The Drivers of Australia’s Green Energy Transition
Why does this need to be discussed?
Australia is one of the few nations at the forefront of decarbonization activities. As per the recent report by Bloomberg, Southern Australia has completely terminated coal-powered electricity generation. And nuclear power plants are completely banned in every territory, eradicating dependency on two major global energy resources.
Today, almost 100% of the energy needs of southern Australia are driven by renewable energy.
So, in this case, a study will analyze the success story of Australia to determine the drivers of change, prospects, and potential lessons for the rest of the world.
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Amid the demeaning conditions of the planet, the urgency to switch to green energy needs no further emphasis. The world is on the brink of breakdown. The climate changes, varied species are dying, glacier ice is melting, and the earth is getting warmer. And the root cause- is an imbalance in the natural carbon levels.
Carbon is the primary component of all building beings, making 40-50% of the total dry biomass on the planet. However, amid the rise in population and industrial revolution, carbon levels have risen to life-threatening levels, posing the threat of even human extinction in coming years.
Hence, we have come up with many ways to save ourselves from extinction. And Decarbonizing is one of the top priorities.
The global leaders have joined hands to sign one of the most revolutionary deals in history- Global Carbon Neutrality by 2050. Known as the Paris Agreement, the pact was signed in 2015 at the UN climate change conference in Paris. The pact is one of the most revolutionary deals in the global front runner in EU’s green energy goals.
Even though developing nations struggle with the idea, some quickly transition to carbon neutrality. China, Australia and the UK are some of the most notable members of the transition.
In this case study, we will analyze one of these members- Australia- because it is undergoing the world's most intense and rapid decarbonization.
The case study will focus on the drivers of the green energy transition in Australia to outline a roadmap for the world.
The energy profile of Australia:
According to the Australian government’s website, fossil fuels contributed 71% of the total energy generation in 2021. Out of the total fossil fuel generation, coal was the dominant contributor contributing more than 50%.
The remaining 29% was generated via renewable sources.
Looking at the numbers, fossil fuels still contribute to almost three fourth of the total electricity generation in the country. However, compared with the historical data, Australia’s dependence on fossil fuels has decreased greatly from more than 80% in 2000.
Delving deeper, if we look at the territory-vice energy generation, some regions have outperformed others.
Take southern Australia, for example. The region has completely phased-out fossil fuel as the energy source, meeting 100% of its energy needs with only renewable sources.
Australian contribution to global demand and supply of coal:
Australia is the largest exporter of coal in the world, exporting more than seventy percent of the total produced coal. And Australian black coal meets more than thirty-two percent of global coal requirements.
In 2016, Australia had more than 1200 times surplus coal compared to the annual coal consumption of the country. This outlines the extensive growth of the coal mining industry in the country, out of which a majority is exported.
The green energy switch:
Australia is a tropical country with long beaches and coastal lines. This makes the country a treasure trove for harnessing solar energy and wind energy. And fully aware of the mammoth potential, Australia is harnessing the potential to its fullest possible capacity.
In 2021, twelve percent of the total energy was produced by solar energy, whereas ten percent was contributed by wind energy. This was the highest renewable energy production ever on Australian record.
The numbers rose in 2022 further. By the end of 2022, Australia had 3.36 million solar PV panels installed around the country, generating nearly thirty thousand megawatts solar power.
In terms of wind energy, the combined potential of the country stood at 9,234 MW with 94 operational wind plants.
Delving at the numbers, the critical question is how did Australia achieve this?
Drivers of Australian Green energy switch:
Australia is the world’s sixth-largest country sheltering just 25 million people. The nation is at the forefront of exporting fossil fuels to other nations, and at the same time, it is also phasing out fossil fuels dependence in its own country. And the main drivers of the dramatic shift are as follows:
The change begins at home:
In Australia, nearly one in every three domestic households has solar panels, the highest in the world. More than 3.3 million homes have already installed solar panels.
Solar rooftop combined capacity of Australia is twenty Gigawatts, the Clean Energy regulator highlighted.
Even the government of Australia is at the forefront of supplying concessions and regular grants for users installing solar panels in their homes. As per the official figures, the government subsidizes $396 for every KW installed solar power capacity.
A similar initiative is employed by countries such as India and Italy, but Australia seems to have mastered the art of luring people toward sustainable energy.
Going smaller, not bigger:
It is well a fact that small-scale electricity-generating projects are more economical and eco-friendly than large-scale projects.
Small-scale projects are quick and economical to erect, can be erected at various locations, and have less impact on the environment, making them ideal for various customers.
Hence, Australia has emphasized a great push on small and medium-scale renewable energy plants, like biomass fuel, small hydro projects and installing small wind turbines and solar panels at home, rather than investing in large-scale projects.
As per the data of the reserve bank of Australia, the investment in small-scale hydro projects grew significantly in the past years, comprising a whooping twenty percent share of the total national electricity market (NEM) in Australia.
Big Battery power projects:
Batteries are the only available method to store electricity. Hence, surplus electricity produced can be stored in batteries during off-demand hours and later used during peak hours. Bigger the battery larger the capacity of the battery. This simpleton model drives battery power plants, which house a group of batteries or a single large battery for backup power supply.
Today, this simpleton principle attracts global investors and leading firms such as Tesla and Black Rock into the batteries business.
And in the past decade, the Australian battery business has been booming because of Tesla Inc.
At the end of 2017, Tesla successfully built and commenced the biggest battery in the world- Powerpack, in Australian Hornsdale Power Reserve. The battery's capacity is marvellous 100 MW, second to only 200 MW Redox flow batteries from China.
Nonetheless, initiating the battery power project in Australia opened doors for global investments and brought a fresh pair of eyes to the renewable energy segment. (Image)
Since then, Tesla has been at the forefront of technological development in Australia and openly boasts about the upliftment of southern Australia as an “outlook of the sustainable future” through battery-driven sustainable power.
Over the years, Tesla has successfully developed the “Tesla Energy Plan on the Tesla Virtual Power Plant” and “Tesla Energy Plan” to expand a virtual power plant in Victoria, Australia.
Impressed by the success and vision of Tesla, global investors, such as Black Rock, invested more than a billion dollars in the big battery business last year.
Restraining the options: Ban on Nuclear power:
One interesting thing about the energy perspective of Australia is that the nation is devoted to expanding sustainable and green energy. And one of the most crucial steps in developing a safe energy future for Australia, the nation has a complete ban on nuclear power plants.
Hence, shifting towards green energy is also facilitated by limiting the available options for Australians.
Prospects for Australia:
Just like Finland passed a law in 2019 to abolish the use of coal as an energy source, Australia should strive for a similar aim in the coming years.
The lesson for the world:
Despite rapid developments in sustainable energy, coal power still dominates almost 70% of the nation’s energy production. Hence, there is still a long way to go. However, delving at the success of Australia, specifically southern Australia, in migrating towards sustainable energy options, the world can surely learn a thing or two from Australia.
Project green energy as the most profitable option:
Prioritizing green energy and restricting other options for the masses is the most common way to popularize sustainable energy. China adopted the same technique to popularize EVs in the market. China imposed fines on gas-driven two-wheelers, restricted the supply of license plates for new cars, and gave hefty subsidies on electric vehicles. As a result, today, China is the world's leading manufacturer and consumer of EVs.
Other nations should also develop new ways, like rising prices of conventional fuels, to project green energy as the better option in the market.
Additionally, the current energy model of Australia serves as the roadmap for other nations, such as India, which are still struggling to reduce their coal consumption.
Australia is feeding on the world’s addiction to coal:
Another critical observation is that just as coal consumption in Australia is decreasing, its net exports are rising rapidly. India, Taiwan, South Korea and Japan are a few of the largest importers of Australian coal. The list comprises nations that are heavily struggling to phase out coal. Australia is feeding on these underfunded nations’ addiction to coal.
Moving forward, rather than digging and supplying coal to addicted nations, the Australian government should extend technological, financial, and political support in phasing out toxic coal.
After all, environmental crises are restricted to a territory or a nation; it is a global problem that shall be treated like one.
Australia is the world’s sixth-largest territory and a front-runner in sustainable development. However, there is still a long way to go.
Australia lays the foundation for phasing out coal-based energy production for the world. However, Australia should not only aim to eradicate coal-based energy generation but also prohibit coal mining and export to other nations.
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