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Renewables are Cheap – Business Waking up to Reality

top 3 reasonsConsider these two propositions: The top reason cited by Australian business for using more, renewables are cheap. The top reason cited by Australian business for not using renewables it that it costs more.

Renewables Cost Less

As Ivor Frischknecht, the head of the Australian Renewable Energy Agency observes, both propositions cannot be right. It is pretty obvious now that the right answer is that renewables cost less, but ignorance is hurting business, as well as Australia’s policy debate.

Less than half of Australian businesses – according to a new ARENA report – actually source any renewable energy at all, and when they do it assumes only a minor role (less than 10 per cent of the needs of the user).

Cheap Renewables

The lack of knowledge is perhaps understandable – the arrival of cheap renewables is not something that gathers much mainstream media attention, despite the soaring cost of grid power to its current ridiculously high levels.

Big Corporate Solar Investments Ignored by Media

Two of the biggest corporate investments in renewable energy have received little or no mainstream media coverage.

These include the Sun Metals investment in a 116MW solar farm to underpin the expansion of its zinc refinery in north Queensland; and the commitment by Nectar Farms to power the country’s largest glasshouse for vegetable crops with just wind and battery storage, preventing a project from heading overseas due to high energy costs in Australia.

No Easy Job

Telstra got a lot of publicity for its recent commitment to a 70MW solar farm in Queensland, but as Nada Kalam, an electrical engineer for Telstra Energy says, it was no easy job.

“The economics for a solar PPA speaks for itself,” Kalam said. “Financially it totally makes sense.” But, Kalam added, it was hard work to get it through the system.

“It took a while but it set a precedent,” she said at the Clean Energy Summit on Tuesday. “We showed it is very doable and we built trust about the process. This is something we can do more of and at a faster pace.”

Solar Decision Process Taking too Long

Frischknecht cited the example of a mining company that was looking to install solar at one of its sites. The process took several years. If it had been a new diesel generator, it would have all been done in a matter of weeks.

Nectar Farms going 100% Renewable

There is no doubt, however, that the idea is starting to catch on. One mine in Western Australia is turning to wind, solar and storage, and is even considering going 100 per cent renewable energy, like Nectar Farms.

The new owners of the ageing Whyalla steel plant says the key to making it viable is to turn to green energy, so it is looking at wind, solar and pumped hydro, as well as expanding its co-generation activities.

Big Companies Embracing Renewables

Within the biggest companies in the country, specialist teams with experience in the energy industry are trying to slowly “turn the ship” around and get the corporation to embrace renewables.

Smaller businesses are installing rooftop solar at unprecedented rates (which explains why solar is by far the most popular technology choice, see graph below).

renewables are cheap, what are businesses using

New players are also coming into the market, looking at the small solar plant. One such is Lightsource, a specialist in corporate power purchase agreements in the UK, where it has installed a 6MW solar array on the rooftop of the Bentley car manufacturer, and the largest floating solar array – also 6MW – on the QE2 reservoir for Thames Water.

“We are looking at entering the Australia market and use our experience and expertise to shape the emerging corporate PPA market as well as developing a long term solar business here in Australia,” says Conor McGuigan.

The Solar Revolution

“Having developed over 1.3 GW in the U.K. We feel we can contribute to the solar revolution here and make a difference.”

Paul Curnow, from legal firm Baker McKenzie, says the shift to corporate PPA’s and the emergence of other providers of energy services is likely to have a big impact on business models for the incumbent utilities. That’s because they will find a way to “go around” the retailers and deal directly with the customer.

It means, however, that some businesses may have to take an element of spot market risk in large off-takes, as Telstra is doing in its investments. “It’s not insurmountable but it can be a “cultural issue”, Curnow says.

“I think we will see a lot more PPA contracting,”Curnow says. “There is real disruption out there. I don’t think we will have the same retailers we have now in 10 years time.”

The ARENA study released this week cites the knowledge barrier for the lack of engagement with renewable energy, and cites a Harvard Business Review article that says the mistake lies in business treating energy as a cost that needs to be managed, rather than an opportunity.

“[It’s] preventing them from making rational long-term investment decisions in the best interests of both shareholders and customers,” the ARENA report says.

“If they stand on the sidelines for too long they risk falling behind their competitors, both locally and internationally, in terms of saving on energy costs, reaching sustainability targets and meeting changing customer expectations.”

Source:  Giles Parkinson


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