Why the Only Way is Up for Renewable Energy Investment and Growth

The energy in the room between the 2014 and 2015 Clean Energy Summit changed from funereal to uplifting. The tone this year was far more positive, with the global sector data showing we are heading in the direction of growth, and the industry in Australia moving upwards from an almost resting position in 2014. With the state-based commitments, more certainty with a RET to 2020, things are starting to look up – it’s no longer dead or dormant. Here are 3 main messages I took from Australia’s premier event on clean energy: 1. Investment is increasing (albeit from a low base), 2. Regulatory Leadership is largely state-based, and 3. The social licence is imperative.

Most of the charts on renewable energy adoption globally now show the classic "hockey-stick" (J-curve) growth. So why is there concern in Australia about the current and future state of renewable energy?  This article discusses some of the issues underlying the current clean energy conundrum and I think there is much to be upbeat about.

1. Investment is Increasing (albeit from a low base)

Importantly, investment is occurring across many sub-sectors in Australia - wind, solar, wave and others. Although the global investment is in excess of $US 300 Billion, Australia represents a seemingly minuscule 0.1%.  Nevertheless, it is still investment and the global trend is locked in. Specifically we are seeing a boom in the SME and commercial sectors with investment being driven by the business case. International players in technology and generation are present and poised to invest further in the various market segments, and to ramp up in-line with investment. The pressure is on the sector to now deliver a consistent reliable source of energy for the diverse range of end-users. As one presenter put it, there is "segmentation down to one [in the market]" with the wide variety of choices available in all market segments. With the falling costs of solar PV and other renewable sources, storage and EVs, investment at all levels can only increase.

We need industrial-scale solutions that address the peaks and troughs in both energy demand and supply

2. Regulatory Leadership is Largely State-based

Regulators are supporting the growth and investment, but from unexpected quarters. The support for renewables is being driven at the state level with New South Wales, Australian Capital Territory (ACT) and Victoria showing the leadership required to position the industry commercially. To see what impact state governments can have, the ACT is now using 33% of its energy from 3 renewable energy sources. Sub-national government authorities are seizing the opportunity to influence these policy settings (such as making RET mandates in their jurisdictions). This is happening not just in Australia, but globally. What is required is greater ambition for renewable energy growth and acceleration, which requires a long-term view and a consistent, bipartisan approach. The policies need to be set for a strong growth agenda to make investment attractive. More is needed to be sure, but it is promising to see what these states alone are achieving. As with most innovations, the regulations tend to progress only relatively slowly - trailing behind the technology - which is what we are seeing in this sector. 

As one of the MPs stated at the summit, the global transfer and transformation to renewables is unstoppable, and if Saudi Arabia is embarking on this, we too should take heed 

3. Even with High Levels of Consumer Support, the Social Licence is Imperative

Thirdly, the Social Licence to Operate (SLO) has a front row seat in the renewable energy sector. This surprised me, having seen the effort that the resource sector has put into SLO over the past 10-15 years, I wouldn't have expected to see the same intensity of focus. But experience from colleagues in the wind sector suggests that an equally serious effort is being made.  

In some communities, wind is perceived in a negative light and there is also reportedly some lack of knowledge of solar which is underlying some concerns (as expressed in focus groups being run by ARENA). The take home messages: the sector is taking the challenge seriously with strong results already apparent (i.e. community approval) and be sure to start any community engagement early. Overall, the results speak for themselves with 89% of Australians reported to be in support of renewable energy. 

An aspect of the transition to renewable energy which wasn't addressed sufficiently in my view is how incumbent industries and their impacted communities will structurally transition to the new sources of energy

Summary

Australia is building its capability in renewable energy. The industry as a group is highly focused, well led and well organised. With a national RET in play of 23% by 2020, its efforts in advocacy to governments have been remarkably effective given the opposition to sector growth.

The main points:

• While investment is low in Australia when compared on a global basis, it is increasing, and remember it is coming off a low base 
• Although national support for the sector has been lacking and uncertain, state-based policies are being effective in enabling technology adoption
• The sector is serious about how it interacts and supports the community and is leading in its approach to community investment and engagement.

The challenges of energy storage, optimising the use of the existing grid infrastructure, dealing with supply intermittency, and the relatively low rates of investment - though discussed extensively - still remain and will keep the industry focused into the future.

One thing is for sure, renewable energy and its future is well and truly alive and well in Australia.

Further information:

• Many of the presentations from the summit are now available online. I have compiled them into a single file here for your convenience.
• For information on the industry in Australia see the Clean Energy Council website.
• Recent global reports on the industry are also available.
• There are several renewable energy groups on LinkedIn that are worth subscribing to to keep up with relevant news items and discussions.
  
  

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Opinions are those of the author & photographs are courtesy of www.123rf.com

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