Through this article, Rebecca Yu discusses how Endeavour Energy is leading the transition to a clean energy future by developing innovative commercial models and investing in emerging technologies. She highlights the importance of community involvement, collaboration, cost efficiency and evolving financial capabilities to support the decarbonization of the grid while maintaining affordability and resilience.

With high inflation driving an increase in the cost of living while society is navigating its way to achieve net zero, Endeavour Energy, one of Australia’s leading electricity distribution businesses with a long-term vision to support the decarbonization of the grid, is playing an increasingly important role in leading the way to a clean energy future, helping the community by providing affordable services, enabling customer choice and balancing investor returns.

Innovating solutions supported by viable commercial models 

For the last 100 years or so, electricity has flowed one way from large generators (traditionally coal-powered) to homes and businesses. Fast forward to 2024, the way customers use electricity is changing rapidly. Across Australia, an ‘energy transition’ is in progress—with more change expected in the next decade than in the last century.  

Today, one in every four residential customers owns solar panels and the average size of solar systems located in Endeavour Energy’s network continues to grow. By 2034, we expect one in every two customers to have solar on their rooftops, while battery storage is predicted to increase to one in three homes. Over the next twenty years, 91 percent of all customers in our network are expected to own at least one electric vehicle.

"Endeavour Energy is leading the way to a clean energy future by developing innovative commercial models and investing in emerging technologies to support the decarbonization of the grid, driving energy resilience and affordability for the community."

Endeavour Energy is helping to drive this transition by developing viable commercial models that support the delivery of new innovative technologies. There is enormous potential at the distribution level to connect more solar, batteries and other customer energy resources closer to where energy is consumed, as this achieves better energy system efficiency and lowers overall costs for consumers.

A great example is the recent launch of a community microgrid for two remote coastal villages, which has helped the residents better manage the impact of increasing storms and bushfires while improving network reliability. As the first microgrid of its kind in New South Wales, Australia, the project has upturned the traditional way of planning and designing electricity grids by adopting a co-design engagement framework, where customers were intricately involved in the decision-making process. The microgrid includes a 3MW grid-connected battery and a virtual power plant orchestrated network of ~200 batteries and solar systems, which can operate as an island while outage occurs. 

The project delivers numerous community benefits, including lower energy bills, improved energy resilience, fewer power interruptions, more choice over how electricity is consumed and reduced risk during major storms, fires and other emergencies.

As Endeavour Energy continues to invest in emerging technologies and more sophisticated commercial models, the ability to tap into multiple income streams under one project will be required. No more “one-size-fits-all” commercial models can be replicated across all solutions.

Leveraging collaboration to expand offerings

Looking beyond our investment in the distribution network, Endeavour Energy is proud to be at the forefront of the industry and to be in charge of decarbonizing the grid. Together with our consortium partners ACCIONA and COBRA as ACEREZ, we recently announced a major milestone in securing cleaner, more reliable energy for New South Wales and have signed a commitment deed with the NSW Government to design, build, finance, operate and maintain the transmission network across the Central-West Orana Renewable Energy Zone (REZ).

It’s Australia’s first renewable energy zone and it will bring billions of dollars in private investment and thousands of jobs to the Central-West Orana region.

Securing the project was a significant step change for Endeavour Energy. It transformed the organization from a regulated utility to a commercial enterprise, stepping up our engineering, project financing, commercial capabilities and efforts.

Driving for cost efficiency

The energy transition offers enormous opportunities to businesses and employees working in the sector. However, with the increasing demand for services and skills and the impact of climate change, we are seeing significant underlying operating cost increases.

We have seen material increases in key expenditure areas, such as bushfire insurance premiums, technology and training to meet future needs. We must look for solutions to improve cost efficiency and maintain customer affordability while balancing investor and shareholder returns. In addition to the conventional operational cost efficiency measures targeting cost-saving outcomes, Endeavour Energy has also evolved its model to include innovative financing solutions.

In 2022, we became the first electricity distribution network in Australia to secure a $920m Sustainability-Linked Loan linking measurable sustainability targets to lower debt costs. For the last two years, we have successfully achieved our commitment to delivering the sustainability targets.

Leading a commercial finance team supporting the delivery of Endeavour’s strategy to decarbonize the grid amid an energy transition means we are at the center of every pursuit.

It is important to lift the bar by having the right financial and commercial capabilities within the finance community and across the organization. The required capabilities are evolving beyond the traditional accounting roles and expanding into providing commercial and financial support for complex commercial models, evaluating evolving investment opportunities in an uncertain and changing regulatory environment and leveraging modern technology to gain greater insights into our data to better support decision-making. Most importantly, we must foster a learning mindset and collaborative culture to evolve with the sector.