assisting vulnerable consumers at risk of financial stress and who have difficulty paying for their energy use.
A report on Customer Hardship by the Essential Services Commission in Victoria that customers on payment plans and in hardship programs use, on average, more than twice as much electricity as other customers in their postcode.
Electricity networks are built to supply electricity to households and businesses reliably at the times when it is needed most, which are the hottest days and the coldest nights.
Managing energy efficiency and demand can make a difference for energy customers now, and in the future.
Demand side management can play a crucial role in enabling networks to provide the best value solutions for their customers. Energy networks have been supportive of the changes to the rules that will foster innovative non-network options that benefit customers through reduced costs over time. There are real savings to be made, with the Australian Energy Market Commission’s Power of Choice review estimating the potential cost savings of peak demand reduction at between $4 to $11 billion over ten years.
How can I get help if I can’t pay my energy bills?
For most customers, energy remains a small proportion of the household budget at just 2%, however the lowest income households are likely to spend over 10% of their income on energy. For those customers experiencing financial difficulty there a number of options available to them.
In Australia’s system, retailers have the responsibility for customer bills, managing hardship and payment plans, and disconnections. If you are experiencing hardship, you should in the first instance contact your energy retailer to ask what options are available to you.
There are also a number of state based programs available to support energy customers who are experiencing hardship.
The research shows some vulnerable energy customers could benefit more by shopping around than from what they receive in government assistance, with potential savings up to 5 times the value of the government assistance.
A practical step you can take, with the potential to save hundreds of dollars on your electricity bill, is to use comparison websites to compare what your retailer is offering.
Networks are responsible for the poles and wires, and have an obligation to deliver an efficient network service at lowest cost to consumers. We recognise that there are a number of Australians experiencing problems with energy affordability, and that there is a need for a collaborative, national approach to this issue.
Networks through ENA are working closely with stakeholders to support a national review of energy assistance measures through the COAG Energy Council.
Who do I contact if I have a problem?
Your retailer will often be your first point of contact about your electricity connection or your bill. Their call centres respond to queries on customer bills and accounts.
Electricity Network operators are responsible for how the poles and wires connect to the customer, and the safe restoration of power in the event of an emergency. They operate call centres to respond when customers lose supply, during storms or fires, for example.
They also conduct routine maintenance of the network, which will sometimes require a planned outage, which they will warn you about in advance.
Now you can also get information on outages from Twitter, Facebook and the Networks’ websites.
Electricity network field staff are out in your community all the time to make sure the poles and wires are maintained properly.