What has been holding back renewables?
Consumers and producers of energy have a clear goal in mind when it comes to Australia’s needs: we want a fuel that is reliable, clean and affordable. While achieving this unique trinity remains an elusive goal, it’s one that should be perceived by industry as an opportunity rather than a threat.
The approval and construction of many new large scale solar farms, wind farms, and recent studies into the development of new hydroelectric projects, are all evidence of Australia’s continuing transition to a low carbon energy market.
A report by the Clean Energy Regulator (CER) found that there was record high investment in renewables in 2016, with large-scale renewable energy investment being five times greater than it was in 2015.
Minister for the Environment and Energy, Josh Frydenberg, said that this increase in investment has seen Australia become a “top 10 destination in the world for renewable energy projects, ahead of other resource-rich economies like Norway and Canada”.
But with this comes the challenge of ensuring Australia’s energy supply is stable, as well as affordable for consumers and producers.
The Australian Renewable Energy Agency’s (ARENA) CEO Ivor Frischknecht summed up these challenges when he said: “As Australia shifts from fossil fuel generation to a low emission energy system with more renewables and more distributed energy resources, we need to make sure energy is secure, reliable and affordable.”
The industry is moving towards renewables, and rather than this being a threat to energy producers, it should be viewed as an opportunity to invest in one of the fastest growing fuel sources.
Cost challenges
The biggest barrier to the uptake of renewables in Australia has often been the high upfront capital costs, in particular for technologies and infrastructure. However, in recent years this cost has been decreasing, and this trend is expected to continue.
The Australian Climate Council’s State of Solar 2016: Globally and in Australia report found that utility-scale solar plants are now providing cheaper power than new fossil and nuclear power.
Expressions of Interest (EoI) data from one of ARENA’s funding rounds also found that capital costs for projects such as utility-scale solar has decreased over the last two years.
Reliable energy for consumers and producers
Reliability is a key consideration for Australia’s energy industry, in particular for renewables as they often rely on intermittent sources, such as wind and sun.
BP’s Energy Outlook 2017 Edition found that despite renewables, nuclear and hydroelectric power expected to “account for half of the growth in energy supplies over the next 20 years”, oil, gas, and coal will still “account for more than three-quarters of total energy supply in 2035”.
The Australian Government has recently backed the gas industry through its 2017 Federal Budget which detailed a $28.7 million investment in a new East Coast gas development program. Gas in particular has been widely viewed as a “transition” fuel, which will provide reliability while the search for the elusive silver bullet fuel – one that is safe, reliable, affordable and clean – continues.
However, further technical progress in electricity storage as well as capital cost decline will advance the commercialisation of renewable energy technologies to this transitional fuel portfolio.
While the intermittent nature of renewables has previously held them back, batteries have been gaining popularity as a solution to this problem.
The CSIRO report, Future energy storage trends. An assessment of the economic viability, potential uptake and impacts of electrical energy storage on the National Electricity Market (NEM) 2015–2035’, found that energy storage could solve multiple challenges, including:
- Smoothing out intermittency
- Mitigating peak demand
- Maximising the value of on‐site generation
- Integrating renewables into the grid through voltage and frequency support
- Increasing the reliability of use of renewables off the grid
Opportunities for energy producers
Fergal Convery, Business Development Manager at Powered, an Australian energy and resource-focused business development company, said while Australia’s energy industry continues to work to create energy solutions, there are significant opportunities for companies wanting to either enter or grow in the Australian market.
“Australia was ranked fifth on the Ernst and Young Renewable Energy Attractiveness Index this year so it’s clear that the industry has significant investment potential.
“At the same time, there is also a strong need for innovative technologies and services that can help overcome current barriers and work towards finding new energy solutions.
“At Powered, we help energy companies grow in the Australian market by connecting them with others in our industry network. This type of collaboration will be one of the essential factors to help to further increase renewable energy in Australia.
“Our aim, along with our clients, is to help play a role in creating energy solutions in Australia by increasing access to innovative technologies and services in the industry,” Mr Convery said.
