By James Hunt, Vice President for Power Systems and Services at Schneider Electric
Australia is powering ahead with its energy transition. Coal is exiting the grid by 2038, and our new energy landscape is increasingly defined by renewables, storage, and electrification. But this transition will falter, and cost us billions, unless we address one critical gap: the need to orchestrate energy demand as intelligently as we are building new supply.
The case for demand flexibility
Grid orchestration means matching energy demand with supply in real time using digital tools, automation, and, critically, human behaviour. Demand response programs, where businesses and households shift or reduce energy use during peak periods, are a cornerstone of this approach.
These programs aren’t about sacrifice. They’re about smarter use of energy. When consumers are rewarded for flexible behaviour – for example, setting the air conditioning thermostat to a higher temperature, shifting EV charging to off-peak hours, or automating commercial building systems – the whole grid benefits. Less strain, lower peak costs, and fewer expensive infrastructure upgrades.
The reward is significant: a $6 billion flexibility dividend. By fully unlocking demand-side flexibility, we can avoid the need for costly infrastructure investments.
The energy system is undergoing a fundamental shift. We are no longer operating within a centralised, supply-driven model but are instead moving toward a grid that is becoming increasingly decentralised, integrated, and interactive, with a growing share of electricity coming from distributed energy resources like rooftop solar, home batteries, and community energy projects. This transformation is turning traditional assumptions on their head, and our policy and investment settings must evolve to keep pace.
From smart tools to shared value
We are transitioning to a system with smart appliances in homes, liquid cooling in data centres, battery storage, and AI-powered control systems in industrial plants, all of these are orchestrating energy use in real time. These technologies are essential, but so too are the frameworks that underpin them.
AI and predictive analytics are critical to operating a decentralised grid. But AI alone can’t deliver trust. We need a policy environment that shares risk, return, and responsibility across the value chain, from grid operators to everyday Australians.
The transition must be affordable and less wasteful for everyone, a principle that underscores the shift from designing systems for infrastructure, to designing them for people.
Demand response participation is growing, driven by digital tools that allow businesses and households to automate and optimise energy use. It’s one of the clearest paths to unlocking grid flexibility. But we must go further. We need incentives that reward flexibility across sectors, especially for small consumers. We need market signals that embed flexibility into every infrastructure decision. And we need trust frameworks that ensure all players, from households to heavy industry, share in the value created.
A national imperative
One of Australia’s National Electricity Objectives is to serve consumers. But too often, system design still prioritises physical infrastructure over user experience. That’s a missed opportunity. True grid orchestration is a national imperative and there is a smarter, faster path forward, one that flips the traditional model on its head.
To unlock the full flexibility dividend, we must:
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Embed flexibility into market design and investment signals by properly valuing it in planning frameworks to avoid overinvestment in hard infrastructure and enable smarter, more adaptive system development.
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Develop the digital and AI backbone needed for real-time orchestration through advanced platforms, predictive analytics, and AI-enabled control of distributed energy assets.
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Introduce policies that reward responsive behaviour and lower participation barriers by scaling and simplifying demand-side mechanisms to include all energy users, not just large industrials.
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Expand demand response participation by supporting aggregated models and making enabling technologies like smart meters and home energy management systems accessible to small consumers.
The transition is happening. But whether it is efficient, equitable, and truly transformative depends on what we do next. We must make this work for consumers, and we must do it together.
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