Q&A: How can we strengthen Australia¡¯s energy transition for resilience?
May 01, 2026
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A stable power system is essential. For it to succeed, we must include decisions about data centres and grid modernisation.
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Power is a precious resource. And growing international uncertainty is reinforcing the need to accelerate the clean energy transition and strengthen Australia¡¯s energy resilience.
Many factors will impact Australia¡¯s energy future. Tilman Thrum, our market Leader for Energy & Power, offers his perspectives on what it will take to improve energy resilience.
Among the topics in this Q&A discussion, he talks about:
- The current state of the energy transition in Australia
- How data centres are impacting energy demand
- Why two-way power flows are driving grid modernisation
Where is Australia right now in the energy transition compared to other countries?
Tilman: At the micro level, Australia is very much at the forefront when it comes to the energy transition. Around 1 in 3 Australian homes has rooftop solar, the highest penetration in the world. Home battery uptake has accelerated¡ªat peak times, Australia has been installing close to 1,000 systems a day across the country.
Distribution networks are also beginning to move community-scale clean energy storage from pilot trials to widespread rollout, and strata and neighbourhood energy systems are emerging. Electric vehicles are also becoming more common. For many households, mobility is increasingly powered by their own energy generation.?
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Globally, millions of households are generating their own electricity through solar. In Australia, about one in three homes has rooftop solar, the highest percentage in the world.?
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At the macro level, however, the picture is more fragile than it needs to be. Despite being an energy?rich country, Australia still relies on imports for around 90 percent of its liquid fuels. Freight transport is still heavily diesel?dependent, and many remote communities rely on diesel generation. These challenges have shown how exposed we are when it comes to our energy resilience¡ªeconomically and strategically.
Given the progress Australia¡¯s making at the micro level, what¡¯s slowing down the energy transition on the macro level?
Tilman: It¡¯s simple: people and materials. There aren¡¯t enough engineers currently working in that field to deal with all the clean energy projects¡ªnot just in Australia, but globally. And there isn¡¯t enough production capacity in the world for certain pieces of power equipment. For instance, transformers are often booked years in advance now. It used to be less than 12 months, but now in some jurisdictions it¡¯s often 3 to 5 years. Overall, capital equipment supply chains have become less predictable due to the rush to electrification all around the globe.?
Financing is another issue. If you have developers wanting to do a clean energy project, you need to make sure it¡¯s worthwhile for them. They face high capital costs on one side but increasing volatility in electricity prices on the other side. Guaranteed tariffs or power purchase agreements are often not predictable or long enough for them to balance the risk, so sometimes they just can¡¯t make that work financially. And if the financials don¡¯t stack up, the project doesn¡¯t happen¡ªno matter how much we need it.
There¡¯s also a societal element at play. Everybody wants power, but nobody wants the transmission line in their backyard. That creates bottlenecks, because you just can¡¯t get clean energy projects built as quickly.
More broadly, we also need to be honest about how fast we can achieve the energy transition. You can come up with all sorts of plans¡ªeverything electrified by 2040 or 2050¡ªbut at the end of the day, it comes back to how much support the country is prepared to put behind it.
One of the big shifts we¡¯re seeing when it comes to energy resilience is the rising demand for power from data centres¡ªhow is that impacting the energy transition?
Tilman: Data centres use a massive amount of power¡ªand the rise of AI is only increasing that demand. Though it¡¯s technically a ¡°nice to have¡±, within a couple of years, we¡¯ve all just accepted things like ChatGPT as part of everyday life. I¡¯ve never seen any technology adopted as fast as we¡¯ve seen with AI. But what people don¡¯t see is the infrastructure and energy required to power AI.
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Data centres use a massive amount of power. Many data centres are exploring on-site power generation to limit their reliance on the grid.
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Utilities, on the other hand, have a clear mandate: provide safe, reliable, affordable power to the people in their jurisdiction. There¡¯s no mention of supplying large amounts of power to data centres, and in some places, we simply don¡¯t have enough power and the grid can¡¯t always handle the load. So, we need to find an alternative solution.
What that means is large data centre operators will start looking at how they fulfil their own energy needs. We¡¯re already seeing strong interest in on-site generation from data centres.?
Gas turbines are the fastest way to deliver the scale of power required. Solar power could play a role, but only if there¡¯s enough land available to provide the amount of energy needed. In Australia, for example, Amazon has invested in the Gunnedah Solar Farm to help power its Australian operations.
In some countries, data centres are also considering small modular reactors, but they¡¯re not viable in many jurisdictions, including Australia, without major policy and regulatory changes¡ªand social licence would be a serious challenge.
We may even get to a point where data centres support the grid, rather than just draw from it.
What role does grid modernisation play in the energy transition and improving our energy resilience?
Tilman: Grid modernisation is about moving away from the old model, where a power plant controlled everything and supply and load were both predictable, and power flow was one-directional. That¡¯s no longer the case¡ªnow power flows both ways.
Households are generating their own electricity through solar, so your house can be a load at one point in the day and a generator at another¡ªdrawing power from the grid at times and feeding it back in at others. In some cases, it¡¯s running off a battery and not relying on the grid at all. The same applies to industrial users. That makes the system more complex to manage¡ªbut it also creates new capacity within it.
" }Grid modernisation is about moving away from the old model, where a power plant controlled everything and supply and load were both predictable and power flow was one-directional. That¡¯s no longer the case.
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The other major shift is at the distribution level. In the past, the poles and wires in the street simply delivered power the last few miles. Now they¡¯re an active part of the system, with more generation happening locally and often consumed locally without reaching the transmission grid.
That¡¯s what helps the system handle growing demand. You¡¯re not relying on a single source or long transmission lines¡ªyou have a more distributed, flexible system that can respond to changes and disruptions more effectively. But it needs to be upgraded and built out for this new role it plays.
How do we see the energy transition playing out in rural and remote communities?
Tilman: People in rural communities are much more aware of the importance of power stability. Some communities are dependent on a single line¡ªif that line goes down in a storm, they have no power until someone comes out and fixes it.
That¡¯s where microgrids and energy storage comes in. If you can generate and store energy locally, you can create smaller, more independent systems, and you¡¯re no longer relying on a line that might run 100 kilometres or more to reach you. That¡¯s a really important part of grid modernisation¡ªnot just upgrading the larger grid but creating these smaller pockets that can operate independently.
Projects like the Gull Bay First Nation microgrid in Canada¡ªa solar and energy storage system that supplies around half of the remote community¡¯s daytime energy needs¡ªshow how local generation and storage can improve resilience in remote areas. The application of microgrids in Hawaii also serves as a powerful example of grid decentralization for smoothing peaks and managing variability.
There¡¯s also a community aspect to installing microgrids. People start to feel like they¡¯re part of the system. If a local council can effectively become a small power operator and run its own setup, there¡¯s a sense of ownership and pride in that.
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Energy storage is a key part of the energy transition. It helps with microgrids and smart grid management.
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What are you advising clients to prioritise right now when it comes to the energy transition?
Tilman: If you¡¯re working on projects that will have significant power needs¡ªdata centres, for example¡ªthe projects that go well are those that consider their power supply very early on. Any project that will have a substantial impact on the grid¡ªwhether you¡¯re generating power or drawing from it¡ªrequires you to engage early with utility providers.
Location also matters. You might have a great piece of land and want to build a solar farm there, but if you can¡¯t get that power into the grid or store it, it¡¯s not going to work. So, understanding the infrastructure around your site is critical.
That¡¯s where we come in. We often act as a translator between what a project needs and how the utility sees it. Not everyone speaks ¡°power,¡± and from the utility side, the question is always: What does this mean for the grid, and how does it impact operations?
A lot of these clean-energy projects are important and support broader societal goals. But there¡¯s still a right way and a wrong way to approach them. The projects that succeed are the ones that think about these issues early¡ªany work you do up front will save a lot of headaches later on.
Looking ahead, what needs to happen next to help the transition deliver long-term resilience?
Tilman: If we want Australia¡¯s energy transition to be successful, we need to invest in it. It¡¯s as simple as that. Long-term system planning suggests that the cost, spread over decades, is a few hundred dollars per person per year. It¡¯s not trivial, but it feels manageable.
I think we need to educate people about how fundamental electricity is to our way of life. Society as we know it starts to fall apart within days if power goes away. You can get by without a lot of things, but not electricity. After a short period, even backup systems start to run out of gas.
Energy resilience isn¡¯t just about keeping the lights on. It¡¯s about options and long-term value creation¡ªand about who controls the energy that underpins an economy. Australia has already demonstrated what¡¯s possible at the household level. The opportunity now is to extend that thinking to the national system.
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