The battle over electricity prices and coal might be raging in Australia but meanwhile business is getting down to business.
Among the interesting news that came our way this week in the jobs and biz space is that US companies are coming to Australia to see why and how we’ve had such success with solar and battery uptake. There’s been a surge in energy efficiency work as energy prices jump 20-30 per cent at contract renegotiation time, signalling that energy efficiency onay once again be sexy. And some mixed news: the closure of the Carbon Disclosure Project at the same time that the financial regulator gets serious about climate risk disclosure.
Demand doubling in the wake of high energy prices
Envizi chief executive David Solsky says demand for his services is double the normal rate of enquiry for this time of the year.
“The fundamental drive we see is the energy prices going through the market, particularly on the east coast,” he said.
“A lot of customers who in the last month needed to go back to market to renew energy contract and find they are faced with prices of 20-30 per cent on the cost of energy.”
Solsky says the imminent closure of the Hazelwood power station combined with South Australia “capacity challenges” means his customers are now starting to “really get concerned”.
In customers’ views the cost scenario seemed “uncontrolled and unmitigated”, he said, with the only option to exert some control looking to be on the demand side, by addressing consumption.
Typically most are looking for low hanging fruit, so cutting operational expenditure, rather than capital expenditure “in order to get the business case across the line”.
Capex isn’t ruled out though, it’s just that it takes longer for approvals and to implement, maybe 12 months, while efficiencies through opex are easier to negotiate and quicker to implement, maybe in just two months.
And when prices rise at that rate, speed clearly becomes of the essence.
See our article on how some building management systems suppliers helped property owners deal with the recent heat wave.
Bluescope says the energy crisis is because of gas (not renewables)
Interesting that BlueScope Steel’s chief executive Paul O’Malley let loose on The AFR on Tuesday with a spray at the huge electricity prices, now about 10 times higher than the US, he said. But in a very long article his complaints were well aired but not the solution, until almost the very end of the article.
It was the fault of gas that prices were so high, he said.
“The biggest issue is the ability to contract for gas. Gas is very tightly held in this country …
“If we do not have coal, then we must have gas,” he said. But he pointed out that gas reservation policies were anathema in Australia.
“Reservation in Australia is a dirty word.
“If there is gas in Australia and we say it can go overseas, and we don’t have any baseload generation I think we are going to have an energy catastrophe in Australia,” he said.
Cost for energy might before long be $150 to $300 per megawatt hour for some players, he said.
Cleantech is going strong
Business engagement manager climate change at WWF Monica Richter says there is strong momentum to pursue a more climate positive agenda at the top end of town.
She points to the growth of impact investing, such as the the Impact Investment Fund, Mirvac’s push into distributed energy and the Renewable Energy Buyers forum with JLL, which is about to announce its first project for a 10 year renewable energy commitment.
None of this is rocket science, she says. All of it “makes good business sense”.
For instance, locking in your electricity prices at a time of volatility.
The buyers forum has significant interest from other potential buyers, she says.
“Every week I meet with companies interested in participating. Either they have a mandate from head office to move to 100 per cent renewable electricity contracts or they are reviewing their carbon and energy commitments. And in the process they want to see how they can reduce their costs.”
EnergyLab and Climate-Kic
The recent launch of Piers Grove and Nick Lake’s EnergyLab under the the European-based Climate-Kic brand with Christopher Lee, (on leave without pay from OEH) as chief executive, was a huge success and case in point, Richter said.
The program, located in the old Blackfriars building in Chippendale in inner Sydney, is a start up accelerator program that’s private-sector led but supported by the NSW government’s Jobs for NSW with a $120,000 grant for fitout and first year operating costs.
Jobs for NSW chief executive Karen Borg said EnergyLab had capacity for 60 clean energy entrepreneurs with a target of creating 76 direct jobs each year in the cleantech sector.
Richter says the launch was a great boost to confidence.
“There was so much positivity about in the room about the opportunity for disruption,” she said.
There are a lot of speedbumps on the road but the dominant feeling is “let’s get on with it”.
For instance, Vicky Lay, managing director at Artesian Venture Partners, says there are 70 different technologies her company has invested in.
The Americans are coming
On the back of this confidence in cleantech Richter says there is a growing number of US firms moving to Australia to see how and why this small market has cracked the model for solar PV take-up by consumers, and why they are fast taking up battery storage.
“We are ahead on distributed energy. We have 20 per cent penetration. California has just one per cent and energy storage is coming faster than we think,” she says.
We’ve innovated around the supply chain and instead of reforming the National Electricity Market, the talk these days is about how to “hack the rules”.
It’s all adding up to “very good market dynamics”.
“It comes back to a business case every time.”