Our strategic direction

Market overview

The Australian energy market is in transition as it responds to changing customer and social demands, technology driven changes and the retirement of ageing thermal coal generation.

Working together, there are a number of challenges which government, industry and consumers need to solve:

The way people consume and source electricity continues to change. The growing proportion of generation from rooftop-solar means that grid-supplied electricity demand is declining overall and peaking more dramatically during the course of the day. Energy efficiency has resulted in people using less electricity overall; however there are days or even a few hours each year (typically during summer heat wave conditions) where demand increases significantly. The challenge is to design a market that can ensure enough generation capacity to supply this peak demand for just a few days or hours.

Policies restricting or banning the exploration and development of gas in various states have contributed to the general tightening of gas supply across the National Electricity Market. This is resulting in increased costs for gas-fired generation, which would otherwise have the potential to assist in the transition to a lower carbon economy (gas has lower emissions than coal-fired generation and is able to quickly respond to changes in electricity demand).

Ensuring a reliable supply of electricity as the generation mix changes is paramount. The proportion and generation profile of renewable energy, along with the rate at which the ‘take up’ of batteries and other technology occurs, will change the supply and demand dynamics of the National Electricity Market. The ability to manage the risks associated with variable renewable energy by pairing it with firming generation is a critical next step.

Ultimately, the challenge is to balance the energy mix to deliver least cost, reliable and lower emission electricity to customers.

Stanwell’s strategic response

Stanwell has an important role to play in the National Electricity Market over the coming years, as the grid transitions away from fossil fuel to renewable energy and storage. As the owner of two of the most efficient coal-fired power stations in Australia, we have a key part to play in keeping the lights on and delivering affordable energy. Through the four elements of our strategy, we are creating energy solutions which help us meet energy users’ short and long-term needs.

Firstly, having a flexible and competitive portfolio means we operate efficiently to reduce our power generation costs while increasing the flexibility of our portfolio so it can meet consumers’ changing demand needs. Over the past two years, we have been looking at how the role of our coal-fired power stations needs to change to support an increasing proportion of renewable generation. As more solar energy comes online, there is less need for coal-fired generation in the middle of the day. However, we need to be ready to respond when demand increases in the evening.

Originally designed to run at a relatively constant high level of output, we recognised that work needed to be done to adapt our plant for a different operations profile. In the past year, we have applied what we have studied and have trialled running our power stations at low load and then ramping up our generation to meet peak demand requirements. There is more work to be done, but the trials and testing to date have been promising. We have also been studying the impact of ‘two shifting’ where a generation unit is shut down during the middle of the day and then restarted and loaded up for the evening peak.

Innovative energy products is the second arm of our strategy. We are working closely with our customers to tailor energy solutions to their needs, as technologies and consumer expectations evolve.

Over the past year we have included power purchase agreement options, green products, customised billing, long-term pricing (up to 10 years), hybrid contracting arrangements, self-management of consumption and environmental certificate requirements in our customer offering.

The third element of our strategy is back a low carbon future. We want to be part of the lower carbon future. We will do this in many ways – we may trade the output from renewable energy assets or we may purchase the electricity directly from renewable generators.

The final element of our strategy – enablers – is about our people and processes. It highlights our focus on engaging and retaining a high performing workforce, complying with – and often going beyond – what is required by regulation, and continuing to deliver a safe workplace so that together we can deliver on our strategy.

Our Environmental Sustainability Policy encourages our people to consider and balance the social, environmental and commercial implications of every decision they make, regardless of whether those decisions are key strategic initiatives or day-to-day workplace choices.

We are working on a diversity and inclusion program to grow career pathways, simplifying our internal systems to continue to keep costs low, and offering greater workplace flexibility for our people. We have also successfully rolled out a new system which provides a consistent approach to managing safety at all our sites.

Together Stanwell’s vision and strategy pushes us to continue finding better ways of doing things so that we can deliver reliable, affordable and lower carbon energy for Queensland.

Our strategic direction

Market overview

Stanwell’s strategic response

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