Increased Consumption Demand in Australia Has Been Largely Met Through Gas and Renewable Energy

According to International Energy Agency statistics, Australia consumed 248 Terawatt hours (TWh) of electricity in 2018, up from 146 TWh in 1990. In 2019, official Australian government statistics broke down the electricity generation mix as follows: 56% coal, 21% gas, 21% renewable energy (solar, wind, and hydro), and 2% oil.

As evidenced in the graph below, the role of gas and renewable energy in the electricity generation mix has increased markedly since 1990 while the role of coal—specifically brown coal—has shrunk. Given this change, increased consumption demand of 100 TWh since 1990 has been met largely through gas and renewable energy power generation.

Australia does not import electricity from other countries. It must be noted that Australia is the world’s largest exporter of fossil fuels, a significant portion of which is used for electricity generation in Southeast and North Asian countries.

Australian electricity generation fuel mix (Source: energy.gov.au)

Electricity policy

What effect has government policy had on this generation mix? The answer is different at a state and federal level.

At a federal level, the introduction of a Renewable Energy Target (RET) in 2001 mandated electricity retailers purchase certain amounts of certified renewable energy from accredited power stations every year to meet an overall national target. This target would scale up, reaching 20% by 2020. Obviously, this has encouraged energy retailers and generators to provide more accredited renewable energy into the system, and Australia is predicted to hit somewhere in the order of 23% renewable energy generation when the RET expires next year. Given its obvious success, experts and analysts have urged the government to renew and strengthen the RET, but the current ruling conservative party has shown no interest in pursuing the policy. You can read more about the RET in our February 2019 country post for Australia.

At a state level, 2020 has been a banner year for legislation designed to integrate more renewable energy into the electricity generation mix. New South Wales has just passed a historic bill that heavily invests in transmission infrastructure upgrades, pays landowners to host new renewable energy infrastructure, creates dedicated “Renewable Energy Zones” across the state, mandates the construction of new renewable electricity generation and battery storage and sets out interim targets for New South Wales to wean itself off coal power. Victoria is set to raise its renewable energy aspirations when it revises its emissions reductions ambitions under the state’s Climate Act early next year, and Tasmania recently became the first Australian state or territory to be officially 100% renewable energy-powered (Tasmania’s ambition is to mandate a 200% Renewable Energy Target and become a major exporter of renewable energy to mainland Australia).

So, while the individual states and territories are seeking to accelerate their transition to renewable energy-dominated electricity generation, the federal government is doing the bare minimum.

Recommendation

A revised and more ambitious national Renewable Energy Target is an easy policy win. Australia currently sits at 21% renewable electricity generation and – given the pipeline of projects that will definitely be realised – will reach 48% by 2030 with no further policy intervention. All states and territories have declared aspirational targets of at least 50% by 2030, so why not renew and update the national target to reflect our new reality?

More challenging, but equally important, is investment in upgraded transmission infrastructure and legislation to support integration of new renewable energy generation into existing power grids. NSW has already shown what state governments can do (note new legislation there has rare tri-partisan support), and federally all that is required is assistance. The states are leading and doing all the heavy lifting: get out of their way, respond to requests in a timely manner and facilitate a smooth process. This gives federal agencies time to focus on bigger emissions challenges, such as a national decarbonsation plan for road transport, reducing industrial emissions, and coordinating a whole-of-sector response from agriculture and farming.