TasNetworks Transformation Roadmap 2025 January 2018

Trusted by our customers to deliver today and create a better tomorrow TasNetworks Transformation Roadmap 2025 2 Purpose We deliver electricity to more than We’d like your 280,000 households, businesses and Our plans take all of our feedback and input organisations on mainland Tasmania, customers into consideration. and to electricity consumers in the rest Our planning is designed around of the National Electricity Market via We published a draft roadmap in June meeting your needs, so we the electricity link across Bass Strait. 2017 and have incorporated feedback encourage you to share your We also own, operate and maintain a we received from customers into this thoughts about this document telecommunications network to enable document. with us. the safe and effi cient operation of the electricity system. You can do this in many This document is to assist customers (referred to as “you”) engage in the ways including through one development of our plans for the future. of our engagement sessions, While most people are connected to the through the TasNetworks electricity distribution network, we also Customer Council, by email, connect large-scale electricity generators and industrial customers directly to the or by talking to us directly. transmission network.

Contact us: tasnetworks.com.au/customerengagement/ [email protected] 1800 060 399

TasNetworks Transformation Roadmap 2025 3 Introduction Electricity systems are radically changing. We must continue to increase our key programs, which are: Improvements in technology, more capabilities, to manage a more complex choice, and greater control over energy energy system and communicate with 1. Voice of the customer are driving this change. Globally, there’s a growing audience. New technologies 2. Network and operations productivity movement for cleaner energy, lower and access to data will help improve costs, and safe, reliable systems. our business productivity and will enable 3. Business productivity our people to learn new skills and 4. Electricity and telecoms network develop innovative ways of working. capability Our services, and the way we We’re already preparing for these 5. Predictable and sustainable pricing deliver them to you, need to changes. We’ve created a Roadmap, meet your changing needs while which sets out how we’ll tackle these 6. Enabling and harnessing new challenges to meet your needs in a technologies and services being as safe and effi cient as rapidly changing world. possible. 7. Workforce of the future On page 15 you’ll fi nd information on our We care about our customers and want to make their experience easier, and as you are one of our customers we want to understand your needs so we can develop services and pricing to refl ect the changing way electricity is used.

TasNetworks Transformation Roadmap 2025 4 A national context Australians are embracing new take together to improve our country’s Our wind resources and complementary technologies, taking control of their electricity system, so you get better hydro energy opportunities provide energy use and supporting action outcomes. the potential for Tasmania to be a on climate change. These shifts are signifi cant provider of dispatchable dramatically changing our electricity renewable energy for Australia. system, which, in turn, shapes our By 2050, Australia’s electricity Further interconnection with Victoria economy and lifestyle. sector is likely to transition to will be needed to fully realise these opportunities. Electricity network businesses are net zero carbon emissions. working together to understand the By then, 30% to 50% of Australia’s The outlook is that electricity network many ways Australia’s energy future electricity will be generated by businesses will: may unfold. people like you who will choose • Connect millions of customer-owned We partnered with the CSIRO to develop to invest in customer-owned generators and energy storage the Electricity Network Transformation electricity generation and storage systems to each other (often referred Roadmap. to as distributed energy resources or like solar, battery and other DER for short) It’s based on scenarios modelled to the technology. year 2050 and shows the steps we can • Enable customers to trade excess energy To support this energy industry • Integrate large-scale renewable transformation the Australian Energy energy into the grid and keep the Market Operator (AEMO) has developed electricity network secure. an Integrated System Plan to facilitate the effi cient development and connection of renewable energy zones across In the future, by harnessing the National Electricity Market (NEM). distributed energy resources Tasmania is identifi ed by AEMO as one of and avoiding duplication of Australia’s key renewable energy zones. investments, it’s predicted you can benefi t from signifi cant savings in your energy bills.

TasNetworks Transformation Roadmap 2025 5 There are many ways Australia’s energy analysed various scenarios to the year Electricity future may unfold. Some futures will 2050 and what we can expect if we produce better outcomes for you and achieve our key high-level goals. Network society than others. Source: Electricity Network Transformation Transformation The Australian Electricity Network Roadmap: Final Report Summary, Energy Roadmap Transformation Roadmap project has Networks Australia and CSIRO (April 2017)

TasNetworks Transformation Roadmap 2025 6 What could this mean for Tasmania and its future? Clean energy transition Customer choice and Safe, reliable and secure • While Tasmania has almost 100% control • People are paying more attention to (and placing more value on) energy renewable energy, this is not the case • We’ve asked Tasmanians and the and power system security following nationally. National and state-based majority are comfortable with the recent power system outages and climate change policies continue to current levels of reliability. You want challenges in the NEM. progress and it seems certain Australia lower prices and more choice of will keep investing to reduce carbon services. • We’re expecting a range of solutions emissions. The energy sector will play to emerge at varying costs. a big role in this by reducing emissions • People are already changing the in the energy market. way they use the electricity network. • We need to maintain overall network More people now produce and use performance and safety while helping • In Tasmania, people and businesses electricity. This means, more and you take up intermittent renewable will keep investing in small-scale more, our electricity distribution energy resources. renewable energy technologies like networks have to manage two-way solar. fl ows. These fl ows are more variable • There will also be investment in more than in the past, which makes it more large-scale renewable generation, challenging to keep things in balance. particularly new wind farm developments. • Tasmania’s Battery of the Nation proposal aims to integrate investment in new wind farms with secure dispatchable hydro energy that can benefi t Tasmania making us self-suffi cient for electricity, and benefi t the NEM with improved interconnection and power system security. • We are working with the Australian Renewable Energy Agency (ARENA) and AEMO on further analysis to progress a second transmission link with Victoria. TasNetworks Transformation Roadmap 2025 7 Capability Data management The economy • The industry is changing and our • Given the increasingly digital nature • Nationally, we’re manufacturing less. business will need to keep pace with of our energy services, data security • Economic growth in Tasmania has change to remain sustainable. and privacy issues will remain an been slow, except in a few sectors, important focus. • Our people will need to learn new like agribusiness, aquaculture and ways of working, develop new skills • We’ll need to use our data to both tourism. and adapt to more and more changes understand customer needs and • With competition increasing in many to keep providing the levels of service operate increasingly complex industries, many large businesses are you expect. electricity networks. focused on remaining viable. • In Tasmania, demand on our Keep electricity aff ordable electricity system peaked in 2008 and looks to stay fairly fl at over the next • Everybody wants aff ordable electricity. decade, so our network has capacity • Our population is ageing and many for present customers. are sensitive to increases in costs • Network upgrades may be needed to of living. support new Tasmanian renewable • Regulatory reforms will continue and energy investments and a second this will change the way electricity is interconnector as part of a national charged. More and more, pricing will plan. be based on how and when you use electricity. We want to ensure that all customers understand and can take advantage of our service and pricing off erings. • We compare our costs to other network businesses to make sure we keep improving our effi ciency.

TasNetworks Transformation Roadmap 2025 8 Technology • Greater competition • We need to meet new and increasing • The uptake of advanced meters compliance obligations. • People are investing in new energy that will enable you to access • Australia’s response to climate change technologies. more services from retailers and government environmental • Technologies such as solar panels, and information to help you policies impact the energy sector, electric vehicles, energy effi ciency, understand and manage your particularly the generation mix (such demand-side management and energy use. as the percentage of thermal and other grid technologies are changing • Electricity is a dangerous product, so renewable energy we use to produce system demand and network use. we need to ensure we manage it with electricity). • New technologies will improve everyone’s safety in mind. • Political change and uncertainty can business productivity. aff ect electricity pricing reforms. • Network visibility and management of solar and batteries will become more critical for safe and eff ective operation of the electricity network.

Regulatory reforms and incentives, and policies • Regulation has a big impact on our business. Through The Power of Choice reform program, the laws are changing to provide improved outcomes for you, including: • Pricing that refl ects the true cost of supplying electricity • Separating the competitive and regulated parts of network businesses to protect your long term interests

TasNetworks Transformation Roadmap 2025 9 Our Tasmanian grid in 2025

40,000 customers will have their own renewable 320,000 energy source such as solar panels customers connected to the grid

* up to 17,000 people will be driving an electric car 120,000 *AEMO insights: Electric Vehicles, Page 13, August 2016 customers with advanced meters 5,000 people will have a battery to store power

TasNetworks Transformation Roadmap 2025 10 Electricity used and generated in Tasmania in 2025

11,000GWH 63.8% Hydro 55% used by large industrial customers

20% 27% 4.4% used by small business customers

25% Wind Gas Turbine used by residential customers 4.1% 0.8% plus an additional 3,000 GWh exported Solar (PV) Other Embedded

TasNetworks Transformation Roadmap 2025 11 TasNetworks in 2025

We’ve used the national roadmap to To provide the best outcomes for all our help us design our Roadmap that will customers and our owners, we need take us to 2025. to keep delivering safe, reliable and competitive network services – both The key ideas in our Roadmap include regulated and unregulated – while also improving our traditional services as we delivering contemporary services that transition to potential new services. are within our capability. We’ll do this by Our main role will be all about operating a lean and effi cient business connecting, transferring and balancing and looking for growth opportunities energy. By doing these things, we’ll make within the rapidly evolving environment. sure we can continue to deliver your power – whether you’re using it or selling it to others.

As we approach 2025, our key challenge will be handling complex changes in the electricity industry to keep the system safe, stable and aff ordable.

TasNetworks Transformation Roadmap 2025 12 What a better tomorrow looks like Customer choice and People Zero Harm is our most important consideration for our people, control • Our people add value and make a positive diff erence to your outcomes. suppliers, customers and the • You have more choice and control public. So, we’ll make sure our of your energy use. • We build capability and partner with suppliers to provide services to equipment and processes are • We collaborate with you in our meet your changing needs. designed and well maintained network planning and investment process. • We’re dynamic, responsive and to keep people and the put our customers fi rst. environment as safe as possible. • You enjoy the benefi t of having a We’ll continue to invest in critical safe and reliable electricity network. infrastructure and the skills of our • We deliver high-quality services at people to enable us to stay on the lowest sustainable prices. top of our emergency and fault • Our people and systems make it easy responses. and eff ective for you to do business with us. • We anticipate and respond to your changing needs and market conditions. • We develop partnerships to provide new services, choice and competitive pricing.

Photo Jonathon Jones

TasNetworks Transformation Roadmap 2025 13 Keep electricity aff ordable Safe, reliable and secure • We show leadership and technical • Our electricity network enables you expertise through regular pilots and to connect new technologies and trials of customer-led technologies. renewable energy sources in a way that supports network reliability and • Our pricing structures refl ect the system security. costs of providing services and enable you to respond to reduce • We support a growing number of your electricity bills. micro-grids and help you get value from your investments in distributed • Tasmania’s natural energy advantage energy resources. John Kobylec to be is its world-class clean energy base. supplied Our expertise and our customer • We use real-time data to manage focus seeks to deliver aff ordable our network and improve unplanned energy; facilitate economic growth; outage response times. and maximise Tasmania’s renewable • We maximise the capability of the energy opportunities. existing network. • Our core network assets are in good condition and effi ciently maintained. • We manage our risks, including the impacts of climate change, bushfi res and extreme weather events. Outcomes of our eff orts • We underpin Tasmania’s economic growth by providing safe, reliable and effi cient electricity network and other complementary services like telecommunications. • We provide benefi t to the Tasmanian community by providing sustainable shareholder returns.

TasNetworks Transformation Roadmap 2025 14 Roadmap snapshot

There are many ‘business as usual’ complex. For instance, we’ll need activities to undertake to keep delivering more sophisticated management, our services to you. Meanwhile, we’re operating and protection schemes for preparing for our transition to the future. intermittent power generation and to enable new technologies. We’ve developed seven programs focused on creating a better tomorrow: 5. Predictable and sustainable pricing Because we want to deliver the lowest 1. Voice of the customer sustainable prices, we’ll transition We’ll keep investing in support our pricing to better refl ect the way systems that make it easy for you you produce and use electricity and to do business with us and help us provide you with greater choice and understand your needs, so that either control over your energy use. directly or through partnerships, we deliver services you value. 6. Enabling and harnessing new technologies and services 2. Network and operations productivity By investing in technology and We’ll improve how we deliver the fi eld customer service, we’ll be better works program, continue to seek cost able to host the technologies you’re savings and use productivity targets to embracing. We’ll aim to make drive our business. the most of your investments in 3. Business productivity distributed energy resources for the We’re transforming our business benefi t of all. support systems to reduce costs and 7. Workforce of the future add value. Our people are integral to delivering 4. Electricity and telecoms power to you. We’ll keep developing network capability knowledge and skills to continuously To meet your energy needs and improve systems and processes, ensure power system security, embrace new technologies and we’ll invest in the network to make provide you with great service. sure it stays in good condition, even while the system grows more

TasNetworks Transformation Roadmap 2025 15 Our programs in detail Voice of the customer We’re making a whole-of-business eff ort Key programs to make sure we earn your trust. To To underpin our eff orts. We will: achieve this, we want to work with you to ensure your experience is easy and • Prioritise our outage restoration eff ective. We’re putting better systems management system, so we can get in place to enable us to engage with your power back on faster you more eff ectively, such as building a • Continually improve our engagement, new customer relationship management particularly by gaining real-time system. insights We’ll be able to better identify groups • Use data and systems to better of people who have similar needs. understand and meet your needs This will help us customise solutions in the best possible way. • Make your experience easy when dealing with us by enabling you to We’ll enable and encourage you to do more via our website and online connect your homes and businesses, portals small and large-scale renewable energy • Smooth the way for new sources and new technologies to the connections electricity network in ways that support grid reliability. • Provide new services you value. We’ll balance your need for choice and convenience with our commitment to reliability and safety.

TasNetworks Transformation Roadmap 2025 16 Network and operations Key programs Business productivity productivity To underpin our operations and increase We’re transforming our business support productivity. We will: We’ve set productivity targets to keep systems to improve processes and improving our business and manage • Maintain our focus on Zero Harm reduce costs. Our transformation is risks. Being productive and innovative based around tools that bring together • Deliver our work program as people, processes and technology are vital steps to keeping us viable and eff ectively as possible ensure we provide safe, reliable and essential to running in a streamlined effi cient services. We’ll continue to • Improve our supply chain and effi cient way – such as asset understand the opportunities and trial management, network operations, • Deliver best-practice network new things with a view to achieving accounting and human resources. We operational response to restore further effi ciencies and continued have plans for future projects that’ll result power supply safely sustainable prices. in further effi ciencies. • Manage critical infrastructure and Key programs environmental impacts To underpin our business transformation. • Ensure our people, particularly in the We will: fi eld, have real-time data to enable them to be more eff ective in • Implement a technology strategy providing services to you and appropriate governance frameworks • Implement our excellence program across the business. • Focus on improving data and asset information, while managing cyber-security risks • Maintain contemporary market systems to meet evolving regulatory and compliance obligations for the National Electricity Market.

TasNetworks Transformation Roadmap 2025 17 Electricity and telecoms In the transmission network Key programs network capability we’ll concentrate on managing To help us maintain network capability. power system security and We will: Power system reliability and security integrating large-scale renewable • Prepare the network for more is critical to meeting ongoing energy distributed energy resources (such needs. So, we’ll invest in the network and energy sources. as solar panels, batteries and electric supporting telecommunications systems, vehicles) particularly as the system grows more Signifi cant growth in industries such complex, to make sure it remains fi t for as agriculture and aquaculture mean • Integrate large-scale renewable purpose. For instance, we’ll need more dramatically increased demand on energy sources like wind, solar, sophisticated management, operating regional areas of the distribution network pumped hydro, and maintain power and protection schemes for intermittent that has had historically weak inter- system security connection. This change, combined power generation and new technologies. • Improve systems for both asset with more distributed energy resources Where it’s safe, we’ll reduce the need for management and geospatial and reliability requirements in some new investments by driving our assets information harder, while ensuring they remain regions, means we need to reinforce resilient. our networks in a targeted and cost • Move to an advanced distribution eff ective way. We’ll improve our network management system To manage demand and balance the planning and forecasting techniques. This load on our network, we need to add will help us put the right network support • Leverage metering data and automated and real-time systems services in place to deliver the biggest distribution network intelligence and practices to our normal network possible benefi ts to you. • Improve our asset management data operations. We want to remain as one of the leading transmission network • Lead analysis of a second transmission operators while improving our link between Tasmania and Victoria. distribution network operating systems. We have long-term asset management information strategies to improve our geospatial information system. This will form the basis of an advanced distribution management system to help us deliver the services you choose, when you need them.

TasNetworks Transformation Roadmap 2025 18 Predictable and Key programs sustainable pricing To make sure we keep pricing predictable and sustainable. We will: We have submitted our fi rst combined transmission and distribution revenue • Trial technologies that’ll enable you proposal. This puts forward the to understand and control your investment plans (to 2025) that will help electricity use and electricity bill, and us achieve success and deliver for our help us develop better customer customers. Our proposal meets our information and pricing signals obligations while reducing network • Continue to implement pricing reform. costs. It includes gradual changes to network pricing arrangements. For you to reap the benefi ts from pricing reform, we must not only get the timing right but also bring the Tasmanian community with us. Changes, such as introducing advanced meters, will enable you to use technology to better understand and control your electricity use. Because we’re the main provider of transmission and distribution network services in Tasmania, the Australian Energy Regulator sets the amount of revenue we can earn from our customers each year. This protects you by making sure we deliver services at a fair cost. We want to provide you with the lowest sustainable prices, while maintaining or improving the safety, quality and reliability of our services.

TasNetworks Transformation Roadmap 2025 19 Enabling and harnessing Workforce of the future new technologies and We’re working towards understanding services what our business will look like in the future, so we can support our people We’ll take the lead on a program of and our key suppliers to develop the skills network and customer-led trials. they’ll need to deliver. A constructive This way, we can make the most of business culture that encourages opportunities by either taking on innovation will boost business proven technologies or developing new productivity and help us adapt to an products and services. To deliver these operating environment that is expected services eff ectively, we’ll identify and to continue changing. build appropriate strategic partnerships. Key programs Collaboration is a focus to ensure To address the changing role of the grid. we achieve good outcomes from We will: end-to-end processes. • Demonstrate and enable customer-led technologies Key programs • Introduce new products and services To ensure our culture and capability to suit changing needs. fl ourishes. We will: • Build organisational capability for a technology-enabled future • Continue to build a constructive business culture • Improve our ability to embrace change • Strive for business excellence in everything we do.

TasNetworks Transformation Roadmap 2025 20 Electricity Network Transformation in Tasmania

There are a range of possible futures, this table shows what 2025 might look like:

CLEAN ENERGY TRANSITION 2018 2025 Conventional hydro = 2,310MW Conventional hydro = 2,400MW Conventional hydro power

Wind = 308MW Wind = 1,100MW Large scale wind farms

Solar systems Solar (PV) = 116MW Solar (PV) = approx 215MW

Pumped hydro (Battery of the Pumped hydro = 0MW Pumped hydro = approx 300MW Nation)

Customers with solar

30,000 customers or (10.5%) 50,000 customers or (16%)

Batteries – installed capacity Approx 75MW Approx 10MW Equivalent capacity to Hydro’s Bastyan Power Station

Electric vehicles Estimate 200 4,000 - 14,000

TasNetworks Transformation Roadmap 2025 21 Electricity Network Transformation in Tasmania CUSTOMER CHOICE 2016 2025 AND CONTROL

Customers with advanced meters (that allow remote read) 1% 35-45%

New urban micro-grids 2 new signifi cant micro grids none (commercial property precinct, community precinct)

Connected customers 288,000 320,000

TasNetworks Transformation Roadmap 2025 22 Electricity Network Transformation in Tasmania LOWER BILLS FOR 2016 2025 VALUED SERVICES

Percentage of residential customers on improved tariff s 1% 1% - 20%

TasNetworks Transformation Roadmap 2025 23 Electricity Network Transformation in Tasmania

SAFE RELIABLE AND SECURE 2016 2025

Maximum demand (MW) (TAS) 1,747MW 1,850MW

Electricity Consumption (GWh) 10,109GWh 9,250 (low) – 11,000GWh (med) (TAS)

Portion of total consumption 5,668GWh = 58% 4,700GWh (low) by major industrial customers 50% – 6,144GWh 55%

Portion of peak demand by 43% major industrial customers 38-45%

Portion of total consumption 1,619GWh or 16% 2,004GWh or 18% by largest 250 distribution customers

Interconnectors Basslink Basslink + second interconnector assessment completed and maybe under construction/ commissioned

TasNetworks Transformation Roadmap 2025 24 TasNetworks Transformation Roadmap 2025 25 June 2017