If there’s anything Australian executives have learned recently, it’s that companies must start addressing their climate impact. From bushfires covering the continent to addressing the rippling effects of COVID-19, it’s clear that no organization is immune to the risks of climate change and global disruption.
With sustainability and resilience topping the corporate agenda, companies should prioritize discussions about their renewable energy options. In this article, Mariette Barnard outlines why Australian corporates should consider renewables as a key component of their sustainability strategy, along with 3 steps to executing a successful renewable energy program.
Mariette Barnard, Cleantech Client Manager of Schneider Electric Energy & Sustainability Services. Mariette has more than 11 years of experience in client management and complex renewable energy transactions. Over the past 12 months, she has been involved in 9 active PPA RFP processes in Australia.
Coal Plants Are Approaching Their End Date
While coal still accounts for a majority of Australia’s electricity supply, the fleet of coal plants are due for replacement, with many already operating beyond their original life span. Aging infrastructure, high maintenance costs and machinery breakdown are only a few reasons why companies cannot rely on coal to power their operations in the long run. As these assets become an outdated source of electricity, renewable energy will gain traction.
The Grid Will Have To Adapt
The Australian grid must undergo significant upgrades to accommodate for the inevitable influx of renewable energy. Although recent grid instability has led to some regulatory backlash on renewables — such as the Australian Energy Market Operator (AEMO) ruling — these initiatives are only short-term solutions. For Australia to maintain a stable energy supply, these policies will eventually have to be replaced by a long-term grid adaptation strategy. This will allow for the sustainable integration of renewables and mitigate risks of renewable project delays.
The Risk of Climate Change is Too Severe to Ignore
Leaders recognize that if they don’t take action, it’s no longer a question of if climate change will damage their business operations, but a question of when. The recent bushfires are one example of how climate change is impacting, and will continue to impact, Australia. By investing in renewables, companies can contribute to reduced emissions while simultaneously protecting themselves from potential market price volatility by locking in a fixed electricity price.
Despite these factors, Australian renewables have taken a few hits over the past years. Unfavorable policies and the aging grid infrastructure have led to dips in both operational feasibility and economic profitability of projects. Still, renewables have a huge opportunity to rise as the predominant source of electricity in Australia.
Here are three ways your company can take the lead:
Start Discussing Renewables Now
There’s no time to waste. Forming a renewable strategy takes time and requires strategic, long-term planning. Particularly during the COVID-19 pandemic, forming a strategy for how to act in the market is an opportune use of time and effort. The market changes rapidly, so companies should stay apprised of the latest trends and be prepared to act quickly when opportunity arises. The companies that will become leaders of their industries are those who recognize the urgency and start preparing as soon as possible.
Think About Your Portfolio Approach
Signing long-term power purchase agreements (PPAs) to cover your company’s entire electricity consumption may not be the optimal solution right away (in fact for many, it’s not, especially in a time of uncertainty). Instead, companies should start by thinking of a way to strategically integrate renewables into their larger electricity portfolio. Depending on a variety of factors, such as company size, industry and location, some solutions might be more attractive than others.
Stay Up-To-Date With Market Information
The amount of highly complex information coming out of the Australian energy market daily can be extremely difficult navigate. Making sure your company is equipped with the right tools is crucial. A third-party advisor with access to in-depth market expertise and sophisticated data can accelerate the process of finding the right solution to fit your company’s unique needs and give you peace of mind that you are making well-informed decisions. Our NEO Network is a global market intelligence resource that any qualified corporate can join at no cost.
While coal plants will continue to retire, technology investments will make renewable projects more accessible and economically attractive. And the companies that are making the switch to renewable energy are leading the future of business - not only in Australia, but globally.
Contact our local experts to learn more about crafting your renewable energy strategy today.