Australia’s Energy Fiasco: How do we extract ourselves from a deep hole?

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A diversified and distributed energy systems is feasible, but attractive – except to powerful incumbent interests and those whose thinking is trapped in the past.

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At present there is intense focus on the design of a National Energy Guarantee. We need to step back and take a few deep breaths.

Energy policy in Australia is being distorted by a small number of conservative politicians in the Coalition party room: we are being held hostage. This is no way to run a multi-hundred billion dollar industry. The NEG is just the latest attempt to try to appease these people.

Our present centralised energy system, developed over a century, has become a point of critical vulnerability to our economic and social development. We need a diversified and distributed system that delivers practical solutions that respond to real world requirements.

And this is not only feasible, but attractive – except to powerful incumbent interests and those whose thinking is trapped in the past.

We are in the early stages of an exciting period of disruptive innovation in which future directions are difficult to predict to a level of accuracy where business models with financially manageable risks can be implemented.

This means incremental, modular, flexible projects and products will have advantages. It will be a very different world.

The reality is that the only group interested in energy for its own sake is the energy supply sector. The rest of us want the services that run our economy and society and are environmentally, socially and economically sustainable.

Energy is just one of many factors considered in decision-making, and in delivery of those services. A cubic metre of gas or kilowatt-hour of electricity is not much use without the technology to use it, the businesses that provide it, and the desire for the outcome delivered by that technology.

Historically the energy sector is one of the industries least responsive to, and with least understanding of, its customers.

The National Energy Market has been predicated on incorrect assumptions, such as the fully informed, empowered, economically rational customer who has an infinite amount of free time and is motivated to focus on something that should be (and mostly is) actually a small factor in rational decision-making.

The NEM’s formal objective is focused on low energy prices, not low overall costs of delivered services. And the sector knows little about the actual services its customers want.

Customers need a seat at the table

It is on a steep learning curve, though, driven by a whole new customer focused industry that still does not have a ‘seat at the table’ within the formal policy-making structure. No wonder energy ‘experts’ continue to be surprised by unexpected change.

As someone who has spent forty years focusing on the interface between energy, people, technology and society, I am still bemused by the energy supply sector – which includes many within the renewable energy industry.

Effective policy starts with people and businesses who want services that respond to needs and desires such as comfort, productivity, shelter and access.

Today these requirements can be delivered by an increasingly diverse range of solutions that may be ‘virtual’ and interactive, and require a lot less energy than in the past.

A key flaw in energy policy is its isolation of the fundamental drivers of demand for energy from the perceived core business of the sector.  For example, even the enlightened Finkel Review reinforced this disconnect in its recommendation on energy efficiency.

While it emphasised that energy efficiency was important, and action should be accelerated, it declared it was a job for governments. Yet the efficiency of energy use is a fundamental factor driving how much, what kind, and when energy is needed.

It is at the core of the energy sector’s existence. And efficiency of energy use is being transformed, along with our capacity to optimise and control it, store it, produce it ‘behind the meter’ and replace it with smart solutions.

An efficient TV now uses around 30 watts, compared with 250 watts or more for early plasma flat screen TVs. Smart phones and laptop computers are examples of astounding energy efficiency. It is the most energy-efficient solar car that wins the Darwin to Adelaide race.

We can build comfortable homes that require almost no heating or cooling in most Australian climates. On-line services are transforming our economy – and saving a lot of energy in material production, reducing time spent travelling and offering services we could not imagine a few years ago.

The need to consider “Enoughness”

Of course, many point out that, associated with technology and energy efficiency improvement, we may buy bigger TVs or seek greater comfort. That’s a reason why governments and business need to focus more on improving efficiency and, as a society, we need to consider ‘enoughness’.

But history has shown that trends are complex. For example, many people now watch ‘TV’ on extremely efficient smart phones, and efficient virtual reality technology can replace big screens while providing a superior entertainment experience.

The proliferation of access to entertainment via new media opens up many issues, such as how much screen time kids should have, whether we are becoming more isolated as we spend more time on social media, and so on.

It also provides an incentive for more people to use public transport instead of driving – so they can play with their mobile devices!

The world is a complex place, but it is now possible to decouple energy use from economic and social development – if we decide it is important to do so. For example, policy makers I spoke to recently in the Philippines recognise that many of their islands will never have a school teacher or doctor.

But they don’t want them migrating to their overcrowded cities. They have recognised that fast broadband and low energy technologies can deliver education and health care services, as well as access to business opportunities and entertainment, to transform lives.

Somehow we have to refocus energy policy so that it is part of the real world, and a facilitator of a sustainable future, not a barrier.

Alan Pears is a senior industry fellow at RMIT University

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12 Comments
  1. Rod 1 year ago

    “Enoughness”. I love the term and the philosophy behind it.

  2. PacoBella 1 year ago

    I read an article on the ABC website today “Price spikes, demand records and the Tesla battery: How the energy market saw off summer” by political reporter Jackson Gothe-Snape. It was a grab-bag of comments from half a dozen “energy experts”, including Josh Frydenberg (see the glaring error right there ABC Editorial Policy reviewers?). It canvassed quite a few technical issues without including any analysis and without drawing any conclusions. I took advantage of the link back to the author to provide some feedback and encourage him to improve the calibre of his work. This type of ad hoc junior reporter assignment masquerading as journalism on our national flagship is really not helpful.

    • Joe 1 year ago

      …bring back Chris Uhlmann ( ex-ABC energy expert ) from Channel 9 to sort any RE issues

      • Nick Kemp 1 year ago

        Are you being sarcastic again – we need emoticons on this site

        • Joe 1 year ago

          100% sarcastic. The Uhlmann lost a bit of credibility with RE reporting as his time at CH 2 came to an end. Maybe that’s why he flicked off to CH 9. But at CH 9 the Uhlmann has been strangely very quiet of late with matters relating to RE.

          • Alastair Leith 1 year ago

            That would be the ABC Activist Board and News Editorial Team no doubt 😉

    • Peter F 1 year ago

      Paco I also replied to the article and have had an email requesting more information so at least he is willing to learn

  3. Peter F 1 year ago

    Along the lines of enoughness is “peak stuff”.The Office of National Statistics estimated. that the resources consumed by the average Briton has fallen from around 15 tonnes in 2001 to 10 tonnes in 2016.
    Similarly the total electricity consumption per Californian is 6.2 MWh, the average Australian is 9.2 MWh and the average Briton 5 MWh. This includes all business and civic loads
    If we focused on energy efficiency with a target of 6 MWh per person that would eliminate the equivalent of half the coal generation. If reduced peak demand from 1.5 kW per person on the NEM to the Californian level of 1.15 kW or the Italian of 1 kW we can eliminate about 9-11 GW of peak capacity. If we can do both it would save Australians about $700 each.across the economy

  4. bruce mountain 1 year ago

    Marvellous Alan. As always much to agree with.

  5. Robert Westinghouse 1 year ago

    Vested interest and filthy profit motive. The old model is no good. We need (and the tech is here) regional power generation, distribution and storage. This old model is TOO expensive and the old one who gets Donald Duck is you me, gran and those who cannot afford it…. Trumbil cares NOT

    • Mike Dill 1 year ago

      Regional power from Renewable Energy is already happening or taking shape in TAZ, SA, WA, and NT. It is starting to gain a foothold in North and Western QLD, and QLD in general. Even with the politicians meeting there the ACT is doing a fantastic job.
      The fact is that most Australians live within 150km of Brisbane, Sidney, and Melbourne, and that there is a lot of transmission connecting them. Most of them are not very concerned, and therefore we get people like Trumbil. I really do not have an answer for this apathy towards the planet.

  6. Ray Miller 1 year ago

    Alan, Top shelf analysis as usual.
    How to we get ourselves out of this hole? It would seem that Rio shareholders (at least some) are making moves to remove support from the Minerals Council Australian and many other similar groups who have been digging the hole. At least stopping digging would be a start. https://www.theguardian.com/business/2018/mar/02/rio-tinto-faces-84bn-shareholder-revolt-over-membership-of-minerals-council
    The share holders are admitting their company is guilty of engaging in activities which are to the determent of our civilization.
    I can feel a class action coming on which will make the all others seem minuscule.

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