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Australia’s energy transformation could set a benchmark

Australian electricity producers are shutting down coal-fired power plants, stoking concerns of a short supply and high prices. Australia relies heavily on coal-fired power plants, with more than 50% contribution to the energy mix of the country.  

Australian energy companies have come under pressure from environmental groups as well as investors to make a shift to clean sources of energy. In February, Origin Energy said it will be shutting its biggest coal-fired power plant in 2025, seven years ahead of schedule. This comes after the country’s top energy producer, AGL Energy, said it is closing two of its biggest coal-fired power plants several years ahead of schedule.   

However, Australian politicians are unhappy with the development, and Federal Energy Minister Angus Taylor said these moves risk “higher prices… and a less reliable grid”. Australia has some of the highest prices for electricity in the world, and the country often suffers from blackouts.

Australian energy and green commitments

Australia, one of the largest emitters of greenhouse gases on a per capita basis, has pledged net-zero carbon emissions by 2050. The government has earmarked A$20 billion for technology development to achieve this target. Late last year, Prime Minister Scott Morrison told media representatives that Australia will reduce emissions by 2030 by between 30-25%, higher than its target of 26-28%. 

Industries in the country are already working on alternative sources of energy. BHP, Woodside, BlueScope Steel, BP Australia, Orica, APA Group and Australia Gas Infrastructure Group have formed a consortium called the Australian Industry Energy Transitions Initiative. 

Australia is also moving away from the use of liquefied natural gas (LNG), which some argue could be a vital energy transition fuel. However, the large export sector for LNG is causing domestic supply issues, writes Reuters. 

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However, while problems for the energy market may arise in the short term, there seem to be some long-term benefits to this strategy. “…in the net-zero scenario, we could increase the GDP of the country by about 36 per cent by 2050,” Dr Larry Marshall, chief executive of the country’s science agency CSIRO said in an interview.  

Microsoft Australia in a recent research paper titled ‘Accelerating the journey to net-zero: A blueprint for Australia’ lists the steps businesses in the country are taking to reach net-zero emissions.

According to the report, nine in 10 organizations have taken steps to decarbonise their use of energy and are turning to renewable sources. Furthermore, Microsoft found that 66% of businesses have already implemented sustainability ambitions in-line with government goals. However, skills and funding are named as barriers to the transition to cleaner sources of energy.

New energy models in Australia

Apart from the climate perspective, Australia’s coal-fired power plants are ageing, unreliable and inefficient, says a report by Climate Council. Due to the obsolete technology and rising demand for electricity, it is more important than ever for the country to transition to renewables and storage batteries.  

The best bets are wind and solar power, as storage costs continue to fall rapidly. New energy sources in the grid have also spurred the use of new technologies by businesses and households to generate and use power.  

The shift can be seen with the introduction of distributed energy resources (DER) which feed the electricity grid from a wide range of sources and are not entirely dependent on a single power plant or station. Australia’s Clean Energy Council (CEC), the peak body for the clean energy industry in the country, sees DERs as key to the impending energy transition.  

The country gets an ample amount of sunlight throughout the year, and Australians are leaning towards solar panels and battery systems to reduce their dependence on the central grid. Australian Energy Market Commission (AEMC) says that by 2050 more than half the houses in the country will have solar PV systems while a third of residential apartments will have energy storage.  

Australia is leading the charge in decentralization and digitalization of electricity around the globe, which can potentially reduce total system costs by over $101 bn through network service platforms, according to CEC. DERs allow the creation of Microgrids, and startups such as Brighte and Power Ledger are deploying new technologies to support distributed energy systems.  

Apart from solar, the wind is another leading source of energy for Australia and formed 9.9% of the total electricity used in 2020. Wind energy is the lowest-cost source of new electricity supply in Australia, which had 94 wind farms at the end of 2018.  

Australia’s Department of Industry, Science, Energy and Resources in a report said that by 2030, coal will fall to just 11% of total installed generation capacity, down from 35% in 2019. Wind power will jump to 17% from 10%, while small-scale solar will be up to 30% from 13%.  

Meanwhile, Australian Renewable Energy Agency (ARENA) was established in 2012 to spearhead the country’s renewable energy programs, provide funding to projects and offer information services. Until now, the agency has funded 618 renewable energy projects with a total investment of $1.83 bn.  

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