The future of the grid requires collaboration

In a transitioning grid, the challenges are changing but the goal remains the same 

Australia’s electricity system is changing fast. The grid used to be a one-way flow from large generators to consumers. Today, it is two-way and far more dynamic, shaped by rooftop solar, new technologies and new demand.

For households and businesses, that shift brings real benefits, including cleaner energy and new choices. But it also means the system needs to be managed in a more dynamic way. The system now needs to cope with sharp swings, sometimes within hours, while keeping power reliable and affordable.

Millions of rooftop solar systems send energy back into the network during the day. Meanwhile, batteries, electric vehicles and data centres are changing how and when electricity is used. Supply is also increasingly weather-dependent.

Rooftop solar is a success story, and it’s reshaping how the grid is operated 

Rooftop solar is one of the fastest changes happening in NSW. More than one million systems are now installed across the state, with panels on nearly one in three homes. Around 1 gigawatt is added each year “behind the meter”, supplying homes and businesses directly rather than flowing through the grid. Without this small-scale solar, energy sent across NSW would be around 20,000 gigawatt hours higher, enough to power about 3 million average Australian homes for a year.

On clear, mild days, especially on weekends, rooftop solar can produce more electricity than households need, pushing grid demand to very low levels in the middle of the day. Since 2020, minimum grid demand has fallen by around 40 per cent. In February 2025, NSW recorded a new low of 2718 MW, 30 per cent below the previous record set only four months earlier.

Minimum demand in NSW is declining and, under some scenarios, could fall to zero in the 2030s. However, significant growth in household and large-scale batteries is likely to temper the decline previously forecast.

In any case, the grid needs to stay stable even when demand is very low. When minimum demand drops, voltages on the transmission network can rise above safe operating levels. This risk is heightened when nearby solar farms are not generating or cannot provide reactive power support, which helps stabilise voltage.

Rooftop solar also shifts the “busy period” later into the day. Peak demand is increasingly occurring in the evening, when solar output falls and large-scale solar is less available to help. The result is larger daily swings that require more active system management.

By 2045, rooftop solar capacity in NSW is expected to nearly triple, reaching 22 gigawatts. That supports progress towards net zero, but it also requires smarter, more responsive coordination and investment across the power system to keep the system strong and reliable.

Electrification is changing where demand shows up 

Electrification is the other major shift. Business and industry already consume around two-thirds of electricity across the grid, and more industrial processes are expected to move from gas and diesel to electricity over time. This includes replacing gas boilers with electric heat pumps, adopting electric arc furnaces, and using high-efficiency motors and induction heating.

This creates two system challenges. First, it lifts overall demand and contributes to higher peaks. Second, it changes where demand appears. New electrified loads are expected to grow in places that have not historically hosted large industrial demand, including regional manufacturing zones and new precincts linked to economic diversification and clean energy investment.

That means the sector cannot only look at state-wide totals. It must understand when and where demand will grow, what the local network can handle, and what upgrades will be required. It also increases the importance of coordination between transmission and distribution networks, and of ensuring there is enough “firming” capacity, like batteries and other flexible resources, to keep power flowing when renewable supply is low.

How we keep the grid stable is changing 

The grid increasingly needs to manage both ends of the challenge at once: very low grid demand driven by rooftop solar, and rising demand driven by electrification and new digital loads.

That is why collaborative, sector-wide coordination matters more than ever. At Transgrid, we are working with industry partners within our role as the NSW transmission network service provider to better account for distributed generation, manage the risks of extreme minimum demand, and prepare for large, concentrated loads in new locations.

Reliable, affordable, and clean electricity depends on getting this right.

For more on how coordinated investment and planning can support the energy transition, see CEDA’s research on building effective clean energy precincts.