Key energy issues

A major transition is underway in the electricity sector due to:

  • the inevitable retirement of Australia’s ageing, unreliable and inefficient coal-fired power stations.
  • dramatically falling costs for solar, wind and battery storage.
  • rapidly changing consumer preferences in response to high electricity prices and emerging technologies, with many seeking greater control over their power bills.
  • rising domestic gas prices due to expanded Liquefied Natural Gas exports linking Australian gas markets with international markets.
  • action on climate change requiring an orderly transition from fossil fuelled power stations to zero emission renewable power sources (Finkel 2016).

Energy and climate policy uncertainty in Australia has reduced investor confidence, and continues to hold the country back from making a smooth and orderly energy transition. In the absence of credible federal climate and energy policy, states, cities, businesses and households are increasingly leading this transition.

For more details:

Ageing Infrastructure

By 2040, 70% of the coal fleet in the National Electricity Market will be 50 years or older, this means the transition to renewables and storage is more important than ever. Because of their age, almost all of Australia’s coal power stations use obsolete and highly polluting technology.

Age, obsolete technology and the high proportion of power generated from coal explain why Australia’s electricity is one of the most polluting in the OECD.

For more detail see:

Costs

Australia needs a plan to replace ageing, coal-fired power stations and to reduce pollution from the electricity sector; this will require investment in new low or zero pollution power plants, such as wind and solar.

Wind and solar power are now the lowest cost sources of new power generation (Reputex and Carbon 2017).

For more detail see:

Modern Technologies

Solar, wind and energy storage costs continue to fall rapidly. These technologies now dominate new global power capacity. At the same time, new consumer products are providing households and businesses with more control over how they generate and use power.

Together these developments are rapidly changing the make up and operation of electricity systems, with a move away from long electricity grids relying on large single-sources of power (like coal and gas stations) to a more geographically distributed grid powered by a wide range of energy sources, and a diverse range of power plant sizes from household-scale to large-scale.

For more detail see:

Climate Change

In response to climate change, countries around the world, including Australia have agreed (under the Paris Agreement) to limit global temperature rise to 1.5 – 2 degrees Celsius. This requires transitioning away from coal and gas to zero pollution power sources well before 2050.

In Australia, tackling climate change requires at least 50-70% renewable electricity by 2030, and a transition to zero net emissions in the electricity sector well before 2050 (ClimateWorks 2017).

For more detail see:

Reliability

A reliable power system is one in which there is sufficient generation and transmission capacity to meet all grid demand (Finkel 2016).

High levels of renewable energy from variable sources like solar and wind can, and have already been achieved in countries such as Demark, Ireland, Spain and Germany without compromising the reliability of electricity supply (IEA 2017).

Variability per se, is not the issue but rather, how electricity demand and supply are matched. The electricity grid has always been designed to cope with variability. This is an essential feature of all electricity grids as electricity demand and supply must always be in balance.

A mix of technologies including variable renewables (like wind and solar photovoltaics), on-demand renewables (such as solar thermal, biomass or established hydro), storage (such as pumped hydro or batteries) and “demand response” (paying consumers to reduce their energy usage) may be used to ensure reliable supply.

For more detail see: