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