RACE for 2030: Business outlook 2022

RACE for 2030 2022 Outlook April 2022

RACE for 2022030 Strategy 2021/ 2022 Outlook

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INTRODUCTION Reliable Affordable Clean Energy (RACE) for 2030 CRC addresses the energy and carbon transition, the importance of our work has significantly grown since we were funded in July 2020.

When I was born there was 317 PPM of CO2 in the atmosphere, but by the end of 2022 it will be 417 PPM. The Glasgow COP26 reminded us about the daunting challenge to manage global temperature rise within 1.5C and the scale and speed of the change to achieve this outcome.

If we continue with our current carbon emissions of over 40GT/year we will exhaust the global carbon bank within 10 years. So, we must reduce global emissions from now by at least 15% annually to have a better chance to stay below 1.5C. While the Commonwealth Government has recently committed to decarbonise by 2050, if we don’t make serious inroads into our emissions by 2030 this will not be enough. With less than 3000 days to 2030, we feel the urgency to make impact on emissions, which is reflected in our name ‘RACE for 2030’.

The energy supply transition is also accelerating. Electricity network business partners are working to keep grids operating stably with continued expansion of rooftop solar (and other renewables), and supply reliability is an increasing concern for state governments. Our network and government partners want impact in the short term, while we need to also focus on innovation to support more fundamental transformation of energy services for the benefit of customers as well as the supply industry.

RACE for 2030’s customer-focused innovation aims to resolve such systems challenges to achieve Reliable and Affordable Clean Energy services which decarbonise the economy while delivering significant economic benefits. Our success will be measured by the economic and environmental outcomes catalysed by our research. We want our legacy to be a transformative change in energy productivity and the decarbonisation of energy services. We have committed to $3.9 billion of energy productivity benefits and reducing carbon emissions by 20 megatonnes by 2030.

In the 18 months since RACE for 2030 officially was established, we have completed initial establishment of the CRC and have 50 research projects in flight. But we need to do much more in 2022, which is a particularly exciting period where we will be ramping up major research projects focused on four key challenges.

The diagram on the following page shows the transition of RACE for 2030 from start-up in the first 18 months to ramp-up in 2022. We expect to reach our targeted research activity level by the end of 2023. We are already having significant impact on energy productivity and emissions.

This document summarises our values, how we work, what we want to achieve and lays out our plan for 2022.

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BUSINESS TIMELINE

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RACE FOR 2030 KEY METRICS

Commonwealth funding through to 2030

$350m of resources to achieve maximum impact

50 projects underway at the end of 2021

Impact tracking, market transformation underway Targeting $3.9B energy benefits and 20Mt CO2 emissions cumulative

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ReAC established First three major projects approved by the Board

70 partners signed up and expecting to reach 100 signed partners in 2022

WHAT IS RACE FOR 2030?

OUR MISSION

RACE for 2030 is an industry-led research collaborative established to drive energy innovation across the supply chain to deliver improved, lower cost and lower emission energy services for energy customers. RACE will increase distributed clean energy uptake by increasing load flexibility and support the growth of Australian energy technology businesses.

“To drive innovation for a secure, affordable, clean energy future.”

OUR CORE VALUES We seek impact through innovation (to achieve our ambitious shared vision)

OUR VISION A flourishing low carbon Australia, where energy research improves quality of life and boosts energy productivity.

We listen to the people’s voice (seek diversity in perspectives and listen to energy users) We speak from the heart (be authentic, with the best of intentions) We translate passion into action (highly driven to deliver great outcomes) We build together (inclusive and collaborative)

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OUR PARTNERS RACE for 2030 brings collaborative innovation across the energy value chain, from energy users to suppliers of energy, technology providers and start-up companies, governments, and Australia’s leading energy researchers. This unique innovation ecosystem allows us to address large complex problems with whole of systemic solutions. The potential impact of RACE is exemplified by the fact that our partners transmit and distribute more than 50% of Australia’s power. We currently have 70 partners and expect to increase this to approximately 100 in the next year. We welcome approaches from companies and other agencies who wish to invest in innovation and join us on our journey.

Industry associations & end users

Research providers

Technology companies & investors

Network businesses & retailers

Education & training providers

Startup companies

State governments

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PARTNER ACTIVITIES AND INITIATIVES With major research projects now underway, the RACE for 2030 partner team is focused on connecting our Partners to projects that align with their core priorities. With 70 Partners and an extensive pipeline of prospective Partners, 2022 will be a year where we expand the partner base to bring in organisations to help deliver our priority projects. We will also see partners bringing us research challenges in their sector and will connect them with researchers and other industry Partners for maximum impact.

We’ve introduced more flexibility in our partner tiers including an option of committing to RACE for 2030 for three years to participate in specific projects as a Supporting Partner. This Tier 3 option allows Partners to join a project that directly aligns with their research and innovation priorities in the near term and grow the scale of a project both financially and through expertise and in-kind contributions from others.

Specific opportunities exist for the property sector with current and prospective Partners aligned to our RACE for Homes and RACE for Business research themes. Industry Associations who represent a broad crosssection of the energy ecosystem including energy users, product manufacturers, energy service companies and employees will be targeted so their members and affiliates can benefit from the opportunities the energy transformation offers. Our government agency Partners will continue to propose and join projects that align with their respective net zero targets and ambitions to show leadership.

Other ways we are improving our Partner’s journey include: • Simplify project development processes and substantially reduce the time for project approval • Recruit new partners that best match skill gaps in priority research areas • Communicate the updated Research Plan to partners twice yearly • Assist partners to propose and connect to projects and identify PhD opportunities • Offer more flexibility for companies to join at Tier 3 for a single major project • Set up and support implementation of partner research plans for all partners • Match partners to Industry Reference Groups • Continue to seek feedback through the Partner Advisory Forum and Business Insights Group

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RESEARCH PROGRAMS 2022 promises to be a big year for partner research at RACE for 2030 as we kick off a series of major, multiyear research projects.

During 2021, we reviewed our research project development processes, and this year we will be implementing streamlined application processes to deliver more value to our partners. We work with partners to highlight a small number of strategic challenges each year which will be addressed over a 2–3-year horizon, to meet key opportunities/problems for energy consumers and the industry. The customer-centred research questions for these challenges will be developed using an impact lab/design thinking methodology.

Four strategic challenges for 2022-23 1.

2.

3.

4.

Minimum demand EV integration One million+ homes Net zero business

Optimising use of rooftop solar, while supporting grid security Accelerating EV smart charging, Vehicle-to-Home (V2H) and two-way charging Retrofitting homes at scale to increase comfort, lower energy bills & lower emissions Pathways to decarbonised businesses

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Minimum demand RACE for 2030 aims to work with partners to develop customer-focused solutions to allow the public and businesses to increase use of rooftop solar, while maintaining reliable supply of energy services. These tools include load management and load shifting, new consumer demand management incentives and tariff structures, residential and community-scale battery orchestration, and smart EV charging.

EV integration RACE is focused on the application of EVs for energy system and network support including assessing customer value proposition, vehicle capability for grid support, pricing and incentives, vehicle warranty implications, voltage, power factor support and other factors. We are particularly targeting V2X i.e., 2-way charging, and will investigate the optimal size, location and functionality of two-way EV charging and demonstrate smart charging and V2G/V2P in practical trials. The activities and research projects in this theme will prepare the energy sector, customers, and policymakers to take advantage of the EV transition to help reduce customer energy costs and CO2 emissions.

One million+ homes We aim to facilitate the large scale retrofit of homes to support the transition toward net zero emissions through improving energy efficiency and increasing electrification. Such energy retrofits together with rooftop solar and energy storage will support lower energy bills, enhanced comfort, lower emissions and provide increased load flexibility for the grid. Our research objective is to design and facilitate a retrofit process that can be scaled with partners to upgrade one million plus homes by 2030.

Net zero business This research will address key innovation for businesses seeking to decarbonise their operations. Research will focus on providing clarity for businesses on the meaning of net zero, innovation to support achieving net zero in their operations and supply chains and develop pathways to reduce emissions by decarbonising hard to abate processes and by utilising zero carbon energy sources. Our objective is to facilitate decarbonisation, particularly in some focus value chains, which will be finalised in the next quarter, and we will be setting stretch goals for business decarbonisation from our research.

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Priority projects RACE will be focusing on 10 priority projects with the aim to initiate by June 2022.

Project

Strategic challenge

One million+ homes

One million+ homes

Customer friendly electricity pricing for the energy transition

Minimum demand

Customers focused minimum demand solutions

Minimum demand

My V2X EV

EV integration

Australian EV data library

EV integration

Matching, tracking and enhancing corporate renewables purchasing

Net zero business

Green Wave (net zero precincts)

Net zero business

Low cabon/energy cement (LC3)

Net zero business

Australian energy employment report

N/A

Other research activities RACE will also be accepting proposals from partners in all research 17 themes. Particular interest in these themes are likely to become the basis for future strategic challenges: • Electrification of businesses and homes • Artificial Intelligence and Internet of Things for enhanced energy performance • Business and home load flexibility and facilitating cost reflective tariffs/pricing • Customer-centered future ‘grid’, and LV network visualisation/optimisation • Future workforce skills and • Least cost energy planning

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MARKET TRANSFORMATION Our market transformation activities will make sure that the potential for transformation identified in our research will be delivered. RACE is currently designing a Market Transformation program with extensive input from key stakeholders to: • Create a low carbon energy system that serves all customer segments • Scale the innovations and business models identified in the research and provide government and regulators with the evidence needed to make informed policy and regulatory changes to facilitate market transformation • Drive the commercialisation of IP to create new low carbon products and services • Build alliances with existing participants in the ecosystem to achieve mutual goals • Lead the development of a theory of change for RACE and the establishment of a measurement and evaluation program with independent contractors • Learn from exemplar organisations involved in research dissemination, scaling of technologies, and sectoral transformation • Ensure all research projects are designed and implemented to ensure impact and market transformation

RESEARCH ACTIVITIES

Identify opportunities Demonstrate technology Demonstrate business models

OUTPUTS

Leverage ecosystem Scale technology Accelerate adoption

MARKET TRANSFORMATION

OUTCOMES

Grow businesses Build trust and confidence Develop knowledge and skills Change business practice Change regulations and policy Change pricing Technology change Improve housing stock

IMPACTS

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Reduce carbon emissions

Reduce business energy bills

Reduce home energy bills

Increase energy productivity

Increase energy reliability

Increase jobs

2022 Outlookfor 2022030 Strategy 2021/22

ALLOCATION OF CASH AND IN KIND RESOURCES

CRC administration Market transformation activities

$22m 6% $17m 5%

Strategic research projects

$8m 2%

$294m 84%

$9m 3%

Education/training

Industry-led research projects

Industry-led research will utilise $100M of cash and some $194M of in-kind contributions, or $294M in total. As explained to partners from early in the RACE journey, we are initially allocating about 30% of cash contributions - 16% of total resources - to RACE core activities, which are: • RACE operations: 14% of RACE revenues or $22M over 10 years are for RACE operating costs, about 2/3 of which are for staff costs for research activities. If you look at total cash and in kind resources deployed, just 6% go to RACE operations. RACE is one of the largest and most complex CRCs in the history of the program but our overheads are on par with most CRCs. • $9M is allocated for the Industry PhD program, which allows highly subsidised postgraduates to work on industry partner research projects of their nomination. 12 of these stipends have already been awarded and we plan for a similar number to be awarded this year (on the way to 55 fully funded positions).

• $17M over 9 years has been allocated to our portfolio of activities to transform the market: ɥ Knowledge sharing and market transformation (about $1M/year) to ensure the innovation from the research program is fully exploited in the economy to deliver the committed RACE impact i.e. energy and carbon savings. ɥ Commercialisation of technology, and support of Australian energy start-ups ($0.6M/year). RACE will help Australian businesses to commercialise intellectual property, with a focus on building start-ups. ɥ Capacity building ($0.4M/year) – which relates to industry education, skills development and training, lodging carbon managers in business, developing specialist training programs (e.g. integrative design)

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RACE BOARD AND GOVERNANCE RACE has an independent and very accomplished board made up of five members with extensive experience in directing CRCs, public administration, governance, and energy innovation.

The Chair is Louise Sylvan, who is also Chair of Energy Consumers Australia, a Director of APRI (Australian Risk Policy Institute), and has previously been Deputy Chair of the ACCC, and a commissioner of the Productivity Commission.

The board was selected by the RACE bid team to provide the highest levels of governance and skills for the establishment and initial operation of the CRC. 4 of the 5 members were re-elected in the 2021 and 2022 AGMs (Simon Smith, Ivor Frischnecht, Katherine Woodthorpe and Cathy Cooper), and one additional member, James Colbert joined at the 2022 AGM.

Louise Sylvan

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Chair

Katherine Woodthorpe Deputy Chair

Ivor Frischknecht Board member

Simon Smith Board member

Katherine Cooper Board member

James Colbert Board member

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OUR LEADERSHIP TEAM A team of seasoned professionals was established with a passion for addressing the array of critical challenges facing Australia, and massive business opportunities relating to climate and energy.

The full RACE team has now been established. We are experienced professionals with a balanced business and innovation background, with a passion for addressing the array of critical challenges facing Australia, and massive business opportunities from innovative climate and energy solutions. We will aim to keep the team as lean as possible while delivering our responsibility for driving major energy and carbon impact from probably the largest and most complex CRC in the history of the program.

Jonathan Jutsen

Thushy Sathi

Chris Dunstan

CEO

Chief Operating Officer

Chief Research Officer

Martina Lyons

Mark Squires

Market Transformation Lead

Partner Lead

Find out more about our Board and staff on our website: www.racefor2030.com.au RACE for 2022030 Strategy 2021/ 2022 Outlook

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© RACE for 2030

www.racefor2030.com.au #151515

2022 Outlookfor 2022030 Strategy 2021/22