Good afternoon and thank you to the Energy Market Company (EMC) for giving me the opportunity to speak to you today. 

Canadian author, Yann Martel, said: "There is nothing like the unimaginable to make people believe." 

Not so long ago, it was unimaginable that a state with a population of nearly 2 million people and a gigawatt-scale power system could be powered entirely by rooftop solar energy.  

But that is what has been achieved in South Australia. 

From a standing start about 20 years ago, when the first wind farms were connected to the grid, we are now seeing what 100% net variable renewable energy (VRE) from wind and solar looks like in practice. And we are seeing this regularly.  

Over 53% of homes in South Australia have solar panels contributing to the state's high percentage of 75% of annual electricity generated from renewable resources.  

Rooftop solar alone can now supply over 100% of electricity demand at times in the middle of the day. 

And by 2027, South Australia is expected to reach 100% net annual variable renewable energy. 

This world-leading energy transition presents both opportunities and challenges, which I'll discuss further as we explore navigating the energy trilemma to a low-carbon energy future. 

First, let me introduce you to the role of the Australian Energy Market Commission. 

At the Commission, we engage widely with stakeholders and make practical rule changes for Australia's National Electricity Market, elements of the natural gas market and related retail markets.  

These rules enable the changes needed for the energy transition and to keep the lights on in the National Energy Market. 

The Commission acts on rule change requests made by stakeholders, including governments, industry participants and consumers. 

This is where the South Australian experience is informative. 

First, to give you some context, the Australian National Electricity Market (NEM) is an energy-only gross pool market in which generators sell electricity into a central spot market to meet demand. Prices are set based on a 5-minute security-constrained dispatch. 

The market operates on one of the world's longest interconnected power systems, extending some 5,000 kilometres and incorporating around 40,000 kilometres of transmission lines and cables. 

It is made up of five connected regions on the east coast of Australia. 

South Australia is a relatively small region that is weakly connected at the southwestern end of this interconnected power system.   

South Australia is a global leader in the adoption of VRE wind and solar resources. 

Its last coal-fired power station closed in 2016. 

Some 75% of its annual electricity demand is supplied by VRE. This is projected to reach 85% this financial year, with a target of 100% net renewable energy by 2027. 

VRE supplied all the electricity demand for at least part of the day on 299 or 82% of days in the 2024 calendar year. 

South Australia is one of only two grids in the world—the other one is Denmark—to be promoted to Phase 5 of the International Energy Agency's renewable integration ladder, where solar and wind power generation frequently exceed local demand. 

This has been achieved in under two decades—from near zero renewables in 2007 to a projected 100% by 2027—thanks to the adoption of large-scale wind and solar, rooftop solar, and large and small-scale battery energy storage. 

And unlike other jurisdictions with high VRE penetration, South Australia has no hydroelectricity, pumped hydro, or nuclear power. 

As I mentioned earlier, rooftop solar can now supply more than 100% of demand in the middle of the day. 

On 19 October 2024, a record 30-minute minimum operational (grid) demand of minus 205 MW was experienced due to mild temperatures, clear skies and a large load outage.  

At this time, distributed solar resources supplied approximately 114% of the underlying demand in the region, with surplus electricity exported via interconnectors to the neighbouring state of Victoria.  

Minimum demand in South Australia has been falling on average by more than 100 MW per year, and this trend is projected to continue. 

The high penetration of VRE, declining synchronous generation, and declining minimum demand have created challenges that need to be managed. 

At a high level, these include managing congestion from reverse power flows and maintaining overall power system security and resilience. 

For example, shortfalls in system strength and inertia have needed to be addressed through investment in synchronous condensers and procurement of essential system services. 

It has become important to ensure there is sufficient fault current available for protection systems to operate as intended. 

The high penetration of rooftop solar panels and lighter loading on the grid mean voltage control has become an issue, with solutions required to manage high voltages and absorb excess reactive power under light load conditions. 

With aggregated rooftop solar now the largest single generator in South Australia, it has been necessary to develop ways to curtail rooftop solar output, when needed as a last resort, to maintain system security. 

Energy storage is being expanded to store excess solar energy for use at times of low solar generation. 

Interconnection with neighbouring states is being expanded to enable greater capacity to export excess renewable energy and conversely to import energy when needed and economically feasible. 

At the local level, the world-leading work of distribution system operator, SA Power Networks, has been a key driver of South Australia's consumer energy resource transformation.  
 
SA Power Networks pioneered flexible connection programs that allow more CER to safely and efficiently connect to the grid.  

It was the first in the world to implement flexible export limits at scale, replacing rigid, one-size-fits-all constraints with dynamic limits that respond to real-time network conditions.  

Under this program, customers can choose a flexible export limit of up to 10 kW compared to a fixed export limit of 1.5 kW. The customer opt-in rate has been a high 86%, and 95% of customers have rarely been curtailed below the maximum flexible export limit. 

This pioneering shift has allowed far more homes to connect and export solar power without creating network congestion or compromising grid stability, unlocking over 3 GW of rooftop solar on a 3.3 GW peak demand power system. 

These outcomes demonstrate how distribution network operators can be a key enabler of clean energy growth. 

A power system with a high penetration of VRE is more weather-dependent and subject to greater variability and wholesale market price volatility. 

The chart shows a typical high degree of variability in VRE output over a recent week. At various points, South Australian demand was met by 100% wind, 100% solar and, on one day, by predominantly gas generation and imports. 

Battery energy storage has an important and increasing role to play in managing this variability. 

South Australia now has over 700 MW of battery capacity versus a peak demand of around 3.3 GW, and stored battery energy now regularly displaces gas peaking generation in the state. 

South Australia is home to the world's first big battery, the Hornsdale Power Reserve, which has been operating since 2017.  

It is also home to the pioneering Dalrymple battery, the first grid-forming battery in Australia, which commenced commercial operation in 2018. 

Battery energy storage in the Australian NEM is also experiencing rapid growth. 

As of June 2025, utility-scale battery capacity was 3.1 GW (6.4 GWh).  

An additional 13.7 GW (36.4 GWh) is either under construction or committed by the end of 2027, bringing the total capacity to 16.8 GW, enough to meet nearly half of peak demand.  

Future projects are characterised by longer durations (2-4 hours or more) and are being co-located with renewable energy sources. 

In addition, Australians are installing 1,000 residential batteries a day, driven by a federal Cheaper Home Batteries Program. 

Battery-electric vehicles with vehicle-to-grid capability will also add significantly to the potential energy storage available in the system.  
 
 

Another point to note is the level of interest South Australia's energy transition is generating from industry looking to source lower-cost, zero-emissions wind and solar energy.  

State transmission company ElectraNet says there is currently more than 2.5 GW of active interest from manufacturers and industries, almost double the state's average grid demand of 1.3 GW.  

New enquiries have also reached levels that were unimaginable just a few years ago.  

37 companies are enquiring about setting up major businesses in the state, representing a massive 15 GW of additional load. While not all these opportunities are expected to be realised, they are a strong indicator of the potential for significant demand growth in the state. 

Further transmission investment will be required in the coming years to meet this demand growth and connect the renewable energy required to supply it. 

Energy transition demand growth is a positive development for the South Australian economy and supports delivering the lowest cost outcomes for all customers.   

South Australia has demonstrated that operating at 100% variable renewable energy is achievable, and this is now being experienced regularly and for longer periods of time. 

The South Australian experience is significant from a national and international perspective. 

It is fast being replicated in other regions of the Australian National Electricity Market. 

Nearly all of Australia's ageing coal-powered generation is expected to close by 2035 and all by 2040. 

This is a key driver of the energy transition in Australia, along with emissions reduction targets, reduction in the cost of solar and battery resources, and the rapid uptake of consumer energy resources.  

The Integrated System Plan (ISP), prepared by the Australian Energy Market Operator (AEMO), serves as a roadmap for the Australian energy transition. 

The plan confirms that renewable energy connected with transmission and distribution, firmed by storage, and backed by gas-powered generation, is the lowest-cost way to supply electricity to homes and businesses as Australia transitions to a net zero economy. 

It forecasts a tripling of grid-scale wind and solar by 2030, a sixfold increase by 2050, and a fourfold increase in distributed solar PV. 

The plan's centrepiece is an optimal development path (ODP), which is the least-cost path to meeting customer demand and federal and state government emissions reduction targets.  

The 2024 ODP included a mix of replacement grid-scale generation, storage, and transmission, with an annualised capital cost of $122 billion to 2050. 

Consumers are already a driving force in Australia's energy transition, and this is set to continue. If CER, like solar panels, batteries and electric vehicles, are enabled to participate actively in the energy system, then this will result in lower costs for all consumers. 

A range of research studies has shown that if CER is integrated well, it could deliver substantial savings in avoided grid-scale investment of up to $45 billion by 2050. 

More broadly, key transition challenges and risks include the scale of investment required, planned projects facing delivery challenges, including approval process delays, investment uncertainties, cost pressures, social licence issues, supply chain disruptions, and workforce shortages. 

There is a real risk that replacement generation, storage, transmission, and essential system services may not be available in time for when coal plants retire, and this risk must be actively managed and avoided. 

The ISP is a clear call to investors, industry and governments to urgently deliver generation, storage and transmission to ensure Australian consumers continue to have access to reliable electricity at the lowest cost. 

A recent independent review of Australia's wholesale electricity market settings addressed some of these challenges, focusing on ensuring market settings remain fit for purpose throughout the rapid energy transition. 

In its draft report published in August 2025, the Nelson Review outlines reforms to support investment in firmed renewable generation and storage, following the conclusion of the federal government's Capacity Investment Scheme in 2027. 

It considers, among other things, the need for mechanisms that ensure reliability, affordability and efficient risk management in a more weather-dependent system.