STRICTLY CONFIDENTIAL

WA Power and Gas Conference

Synergy’s activities and projects in emerging markets:

The role of the utility in this period of consumer led transformation

28 March 2017

1STRICTLY CONFIDENTIAL

What We DoSynergy is Western Australia’s largest provider of electricity and gas, holding over 2,800MW of generating capacity

and delivering energy to more than one million residential, business and industrial customers

Western Power transports

the electricity and manages

the poles and wires

Synergy makes

and sources the

electricity

Synergy sells

the electricity

2STRICTLY CONFIDENTIAL

Energy markets are rapidly transforming

Consumers

Disengaged customers

Centralised energy supply

Single points of control

Basic infrastructure

Distribution & transmission

Energy intense

Carbon dependent

Industry consolidation

Monopolistic

Prosumers

Involved energy producers

Distributed generation

Decentralised energy management

Smart networksDigitisation & automation beyond the

meter

Energy/carbon efficient

Renewables focus

Disaggregation & Deregulation

Competitive markets

To

New technologies are driving the greatest upheaval of the past century in electricity

marketsFrom

3STRICTLY CONFIDENTIAL

A more personalised approach to supply is required with different customers requiring different

services at different times

Customer Centric Supply Chain

Customer

Trading /distribution

Generation and T&D

Energy services

Storage

RetailingElectric vehicles

Metering

Data analytics

Load aggregation

Possible future customer-centric model

4STRICTLY CONFIDENTIAL

Utilities worldwide are adopting new operating modelsbased on partnerships, alliances and acquisitions

• Key players are positioning themselves

in the new downstream space.

• Increased prevalence of joint ventures

and strategic alliances.

• New energy technologies have the

potential to unlock value of both the

solar and battery business and support

customers desire for energy independence

and control.

Source: Company’s websites

5STRICTLY CONFIDENTIAL

Potential scenarios for electricity in Australia1

Customer choice and behavior will define the future electricity landscape

1. Set and forget 2. Rise of the prosumer 3. Leaving the grid 4. Renewables thrive

• Customers adopt peak

demand management.

• Consumers are not

particularly motivated and

systems are designed on a

“set and forget” basis after

customers decide the level of

demand that suits them.

• Widespread adoption of on-site

generation.

• Consumers are actively engaged

in their electricity supply. Electric

vehicle adoption is popular.

• By 2050, on-site generation

accounts for half of all

consumption.

• New energy service companies

invite consumers to leave the grid,

offering an initially higher-cost

solution but one that appeals to a

sense of independence.

• By 2040, with reduced storage

costs, disconnection becomes

mainstream.

• 100% renewable target by 2050

for centralised generation.

• To shift demand and meet

renewable supply gaps, storage

technology is enabled at utility and

consumer sites.

• By 2050, overall renewable share

is 86% (centralised and on-site).

Source: CSIRO “The Future Grid Forum’s analysis of Australia’s potential electricity pathways to 2050”

6STRICTLY CONFIDENTIAL

The role of the utility

Traditional utility providers recognise that to stay competitive and relevant to customers,

they need to look at energy differently.

7STRICTLY CONFIDENTIAL

Customers expect Synergy to be a leader in energy efficient and innovative future technologies

Source: Synergy Connect surveys

Synergy should be a

key player in

exploring how future

WA homes can be

more efficient

Expect Synergy to

be a leader in

innovative future

technologies

I’d feel more positive

about Synergy if they

had products around

future-orientated

technologies like

batteries and EVs

Brand Perception of Synergy in the Renewable Category

(Agree or strongly agree)

81

%

60

%

74

%

8STRICTLY CONFIDENTIAL

Our teams are well advanced on scoping, sourcing and bringing new products to market

Synergy activities and projects

Alkimos

Beach

Solar

ReturnStorage

Electric

Vehicles

Home of

the Future

Virtual Power Plants

Network Optimisation

Energy Trading

9STRICTLY CONFIDENTIAL

WA has one of the highest solar uptakes in the country but distributed storage uptake remains low

Source: Jacobs

The Impact of Distributed Solar and Storage

Installed capacity of battery systems, 2015-16 to 2025-26

10STRICTLY CONFIDENTIAL

Electric Vehicles

Source: AEMO

Base case scenario based on assumptions consistent with the neutral sensitivity from the AEMO.

Energy consumption estimates assume average battery sizes of 23 kWh, different PHEVs/BEVs for the different uptake scenarios with PHEVs driving 50% of distances on petrol.

11STRICTLY CONFIDENTIAL

Future technology will open the door to multiple

product offerings

Demand Response Appliances

• Demand response enabled appliances shed load

from the grid and may help consumers save money

during peak demand with the right tariff incentives

Energy Storage

• Maximises self consumption, back-up power and

peak load reduction

• Enables flexibility to distributed generation and

potentially enables off-grid solutions

Electric Car

• The charging of EVs increases electricity

demand and provides back up storage.

Energy Efficiency & Insulation

• Improved efficiency through weather-

proofing and appliances

Micro wind turbine

• Supplementary renewable generation

Solar panels

• The average home would need at least

10 panels in addition to battery back-up

Smart meters

• Communication gateway between the

Smart Grid and the home.

• Key enabler of new tariff products &

BTM tech

Solar & heat pump water heater

Geothermal heat pump

Energy efficient lighting & appliances

Home energy manager

• Helps homeowners optimise energy

consumption.

Battery Management System

• Monitors power generated from solar

panels to load batteries or into the grid

12STRICTLY CONFIDENTIAL

Our regulatory framework needs to adapt to previously un-thought of grid and market requirements

Source: McKinsey analysis, July 2015; Customer Insights & Retail Strategy team, March 2016; VaasaETT, Dynamics of Retail Margins, Churn & Market Share, December 2015

Development and uptake of distributed energy resources in the SWIS

Power is shifting to the customer,

who is more engaged, has more

choices and is seeking to control

energy costs

Customer led growth

Definition of coherent

frameworks and systems for

market design

▪ Full retail contestability on the

horizon but timeframe uncertain

▪ Current capacity mechanism future

design undecided

▪ Metering contestability

▪ Gas moratorium still in place

▪ Tariff reform under discussion

Technological breakthroughs are

underway and are primed for

accelerated adoption

Technology Policy/Regulation

STRICTLY CONFIDENTIAL

WA Power and Gas Conference

Synergy’s activities and projects in emerging markets:

The role of the utility in this period of consumer led transformation

28 March 2017