Australian Businesses Are Leading the Transition to Renewable Energy

30th May 18

Cameron Quin

Written by Cameron Quin

Although the National Energy Guarantee (NEG) only establishes moderate emissions reduction goals for Australia, this hasn’t slowed down companies in their clean energy initiatives. Investment in renewable energy was nearly zero just a decade ago, and the few companies deploying it were focused on reducing their environmental footprint, since savings were not viable yet. As of 2018, commercial solar power and other clean energy system are simply the best business decision: it is now cheaper to set up a new solar or wind farm with energy storage than to build a new coal-fired power plant.

Consider the example of commercial solar power, which has become a much better investment. In less than a decade, solar photovoltaic systems became around five times cheaper, while electricity became twice as expensive. It’s simple math: the return on investment for solar power became 10 times higher!

Why Do Australian Companies Prefer Renewable Power?

The Australian Climate Council surveyed businesses of all types and sizes, and determined that most are considering renewable generation due to the excessive electricity tariffs.

  • Between 2016 and 2018, renewable energy production from Australian businesses doubled. As of May 2018, more than 46,000 companies have deployed clean energy.
  • 46% of companies are planning solar and wind power projects, and 33% plan to use them as their main energy source.
  • Many companies are also considering newer technologies like electric vehicles and energy storage systems.
  • The NEG aims for a 26% emissions reduction by 2030, with respect to 2005. However, with the current growth of solar and wind power, the target will probably be met by 2020.

Note that these trends are not specific for one industrial sector; companies of all types and scales are expressing their interest in renewable energy. These findings also confirm that coal is no longer the cheapest electricity sources, because otherwise these firms would be investing in it. Coal continues to provide low-cost electricity for a very simple reason: existing plants are old and paid back their investment decades ago, but new units are not competitive.

Another important finding from the Climate Council survey is that companies are starting to replace natural gas with electricity from renewable sources. Electric heating appliances have an extremely high running cost when the power grid supply is used, but they become viable with self-generated electricity.

Concluding Remarks

The business case for solar power and other clean energy systems is different for each customer. However, with the high electricity prices in Australia, the financial return is attractive. In the case of commercial solar systems, the Power Purchase Agreement (PPA) model is preferred by many companies because their upfront investment is zero while savings are immediate.

Investment in solar and wind power will most likely speed up as the cost of energy storage decreases. Although batteries are still held back by price, there can achieve synergy with solar panels and wind turbines by eliminating their main weakness – variable energy output. You can simply store energy in batteries, to be used when sunlight and wind are lacking.

 

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