Australian Government announces program to bolster energy innovation

Article published 29 November 2023

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Australian Government announces program to bolster energy innovation

HAVE you ever heard of a virtual power plant?

Households that are set up with solar panels can install a battery, which stores power to use later or sell back to the grid.

If that household is a part of a virtual power plant (VPP), they join with thousands of others across Australia to provide a back-up source of power. This network forms a part of the energy grid that is especially useful in emergency situations, when power can immediately be drawn on and redirected to where it’s needed.

There’s a range of incentives for people to join a virtual power plant, including bill credits, direct payments and steeply discounted batteries.

It’s not just households with the funds to install solar panels that are joining up – schools and businesses are participating, too.

As of 2021, there was 1.1 gigawatts of power stored in home batteries. That’s more than four times the capacity of the Liddell power station that closed in April 2023.

It’s a clever idea, and it’s just one of ways that the energy sector is working to catch up to Australia’s target of 82% renewable energy by 2030.

Transition to Renewable Energy

Right now, we’re far behind on that goal. Australia is ranked in the top 10 globally for coal consumption – which generates just under half of our energy.

Even if you’re not worried about the environmental impact of fossil fuels, the reality is that renewable energy is much cheaper once the infrastructure is in place.

Australia is a massive exporter of coal, but that also means that we are competing with other countries to purchase coal from private mining companies – so if demand goes up overseas, your power bill goes up accordingly.

The Australian Government has put a cap on the cost of coal in the domestic market but that’s set to end in 2024, along with a similar cap on natural gas.

In contrast, Australia has never had a shortage of sunshine. The use of hydropower and wind farms as well as massive ‘grid scale’ batteries and VPPs can shore up the risk of overcast days.

So how far off are we?

For a single half hour in September we managed to generate enough renewable energy to meet more than 98% of Eastern Australia’s consumption – but that was under fairly ideal conditions and we’re a long way away from being able to consistently meet the country’s energy needs without coal-fired power stations.

South Australia is doing much better and has recorded more than 10 consecutive days where wind and solar generated enough energy to meet 100% of the state’s needs.

Overall, only about a third of Australia’s energy is generated through renewable sources. This creates a lot of movement in the cost of energy because of shifts in the export prices for coal and natural gas.

That said, there are some big ideas for how to speed up the transition and get energy prices down.

To support this, the Australian Government has announced that they are expanding an existing scheme that is designed to encourage investment in the clean energy sector.

Federal Investment Scheme

The ‘capacity investment scheme’ will underwrite renewable energy projects. It is believed this will provide 23 gigawatts of new energy from a variety of sources, as well as 9 gigawatts of storage.

That’s a whole lot of power. Not as much as we need, of course.

The scheme will involve a competitive tender process and will provide both a floor and a ceiling for revenue. Basically, investors can only make a certain amount of profit but they also can only lose so much if things go south.

There’s a risk involved to all parties, as with any investment. However, that risk is split between the Government and the private sector.

It’s unclear how much this program will cost, or how much revenue could be raised.

Future plans

This all may be very interesting for some, but for many of us there are more immediate concerns when it comes to energy – namely, how much is the next bill going to cost?

Well, there will hopefully be good news on that front from July next year when the new default market offer is announced. It’s expected that if inflation continues to ease, energy prices will drop.

At the same time, rebates should also go up. Hallelujah.

Energy Rebates and Assistance

If you live in NSW:

If you are elsewhere in Australia, you can find information here. You can also use the Australian Government’s Energy Made Easy website to compare energy retailers and find the right plan for you.

If you’re having trouble figuring out how to find the information you need, you can also get in touch with us on 1800 451 488

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