Home' Future Building Australian Infrastructure Review : Volume 8 Number 1 Contents 32 futurebuilding
Among the consequences of the storm
that cut power in Victoria late last year
was Alcoa’s closure of one of two
potlines at its vast Portland smelter.
Although the disruption lasted just a few
hours, it took months to get the line up
and running again. The outage was a
stark reminder that we need to act now
to secure Australia’s energy future.
As reliability has declined, electricity
prices have soared. Earlier this year,
some businesses faced price hikes of
around 20 per cent.
These two elements – cost and
the reliability of supply – lie at the
heart of the challenge. Also, there is
sustainability, with corporates expected
to consider their carbon footprint
and how they source energy. The
challenges in getting this right are
significant; larger still are the costs of
getting it wrong.
Australia’s ongoing energy transition will
eventually see zero-carbon renewables,
such as solar, wind and hydro, provide
the bulk of its energy requirements.
Gas has a vital role to play as
a bridge – but the rapid rise in gas
prices coinciding with the shutting of
nearly 15 per cent of Australia’s ageing
coal-fired power stations recently has
undermined that, with more to come
(for example, the Liddell Power Station
in New South Wales).
An inconsistent approach,
and lack of consensus on the way
forward between federal and state
governments, has complicated efforts.
The recent Finkel review tackles
these issues with a multi-decade blueprint
focusing on four areas: increased
security, future reliability, rewarding
consumers and lower emissions.
The paper foresees a reduced role
for coal by 2050, and a vast increase
in the use of renewables – from 28 per
cent in 2020 to either 73 per cent under
a clean energy target (CET) policy, or
70 per cent under an emissions intensity
scheme (EIS). As the paper points out,
wind power is now cheaper than coal,
and solar is closing fast.
Firmly mid table
When it comes to energy development,
dozens of countries are ahead: Australia
ranks in 53rd place in the World
Economic Forum’s 2017 Global Energy
Architecture Performance Index, just
behind the United States and Israel.
Switzerland, Norway, Sweden,
Denmark and France lead the way;
Sweden’s investment in renewables is
helping it to reach its target of 50 per
cent of consumption from renewable
energy ahead of schedule.
The index assesses each country
based on three factors: how well its
energy architecture meshes with its
economic growth; the impact of its
energy supply and consumption on
the environment; and the extent to
which the energy supply is accessible
and diversified. It is the second of
these factors in which Australia fares
The Australian Government’s
acceptance of 49 of the Finkel review’s
50 recommendations is a welcome step
to building a more secure, reliable and
lower-cost energy future. But without
the 50th recommendation – the clean
energy target – this will not provide the
clear direction and investment certainty
required to ensure an orderly transition.
Improving Australia’s energy mix will
require investment in new energy assets.
Uncertainty has seen some
companies implement their own
solutions. The road to self-reliance is
not straightforward, but the benefits
– reduced volatility and operational
By Craig Shortus, Head of Utilities & Infrastructure Australia, ANZ; and Tsen Wong, Director, Utilities
& Infrastructure, ANZ.
Are we harnessing the
Source: AEMO, ANZ
Some businesses faced price hikes of around 20% this year as reliability declines
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