Australia’s abundance of renewables can power future industry – but we need it resilient and we need it fast

Energy is the foundation of Australia’s economic prosperity. Yes, our second and third largest exports are coal and gas. But energy also underpins absolutely every sector in our economy. 

To develop new export industries, as demand for our fossil fuels evaporates, we need to provide abundant and resilient energy. And we need it fast. 

Australia again, is flush with the energy resources we need to power our new economy. We have the highest solar radiation per square metre of any continent and our wind resource is also hard to beat. We have an excess of critical energy materials including, in 2023, being the world’s leading lithium producer. 

Energy abundance can power Australia’s future industry

Abundance of renewable energy can underpin a new wave of industry development. We can lean into our existing industrial strengths – mining and agriculture – and power them with renewables. And, with strategic investments, we can revitalise our manufacturing sector as well.

Underground, Australia can provide almost all critical minerals needed in any version of the future. 

Iron ore of course, but also the copper, tin, nickel and even graphite if we can find a good use for it. If we power our mines with firmed solar and wind, we’ll be exporting embodied renewable energy. 

Last year, the Superpower Institute found that Australia could generate up to $386 billion annually from green iron exports by 2060. And, in May, UNSW research found that a 50,000 tonne polysilicon plant in the Hunter could deliver $1.1 billion in economic value to Australia annually.

Above ground, Australia’s agricultural sector can also benefit. 

In 2023-24, agricultural exports delivered approximately $71.6 billion in value to the Australian economy – about 11 per cent of our total exports. However, agribusinesses are already suffering from the impacts of climate change with more extreme weather and less predictable seasons. This is despite our agricultural science ranking among the best in the world.

Renewable energy projects offer a way to diversify agricultural income, ensure reliability of energy supply including liquid fuels, and, in some cases, protect crops from extreme weather.

Agrisolar is an example of a mutually beneficial opportunity, supporting additional investments in renewable energy while delivering climate and revenue resilience for farmers. The Clean Energy Council (2023) highlighted that global programs increased agrisolar deployment from 5MW in 2012 to at least 2.8GW in 2020. Australia is well placed be an agrisolar leader and the sheep, who love the shade, will thank us for it.  

To revitalise our manufacturing communities through renewable electricity, Beyond Zero Emissions has identified fourteen opportunities to establish renewable energy industrial precincts.

The focus is on regions in transition, including the Hunter, Gladstone and Kwinana that host our coal-fired power stations that will inevitably close over the next twenty years. The prize could be $333 billion in exports by 2050.

Industry transformation relies on reliable renewables, rolled out fast

A successful transformation of Australia’s economy will rely on the rapid deployment of renewables that are reliable and secure. To achieve this fast enough, we will need innovation in both finance and technology.

Financing renewables can be tricky. Solar farms without storage struggle because the wholesale prices in the sunny hours of the day are being driven down to negative prices. Wind farms also struggle because costs are going up.

Other challenging factors include the difficulty contracting power purchase agreement beyond 3-7 years, and some of our best renewable resources (for example, in far western NSW) are not going to be connected by renewable energy zones. 

There are opportunities for new financing models. For example, using very long-term debt (50-100 years) with a repayment holiday over at least the first decade. An approach like this could overcome short-term finance barriers and support intergenerational justice by timing the costs with those who will benefit. 

Integration is also tricky. Australia currently leads the world in rooftop solar – our largest energy generator, which sometimes powers the entire state of South Australia.

While we have successfully integrated more than 40 per cent of mostly variable renewable power, the job becomes harder rather than easier from here. Last year, Transgrid procured synchronous condensors for five sites on the NSW network, which are expected to cost more than $1 billion, to secure sufficient system strength when coal-fired power stations close. 

Finding new ways to integrate renewables without expensive equipment will be crucial. For example, using grid-forming inverter technology with utility-scale batteries to avoid the purchase of just one synchronous condenser would save hundreds of millions of dollars. To prove the ability of this technology to deliver system strength, we need high-quality grid simulation infrastructure at scale.  

In a future dominated by renewables, Australia can remain an energy powerhouse. But to be successful, we need to build renewables faster and use them to leverage our competitive advantages. It will require creativity with how we finance and deploy the energy assets we need to underpin our future economic prosperity.  

Because, as the lucky country, we must remember that luck requires preparation to meet the opportunity. 

Learn more about the work of the NSW Decarbonisation Innovation Hub here, where we will be sharing Michael Liebreich’s opening remarks from the event and along with other updates about our events and programs.  

Dani Alexander is the interim CEO of the NSW Decarbonisation Innovation Hub and the UNSW Energy Institute