Melbourne Energy Institute

ANNUAL REPORT 2016 © The University of .

Enquiries for reprinting information contained in this publication should be made through the Editor, Melbourne Energy Institute The University of Melbourne 3010 t: +61 3 8344 3519 e: [email protected]

Editors: Susannah Powell Caitlin McGrane

Views expressed are not necessarily endorsed or approved by the University. The information in this publication was correct at the time of printing. The University reserves the right to make changes as appropriate.

For further information visit: www.energy.unimelb.edu.au Melbourne Energy Institute – Annual Report 2016 3

Contents

Background...... 3

Message from the incoming Director...... 4

Major Initiatives...... 5 Achieving Cost-Effective Abatement from Australian Generation...... 5 Australian German College for Climate and Energy Transitions...... 6 Centre for Market Design...... 7 Energy Geophysics Cluster...... 8 Geothermal Program...... 10 Energy Transitions...... 12

Our People...... 13 Capacity Building through early career researchers...... 13

New Energy Research Training Program Scholarships...... 15

Public Engagement...... 18 Fugitive Emissions report...... 18 Winds of change: An analysis of recent changes in the South Australian electricity market...... 19 Victorian Geothermal Assessment Report...... 20 Energy Hack 2016...... 21 Energy Futures Seminar Series...... 22

Governance...... 22 Advisory Board...... 23 Institute Staff...... 23

New Funding Initiatives...... 24

Expenditure...... 25 4 Melbourne Energy Institute – Annual Report 2016

Background

Changes within the energy The increasing recognition that our dead ends, we must strive for a deeper energy systems need to be more understanding of the environmental, sector have been rapid, sustainable, while also providing reliable social and economic impacts of these as new technologies, and affordable electricity supply to changes. This requires research that business models and policy more people presents a daunting transcends traditional lines of enquiry challenge. The prospect that rising and links the many different ways of settings emerge. Our energy greenhouse gas concentrations are thinking about how the environment system is undergoing a contributing to unprecedented and and contemporary societies work and transformation, and this potentially irreversible prosper. makes redesigning our energy systems The Melbourne Energy Institute presents new opportunities one of the most important challenges therefore engages researchers across and challenges that are of our time. many disciplines at the University of crucial for national and Changes within the energy sector have Melbourne. It is one of a family of five global policy considerations. been rapid since the Institute was Institutes that together comprise the launched in 2010. To help ensure that Melbourne Research Institutes. the emerging pathways do not lead to Melbourne Energy Institute – Annual Report 2016 5

Message from the incoming Director

I started as Director of I first take this opportunity to sincerely Of course, we must also never forget thank Professor Mike Sandiford for the impacts of technology and industry the Melbourne Energy his leadership of MEI to date, and for on our environment and on our society. Institute in September 2016. his generosity during the handover Indeed, understanding the manifold It is indeed an honour to process. Mike leaves big shoes to fill. connections between different technologies, the environment and As I settle into the Directorship, this commence in this role society will be a feature of much of our period of transition will be a mix of the research that we hope will underpin familiar and of the new. Our outstanding better decision making and policy. public lecture series will continue; the need for open and rigorous debate Professor Michael Brear on energy remains acute. As an Director, Melbourne Energy Institute engineer, it is of no surprise that I will also emphasise the importance of technology and industry partnerships in our future research. 6 Melbourne Energy Institute – Annual Report 2016

Major initiatives

ACHIEVING COST-EFFECTIVE ABATEMENT FROM AUSTRALIAN ELECTRICITY GENERATION

By implementing a mix of Achieving deep greenhouse emissions an emission reduction scenario of abatement from Australia’s National 80- 90% by 2050 is economically wind, solar concentrating Electricity Market (NEM) by 2050 feasible without appearing to place thermal energy and requires changes to the way energy unacceptable technical demands on combined cycle natural is produced and consumed. Under the power system. However, achieving funding from the Australian Renewable 100% is considerably gas turbines, an emission Energy Agency (ARENA), a team at more costly due to the required reduction scenario of the University of Melbourne with overcapacity, and nuclear is observed 80-90% by 2050 is partners at UNSW identified least cost to become an increasingly competitive technology pathways for achieving form of generation as emissions targets economically feasible. emissions reductions in the NEM. become more challenging. Extensions of the project conducted in 2016 have The project involved undertaking investigated the role of distributed large-scale optimisations that consider FACULTIES: rooftop PV and storage, and showed the impact of current and future that under some scenarios significant Science and Engineering fossil plants, with and without Carbon uptake of these technologies is already Capture and Storage (CCS), renewable LEAD ACADEMICS: economic without subsidy. plants and nuclear as well as the Dr Roger Dargaville, Prof Michael performance of an extended Renewable Encouragingly, this study has shown Brear Energy Target (RET). Electricity market that that optimal pathways up for 2030 modelling was also undertaken to are much the same for policy settings PARTNERS: determine the impacts of increased with a carbon price or with an extended The University of New South renewable energy on the wholesale RET. This suggests that current policy Wales, Australian Energy price volatility. settings are not leading us along a sub- Market Operator, GE, Bureau optimal abatement pathway, although This research revealed that by of Meteorology and Australian beyond 2030, policy must directly implementing a mix of wind, solar and Renewable Energy Agency focus on emissions rather than only combined cycle turbines, renewables.

As the penetration of wind and solar PV increases, the volatility in the wholesale market is likely to increase. Some argue that high volatility makes for investment uncertainty and that other types of energy markets should be adopted. Part of this study addressed the question of whether an energy only market, as we currently have, will continue to be suitable, or whether a capacity market might also be needed. The results suggest that the need for a capacity market strongly depends on the generation mix, and that if storage and dispatchable renewables are deployed then capacity markets are unlikely to be required. AUSTRALIAN GERMAN COLLEGE FOR CLIMATE AND ENERGY TRANSITIONS

The College addresses Smarter Grid’. This year had a number of highlights including having a strong FACULTIES: some of the most pressing presence at international negotiations issues facing society such as the UN Climate Change Science, Arts, Law, Engineering, Veterinary and Agricultural today — climate change Conference, COP22; UN Conference on Housing and Sustainable Urban Sciences and energy transitions — Development, Habitat III; and the G20 LEAD ACADEMICS: and strives to deliver the Energy Policy Workshop. The College’s research capability that will engagement with the public debate A/Prof Malte Meinhausen, continues with topical seminars, Prof Ross Garnaut, Prof Robin bring society towards a low- round table meetings and workshops Batterham, Prof Mike Sandiford, emissions future. with industry and governmental Prof Robyn Eckersley, Prof John stakeholders, and a media presence Wiseman, Prof Brendan Gleeson, The Australian-German Climate and in key discussions surrounding Prof David Karoly, Dr Roger Energy College, established in 2013 with climate change and energy transition Dargaville, Prof Robyn Schofield, a consortium of universities in Germany issues. The College’s seminar series Prof Richard Eckard, Dr Sebastian and with support from the Institute, continue to provide PhD candidates Thomas, Prof Peter Christoff, Prof is a post graduate PhD research and the general public with access to Peter Rayner program that seeks to address the insights from renowned national and PARTNERS: interdisciplinary and global challenges international speakers across a range posed by climate change and energy of fields, from within and outside of Potsdam Institute for Climate transitions. academia. Impact Research, Karlsruhe Institute of Technology, University The College provides a collaborative In 2016, the College strengthened of Muenster, Mercator Research cohort-based environment in which collaborations with German partners Institute on Global Commons research is undertaken across through hosting a number of Potsdam and Climate Change, University four key research clusters: energy Institute for Climate Impact Research of Bayreuth, Humboldt University, systems, climate systems, climate (PIK) staff and students, plus hosting Technical University of Berlin, impacts, and emission pathways and and organising a range of activities for University of Potsdam mitigation strategies. Topics are varied the Director of the Mercator Research in scope, covering the integration of Institute on Global Commons and renewable energy into existing energy Climate Change (MCC). infrastructure, to evaluating societal stability during internally and externally It also developed a new collaboration induced transitions. with Karlsruhe Institute of Technology (KIT) with a joint PhD program, and has 2016 was a busy and successful commenced working with Postdam for the College; the curriculum was Institute for Climate Impact Research expanded, with 26 PhD candidates (PIK), University of Muenster, and and 6 Associates now active across Mercator Research Institute on Global a broad range of climate and energy Commons and Climate Change (MCC), topics. The College has now published on a joint project. eighteen articles in refereed journals, these examine pertinent topics such as For more information please visit: ‘Flexible Electricity Tariffs: Power and www.climate-energy-college.net Energy Prices Signals Designed for a 8 Melbourne Energy Institute – Annual Report 2016

Major initiatives

CENTRE FOR MARKET DESIGN

The Centre’s Energy Advances in digital and information “The energy industry has long theorised technology are radically changing the on the impact of smart meters and Markets Program looks at way people buy and consume energy related technologies. This research market challenges around through helping households make aims to deliver concrete insights to next generation electricity better informed electricity usage benefit both consumers and the energy decisions. Under an ARC linkage grant industry” – Yann Burden CEO BillCap with the ambition of ‘Technology Transforming Markets: The program is an example of the way establishing the University Large-Scale Field Experiments in partnerships between the University, Electricity Use’ the Energy Markers as an internationally Private Sector and government create Program is analysing this trend. recognised hub for energy the opportunity for research that economics research. The project has drawn on a partnership is of high value for policy-makers with a start-up software company and academics alike. Through the BillCap to provide the first published Energy Markets Program the MEI is insights into the behaviour of helping the University develop the FACULTY: consumers in a competitive and smart- critical research capacity required Business and Economics meter enabled retail electricity market. to become an international leader in energy and resource economics. The In 2016, the project grew with LEAD ACADEMICS: MEI has supported two key strategic the establishment of two new appointments, in 2014 the MEI provided Prof John Freebairn, Dr Leslie engagements, a large Victorian support for Dr Leslie Martin’s position, Martin, Dr David Byrne, A/Prof electricity retailer with >250,000 and in 2015 this support continued Renaud Coulomb customers and another with South East with the appointment of Dr Renaud Water (with >750,000 customers). The Coulomb; Dr Coulomb’s research program is now running four innovative focuses on issues of optimal taxation of large-scale field experiments that inform resource-extracting firms, representing policy-relevant questions surrounding an invaluable addition to the team. flexible electricity pricing and solar panel adoption and electricity use.

A CONSORTIUM OF Melbourne Energy Institute – Annual Report 2016 9

ENERGY GEOPHYSICS CLUSTER

The Melbourne Energy to underpin the testing of new concepts requires much greater sophistication. for understanding basin structures, and The Hubs new approaches will help Institute has worked with in the riving sustainable use of basin address a variety of issues in the The Faculty of Science resources. The Australian Research context of basin structures and and the Melbourne School Council (ARC) Research Hub for evolution for sustainable deep and Basin Geodynamics and Evolution of shallow earth resource extraction and of Engineering to build on Sedimentary Systems (Basin Genesis management. the University’s existing Hub) connects ‘Big Data’ analysis and The Australian Geophysical Observing high-performance computing in an capabilities in the field of System open innovation framework. The hub geoscience to position the will fuse data into 5D basis models AuScope’s Australian Geophysical University of Melbourne as a (space and time with uncertainty Observing System was funded through world leader in knowledge of estimates) by coupling the evolution the Education Investment Fund (EIF3) of mantle flow, crustal deformation, and designed to augment existing the earth’s accessible crusts erosion and sedimentary processes NCRIS AuScope infrastructure with new and resource sediments. using open source modelling tools. capability that focuses particularly on emerging geophysical energy issues. It This energy geophysics research Sedimentary Basins capture the built the integrated infrastructure that cluster includes the Basin Genesis Hub, Earth’s sea level, climate history, and facilitates maximum scientific return the Australian Geophysical Observing variation of the surface topography from the massive geo-engineering System and the Peter Cook Centre for due to geodynamic, tectonic ,and projects that are now being considered, Carbon Capture and Storage capability surface processes. They host a range such as deep geothermal drilling — and is unified by the goal of deepening of conventional and unconventional in effect building the platform for understanding how Australia’s energy hydrocarbon resources of critical treating these as mega geophysical needs can be met sustainably. importance for the continued science experiments. AuScope AGOS functioning of modern society. We infrastructure enables collection of The Basin Genesis Hub increasingly rely on the same basins for new baseline data including surface This project is developing quantitative, oil, gas, geothermal energy, and water, geospatial and subsurface imaging cutting edge data analysis techniques and managing these competing uses and monitoring data, thereby providing for better long-term management of crustal services, particularly in Australia’s energy-rich sedimentary basins.

Peter Cook Centre for Carbon and Capture Research The Peter Cook Centre for Carbon and Capture Research research underpins the development of enhanced technologies for carbon capture and storage in Australia. Working closely with our partners the Cooperative Research Centre for Greenhouse Gas Technologies (CO2CRC), Rio Tinto and the State Government of Victoria’s Department of State Development, Business and Innovation (DSDBI) the Centre’s outputs will deliver the next generation of skills and research and development services in CCS research. 10 Melbourne Energy Institute – Annual Report 2016

Major initiatives

GEOTHERMAL PROGRAM

Direct Geothermal This research is showing that FACULTIES: Direct geothermal systems provide an substituting common heating and Engineering and Science exciting way for homes and businesses cooling systems with well designed and to reduce their own energy bills and installed geothermal systems in both LEAD ACADEMICS: carbon footprint through using shallow residential and industrial areas can Dr Guillermo Narsilio and Prof Ian ground as a heat source and sink for significantly reduce overall energy bills, Johnson (Victorian Government heating and cooling buildings. particularly in rural Victoria. Project); Dr Guillermo Narsilio, A/ Direct geothermal systems use In collaboration with partners, Prof Lu Aye (ARC LP project); Dr shallow ground as a heat source and Dr Narsilio from the Department A Bidarmaghz and Dr M Disfani sign for heating and cooling buildings of Infrastructure Engineering is (MMRA project) using ground heat exchangers and developing new models for studying PARTNERS: heat pumps. They provide an exciting the performance of ground heat way for homes and businesses to exchangers, including energy piles, State Government of Victoria; reduce their own energy bills and energy walls (basements), and other Geotechnical Engineering; Direct carbon footprint. The project is geo-structures to improve the design Energy; Golder Associates; The trialling a number of different types and efficiency of geothermal systems University of Cambridge; The of instrumented, and vertical and for cooling and heating buildings. University of Southampton; horizontal ground loop systems, The trial is supported by the Victorian KAIST; Korea University; The including energy piles (building Government and the Australian University of California, San foundations fitted with HDPE piping) Research Council, under the Future Diego; Ground Source Systems and borehole installations to depths of Fellowship scheme. Pty Ltd; and The University of 30 to 50 m. California, Berkeley. Together with industry partners Ground Source Systems Pty Ltd and Golder Associates Pty Ltd, the University of Melbourne is exploring new applications of the technology within the rural industries, that are typically deprived of easy access to natural gas, such as heating and cooling chicken brooder houses. This work is supported by the Australian Research Council, under Linkage Project scheme.

Finally, Dr Narsilio’s team engaged with the Melbourne Metro Rail Authority on collaborative studies on the technical feasibility of utilising part of the geostructures to be built for the $10 billion Melbourne Metro Project as ground heat exchangers, and thus providing operational and GHG emission savings for geothermal heating and cooling of the new metro stations and adjacent buildings. Melbourne Energy Institute – Annual Report 2016 11

ENERGY TRANSITIONS

Social and policy science for climate Adoption of renewables in Victoria’s which they are exploring how a social change mitigation agricultural industry: MEI Seed Fund licence to operate is defined and how In 2016, MEI and the Melbourne In partnership with DEDJTR Victoria the concept has affected experiences School of Government (MSoG) worked and working with MEI researchers of Australia’s Coal Seam Gas (CSG) collaboratively to seed a growing and Masters students from the UoM industry. The project’s early stages research program aimed at providing Office for Environment, this project is captured almost 1 million tweets robust social and policy science to exploring the extent to which Victoria’s about CSG from Twitter and the team support climate change mitigation. agricultural community has adopted are busy analysing the new forms of Led by Dr Sara Bice, MSoG Director or is willing to adopt renewable energy. activism and policy platforms that have of Research Translation and Westpac The project involves scenario building emerged as a result. This year, they are Bicentennial Foundation Research of three potential renewable energy interviewing people in the field about Fellow, the project team has expanded situations and tests the ways in which their experiences with the industry. to welcome Ms Colette Einfeld, Dr Kate agriculturalists’ risk profiles and a The team remains busy on a number Neely and Ms Susan Wright, along with social licence to operate for renewables of other projects that are contributing a small team of dedicated research influences their uptake. to the efforts of MEI to understand assistants. MSoG Labs: Energy transitions how social risks and community engagement influence understanding Sara and her team are undertaking a In 2016, MSoG’s Research Translation and experiences of decarbonisation, range of projects focussed on social team launched the MSoG Labs program energy transitions and related climate licence to operate, responsibility in aimed at bringing together the best change mitigation measures. This mining and extractives industries, and research from across the University includes a 12-month investigation energy transitions and community to tackle society’s big challenges. The into community engagement for one engagement. Key projects include: Energy Transitions lab, supported by of Australia’s largest infrastructure MEI, involved researchers from Arts, Managing the space beneath: projects. Evidence based policy for Engineering, Science, Medicine, FBE underground resources management. and Law working together to map Researchers contributing to this the key influences affecting energy program of work in 2016 include: Ruby An offshoot of MEI’s Sedimentary transitions and decarbonisation in the Bell, Martin Bortz, Colette Einfeld, Basin Management Initiative, this social state of Victoria. The lab was supported Chen Li, Kirsty O’Connell, Sebastian science project is investigating how by participation of the Victorian O’Connell, Catherine Smith and Susan the general public and policy makers Government (DEDJTR) and the LaTrobe Wright. understand and take decisions about City Council. In 2017, we will be working underground resources use. This year, with researchers to further define and the team are mapping the key policies tackle the five priority research areas and regulations that apply to Australia’s Want to know more? Check out identified through the MSoG Labs underground resources. Fieldwork with Sara’s 2016 book Responsible process. policy makers will commence later Mining or get active and join this year as the team explores how we Social licence to operate and the International Association conceptualise those resources that we Australia’s coal seam gas industry for Impact Assessment (http://www.iaia.org), cannot see and how different policy Professors Fiona Haines (School of for which Sara was recently areas affect one-another. Social and Political Sciences and MEI named President-Elect. Advisory Board member) and Helen Sullivan (Director, ANU Crawford School of Government) and the MSoG-based team are also now just over halfway through an ARC Discovery project in 12 Melbourne Energy Institute – Annual Report 2016

Our people

CAPACITY BUILDING THROUGH EARLY CAREER RESEARCHERS

Pierluigi Mancarella Julie Dickinson Pierluigi Mancarella is Chair Professor of Electrical Power Dr Julie Dickinson has been with RPS for the last 9 years Systems at the University of Melbourne, Australia, and consulting to the petroleum sector, originally as a Senior Professor of Smart Energy Systems at the University of Sedimentologist and then as Geohazards Manager. During Manchester, UK. Pierluigi has been involved in and led, in the this time she has been involved with numerous consulting last 10 years, some 50 research projects and consultancy and projects ranging from core logging, reservoir characterisation professional activities in, Australia, the UK, and internationally, and paleogeography reconstruction through to shallow drilling in the area of techno-economics and business cases for hazards and seabed characterisation for ground engineering smart grid technologies, risk and resilience assessment of in basins across Africa, Europe and SE Asia. Julie is currently future networks, integrated multi-energy systems modelling, working on the Distribution and Geometry of Latrobe Group and energy infrastructure investment under uncertainty. intraformational seals, Basin funded by ANLEC, which aims to provide a detailed understanding of the Nando Ochoa stratigraphy and structure of the Latrobe Group, with particular Luis (Nando) Ochoa is Professor of Smart Grids and Power emphasis on the seal lithologies (coal and shale) within the Systems at The University of Melbourne, Australia and unit. The project will provide important information for the assessment of CO storage sites in near- and off-shore areas part-time Professor of Smart Grids at The University of 2 Manchester, UK. His expertise in network integration of low of the Gippsland Basin. Consequently, this project will provide carbon technologies and his extensive portfolio of industrial a facies model for the Latrobe Group coals and sands that and academic projects has led to over 130 publications may be applied to other coal successions globally. and 50 technical reports, one patent filed by Psymetrix Ltd (now part of General Electric), a Scopus h-index of 18, and Stephan Matthai 1,500+ citations. Prof Ochoa is an IEEE Power and Energy Professor Stephan K. Matthäi is best known for his Society (PES) Distinguished Lecturer and has also several contributions to the understanding of multiphase flow in leadership roles within IEEE PES, including Member-At-Large fractured porous media and multidisciplinary field- and of the Governing Board and Editorial Board Member of the numerical simulation studies. He also is the originator of the IEEE Power and Energy Magazine. He is also an IEEE Senior Complex System’s Modeling Platform (CSMP++), a hybrid Member since 2012. In 2010, Prof Ochoa also undertook an finite element - finite volume tool for the solution of multi- industrial secondment with the Edinburgh-based company physics problems in geometrically complex models, enjoying Psymetrix Ltd. He is also a Visiting Professor at UNICAMP a growing international user community, both in academia (Brazil) since 2014. and the O&G industry. Stephan conducted postdoctoral research on hydrocarbon systems in the Gulf of Mexico basin at Cornell University, and fluid flow in fractured rock masses at Stanford University. At the Swiss ETH Zürich, he implemented subsurface fluid convection and heat transfer models. Melbourne Energy Institute – Annual Report 2016 13

New energy research training program scholarships

In 2016 The Melbourne Energy Institute was delighted to announce three PhD scholarships for students with an interest in energy research from disciplines including Science, Engineering, Arts and Economics. The Melbourne Energy Institute Scholarships are offered for the following theme areas: energy and resource economics, community engagement, and energy systems.

Energy & the Energy Environment systems

Energy technology

Energy, Community & the Region 14 Melbourne Energy Institute – Annual Report 2016

Public engagement

FUGITIVE EMISSIONS REPORT

Given the vast growth If natural gas is to provide maximum Canadian Prime Minister Justin Trudeau net climate benefit versus coal, the and former U.S. President Barack potential of unconventional release of methane to the Earth’s Obama agreeing to new initiatives to oil and gas in Australia, atmosphere (both intentional and reduce methane emissions. unintentional) must be held to less this review addresses the This report found that: no baseline than about one per cent of total methane-emission studies were current understanding of gas production. In this context, completed prior to the commencement methane emissions by the the commitment of the Australian of the Australian CSG-LNG industry; CSG-LNG industry to limit methane industry, referencing recent there is significant uncertainty emissions to no more than 0.1% of total about methane-emission estimates developments in overseas gas production is commendable. jurisdictions. reported by oil and gas producers In the Australian Government’s most- to the Australian government, and by the Australian government to the The report called for fugitive recent United Nations greenhouse-gas United Nations; Australian methane- emissions to be independently inventory it reported that methane emission reporting methodologies rely verified by a regulatory body emissions from the oil and gas industry to a significant extent on assumed funded by a levy on the industry. amounted to 0.5% of gas production. Meanwhile in the United States emissions factors rather than direct Methane is a powerful greenhouse unconventional gas developments have measurement; the assumptions used gas, 86 times more powerful than reported fugitive emissions of 2 to 17%. to estimate methane emissions include carbon dioxide when its atmospheric some that are out-dated, and some warming impacts are considered over These measurements have led the U.S. that lack demonstrated relevance to a 20-year time period, and 34 times Environmental Protection Agency (EPA) the Australian unconventional oil and more powerful over a 100-year time to increase official estimates of methane gas industry; there has as yet been no period. Reducing methane emissions emissions from the total ‘upstream’ oil comprehensive, rigorous, independently is therefore an important part of any and gas production sector by 134%, verifiable audit of gas emissions; if strategy to avoid dangerous climate and to revise its estimates of emissions methane emissions from unconventional change, as agreed by world leaders at from gas production to 1.4% of total oil and gas production are being the December 2015 Paris conference. production. As a result, U.S. regulators significantly underreported, this could are placing increasing scrutiny on have a large impact on Australia’s unconventional methane emissions, with national greenhouse accounts. Melbourne Energy Institute – Annual Report 2016 15

WINDS OF CHANGE: AN ANALYSIS OF RECENT CHANGES IN THE SOUTH AUSTRALIAN ELECTRICITY MARKET

The authors of this report note that the South Australia currently The addition of renewable generation South Australian experience provides a capacity and its heightened impact has one of the highest salutary forewarning of the havoc that on merit order dispatch system has penetrations of wind can ensue from lack of coordinated contributed to downward pressure on system planning in times of transition. generation in any liberalised wholesale prices, while also generating It bears on the question of disorderly net large-scale Renewable Energy Target energy-only market, exit that will be faced in all markets (RET) certificates to the annual value of and therefore provides requiring substantial decarbonisation, about $120 million. In so doing, it has in part because of the scale of the fossil important lessons for other contributed to decisions to close brown power stations that are displaced. jurisdictions contemplating coal generators, and increased South similar transitions. The context for the developments Australian dependence on imports and, in the South Australian energy in times of low wind output, gas. As one of the largest stations on the National South Australia set new records set for market can be understood in terms Electricity Market (NEM) the closure of extreme wholesale electricity pricing in of several intersecting factors, Northern in May, 2016 has June and July 2016. These events are of including the increasing penetration tightened the demand-supply settings particular pertinence to understanding of renewable energy generation, the with consequent increases in wholesale transitional issues associated with rapid and unprecedented changes in prices. decarbonisition of the electricity sector the gas market, the level of market concentration, and the degree of with renewable technologies. Since the closure of Northern, South system-scale planning. Australia is the most concentrated region in the NEM, and this was further exacerbated by the earlier decision taken by to effectively mothball its Pelican Point Power Station and on-sell its contracted supply into the gas market.

The policies that have opened up of the east coast gas market to international gas pricing have had disproportionate impact in South Australia, and flag tensions between national gas market developments and the RET.

While there are no specific recommendations in this report, the authors suggest particular attention should be given to the following: potential for market power to be concentrated as a consequence of transitional arrangements; diversification of low emission generation and storage portfolios; alignment of national energy policy across related sectors, specifically the intersection of gas export markets and the RET; and coordinated system planning of transitional arrangements. 16 Melbourne Energy Institute – Annual Report 2016

Public engagement

VICTORIAN GEOTHERMAL ASSESSMENT REPORT

The use of geothermal While these same drivers apply in and quality of the water itself, for Victoria, Victoria’s unique geological direct use in a range of industrial energy is increasing around and economics conditions require applications. Identification of economic the world in order to achieve a unique consideration of how geothermal resources is currently CO2 emissions reduction, geothermal energy might cost- limited by inadequate knowledge of effectively address these drivers. The aquifer temperature and distribution, reduce energy costs and Victorian Geothermal Assessment sustainable extraction rates, and a lack improve energy security and Report, published in 2016, explores in of public awareness of the possibilities. detail the opportunities and challenges energy efficiency. The Victorian climate everywhere lends of geothermal energy production itself to the deployment of energy methods in Victoria. efficient ground source heat pumps FACULTY: Geothermal energy already represents (GSHPs). GSHPs provide efficient an economic resource for direct heat in heating in winter and cooling in Science a number of Victorian locations. Warm summer, with additional environmental LEAD ACADEMIC: aquifers are known to underlie many and public health benefits. Further, parts of the state including the Bellarine geothermal electrical power could Prof Mike Sandiford, Prof Rachel and Mornington Peninsulas, the be cost competitive with established Webster Werribee Plains, and the . technologies at scale, even though initial pilot and demonstration PARTNERS: There is strong technical potential for geothermal projects might not be harvesting the heat in these aquifers, Geological Survey of Victoria cost competitive. The cost, risk and with little impact on the quantity time frame for demonstrating the technology in Victoria, as well as elsewhere in Australia, have so far not proved attractive to investment markets. However, unlike in other parts of Australia, geothermal also represents an opportunity to ‘repurpose’ existing energy infrastructure and expertise. For example, skilled power industry personnel, drilling contractors, transmission lines and large energy consumers are all co-located in the Latrobe Valley, which is also one of the most prospective locations for geothermal energy in the state.

More information about the landscape and future landscape of geothermal technology in Victoria, can be found in the Victorian Geothermal Assessment Report 2016 on the MEI website available for free download. Melbourne Energy Institute – Annual Report 2016 17

ENERGY HACK 2016

The inaugural Energy “We will use recent breakthroughs in machine learning techniques to dig PANEL OF JUDGES Hack, co-hosted by the into data and improve individual and Melbourne Energy Institute collective intelligence on energy usage.” Michael Brear, and brought Director Melbourne Energy The event harnessed the consumer- Institute together over a hundred driven revolution kicking off in the participants from a variety global electricity sector. The rapid Georgia Beattie, changes in the way energy is produced, CEO StartUp Victoria of backgrounds, ages and stored and used, including the Dominique Fisher, exponential uptake of solar + battery skill-sets to participate in a Director LaunchVic weekend full of innovation, systems. It explored solutions for the Virtual Power Plant, Community Power, Chris Murphy, technology and community- Electric Vehicles and what to do with Strategic Advisor Powershop driven power. the massive amounts of data Australia’s Australia power system produces. Jason Bagg, Team Plant Lovers won the Hack for We are proud to thank the event The Myer Family Investments their idea using machine learning to sponsors: Bank of Australia, City of improve energy efficiency. Paul Breen, Melbourne, Victoria State Government, Founder Powershop Australia and “Existing energy services don’t use the Deloitte Digital, Citipower PowerCor, Serial Entrepreneur full potential of big data to provide deep Future Assembly, Allens Linklaters, New insights for consumers,” said Plant Audio, BOMBA and Yerring Station. Lovers co-founder Zahra Ghafoori. 18 Melbourne Energy Institute – Annual Report 2016

Public engagement

ENERGY FUTURES SEMINAR SERIES

In 2016, the Institute Run in partnership with policy think- of Gas in Australia, a new paradigm; tank Grattan Institute, the Energy Climate Policy 2016, Has Labor got continued to bring together Futures Seminar Series presents a it right this time around featuring industry, government and range of views on the immediate and Mark Butler MP Shadow Minister academia around critical long-term impacts of changes in energy for Environment Climate Change policy and the development of novel and Water; Potential Pathways to energy research issues energy technology solutions. Decarbonisation; and the National through our Energy Futures Electricity Market Review Preliminary In 2016, the Energy Futures Seminars Report launched by Chief Scientist Seminar Series. were sold-out throughout the year Dr Alan Finkel. exploring topics including: the Future Melbourne Energy Institute – Annual Report 2016 19

Governance

The Institute reports to the Deputy Vice The Director and Executive Committee Science, Business and Economics and Chancellor of Research, Professor Jim govern the Institute and the Advisory Architecture, Building and Planning. McCluskey, for research matters and Board provides strategic advice. A small team of professional the Faculty of Science Dean, Professor The Executive Committee is made staff support the Director in the Karen Day, for operational matters. up of senior academics from the implementation of Institute activities. Faculties of Engineering, Law Arts,

Jim McCluskey Karen Day Deputy Vice Dean of Faculty Chancellor of Research of Science

Advisory Board Institute Staff Executive Committee Andrew Stock (Chair) Michael Brear Paul Webley Alec Broers Director Ralf Haese George Gerdan Roger Dargaville David Jones Michelle Groves Deputy Director Lee Carol Godden Fiona Haines Susannah Powell Rowan Doyle Simon Holmes a Court Institute Manager Adam Bumpus Natalia Southern Sara Bice Caitlin McGrane Tony Wood Mark Stevenson Marketing & Communications Officer Pierluigi Mancarella Richard Sandberg Ashley Johnson Leslie Martin Administration Malte Meinhausen Robyn Schofield 20 Melbourne Energy Institute – Annual Report 2016

New funding initiatives

CONFIRMED NEW FUNDING FOR INSTITUTE LED AND SUPPORTED ACTIVITIES IN 2016

Funding source Name CI/proponent Faculty Funding Period Total($k)

ANLEC R&D CCS Storage in the Ralf Haese SCI/ENG 2016 1,600 Gippsland Basin

Characterising Malcolm Wallace SCI 2016 500 Stratigraphy

GIPNET Microseismic Mike Sandiford SCI 2016 660 project

Australian Renewable energy Roger Dargaville, SCI/ENG 2016 100 Renewable and least cost Michael Brear Energy Agency abatement scenarios

Energy Consumer Energy price Dylan McConnell SCI 2016 16 Association data access

The Australia Fugitive Emissions Dimitri LaFleur 2016 35 Institute Report

AuScope Geophysics Mike Sandiford, Andrew SCI 2016-2017 630 Capability Support Gleadow, Louis Moresi

Geoscience Australia Geodynamic Ground Mike Sandiford SCI 2016-2017 100 Water Project

Coal Innovation New Membrane system Colin Scholes, Paul Webley ENG 2016-2017 350 South Wales Grant testing Vale Point

Commonwealth Energy Reliability Michael Brear, Roger ENG/SCI 2016 25 Dargaville, Pierluigi Mancarella, Matthew Jepperson

Clean Energy Jobs Small Scale Pumped Roger Dargaville SCI 2016 50 Fund (Victorian Hydro Feasibility Government)

Total($k) 4,066

Multiplier 4

Melbourne Energy Institute – Annual Report 2016 21

Expenditure

Operations

Salaries 540,000

Administration and general expenses 10,000

Events and Communications 20,000

Subtotal 570,000

Research

Capability 253,000

Project Seed Funding 69,000

Partnership development seed funding 97,000

PhD support 25,000

Other 58,000

Subtotal 502,000

Total 1,072,000 22 Melbourne Energy Institute – Annual Report 2016

Notes Melbourne Energy Institute – Annual Report 2016 23 WWW.ENERGY.UNIMELB.EDU.AU

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