The energy transition is also a transformation of the grid.

In the first two articles of this series, I sought to share two insights that solidified during the Australia Mission. The first was that the energy transition needs to be viewed from a systemic perspective, and not simply as a replacement of technologies.

The second was that, in an increasingly renewable and decentralized system, flexibility, economic signals, and new market designs become as important as the expansion of generation itself.

A third reflection emerged repeatedly throughout the meetings: there's no point in producing energy where the grid can't receive and transport it.

It may seem like an obvious conclusion. But perhaps it is precisely one of the most relevant contradictions of the energy transition.

For many years, the expansion of electrical systems followed a relatively predictable logic. Large power plants were built, and transmission infrastructure developed to connect these production centers to consumer centers. The energy transition is also altering this geography.

In Australia, this transformation is particularly visible. The country's electricity system was built for decades around large thermal power plants, especially coal-fired ones.

The rapid expansion of solar and wind energy has progressively shifted the best generation resources to other regions, often far from existing infrastructure and major consumer centers.

The problem, therefore, is not the absence of energy resources. It is getting those resources into the system.

And Brazil has a particularly relevant experience in this regard. In a country of continental dimensions, we have built over decades an extensive and highly interconnected transmission system, capable of connecting large generation centers to consumer markets located thousands of kilometers away.

However, there is an important difference. Brazil has already faced major transformations in the geography of generation and has developed extensive infrastructure to transport energy, especially from the expansion of hydroelectric power. The current challenge is different: adapting this system to the speed of wind and solar expansion, to the decentralization caused by distributed generation, and to a new geography of energy flows.

This discussion came up at the mission's first meeting, held at UNSW. (University of New South Wales) and at CEEM (Center for Energy and Environmental Markets)When discussing the growing presence of renewable energy sources, researchers highlighted that the Australian curtailment is not due to a single cause.

Shortages can result from physical network constraints and system security requirements, but they can also be associated with economic conditions during periods of high supply and very low or negative prices. Different diagnoses require different solutions.

The UNSW's approach to understanding these interactions also caught my attention. The researchers presented power system modeling initiatives that seek to replicate Australian planning and dispatch and test different expansion scenarios.

At one point, one of the researchers summarized the objective of the work as follows: “The idea is to create an open model where we can really interrogate more different scenarios.” In a free translation: "The idea is to create an open model in which we can effectively test and question different scenarios."

The phrase reflects an important characteristic of Australian energy transition planning: it's not enough to project how much renewable energy will be needed. It's necessary to simulate how generation, storage, and grids will interact under different conditions.

This concern resurfaced during the meeting with representatives from DCCEEW. (Department of Climate Change, Energy, the Environment and Water), The Australian government department responsible for, among other things, energy policy. There, the scale of the infrastructure challenge became clearer.

The Australian government structured the program. Rewiring the NationThe program, aimed at modernizing and expanding the electricity grid, utilizes long-term financing and concessional conditions to enable new transmission infrastructure and reduce its impact on consumers.

Australian planning, at the time of the mission, estimated the need for approximately 4.600 kilometers of new transmission lines just to meet the 2030 targets.

The expression used to name the program is quite revealing:  In a free translation, "rebuilding the country's electrical connections".

It's not simply a matter of adding a few lines to the existing grid. Australia is, to some extent, redesigning its electricity infrastructure for a new geography of generation.

This perception took on a financial dimension during our conversation with the CEFC (Clean Energy Finance Corporation).

CEFC is the financial arm of the program. Rewiring the Nation and manages resources specifically earmarked for the expansion and modernization of the infrastructure necessary for the transition. The point that caught my attention was that the financing of transmission was not treated merely as a matter of providing capital. There was an explicit concern about how the cost of this infrastructure would reach the consumer.

Just a few days before our visit, for example, CEFC had announced AUD 1,2 billion for the expansion of transmission in northwest Tasmania. According to the institution, the long-term, lower-cost financing structure could reduce network charges associated with the project by approximately 55% over its lifespan, compared to traditional regulatory conditions.

This discussion brought up a point that I consider particularly relevant. The energy transition requires infrastructure. And infrastructure has a cost.

We can discuss the ever-decreasing price of solar, wind, or battery power generation. But the cost of the transition is not simply the cost of the equipment that produces or stores energy.

It also includes the cost of connecting these assets, reinforcing networks, maintaining stability, creating redundancy, and transporting electricity between regions. In other words, there is no such thing as cheap renewable generation in a system that cannot transport it.

This perception became even more apparent during the meeting with Samsung C&T, where we spoke with Brazilian executives working in Australia. In the discussion about the development of new renewable energy projects in the country, one of the central themes was precisely the connectivity difficulties and bottlenecks in the electrical infrastructure.

The expansion of solar power generation had highlighted a structural limitation, with a consensus that the grid was not prepared.

The statement did not mean that Australia lacked a developed electrical system. It meant something more interesting: the grid had been built for a specific energy matrix and a specific generation geography.

When both change rapidly, the infrastructure also needs to change. This is perhaps one of the greatest similarities with the current situation in Brazil.

Brazil has an advantage that Australia did not have when it began its transition: our electricity matrix is ​​already predominantly renewable, and the hydroelectric system offers significant flexibility and storage capacity. We have also built, over decades, a highly interconnected continental transmission system.

But that doesn't mean our infrastructure is automatically prepared for the next stage of the transition.

The rapid expansion of wind and solar power generation, especially in the Northeast of Brazil, has modified the geography of energy supply. At the same time, distributed generation (DG) has profoundly altered flows in distribution networks. New projects continue to seek connectivity while curtailment incidents have become central to the sectoral debate.

The Brazilian problem, therefore, is beginning to present a contradiction similar to that observed in Australia: we may possess an abundance of renewable resources and, simultaneously, face difficulties in fully utilizing them. This reality should also alter the logic of developing new projects in Brazil.

For a long time, the first question an investor in renewables naturally asked was about the quality of the resource: where is the best wind? Where is the best solar irradiance?

In a congested system, a prior, or at least equally important, question arises: where is the connectivity capacity?

Australia is seeking to address this problem through REZs. (Renewable Energy Zones). The idea is to coordinate, in specific regions, the expansion of renewable energy generation, storage, and the transmission infrastructure needed to connect them.

This represents a significant change in planning. Instead of dozens of projects making decisions in isolation and then competing for connectivity, the aim is to identify in advance where good resources exist, where expanding generation makes sense for the system, and what infrastructure will be needed to make it viable.

Perhaps this is a particularly important reflection for Brazil. In a scenario of increasingly contested connectivity capacity, access to the network also becomes a scarce economic resource. This requires discussing not only how to expand transmission, but also how to better coordinate the location and entry of new projects.

The ISP itself (Integrated System Plan) The Australian government is seeking to achieve precisely this integration. The 2026 version, published after our mission, reinforced a formulation that summarizes the strategy well: renewables connected by transmission and distribution, underpinned by storage and complemented by gas-fired generation constitute the lowest-cost path to maintaining a safe and reliable system during the progressive phasing out of coal-fired power plants.

It's interesting to understand the order of the elements. It's not just renewable generation. It's generation + grid + storage + security resources. This is exactly the systemic vision that emerged from the mission's first meeting. The parallel with Brazil deserves attention.

Our expansion model has historically been able to coordinate large generation and transmission projects. But the speed and quantity of new renewable energy ventures have created a different reality.

We have a huge backlog of projects, connectivity limitations, transmission expansion that takes years to implement, and growing signs that simply adding installed capacity does not necessarily mean adding the same amount of usable energy to the system.

Perhaps it is necessary, therefore, to evolve the question we are asking as well. Instead of simply asking how many gigawatts of new generation Brazil can install, perhaps we should ask how many additional gigawatts the system can efficiently integrate. The difference between the two questions is enormous.

The first measures construction capacity. The second measures systemic capacity. And this reflection also avoids a simplistic conclusion: the solution is not necessarily to build transmission indefinitely.

One of the most interesting discussions during the mission was precisely about the need to make better use of existing infrastructure.

Batteries, demand response, coordinated distributed generation, digital technologies, and flexibility mechanisms can, in certain situations, reduce congestion or postpone grid investments.

Australia has even been funding technologies aimed at increasing the use of existing infrastructure. The federal program of Grid Enhancing Technologies It supports sensors, smart equipment, software, and batteries capable of increasing network capacity and productivity, reducing congestion, and, in certain situations, postponing or reducing the need for new conventional network expansions.

This directly connects this third article to the previous one. In the second text of this series, I argued that the next necessary transformation is not simply technological, but institutional: we need to create economic signals capable of transforming flexibility into value. Now a consequence of this idea is emerging.

Flexibility and transmission are not necessarily competing solutions. They need to be planned together.

In some regions, building a new line will be unavoidable. In others, energy storage can reduce peak loads and congestion. In certain areas, reinforcing an existing substation may be more efficient.

In other cases, demand response mechanisms or network optimization technologies may postpone significant investments. The challenge is not to choose a technology beforehand. It is to identify what problem the system needs to solve and compare the available alternatives.

Perhaps the challenge, therefore, is not to maximize the amount of infrastructure built, but to maximize the amount of energy we can integrate with the available infrastructure, expanding it when necessary and using it better whenever possible. This was, again, one of the most recurring lessons from Australia. The energy transition cannot be planned as a sum of independent assets.

Generating power where there is no connectivity creates short circuits. Building transmission lines without coordinating the location of new projects can lead to inefficient infrastructure. Installing storage without identifying the service it will provide may simply transfer the problem.

Allowing thousands of individual decisions to occur without adequate economic signals can further increase the complexity of the operation. The grid, therefore, ceases to be merely the pathway between generation and consumption.

It becomes one of the most strategic resources in the transition. Brazil has sun, wind, water, biomass, and one of the cleanest electricity grids among the major economies. There seems to be no doubt that we will be able to continue expanding renewable energy production.

Perhaps the most difficult question is another one. Will we be able to build and use the necessary infrastructure more intelligently to transform all this potential into energy that is effectively available to the consumer?

After the mission to Australia, I was left with the impression that perhaps one of the scarcest assets in the next stage of the energy transition will not be renewable energy. It will be the ability to connect it to the system.

See previous articles in this series.

The next revolution we need is not technological, it's institutional.

From technology to system: Australia's first lesson.

The opinions and information expressed are the sole responsibility of the author and do not necessarily represent the official position of the author. Canal Solar.