We’re in the midst of an energy crisis, and commentators, politicians, industry figures and consumers alike are all looking for two things: relief, and someone, or something, to blame.
Debate rages about Australia’s energy mix. Geoscience Australia says our energy consumption is dominated by coal, oil and gas, which together make up 96 per cent of total consumption; coal also accounts for about 75 per cent of our electricity generation.
If you’re a reader of Liberal MP Matt Canavan’s Twitter, you’ll know that he, along with many others on his side of politics, believe fossil fuels are the way forward.
Lack of investment hurting consumers
But green power providers say their arguments ignore the fact that renewable energy is now cheaper, and it is a lack of investment in renewables that is further worsening the energy crisis.
“The reason we’re in this crisis is because we’re too reliant on fossil fuels, and the prices of those fuels have shot up because of world events,” said Dan Adams, co-founder of Amber Electric, an energy retailer with a stated mission of moving the world towards 100 per cent renewable energy.
“Renewables are now the cheapest form of power, and we’re in this situation because we’ve under-invested in renewables, batteries and storage over the past decade.”
Adams’ claims are backed by UNSW Professor Alistair Sproul, who said the cost of renewables has plummeted.
“We can and will make the transition to 100 per cent clean, green, renewable energy and it won’t cost the earth,” he said.
“The dollars and cents are on our side now and the market is changing before everyone’s eyes, so I think it will likely happen faster than most people might think.
“Companies who are invested in coal were perhaps thinking they were viable for the next 10 to 15 years, but now they are losing money hand over fist – and that becomes the driving force behind some of the changes.”
What’s happening in the energy market?
So with the cost of renewables relatively low, why are we in the midst of an energy crisis?
“International coal and gas prices have increased dramatically over the last few months as a result of sanctions against Russia, and so coal and gas generators in Australia are facing higher costs,” Adams said.
“We’ve also got lots of coal generators offline, about 30 per cent of the fleet, for scheduled or unscheduled maintenance.
“And, of course, it’s been a very cold start to winter, so demand has been higher than normal. All of these things combined has meant wholesale prices have spiked to very high levels, until the point where the regulator has had to intervene.
“All the coal and gas generators are annoyed because they’re not making money and so they’re withdrawing supply from the market.”
David Ireland, founder of fellow electricity retailer Radian Energy, agrees.
“One reason why we have the price rises we have now is that we haven't made the necessary investments into the national grid and national generation assets that we should have,” he said.
“The government just hasn’t done enough. So, like we have now, when it rains a lot, gets cold, and when a third of our coal generation assets are down for maintenance - and if you’re suspicious as to why that would be the case, you’re not the only one - then you get big price rises.”
The crisis reached a nadir earlier this month, when the Australian Energy Market Operator (AEMO) took the unprecedented step of suspending the wholesale electricity market.
It introduced a price cap and forced generators who took their services offline to fire them back up, in what AEMO chief Daniel Westerman described as “very challenging times”.
"It was impossible to operate the system under current conditions while ensuring reliable, secure supply of electricity to Australian homes and businesses,” he said.
Ireland, Adams and Professor Sproul all agree investment in renewables is the path forward.
“We do need a lot of investment in renewables that provide base load power, day and night. We need to upgrade our networks to be able to support this, and we need to continue to incentivise homeowners and business owners to install solar and battery,” Ireland said.
Adams said Amber customers with solar, electric vehicles or batteries at home have been drawn to its unique business model, which automates customers’ batteries to discharge around 6pm each day, earning them money as they pump much-needed renewable energy into the grid.
“If we could get the three million households with batteries to contribute to the grid, we’d have 15 gigawatts of battery storage, which could replace the entire coal fleet in the country,” he said.