New Energy Versus Old Industry in Australia

Patrick Lau

A scramble for new ways to generate and distribute energy has created a new gold rush Down Under.

This year's summer hit Australia's eastern seaboard particularly hard, with tarmac-melting heat waves charring the coastline. Sydney, the country’s most populous city, was briefly the hottest place on earth: a district in the city’s west recorded 117.14° F (47.3° C) on January 7. 

It was a scorch mark in a long summer of scorch marks, with temperature records falling like blowflies from September through April. As always, it’s difficult to ascribe an individual weather event (or even a prolonged series of extreme heat waves) to climate change. But independent analysis from the consultancy Ndevr Environmental has shown that Australian notched up another notable milestone in 2017: greenhouse emissions were the highest ever recorded. 

In those conditions, it’s no wonder that the battle over Australia’s energy mix reached a new level of intensity. Coal diehards, led by former Prime Minister Tony Abbott and hijacking the name of a prominent WWI general in the name of their group, the Monash Forum, launched a sudden lobbying campaign for a new government-funded coal power plant in April 2018. 

Most dismissed the Monash Forum as buffoons and dinosaurs, out for one last Jurassic lark. Even former Abbott ally, Treasurer Scott Morrison, a man who once brandished a lump of coal in parliament like a comic-book villain wielding a superweapon, slapped down the idea of government support for new coal plants as economic nonsense. “The risk of that,” Morrison told a business summit, “is consumers are going to have to pay more, or taxpayers are going to have to pay more in higher subsidies.” 

Meanwhile, the man who deposed Abbott, Malcolm Turnbull, is pushing ahead with his own National Energy Guarantee (NEG). Due to be finalized by the end of 2018, it sets an emissions reduction target for stationary (non-transport) energy of 26 percent by 2030. The renewables industry argues that this target will be met by projects already underway, effectively locking out any new large-scale renewable infrastructure for a decade. 

Whether the NEG gets up or not, it’s unlikely to come with a strong warranty. The current state of play, discouraging as it may be, is far from abnormal. Feckless politicians have relentlessly jerked the sector around for years, creating a hot mess out of inconsistent and insincerely applied policies. 

But almost by stealth, Australians have been integrating renewables into the mix from the bottom up. Led by industry, and increasingly focusing on a distributed grid, a paradigm shift is occurring—with or without explicit national direction. On-site generation technologies, in which electricity is created and used at the same point, are entering a period of exponential growth. 

Solgen is Australia’s largest commercial solar installation company, focusing on 100 kilowatt (and larger multitenant projects like shopping malls and airports. “For many years, Australia was world number-one in volumes of [residential solar] installations,” said its CEO, David Brown. 

“Up to 1.5 million homes [had installed solar] to 2016. In March this year, there were 127 megawatts of small-scale solar installed in Australia, which is a record bypassing anything we’ve seen before. So the residential segment of PV [photovoltaic] solar installation in Australia is still very, very strong. And it’s experiencing probably its second wave of growth with the use of storage—typically batteries.” 

Battery storage is booming across the country, with GTM Research reporting 247 MW of residential storage deployed in 2017—three times the figure of 2016, and handily beating out Germany, China, and Japan. Small- to medium-scale deployments of PV solar panels, combined with battery storage solutions, are rapidly becoming the norm for new construction projects across residential, commercial, and industrial sectors. And retrofit packages continue to become cheaper and more efficient. 

Brown noted that “what we are seeing is that the projects coming to us are increasing in volume, but also increasing in size. We installed the Adelaide Airport two and a half years ago, and it was 1.2 MW. At four and a half thousand panels, it was the biggest rooftop mounted [array] in Australia at the time. We currently have under construction four projects that are all well and truly bigger than Adelaide, all at once. So these things are getting bigger and bigger.” 

Bigger is putting it mildly. In late 2017, Australia reached peak storage hype when the futurist/flamethrower industrialist Elon Musk entered the ring. After a catastrophic storm hammered grid infrastructure in the state of South Australia, causing a massive blackout, Musk promised that Tesla would build the world’s largest lithium-ion battery there. And he promised that they’d either do it in 100 days, or do it for free.

 He got his money. 

Alongside storage, a number of improvements in PV technology are driving the take-up. According to Brown, “the price of energy from more traditional sources is going up … [and] the cost of componentry has reduced substantially over the last two to three years. The technology is becoming more efficient … [and] we’re getting smarter and more sophisticated in how we’re designing and installing these systems. We’re having panels that are a third capacity bigger, the same size, and a cheaper price … panels that we install with 25 years’ warranty, up to 95 percent efficiencies.” 

And larger commercial customers are following the homeowners’ lead in realizing that such moves make good financial sense. Projected payback periods can be as short as two years, down from as much as eight years in 2016. 

“The return on investment, or the commercial viability of this for a business, is much, much greater than it was even two years ago,” said Brown. “We no longer have as many conversations with the sustainability manager of an organization. These decisions are now largely made by the CFOs.” 

Of course, a secure energy sector is a diverse energy sector. Some days the sun just doesn’t shine, even in Australia, and it’s true that larger, traditional energy companies are starting to shift to renewables. AGL Energy, the owner of the coal plant that Abbott and company want to replace, is scoping to build renewable capacity in its stead.

 One group of technologies likely to see increasing adoption is waste-to-energy, variously rendered as WtE, W2E, or energy-from-waste (EfW). The terms refer to a suite of loosely grouped practices that use trash as a source of fuel. 

Those technologies are vastly more developed in East Asia and Europe (Sweden even imports rubbish to fuel its power plants). Smaller-scale industrial examples, particularly in agriculture and wastewater, can already be found across Australia. But it’s only recently that larger, municipal-scale projects are entering the pipeline. 

Australia’s first major WtE plant, the AUD$400 million (USD$306 million) Kwinana facility in Western Australia, entered its construction phase early this year. The Kwinana plant will absorb up to half of Perth’s nonrecyclable waste—as much as 400,000 tons a year— churning and burning it into 32MW of energy. In a country battling the effects of a Chinese ban on importing waste into the country, that’s a significant if imperfect solution to two problems at once. 

Questions remain about the environmental bona fides of WtE, and an even larger project in Sydney has been tied up in political debate for years. Critics maintain it’s a Band-Aid solution to the ever-growing volumes of waste generated by a disposable, consumerist society. And, despite improvements in filter technology over the years, WtE plants have the potential to be significant contributors to greenhouse and pollutant emissions. 

Ironically, turning landfills into small power plants may be less contentious. The Summerhill site at Newcastle, two hours north of Sydney, is building a solar farm on top of a capped (but otherwise unusable) landfill. That 5MW array will join a 2.2MW landfill gas generator, and a small wind turbine, already on-site. Because Summerhill has existing infrastructure allowing energy to be fed back into the grid, it’s a perfect location for a satellite energy generation and storage district. 

And increasingly, it’s the decentralized nature of the energy grid that promises the greatest disruption in the sector. Whereas utilities were once considered natural monopolies due to their huge capital outlay costs and the intrinsic network structures of their infrastructure, on-site generation promises to do for energy what cell towers did for telecommunications. 

A distributed grid offers massive advantages. Lower reliance on transmission networks, for example, means a smaller attack vector for storms or bushfires, and less energy lost as heat along the way. But industry experts agree on the need for a holistic strategy that doesn’t just replace coal-fired plants with renewable plants, and the need for a more versatile and powerful set of data tools. 

“We’re seeing a lot of technology around management and control of that energy, through monitoring systems and the like. The exciting part for us is finding new ways to disperse energy that’s already been tapped into a PV solar system,” said Brown. “And I think the convergence that we’re seeing from these new technologies is where we’ll see the most advancement in the next 12–24 months.” 

One striking initiative in this area is led by the Australian company Power Ledger, whose blockchain-based approach to energy monitoring promises to democratize the concept and use of electricity—power to the people, if you will. 

David Martin, cofounder and managing director of Power Ledger, said that “when you can put PV on your roof, and a battery in your garage, you can make a whole range of decisions about how you’re going to access energy. In places like Perth, and Queensland and Adelaide, where you have really high penetration of distributed renewables, treating networked businesses like captive customers doesn’t make any sense.” 

Power Ledger is rolling out projects alongside partners internationally, with their focus in Australia on residential developments. The eventual aim is to allow frictionless peer-to-peer trading of energy by small-scale “prosumers” (energy consumers who also produce it), although there are many steps (and other benefits) incorporated into that. 

“Where the blockchain becomes really useful: We can identify every kilowatt hour, where it was generated and consumed, by whom and when and at what price—all those elements of the transaction. We can then run a P2P trading environment in parallel with the existing wholesale market. So the blockchain gives you the granularity of data and record keeping, in an immutable way; sufficient that you can tie in an autonomous transaction to a series of physical transactions. Linear or relational databases can’t provide that,” said Martin. 

For now, that’s applicable to microgrids or embedded networks with a master meter—like new housing precincts, or shopping malls. But Martin noted that the next stage of energy markets is already on the doorstep, and there are concerns that mass grid flight will have unintended side effects. 

“What we’re seeing now is a transition to a small-scale system. More than one in four households in Western Australia have rooftop solar panels. In any other industry, that would be seen as a fundamental shift in consumer behavior. We’ve installed more generation capacity on rooftops in the last eight or so years than we have in large-scale transmission systems. The disruption’s already happened—the genie’s out of the bottle. 

“If transition continues to happen in an uncoordinated fashion, we get consumers that are less and less using energy from the grid,” Martin added, “and that drives up the cost of networks. If you take that to its logical conclusion, the people that are impacted most are the people who can’t afford it.” 

Energy trading could help to “smear” benefits and risk across society, according to Martin, although policy will have to catch up. 

“Because we’ve got this unmitigated move from a centralized to a decentralized model, that’ll fracture the value proposition of staying connected to the grid. If we can encourage someone to sell their energy to their neighbor, then we’ve got an opportunity to say ‘we’ve got a role for the network,’” said Martin. 

“The way network regulation is designed, the ability to sell electricity between peers doesn’t exist. And that’s not because it’s a bad thing, or because the regulatory framework says you can’t or shouldn’t do it — it’s because the technology’s never been available, so the rules just don’t contemplate it.” 

From Brown’s perspective at Solgen, the move to a distributed grid is inevitable: “I think that’s the unique thing that’s happening here. Because of the void of policy, the void of a plan, and the cost of energy in Australia, people are taking control … and risk-managing their future around the cost of energy. Because there’s no signs of it abating at the moment through traditional channels.” 

One of the catechisms of techno-progressivism is that invention moves ahead of institution; that means early adopters reap the gains while others clamber to catch up. The mulish obstinance of Abbott and his ilk have long prevented Australia from benefiting from large-scale renewables, as other economies have. But the next phase of the energy revolution is unstoppable. Distributed grid technology has its own momentum— but without high-level oversight, it will only deepen inequality, both within single countries and internationally. Countries like Germany, with consistent and overarching energy frameworks, can win out; the United States, embroiled in policy chaos, doesn’t have a clear pathway to capitalize on the technology for the benefit of multiple groups. 

There’s a quote attributed to William Gibson that’s that’s doubly apt here: “The future is already here—it’s just not evenly distributed.” For the full societal value of distributed grid technology to be realized, governments need to embrace it and let the sunshine in.