ESI GENERATION IRC

SKILLS FORECAST KEY FINDINGS DISCUSSION PAPER 2017

ESI Generation IRC Key Findings Paper | March 2017 | © Australian Industry Standards Ltd. 1

The purpose of the paper is to provide industry stakeholders with a summary of the key findings from the recent industry intelligence gathering activities overseen by the ESI Generation Industry Reference Committee (IRC). The key findings will be used by the IRC in the development of the ESI Generation IRC Skills Forecast and Proposed Schedule of Work for the UEP12 Electricity Supply Industry - Generation Sector Training Package. Once approved by the Australian Industry and Skills Committee (AISC) the Skills Forecast will replace the 2016 ESI Generation IRC Workplan.

Several targeted strategies were employed to collect industry intelligence about the opportunities and challenges for the ESI Generation workforce and any Training Package review work necessary to meet these industry needs. These included:

• A Call for Submissions process inviting stakeholder responses about key issues affecting skills and workforce development;

• An IRC Skills Forecast Survey seeking information on priority skill needs, skill shortages and issues relating to workforce training and;

• A comprehensive review of Data and Research Sources nominated by the ESI Generation IRC Australian Industry Standards has been tasked by the IRC to collect feedback from interested stakeholders about these issues on its behalf.

HOW TO PROVIDE FEEDBACK Stakeholders are invited to submit their comments on the findings outlined in this paper by close of business on March 17th 2017.

It is acknowledged that the information provided about issues in this paper is deliberately brief. The purpose of this paper is to validate and confirm the findings, which will inform the advice the ESI Generation IRC will provide to the AISC.

In considering the key issues and themes identified in this paper, we are keen to have any feedback that either confirms your issue has been covered, or else raises an issue you feel should be addressed in the Proposed Schedule of Work (FY17/18–FY20/21) for the UEP12 Electricity Supply Industry - Generation Sector Training Package to be submitted to the AISC on April 28th 2017.

Responses can be emailed to enquiries@australianindustrystandards.org.au

For further information please contact:

Jason Lazar Industry Manager M 0417 903 566

KEY FINDINGS DISCUSSION PAPER MARCH 2017

ESI Generation IRC Key Findings Paper | March 2017 | © Australian Industry Standards Ltd. 2

The ESI Generation industry has an estimated annual revenue of $17.68 billion, adding $6.26 billion to the Australian economy in 2016. The industry employs over 11,500 people across Fossil Fuel and Renewable generation. Although the demand for electricity is expected to increase over the next five years, public concern about the environment represents a significant challenge for the industry.

ESI GENERATION INDUSTRY METRICSRevenue ($b) 17.68Profit ($m) 2,579Average Wage ($ per year) 106,188.11No of Businesses 415Employment Growth (% to 2022) -3.1

Scope: Wind and Other Electricity Generation, Hydro-Electricity Generation, Fossil Fuel Electricity Generation1

KEY FACTS:

• 249 billion kilowatt hours of electricity produced by Australia’s power stations in 20152

• 28 per cent increase in energy productivity over the past 15 years3 • 4 per cent increase in energy production in 2014–15 to 16,711 petajoules3

• 33.7 per cent of Australia’s clean energy supplied by wind farms in 20154 • 105 per cent increase in wind electricity production between 2009-10 and 2013-145

ESI GENERATION INDUSTRY OVERVIEW

1 IBISWorld Industry Reports. Retrieved from http://www.ibisworld.com2 World Nuclear Association. September 2016. Australia’s electricity: Appendix to Australia’s Uranium paper.3 Australian Government, Department of Industry, Innovation and Science, Office of Chief Economist. October 2016. Australian energy update 2016.4 Clean Energy Council. Wind energy.5 Australian Government, Department of Industry, Innovation and Science, Office of Chief Economist. 2015. Australian energy update 2015.

ESI Generation IRC Key Findings Paper | March 2017 | © Australian Industry Standards Ltd. 3

ESI GENERATION SKILL SHORTAGES56 per cent of employers reported experiencing a skills shortage in the last 12 months6. The occupations reported as being in shortage were:

1. Educators2. Renewables Specialists

Employers identified the following reasons for the shortage with the most frequent response listed first.

Reasons for shortageShortage of skilled/qualified personnelAgeing workforce/current staff retiringCost/time to achieve the required qualificationGeographic location of the vacancyRemuneration/employment conditions

ESI GENERATION WORKFORCE

Source: ABS Labour Force, Australia, Detailed, Quarterly, Nov 2016

UEP

150175

525825875

1,6753,275

5,875

0 1000 2000 3000 4000 5000 6000 7000

ACTNTTASSAWAQLDVICNSW

ESI GENERATION WORKFORCE

6 Australian Industry Standards. February 2017. IRC Skills Forecast Survey.

ESI Generation IRC Key Findings Paper | March 2017 | © Australian Industry Standards Ltd. 4

TRANSITION AWAY FROM CARBON INTENSIVE GENERATIONThe industry faces future challenges with an increased focus on renewable energy due to concerns about the environment and consequent Government policies that promote renewable energy generation. This changed focus will limit fossil fuel electricity production over the next five years and subsequently reduce total wages and employment numbers in the industry7. Within the grid-supplied electricity sector, consumption is predicted to remain flat for the coming years8, leading to a changed focus from operations to maintenance9.

The 2016 National Electricity Market (NEM) Electricity Statement of Opportunities (ESOO) provides a projected outlook to 2025–26 of supply adequacy under a number of scenarios10. The Government is also supporting research into Carbon Capture and Storage technology to meet targets using conventional fossil fuel energy sources11.

CLOSURE OF THERMAL POWER STATIONSThere are concerns about the oversupply of electricity, with more power plants and the focus on renewable energy sources resulting in overcapacity12. Industry participants have built new power plants over the past decade based on forecasts of growing electricity demand13. New renewable capacity has also been established but capacity has not been significantly curtailed to avoid oversupply, although some plants have been mothballed14. Less-competitive plants are expected to continue to be mothballed or closed over the next five years15, meaning enterprise and establishment numbers are set to fall slightly over this period. There are also concerns within the industry that the ageing of generation assets and increased maintenance needs could increase the variability of electricity supply over this period16.

KEY ESI GENERATION SKILL ISSUES

7 IBISWorld. September 2016. D2611 Fossil Fuel Electricity Generation in Australia.8 Australian Energy Market Operator (AEMO). June 2016 National electricity forecasting report: For the national electricity market. http://www.aemo.com.au/Electricity/Na-tional-Electricity-Market-NEM/Planning-and-forecasting/-/media/080A47DA86C04BE0AF93812A548F722E.ashx 9 IBISWorld. 2016. OD5330 Infrastructure Maintenance Services in Australia.10 Australian Energy Market Operator (AEMO). 21 September 2016. NEM Electricity Statement of Opportunities. https://www.aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/NEM_ESOO/2016/v2/2016-Electricity-Statement-of-Opportunities-Report_V2.pdf 11 Minister for Resources and Northern Australia. 12 August 2016. Media release: $23.7 million for carbon capture and storage. http://www.minister.industry.gov.au/ministers/canavan/media-releases/237-million-carbon-capture-and-storage 12 Australian Energy Regulator. Generation Capacity and Peak Demand. https://www.aer.gov.au/wholesale-markets/wholesale-statistics/generation-capacity-and-peak-de-mand13 Engineers Australia. 13 July 2010. Infrastructure Report Card 2010. https://www.engineersaustralia.org.au/sites/default/files/resource-files/2017-01/Div_Can_archive_pub_Infrastructure%20Report%20Card2010.pdf 14 The Advertiser. 5 July 2014. Pelican Point Power Station will cut more than half its generation capacity early next year, threatening jobs.http://www.adelaidenow.com.au/news/south-australia/pelican-point-power-station-will-cut-more-thanhalf-its-generation-capacity-early-next-year-threatening-jobs/news-story/dec703384bd7448e1facc1c0d79b2047 15 Gladstone Observer. 11 March 2016. NRG cuts 20 per cent of workforce. http://www.gladstoneobserver.com.au/news/power-station-cut-20/2960169 16 IBISWorld. September 2016. D2611 Fossil Fuel Electricity Generation in Australia.

ESI Generation IRC Key Findings Paper | March 2017 | © Australian Industry Standards Ltd. 5

KEY ESI GENERATION SKILL ISSUES

AUTOMATION AND TECHNOLOGY CHANGESTechnology represents a challenge and a fillip for the electricity generation industry. Industries are using technology to modernise their workforces, reduce costs and improve production. Automation can either be applied to a relatively small part of a larger plant control system, or scaled up to fully-automated power stations. The Department of Industry, Innovation and Science ranks Power Generation Plant Operators as being at mid-range risk of automation17.

Another significant change is the introduction of remote monitoring where experts can remotely log-in to check the status of a whole control system, detailing findings and any actions required.

Predictive analysis tools are also assisting and enhancing maintenance activity. Predictive analysis of sensor data – process, condition monitoring and electrical sensor data – provides early warnings of emerging reliability, efficiency, throughput and environmental and safety compliance issues. These changes bring with them new skill demands for the existing and future workforce, as well as those organisations involved in their education and training.

DECENTRALISED ELECTRICITY GENERATIONIt is predicted there will be a decline in demand for centrally-generated electricity over the next five years. This trend is expected to continue as the decline in the energy-intensive manufacturing industry shows no sign of abating18.

This trend has occurred across fuel refining and metal processing industries over the past five years and is set to continue in other manufacturing industries over the next five years. Storage solutions for renewable electricity continue to diversify, improve and reduce in cost, further bolstering growth in solar panel uptake across Australia19 20 21.

17 Powerwest. Remote Power Stations. http://www.powerwest.com.au 18 Parliamentary Library. 17 November 2014. Performance of manufacturing industry: A quick guide. http://www.aph.gov.au/About_Parliament/Parliamentary_Depart-ments/Parliamentary_Library/pubs/rp/rp1415/Quick_Guides/Manufacturing 19 The Australian. 4 February 2017. Efficient solar energy storage a game changer in going off grid. http://www.theaustralian.com.au/news/inquirer/efficient-solar-ener-gy-storage-a-game-changer-in-going-off-grid/news-story/230f5f483c98dc3bd7139a8bb25bc153 20 The Australian. 31 October 2016. Tesla releases solar roof tiles. http://www.theaustralian.com.au/business/technology/tesla-batteries-to-be-installed-as-part-of-new-housing-estates/news-story/e31014be270790f70ea948539e153670 21 AGL. 5 August 2016. AGL launches world’s largest solar virtual power plant battery demonstration to benefit customers. https://www.agl.com.au/about-agl/media-cen-tre/article-list/2016/august/agl-launches-world-largest-solar-virtual-power-plant

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TECHNOLOGY AND RENEWABLESThere are a number of trends that are shaping the workplace and job design of the ESI Generation industry. There has been a move away from carbon intensive power generation, the closure of thermal power stations and a rise in renewable energy generation. The sector is also operating in an increasingly automated operating environment with the use of big data for decision making and efficiency gains.

The industry faces future challenges with an increased focus on renewable energy supported by Government policies that promote renewable energy generation.

The industry faces automation which can either be applied to a relatively small part of a larger plant control system, or scaled up to fully-automated power stations. Predictive analysis of sensor data – process, condition monitoring and electrical sensor data – provides early warnings of emerging reliability, efficiency, throughput and environmental and safety compliance issues.

These trends will see changes in the skills required by those working in the industry, with greater demand for skills in renewable energy systems, innovative operating systems, and big data analytics.

The workforce will operate in an increasingly automated environment with a requirement to understand and apply new technologies.

Significant stakeholder feedback indicates that the Training Package has not kept pace with the changes in the industry and that this has been the case for some time.

FUNDING AND APPRENTICESHIPSVariations in jurisdictional funding and traineeship arrangements are reported as impacting the viability of delivering training, in particular for narrow markets and in specialist technical areas. Longer term, this situation may lead to capacity constraints for employers and training organisations alike. These conditions also present challenges for RTOs and when considering future investment in training infrastructure and equipment, particularly those involved in new technology. There is also concern that reduced apprentice recruitment and concurrent loss of knowledge and skills due to an ageing workforce is resulting in fewer institutions providing - or having the capability to provide - contemporary and industry-valued training.

KEY ESI GENERATION SKILL ISSUES

ESI Generation IRC Key Findings Paper | March 2017 | © Australian Industry Standards Ltd. 7

PRIORITY SKILLS

The priority skills results are drawn from ESI Generation stakeholder responses to the IRC Skills Forecast survey conducted in February 2017. In order of priority to the industry, the following skills were identified as the most important for the ESI Generation workforce within the next three to five years.

SKILL CATEGORYRenewable technologyAdaptabilityPlant operationsElectricalInformation and Communication technology

Ranking of the 12 generic workforce skills in order of importance to the ESI Generation industry.

GENERIC SKILLTechnologyScience, Technology, Engineering, Mathematics (STEM)Learning agility/Information literacy/Intellectual autonomy and self-managementManagerial/LeadershipLanguage, Literacy and Numeracy (LLN)Design mindset/Thinking critically/System thinking/Solving problemsData analysisCustomer service/MarketingEnvironmental and SustainabilityCommunication/Virtual collaboration/Social intelligenceFinancialEntrepreneurial

ESI Generation IRC Key Findings Paper | March 2017 | © Australian Industry Standards Ltd. 8

INDUSTRY REFERENCE COMMITTEES New arrangements for training product development commenced in January 2016. These arrangements consider the needs of employers of all sizes, across all industry sectors, and ensure the delivery of high quality Training Packages that are nationally endorsed and internationally regarded.

Industry References Committees (IRCs):

• Provide a forum for industry engagement.• Direct the review, development and implementation of training package content relevant to

the industry sectors they cover.• Act as a conduit for industry feedback to the Australian Industry and Skills Committee (AISC)

and governments on industry trends.

IRCs are composed of individuals and industry members with the experience, skills and knowledge of their particular industry sector. IRCs are supported by independent and professional Skills Service Organisations (SSO) to develop and review Training Packages, and to inform Training Package development priorities.

IRCs have a direct relationship with the AISC, and are charged with identifying industry’s skills needs, developing business cases setting out the case for change, and providing the sign off on training products before they go to the AISC for consideration.

Each IRC will perform the following functions;

• Gather intelligence for their industry sectors to inform advice on Training Package development and review.

• Direct the work of its SSO in the development of industry proposals, cases for change and cases for endorsement.

• Oversight the development and review of Training Packages in line with the requirements of the AISC.

• Provide sign off for industry proposals, cases for change, cases for endorsement and other submissions for consideration by the AISC.

• Direct the work of the SSO in preparing the support materials where funding for additional activities is provided.

• Report to the AISC on progress of its work.• Promote the use of Vocational Education and Training (VET) in the sectors they represent.

BACKGROUND INFORMATION

ESI Generation IRC Key Findings Paper | March 2017 | © Australian Industry Standards Ltd. 9

ESI GENERATION INDUSTRY REFERENCE COMMITTEEThe ESI Generation Industry Reference Committee (IRC) has been assigned responsibility for the UEP12 Electricity Supply Industry - Generation Sector Training Package.

Chair (Interim): Richard Harvey, AGL

http://www.australianindustrystandards.org.au/committee/esi-generation-sector-industry-reference-committee/

The UEP12 Electricity Supply Industry - Generation Sector Training Package provides the only nationally recognised Vocational Education and Training (VET) qualifications for occupations involved in the electricity generation sector of the electrical supply industry including: plant operations support, systems operations, plant operations, electrical and mechanical maintenance and large scale wind generation maintenance.

The UEP12 Electricity Supply Industry - Generation Sector Training Package comprises 13 qualifications, four Skill Sets, 244 units of competency and associated assessment requirements and covers: Generation Operations and Maintenance, Large Scale Renewables and Remote area supply.

The UEP12 Electricity Supply Industry - Generation Sector Training Package is in the Scope of Registration of 43 Registered Training Organisations.

BACKGROUND INFORMATION

ESI Generation IRC Key Findings Paper | March 2017 | © Australian Industry Standards Ltd. 10

IRC SKILLS FORECAST & PROPOSED SCHEDULE OF WORKThe IRC Skills Forecasts focus on the prioritisation of the skill needs of the industry sectors each IRC has responsibility for. They are developed and reviewed annually in consultation with industry stakeholders, and submitted on behalf of the IRC to the Australian Industry and Skills Committee (AISC) for approval.

IRCs are required to consult broadly with stakeholders to ensure a whole-of-industry view about the opportunities and challenges for the workforce and the Training Package review work necessary to meet industry needs.

The IRC Skills Forecast is submitted to the AISC to inform the development of a four-year rolling National Schedule for Training Package development and review work. More information on the National Schedule can be found at: www.aisc.net.au/content/national-schedule

AUSTRALIAN INDUSTRY STANDARDSAustralian Industry Standards (AIS) provides high-quality, professional secretariat services to the ESI Generation Industry Reference Committee, in our role as a Skills Service Organisation. AIS provide services to eleven allocated IRCs which also cover the Gas, Electricity, Electrotechnology, Corrections, Public Safety (including Police, Fire and Emergency Services, Defence), Water, Transport and Logistics, Rail and Maritime industries. AIS supports these important industry sectors using our world class in-house capability and capacity in technical writing, quality assurance, project management and industry engagement in the production of training packages.

AIS was established in early 2016, 20 years after its predecessor the Transport and Logistics Industry Skills Council (TLISC) was established in 1996. More information about AIS can be found at www.australianindustrystandards.org.au

• We support industry growth and productivity through our modern innovative approach to establishing skills standards.

• We provide high-quality, professional secretariat services to help our allocated industry reference committees develop the skills that industry needs.

• We partner with industry to shape the workforce of the future.

BACKGROUND INFORMATION

ESI Generation IRC Key Findings Paper | March 2017 | © Australian Industry Standards Ltd. 11

P: (03) 9604 7200E: enquiries@australianindustrystandards.org.auW: www.australianindustrystandards.org.au twitter.com/AusIndStdsLevel 2, 31 Market Street, South Melbourne, Victoria 3205