03 Oct 2019
Setting aside the political and ideological debates around renewable energy and looking at the practicalities of the shift, it is clear the transition to renewables is not straightforward.
There is a growing awareness that a high proportion of renewable generation needs complementary and enabling technologies to provide the kind of quality in energy supply expected by Australian households and businesses. Indeed, businesses and households anywhere.
"Energy sits at the core of the entire economy and so… consideration of its environmental impact is a profound issue for Australia.”
Put simply, I personally don’t think the original designers of Australia’s National Electricity Market (NEM) could ever have contemplated the amount of change the market is being asked to absorb.
Energy sits at the core of the entire economy and so the way it is produced and delivered, what it costs, and more recently, consideration of its environmental impact is a profound issue for Australia.
To reconcile production and distribution, cost, and sustainability is hugely challenging and so it is not surprising that there are numerous views on how to solve this conundrum.
There is no better way to illustrate this than on the range of government policy and support mechanisms in place.
But this complexity also means there is ample opportunity for offshore investors, equipment manufacturers and technology providers to participate given the potentially enormous amount of programs to stimulate investments. Japan is of course a major player in this space.
Some examples of this offshore interest would be J-Power’s stake in the Genex Pumped Hydro Project in Queensland and Eurus Energy’s portfolio of renewable assets (Hallett 5, Coonooer Bridge Wind Farm, Kennedy Energy Park).
There are certainly other challenges – affordability being one that both Australian federal and state governments are very keen to address. But there is also the technical integration of growing amounts of variable renewable energy into a system not designed for it.
(As an aside, who would have thought even in the recent past the issue is less the quantity of energy but more the quality and where it is made, to ensure the value of the grid is maximised!)
The industry is however keen to find solutions and, with time, these solutions should prove affordable.
At ANZ, we are very aware of the societal, economic and environmental impacts of energy policy and outlook.
From our perspective, for Japanese industrials, technology providers and investors in Australia, there will be opportunities in helping manage supply and demand in a decentralised network with a high proportion of variable renewable energy resources.
These opportunities could range from storage and gas peaking at the utility level to district energy systems, advanced heating, ventilating, and air conditioning (HVAC) and intelligent building services at the local level.
We see the momentum towards a decentralisation of the energy system is only going to increase, providing both challenges in terms of orchestration and management but also opportunities in terms of system resilience, cost reduction and carbon abatement.
Tsen Wong is Head of Energy at ANZ
This article is based off a presentation by Tsen Wong to Japanese clients at ANZ’s Resources, Energy & Infrastructure (REI) Day in Tokyo 2019
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
03 Oct 2019
24 Sep 2019