After decades of being tagged as the 'environmentally conscious but more expensive' energy option, renewable energy technologies are now breaking through the commercial barriers in Australia.
There is a global race to produce clean energy infrastructure more cheaply and make it more efficient. Australian technology businesses and researchers are at the forefront, leading advances in both solar and wave energy technology, amongst others.
THE REVOLUTION IS COMING
Considering the effects of climate change were first identified in the 1970s, the use of renewable energy technology got off to a relatively slow start in Australia.
However, several factors are now coming together to make renewables more commercially viable.
- Renewable energy is becoming cheaper to produce
In the past, the large upfront costs to purchase and set up renewable energy technology have been a big disincentive for consumers and businesses.
However, these costs are dropping fast as technologies develop and manufacturing processes become more streamlined and achieve economies of scale.
Lithium ion batteries are a good example. Used in many solar power systems to store power, McKinsey predicts their production cost could plummet by as much as two-thirds in the next few years. From $400/kWh to produce now to as low as $150/kWh by 2020.
And energy storage may be about to become even cheaper. A team at the University of South Australia has developed a system that it claims stores energy at one tenth the cost of batteries by melting and solidifying liquid salt solution.
- Renewable technology investment is becoming more mainstream
It's taken many years for the financial sector to warm up to renewable energy as an investment option. But this is changing rapidly.
Last year, NAB introduced Australia's first 'green bonds' – bonds that fund wind farms and solar energy projects.
Likewise, the Commonwealth Bank, in partnership with the CEFC, has launched a specialised loan stream for investment in renewable energy infrastructure.
German utility company, E.ON, has even gone as far as to move its conventional energy generation assets into a separate company away from its renewable assets. The split recognises the two distinctly focused companies and is also intended to isolate the low volatility high growth potential of the renewables business from E.ON's conventional energy generation business.
While German businesses and consumers have for some time been leaders in the adoption of renewable energy technologies, this is a powerful statement from E.ON about where it sees the future of power generation. E.ON's CEO said in November 2014, "We are convinced that it's necessary to respond to dramatically altered global energy markets, technical innovation, and more diverse customer expectations with a bold new beginning."
- Slowing growth in energy demand in developed nations
It's been well-documented that overall demand for energy in developed nations has started to plateau. This is in part thanks to improved energy efficiency of residential and commercial appliances and equipment, as well as a shift away from more energy intensive industries.
The Bloomberg New Energy Finance Corporation predicts that for OECD countries power demand will be lower in 2040 than it was in 2014.
Stagnating demand for power combined with lower costs for renewable energy production, is causing many energy suppliers to consider renewable energy production as an alternative to their traditional energy generation technologies.
RENEWABLE ENERGY – NOT JUST FOR THE CLIMATE CONSCIOUS
Renewable energy is undergoing a shift - it is no longer just purchased by the climate conscious. Many companies are taking it up for good economic reasons.
Ikea has recently committed to obtain 100% of its power from renewable sources by 2020. Last year it installed 16,000 solar panels on the roofs of its Australian stores, and currently generates enough electricity to power the stores' air conditioning systems and low energy lighting during the day.
Telstra is trialling the use of solar cells for back-up power generation. The system uses solar power to extract hydrogen from water, that is then stored for later use. If mains power to a site fails, the site can continue to run for eight hours using the hydrogen as fuel.
AUSTRALIA AT THE FOREFRONT
Australia is one of the world's leaders in photovoltaic (solar power) research. Last year, an Australian team led by researchers at the University of New South Wales set a world record in solar energy efficiency with a new solar panel design.
In a similar vein, last month Monash University released information about its research that has set a new efficiency record for solar powered hydrogen production systems.
Australia is also positioning itself as a leader in wave energy technology. Australian companies Carnegie Wave Energy and BioPower Systems are each developing their own technologies that generate sustainable power from the ocean's waves. Carnegie Wave Energy has installed a demonstration unit off the coast of Western Australia (which also generates desalinated water) and plans to begin producing power later this year.
THE TIPPING POINT
In spite of funding cuts and uncertainty over the renewable energy target, Australian renewable energy companies and researchers continue to make their mark as leaders in renewables technology. There is a growing sense of optimism in the Australian market that a technology led renewable energy revolution is swiftly approaching.
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