Powering Western Sydney

This editorial is based on Guy Chalkley’s presentation at Business Western Sydney’s Utility Conference on Thursday 28 June 2024.

Customers are at the heart of what we do

At Endeavour Energy, our purpose is powering our communities for a brighter future. As the electricity distributor that’s responsible for powering the lives of 2.7 million people living and working in Greater Western Sydney, we own, operate and maintain the electricity network of ‘poles and wires’, underground cables, streetlights and substations that supply safe, reliable, sustainable and affordable electricity and are increasingly integrating renewables as our customers take up rooftop solar, and invest in electric vehicles and batteries.

Endeavour Energy’s operations are at the heart of the region’s unprecedented growth, supporting the delivery of Federal and State critical infrastructure projects including new housing, roads, rail, hospitals and international data centres, logistics centres connect and of course, the new Western Sydney International Airport opening in 2026.

Accelerating change and supporting customer energy choices

It’s a pivotal time for the industry, and our people and our customers – with more change expected in the next ten years than the last century.  Collaboration with our industry partners continues to be a critical lynchpin of how we work, so we can better serve our customers and be responsive to their current and future needs.

To put this in some perspective, one in every four residential customers currently own solar panels. By 2034, this is forecast to grow to one in every two households, while battery storage is predicted to increase to one in three homes. Over the next 20 years, 91 per cent of all customers in our network will have an electric vehicle.

Commercial and industrial customers are looking to take up industrial solar to cut costs, transition to renewables, and meet sustainability targets, but need the right pricing and incentives to make it worthwhile. Meanwhile Councils are making a rapid shift to ‘electrify everything’ as they drive their own sustainability and net zero goals and look to reduce costs for residents. We’re working with Councils, State and Federal government to roll out 44 community batteries, with our first three at Bungarribee, Shell Cove and Kiama, already fully subscribed.

Yet the most rapid change of all is coming from artificial intelligence (AI), cloud and edge computing and modern technologies, which together are driving an increasing demand profile as more and more data centres look to base themselves in Greater Western Sydney. To give you some sense of why it matters - data centres ramp up their operations far quicker than other large energy users and have intense energy consumption needs, consuming 10 to 50 times the energy per floor space of a typical commercial office building, to cool the thousands of servers they house, accounting for around 80 percent of the total data centre power load.

We already have 16 data centres in our distribution area and are seeing significant requests for capacity. If realised, this could add around 25 percent of our total network load within five-years and could triple our network need longer-term. This growth is beyond anything we have ever experienced, and requires new ways of working, including active collaboration with AEMO and TransGrid on network planning to identify how these long-term energy aspirations can be serviced to ensure Western Sydney continues to be an attractive place to do business.

We’re mindful that our customers are doing it tough

As a regulated business, every five years, we are required to submit a proposal to the national energy regulator outlining our plans to deliver power supply, investments in building and maintaining the network, customer service and proposed tariffs.

We have just spent more than three years engaging with over 2,000 stakeholders and during this time we consistently heard our customers tell us that they want us to take the necessary steps to prepare for an accelerated transition so they can benefit through smarter, more efficient technologies and greater choice and control of their energy usage. But they want this at least cost, not any cost.

For this reason, the Australian Energy Regulator (AER) approved our plans for the next five years focused on maintaining our costs and managing the impact on our customers’ bill. With such an ambitious growth profile – we know that any delay is a significant impost on delivery of critical State and Federal growth projects.

To this end, we are very conscious of the ongoing impact of protected industrial action currently being taken by the Electrical Trades Union (ETU) over pay and conditions being offered for an Endeavour Energy enterprise agreement.

We acknowledge that union members have a legal right to take action to have their voice heard as part of the bargaining process. But this action is significantly impacting many customers, including housing and construction, with costs and delays continuing to escalate. Protected industrial action started in February and includes work bans, such as refusing to switch the electrical network off to allow work to safely occur or refusing to use or unlock devices or locking systems. This means requests for planned outages and electricity network maintenance are repeatedly cancelled, and often with only 15-30 minutes notice.

Our top priority during this time, continues to be the safety of our employees, customers and communities. For this reason, we have an agreed safety commitment with the Fair Work Commission and Unions to ensure there is no imminent risk to life or threats to personal safety due to this action, and we’re working carefully to assess, monitor and allocate resources to minimise the impact of any industrial action, where we can.

That said, we’re extremely concerned that the uncertainty of work combined with financial impacts has already resulted in some qualified and highly experienced trades people and businesses leaving the industry – when we can least afford it. We are hopeful that the ETU and Professionals Australia will participate in a Fair Work Commission process to assist with the ongoing dispute, which they have declined twice now.

There is a way forward if people are prepared turn up, respect the process and have customers, communities and employee and employer interests in mind.

Recently there has been a bit of media coverage on the devastating impact of the ETU’s protected industrial action on growth projects, with more than 1600 new home sites frozen due to union actions. We deeply value our workforce and are committed to providing a safe, productive workplace that recognises the contribution our people make to our operations. We also encourage the Unions to look beyond exaggerated pay claims and help protect job and working conditions needed to ensure NSW and particularly Western Sydney continues as NSW’s economic powerhouse.

We are working hard to manage and minimise the impact on customers, electrical contractors and developers where we can, but this requires a willingness by the unions to think about those businesses that are hurting because of union action and the kind of jobs and industry they would like see their children and grandchildren to work in.

Transmission vs Distribution – not one or the other but BOTH

You may have heard the saying that “there is no transition without transmission.” While we agree transmission is critical, it’s becoming very clear that it will be “a very expensive transition with only transmission.”

To that end, we have identified what supports our customers’ ambition of accelerating the energy transition at least cost; and believe we can help the NSW Government towards achieving the NSW renewable target at a faster and cheaper rate.

Let me be clear – we’re not suggesting its distribution OR transmission. You need both.

We’re already playing our part to help fast track ~350km of new transmission, as part of a consortium called ACEREZ, that together with our partners Acciona and Cobra, has signed a commitment deed with the NSW Government to finance, plan, build and operate the first Renewable Energy Zone in Central West Orana in NSW.

On top of this, we have identified three to four gigawatts of potential renewables capacity (including solar, wind, commercial and industrial rooftop solar) that can be connected at the high voltage and medium voltage levels within our network area by 2030 without significant investments into network augmentation and/or storage using a ‘distribution renewable energy zone’ - or DREZ for short.

This renewables capacity can generate around five terawatt hours annually, assuming the lower bound of three gigawatt capacity. Put simply, this equates to 30 percent of Endeavour Energy's customers' annual electricity demand - well beyond of our residential demand. We have identified Eastern Creek as a pilot site to test the DREZ model because industrial users are the 'missing middle’ - an untapped potential of renewable energy. Eastern Creek beneficiaries include residential areas covering Werrington, St Marys, Plumpton and Claremont Meadows. Data centres and freight/logistics in the precinct also provide supporting test cases for energy consumption.

A commercial model co-developed with Boston Consulting Group indicates that up to 200 megawatt could be generated from the Eastern Creek site. While this seems relatively low, rolling out the model across the franchise area could generate up to 1.4GW from commercial and industrial rooftop solar and 1.5 gigawatt from solar farms on easily accessible land including ‘agrisolar’, carparks and other dual use lands.

We are collaborating with other NSW distribution networks and together, with Government support, believe we can potentially produce several gigawatts of extra renewable capacity in total. We also believe we can do this faster and cheaper than transmission REZs which could de-risk and provide valuable back up to the aging Eraring Power Station. It is critical that distribution networks act to deliver the energy transition quickly and cost effectively for customers whilst providing the appropriate controls for grid security.

We are also collaborating with State and Federal policymakers to modernise and align regulatory frameworks with the rapid pace of change in the industry. This involves transitioning customers to smart metering, flexible connections agreements and cost-reflective tariffs. This means we need to help customers make the transition with simple and clear communication. It also means new business models for us. As the energy industry changes, we are changing too. Our traditional network model is shifting fast toa distribution system operator, where we manage two-way energy flows, support the take-up of EVs and update AEMO’s Integrated System Plan (ISP) network planning framework.

Customers are driving this transition, and our goal is to work with them and for them to ensure this is done at least cost, not at any cost.

I’m excited about the immense challenges and opportunities ahead in working together. For more than 130 years, Endeavour Energy has been with you, powering the economic growth and prosperity of this thriving region. I am extending an invitation to you to come with us as we enter one the most exciting – and ambitious – phases of Endeavour Energy’s history.

Guy Chalkley is Endeavour Energy’s Chief Executive Officer. He has a wealth of international, financial and operational experience gained across a diverse range of sectors operating and residing in Australia, Asia, Africa, Europe, and North and South America.

His outstanding leadership qualities and experience see him well positioned in leading Endeavour Energy as it continues its customer-centric journey, meets record growth across Greater Western Sydney, adapts to rapid technological change, and continues to deliver safe and reliable essential electricity services to 2.7 million people every day.