How government inaction fuelled Australia’s renewable energy boom

Another report, another plan and yet still, we are as far from political consensus over energy and the environment as ever.

After the Australian Competition and Consumer Commission released the findings of its long-running review into the electricity sector last week, Canberra once again went to war, duking it out along the very same battlelines it has been for two decades.
It follows the Finkel Report, the ongoing fight over the National Energy Guarantee and the bitter war over carbon pricing.
But those despairing Australia will ever solve its energy crisis should take heart.
Canberra appears to be increasingly moving into a parallel universe, fighting ideological battles over coal-fired power generation, while the nation simply moves on.
Like many other countries, Australian business and consumers have left their political leaders behind, opting for renewables backed up by gas, hydro and, to a smaller but growing extent, batteries.

The global rush to renewables

According to the International Energy Agency, renewables last year saw the highest growth of any energy source, meeting around a quarter of global demand growth. China and the US are leading the push.
This chart compiled by BP shows the rapid acceleration in renewable uptake across the globe. Like its competitors, the oil company too has joined the renewables race.

Here in Australia, we are on track to wildly overrun our renewable energy targets as households rush to rooftop solar. You can thank Federal Government policy failures for that.
As political battles between and within the two major parties raged for 15 years, power companies refused to invest. As ageing coal fired generators were shut down — reducing supply — electricity prices spiked. And that provided a direct incentive to households to take matters into their own hands.
That has coincided with plummeting costs of solar panels and wind power generation, making the decision for many a no-brainer. In fact, the next big push for rooftop solar is expected from manufacturers and businesses looking to cut electricity bills.
According to industry research group Green Energy Markets, renewable generation large and small made up 17.2 per cent of all Australian electricity generation in the June 2017 financial year and, with the current rush underway, is on track to hit more than 30 per cent within the next two years.
That’s way above Labor’s 20 per cent target by 2020 which was deemed wildly optimistic when formulated a decade ago.

How energy storage could help

Banks refuse to finance coal-fired generators and our major energy producers see no future in them. The reasons are simple: They take far longer and are hugely more expensive to build than large-scale renewable plants. Plus, they cost more to run.
Most also view a carbon price as inevitable at some stage, which would make coal-fired generators unviable and their bankers nursing multi-billion-dollar losses.
It is a triumph of economics over ideology. While coal will remain an important part of our electricity industry for another 20 years, its influence rapidly will diminish as the new technology takes over.
It is worth remembering that, unlike renewables and gas plants, none of the coal-fired generators have been built with private capital. The only way another will ever be built is with yet another massive government subsidy.

Gas the culprit for higher power bills

Last week’s ACCC report into Australia’s ongoing energy catastrophe appeared to open the door for government intervention, via long term contract pricing, an idea quickly seized upon as justification for federal financing of a new coal-fired generator.
While the report highlighted ways to improve retail competition to help reduce power bills, it overlooked the key factor behind soaring energy prices: gas.
Renewable energy may be the cheapest way to produce electricity but, because of its intermittent nature, it requires back-up. Gas turbines, which unlike coal generators can be quickly turned off and on, are ideal.
The east coast gas boom transformed Australia into one of the biggest global gas exporters but left us chronically short of gas, sending prices into orbit.
Because it plays such an important role in electricity generation — as the final player to meet peak demand — gas is the swing factor in our power bills.

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