Most of my previous blog articles have focused on summarizing single journal articles or research papers. However, this time, I decided to undertake a comprehensive literature review on renewable energy generation in Australia and its future. In this article, we will delve into the energy usage and generation landscape in Australia, exploring its impact on society, economy, and the environment.
Introduction
In our modern world, the demand for electrical energy is insatiable. However, our reliance on non-renewable energy sources like gasoline and diesel to power vehicles has taken a toll on the environment. Meanwhile, the vast majority of machinery and equipment we depend on is powered by electricity, generated in specific locations and transmitted across vast distances. While electricity may seem convenient and benign locally, it poses significant long-term challenges for the planet. One critical aspect is its dependence on fossil fuels, contributing to greenhouse gas emissions that threaten our global well-being. Consequently, investing billions of dollars into renewable energy sources is not just a matter of business or politics; it is an essential investment for a sustainable future.
Australia’s Renewable Energy Generation
Australia has made significant strides in renewable energy generation since the early 1990s. While more than 70% of the country’s electric energy still relies on non-renewable sources like coal and fossil fuels (a notable decrease from over 90% in the early 2010s), solar and wind power have emerged as key players. These renewable sources hold special significance due to their widespread availability across different geographical areas globally. In Australia specifically, wind energy is particularly advantageous, with ample wind resources present throughout most of the country, allowing for year-round energy generation. Additionally, although solar energy availability varies across the nation, Australia harnesses a considerable portion of its annual electricity demand through solar PV systems. Given the country’s vast geographical expanse, solar energy remains accessible year-round, at least in a single state.
Rapid Development in RE Generation
Despite the challenges of integrating renewable energy (RE) into the main grid, the retirement of coal power plants and a push for decarbonization hold promising prospects for the future of RE. Prior to 2008, non-renewable energy sources accounted for approximately 90% of Australia’s energy generation.
However, by 2018, this figure had decreased to below 75%, thanks to substantial investments in alternative RE methods such as hydro and wind power. Throughout the 1990s, hydroelectric power fulfilled around 5–10% of Australia’s electricity needs. Yet, in recent years, wind and small-scale solar PV energy stations have emerged as significant contributors to the country’s RE generation. Notably, large-scale solar PV investments began in the mid-2010s, further bolstering Australia’s renewable energy landscape.
Australia’s Investments on RE
Australia has witnessed a significant rise in electricity generation from renewable energy (RE) sources, reaching a 20% share in 2018, thanks to government support and the declining costs of RE generation worldwide. Graph 2 illustrates the remarkable growth in large-scale RE investments, which primarily took place after 2015. Notably, Queensland, Victoria, and New South Wales were the key locations where the private sector made substantial investments between 2016 and 2019. Graph 2 also indicates that investors recognized both solar PV and wind as equally profitable opportunities, further driving the expansion of Australia’s RE sector.
According to insights gathered from the Reserve Bank’s liaison, the primary cost component of renewable energy (RE) generation lies in imported equipment and parts like solar panels and wind turbine blades. Nonetheless, it’s crucial to highlight that these RE investments have brought about a multitude of job opportunities in the regions where energy generation occurs. Reports further indicate that approximately 25–40 percent of the total production cost includes local content such as engineering, construction, and domestically manufactured products. As a result, there is a positive spillover effect benefiting domestic firms, despite the need to import certain components from abroad.
Demand and Supply
Various factors such as rising wholesale electricity prices, government incentives, and declining technology costs have spurred both investors and customers to prioritize renewable energy (RE) generation within Australia. The National Electricity Market (NEM) powers the eastern and southern states, while a separate grid caters to Western Australia and the northern region. The substantial increase in electricity rates within the NEM has provided significant support to the RE industry.
The fluctuating energy prices can be attributed to changing supply-side factors, as the demand for electricity in Australia has remained relatively constant over the years. This can be attributed to the oversupply of energy that was prevalent in the early 2010s, resulting in a scenario of low prices due to the surplus. Subsequently, as certain coal power plants were retired, the supply and demand for energy reached a more balanced state, albeit with a diminished supply side.
The closure of two brown coal-fired plants, namely Northern in South Australia (2016) and Hazelwood in Victoria (2017), had a substantial impact on energy supply. These closures resulted in the removal of over 2 gigawatts (GW) of cost-effective generation capacity, equivalent to 5% of the total capacity in the National Electricity Market (NEM) during the 2015–16 period (AER 2018). While this development provided support for the renewable energy (RE) industry, it also led to a significant increase in electric energy rates within the country. This was primarily due to the fact that coal is a cheaper source of energy, and RE generation involves higher fixed costs. Additionally, the rise in coal, gas, and other non-renewable energy (NRE) sources globally also contributed to this trend.
Conclusion
In conclusion, the information presented in this article sheds light on the economical and political landscape of renewable energy (RE) generation in Australia. The country has made significant progress in transitioning to renewable energy sources, with solar and wind power playing prominent roles. Government incentives, declining technology costs, and rising wholesale electricity prices have spurred investment and customer interest in RE.
However, it is important to note that this article provide only a summary of the collected information, and there is much more to explore in future sections of this ongoing article. Stay tuned for further updates on Australia’s renewable energy journey and its implications.
References
(1) Renewable Energy Investment in Australia – by Timoth de Atholia, Gordon Flannigan and Sharon Lai
(2) Australian Renewable Energy Progress – by A. Zahedi