Australian energy white paper needs to plan for renewable future

The Australian Federal Government has released the Draft Energy White Paper 2011 - Strengthening the Foundation for Australia’s Energy Future (http://www.ret.gov.au/energy/facts/white_paper/Pages/energy_white_paper.aspx) that provides the Australian Government’s “overview of Australia’s future energy needs to 2030 and defines a … strategic policy framework to guide the further development of Australia’s energy sector.”

The core objectives of the plan are: provide accessible, reliable and competitively priced energy for all Australians; enhances Australia’s domestic and export growth potential; and deliver clean and sustainable energy.

Today (13 December 2011) the Australian Minister for Resources, Energy and Tourism, The Hon Martin Ferguson, released the Draft Energy White Paper to draw in consultation for the plan.

‘The Sustainable Energy Association of Australia (SEA) is an industry chamber supporting market-based solutions to grow sustainable energy, and we welcome the continued planning for a sustainable energy future for Australia, and the White Paper will be an important element to lead market reforms across Australia’ says Professor Ray Wills, SEA Chief Executive.

The draft Energy White Paper emphasises energy efficiency, as it should. Energy efficiency is fundamental to the punter (reduced household costs), to businesses (profitability and national productivity) and to all consumers through reduced network costs removed when over-investment in systems occurs to deliver energy that might then be wasted.

‘Electricity price reform is needed – reform that eliminates subsidies for the use of fossil fuel in the generation of energy, and delivers cost reflective pricing that has perversely inhibited the improvement of energy efficiency, and take up of renewable energy in Australia,’ says Prof Wills.

‘While the draft Energy White Paper frequently mentions renewable energy, it is hardly bullish on the expected share of renewable energy in the longer term, yet there is already strong data suggesting significant moves for electricity generation from renewable sources in Australia has started,’ says Prof Wills.

The latest Bureau of Resources and Energy Economics’ (BREE) annual publication, Major Electricity Generation Projects shows the start of the transformation of Australia’s energy mix, with 36 per cent of the committed new investment in gas and 41 per cent in wind in the 12 months to October 2011; while coal-fired power generation, which currently accounts for around 75% of Australia’s total electricity generation, was only 17% of the committed new investment in power stations for the 12 months to October 2011.

‘If this figure held for the next few years, this potentially means that in 30 years time, less than 20% of Australia’s energy use will be from coal,’ says Prof Wills.

‘While Australia is lagging the rate of investment in renewables in other parts of the world, the market is now starting to change. But the white paper does not acknowledge the global change that has already occurred – in 2010, average world-wide investment in renewable energy accounted for approximately half of the estimated 194 gigawatts (GW) of new electricity generation capacity added globally during the year.’

‘Renewable energy will get cheaper over time and the report needs to consider rapid technological development of renewable energy generation in other parts of the world are significantly reducing the cost, and improving the efficiency, of renewable energy generation right now.’

The report describes domestic solar as a“small but growing segment of customer‐owned generation”but does not refer to the current data – which is, as of October 2011, 500 000 homes in Australia, or around 4% of almost 8 million Australian homes, now have solar panels.

‘As solar electricity has reached domestic retail parity now in Australia, I would also suggest that by no later than 2013:

  • almost all builders will offer new homes will have solar fitted as standard, representing at least 100 000 homes per year around Australia.
  • as a conservative estimate, existing homes will be adding solar panels at no less than 200 000 homes per year (2.5% annual take up).

Based on these estimates, as much as 50% of domestic electricity consumption will be sourced from solar by 2025.  In relation to other domestic energy use in 2011, according to Australian Bureau of Statistics (ABS) data, over half of hot water systems in Australian households were electric (52%) one-third were mains gas (36%), and 10% from solar hot water. With the increasing price of both electricity and gas, potentially 90% of hot water heating in homes could come from solar hot water, ground source heat pumps, or other renewable sources by 2025.

The draft White Paper is also very reserved in its forecast for motor vehicle renewal and the adoption of electric vehicles (EVs) in Australia.

‘Adoption of EVs will in reality have more rapid transitions favoured by government policy measures and regulation, buoyed by consumer sentiment, targeted by corporate and government fleet managers, and soon to see increased demand as reduced vehicle costs will combine with a high oil price to bring real price advantages to electric motorists.’

‘If the adoption rate of electric vehicles follows that of other motor vehicle technologies, electric vehicles even at a modest cumulative adoption rate of 5% per annum from 2015 could well exceed 25% of new car sales by 2020, and more than 50% of new car sales by the mid 2020s,’ says Prof Wills.

The Energy White Paper for 2030 needs to ambitiously plan for how we decarbonise, and provide confidence that our economy will not be stuck with a carbon legacy in energy generation as we establish a carbon price.  With the level of incentivisation and engagement across government, business and the broader community, transition to a clean technology future is not likely to be slow.

Australia’s economy for the last 20 years has witnessed rapid technological transitions. In relation to the next wave of change to low carbon technologies, the response is likely to be an even faster transition, favoured by government policy measures and regulation, buoyed by consumer sentiment, targeted by corporate and government operations, and soon to see increased demand as renewable energy arrives at grid parity across Australia.

‘Around the world, growth in renewable energy investments is now greater than any other energy investment – except for Australia. As the nation with the world’s best renewable energy resources, all Australian Governments and their agencies need to not only be more ambitious in their support of renewable energy, and the final Energy White Paper must do more to embrace this.’

‘Even more importantly, the final Energy White Paper must also prepare Australia for the transformative arrival of renewable energy generation,’ says Prof Wills.

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