As our energy system experiences a total shift in how we use and generate power, there is one company leading Australia through this significant change.
Horizon Power has been making waves in the west with a raft of innovative projects across a range of different generation sources. Energy Source & Distribution sat down with Horizon Power managing director Frank Tudor to discuss these projects and how they are shaping the future of the industry.
Tell us a bit about your background and career in the energy industry.
I have been fortunate to hold various executive management roles throughout the past 27 years in the European, Asian and Australian oil, gas and power industries.
Before joining Horizon Power, I worked with BP managing commercial issues to develop gas interests in Papua New Guinea for the Chinese energy market. I also worked for Woodside where I was responsible for managing business development activities.
For the past 12 years, I have been lecturing part-time in oil and gas economics, and oil and gas legal frameworks at the University of Western Australia. I really enjoy the opportunity to share my knowledge and experience with future employees and leaders in the energy industry.
I am the vice chairman of the Chamber of Commerce and Industry’s Energy and Resources Forum; a board member of the Federal Government’s Australia China Council; and a member of the Australian National University’s China in the World Advisory Board. I also served as National President of the Australia China Business Council for five years.
What excites me about working in the energy industry is the unprecedented level of change we are going through. Ours is an industry that has been left unchanged for the past decade, but we are now experiencing a total shift in how, and what, we deliver to customers, driven by their desire for more choice and control.
How do you see the future of Australia’s energy industry evolving?
Bloomberg notes that more has been spent globally in recent years on renewables than thermal generation, and Navigant Research anticipates more will be spent on distributed rather than centralised renewable energy by the end of this decade.
Studies by CSIRO and Energy Networks Australia (ENA) foreshadow a similar trend towards distribution enabled by advances in technology. This will inevitably challenge regulation, business models and the very essence of the status quo in the electricity industry.
I would argue microgrids in their various guises (and all the technological advances made possible by them) will form the DNA of the electricity industry in the 21st century.
How is Horizon Power adapting to the changes in the industry?
I believe investing in microgrids is the answer and our business strategy supports that – we aspire to be the world’s leading microgrid company.
Western Australia is leading the rest of the nation on the energy transformation journey. Our regional and remote communities are well and truly at the forefront of this change because the technological advances underway in our industry are best applied to microgrids, and regional WA has those in abundance. Our footprint contains around 40 microgrids spread across 2.3 million square kilometres.
Microgrids are a means of getting the most out of all manner of distributed energy resources (DER) devices displayed across customers’ premises and will unlock the potential for technological advances, cost-saving measures, and more renewable and environmentally-friendly energy options in the network.
A microgrid is a self-sufficient electricity network that can be embedded in, or remote from, a larger network. These grids enable DER like solar panels and batteries to be located separately to a central power station and have the ability to feed energy back into the network.
As an intelligent network, a microgrid will also allow the integration of smart devices and appliances such as pumps, air-conditioners, water heaters and, in the future, electric vehicles. DER can be combined to complement the main power supply to meet demand, and can offer greater potential for consumer participation, catering to a future world where prosumers are the norm.
In our industry, the prosumer is a person who both consumes and produces energy. Being a small, vertically-integrated utility supplying customers in the remotest corners of regional Western Australia, we are seeing the energy sector changing more acutely and more immediately than most. This is due to the isolation of our grids, relatively low customer density, increasing uptake of rooftop solar panels and the higher cost of energy supply for our networks.
During the past five years, we have managed to reduce our government subsidy toward operating costs by more than $100 million per year (almost 20 per cent of our total cost-base) and simultaneously re-align our strategy to position the business as a global leader in DER microgrids. We are carefully, and deliberately, reinvesting in our people, our systems and our processes to create a home for microgrids.
At Horizon Power, we recognise DER microgrids are our future, and with the rapidly falling costs of solar and battery storage systems, coupled with advances in control and software systems, we are presented with a significant opportunity to offer customers a cheaper, cleaner, more attractive solution than the traditional poles and wires model.
Horizon Power is doing fantastic work in pretty much all areas of energy generation – from gas plants, renewable energy, standalone power systems and microgrids – can you run us through how these projects are tracking?
Our business strategy – something we invested significant time in to revolutionise – outlines the shift we want to see from traditional energy infrastructure to a future of more rooftop solar, batteries and stand-alone power systems in our electricity networks.
Our strategy forecasts by 2050, around 62 per cent of systems will be best served by DER, 12 per cent will be off-grid (such as stand-alone power systems), and the remaining 26 per cent will remain centralised, but incorporate a higher level of renewable sources. Over the same timeframe, carbon emissions are forecast to reduce by 51 per cent, reliability will improve, and overall system security will be maintained.
So, we are researching and implementing technology and initiatives that will continue to give our customers choice and control, while allowing us to diversify into exciting new areas of the energy industry.
We are seeing this play out with our award-winning Power Ahead pricing plan pilot. In a novel move away from traditional electricity supply models, it provides customers with improved control over their power bills and incentives to help them manage their electricity usage more efficiently.
We also continue to receive extremely positive feedback on the stand-alone power systems (SPS) we are installing across the state, and we are committed to developing these systems as a key product and service offering of the business, along with a suite of behind-the-meter consumer products.
Many of our projects are receiving acclaim from industry experts. In early October, Deloitte named Horizon Power one of the three most innovative electricity companies in Australia.
Western Australia has been praised for its SPS and microgrids giving regional areas access to reliable power. What are the benefits of these projects?
In the Pilbara town of Onslow, we are replacing the entire traditional power system for the town with a new modular power station supplemented with DER. The project connects traditional energy sources with solar power and battery storage, which will deliver more than half of Onslow’s electricity needs with renewables.
It is one of the largest microgrid projects being undertaken in the Asia Pacific region. DER will be integrated, in collaboration with the community, at levels not previously achieved in remote microgrids.
Exmouth Golf Club recently celebrated the installation of its new stand-alone power system, which will provide all of the club’s power requirements, completely removing its connection from the electricity network. The system generates and stores its own electricity through solar panels and battery energy storage and has a back-up diesel generator, meaning the club will have a continuous power supply 24 hours a day, regardless of the weather, leaving the golf course unencumbered by poles and wires.
Projects such as these are giving customers greater choice and control over how they use energy.
What are your thoughts on the Finkel Review and the great debate surrounding a clean energy target? How do you think we can transition to a stable and reliable electricity grid?
Obviously, there is a great deal of debate at a federal level surrounding this topic. Under the Federal Government’s latest proposal, the National Energy Guarantee (NEG), there is potential to achieve the much needed certainty from government on energy and climate policy.
While many of the details are still to be revealed, the reliability obligation and emissions guarantee for retailers are important limbs for transitioning to future, high renewable grids that are stable, reliable and efficient.
Time will tell how the federal energy policy plays out, however, given WA is separated, both physically and legislatively from the National Electricity Market (NEM), we will also be working with our state government and local regulators to ensure that Horizon Power’s long-term commitment to a microgrid future, and the benefits that brings to our customers in terms of reliability, affordability and lowering emissions, is enabled and not constrained, by ongoing policy decisions.
In Australia, 87 per cent of our electricity generation comes from fossil fuels. That is one of the highest levels of fossil fuel generation in the world, so we have important decisions to make about how we will generate energy as Australia’s fleet of coal-fired power stations reach the end of their operating lives.
While the impact of renewables on the security of our electricity networks has generated some negative press coverage, the reality is that with the proper controls and systems in place, the grids in Western Australia and across the NEM can absorb more renewables going forward.
You were recently recognised as Energy Professional of the Year at the WA Energy Awards. What does this award mean to you?
Firstly, the award is a reflection of the efforts of all Horizon Power people throughout the past few years and acknowledges the work being done in our state to build a world-class energy sector – Horizon Power is leading the charge on this.
We conducted a strategic review, which began in 2013, and completely rebuilt our organisation from the ground up, and positioned us so we were future-focused. I believe we are helping to define the future of the industry, and investing strategically to strengthen our competitive advantage. This position is a result of the hard work and dedication of everyone at Horizon Power.
Do you have a message for your peers?
What is becoming increasingly obvious to me is the collaborative atmosphere we have created here in Western Australia.
The fact that as a collective, our trials, market mechanisms, start-ups, legal frameworks and regulatory approaches are gaining prominence on the national, and indeed global stage, is testament to our incredible ethos, unwavering focus on the future and commitment to innovation in this state.
With this in mind, there is a whole range of wicked problems to address across the value chain – from the very technical (how do we maintain inertia and integration requirements), through to customer platforms and pricing models.
Our 38 vertically integrated, lightly regulated microgrids create a significant microgrid ‘sandbox’ opportunity to test and prove concepts across technology, pricing, regulation, human behaviour spheres, as we are already doing with tariff reform, off-grid systems, and DER take-up.
We have a vision to establish a world-class research, development and deployment cluster in our current location in Bentley Technology Park.
This will be focused on high penetration renewable microgrids and the commercialisation of energy technologies, utilising our ‘sandbox’ for trials, demonstrations and then full-scale product rollout.
We see the creation of a cluster in Perth as our opportunity to leverage the state’s natural endowment of remote and fringe off-grid microgrid potential, which will create value for Horizon Power, other utilities, industry participants and the state.