Marking the milestones of 2013

Australia's transition to a clean energy economy took some political blows in 2013, but progress on the ground was heartening with energy efficiency, solar and wind all providing tangible proof of their future potential.

Last year was one of considerable trepidation and uncertainty for the clean energy sector in terms of the politics, but also one of success in demonstrating what the sector could do.

The imminent election of 'Tear-it-up Tony' left many in the sector nervous as to what the future might hold. He then well and truly delivered by moving to slash the uncommitted funding for the Australian Renewable Energy Agency, completely contrary to reassurances before the election that “we fully support ARENA”. 

In addition, he put forward legislation to rescind the emissions cap and trade scheme while putting forward just seven dot points on what would replace it to achieve his 5 per cent reduction in emissions by 2020.

The Gillard/Rudd Labor government didn’t help things either by taking their sweet time to respond to the findings from the review of the Renewable Energy Target and constant fiddling with the ETS.  

It may have been the hottest year Australia has experienced since records began, but the politics seemed to operate in a parallel universe to the physical world, as this infographic from Angus Hervey so neatly summarises.

Graph for Marking the milestones of 2013

Source: Dr Angus Hervey, environmental economist.

Still, when you look back over the year there are some reasons to celebrate. Ultimately, 2013 may well be remembered as the year that energy efficiency and renewable energy demonstrated in Australia, not just some other country, that they could make a serious impact.

No fluke – electricity demand up for 100 years but now heading down, thanks to energy efficiency

First and foremost, energy efficiency programs have now well and truly delivered. For more than 100 years electricity demand has increased each and every year. But for the last three it has declined and 2013 was the year it really sank – in that electricity demand wasn’t just undergoing a temporary downward blip, rather there was a structural improvement in how efficiently Australians use energy.

Of course, there were also some major industrial plant closures but, as Hugh Saddler’s analysis shows (The demand drop mystery explained, January 6), most of the change in electricity demand is down to improvements in energy efficiency, particularly in the residential sector.  

Solar powers on to 2 million systems in spite of government withdrawal of support

Also, as reported yesterday, Australia has just reached 2 million installed solar systems (photovoltaics plus solar and heat-pump water heaters). Last year was the moment of harsh truth for the solar PV sector as it was when feed-in tariffs, that gave any premium over the wholesale electricity price, were completely wound up. In addition, the solar PV sector would have to make do with a government rebate of just one small-scale renewable energy certificate, or ‘STC', per megawatt-hour of power generation (down from two the prior year, three the year before and five the year before that). 

The Queensland premium feed-in tariff kept things going strong in the first part of the year but that came to a close midway through the year. Sure enough, sales have dropped substantially since then but the industry managed to surpass the government target of about 850 megawatts. While installed capacity was down by about 15 per cent on 2012, it was slightly better than 2011. For an industry built around an assumption of double digit sales growth a 15 per cent decline was tough. But to add such an amount of capacity in one year is a big deal for anyone in the Australian electricity market, let alone the solar sector. The last time we saw that kind of coal capacity installed was back in 2007 with the 750 MW Kogan Creek power plant.

In February of 2013 I predicted the solar PV party was over, but 850 MW for the year far exceeded my grave expectations. It is a huge amount, better than anyone would have imagined a few years ago given the precipitous drop-off in the level of government support. Helping cushion the blow of declining feed-in tariffs were robust prices for STCs. These got very close to the $40 price cap and have tended to remain above $38 over the year.

Macarthur marks a big milestone in wind as SA hits 30 per cent renewables

Australia’s biggest wind farm, and also large in global terms, AGL’s 420 MW Macarthur farm, was fully commissioned in April. Its scale provides a visual testament to the fact that wind power has arrived as a serious source of power in this country. More important than its visual scale is that it also produced plenty of electrons, pumping out nearly 1000 gigawatt-hours of power last year or equivalent to the power consumption of 190,000 households (an awful lot more than what tabloid columnist Terry McCrann suggested).

In addition to Macarthur, Musselroe in Tasmania finally became reality after being on then off and then on again over the years. And Mount Mercer in Victoria was also commissioned. Thanks largely to just these three projects, wind generated electricity was up 43 per cent on the prior year. 

Also worthy of mention is that a number of wind farms were under construction over 2013. It wasn’t nearly as many as required, but they will provide a living example to the community of the positive changes and employment being generated by the RET.

One outstanding example of what these projects are delivering can be seen in the short documentary Climate Spectator produced below on Snowtown II wind farm, the first in Australia to use Siemens’ state-of-the-art direct drive turbines. With this documentary we’ve tried to bring alive the story behind these projects; the people involved; the sheer scale of the construction task; the technology; the benefits to the local community and, of course, lots of those hard hats and reflective vests that our prime minister is so fond of.

With Snowtown II already generating electricity (but not yet fully complete), South Australia now gets over 30 per cent of its power from a combination of wind and solar, when little more than 10 years ago it represented less than 1 per cent.

Wrecking ball, python squeeze or, perhaps, just mild inflation and moderate unemployment

Lastly, we passed the one year anniversary of the introduction of the carbon price and, miraculously, the sky had not fallen in, the economy continued to function, price rises were extremely moderate and unemployment remained relatively steady. All completely contrary to what we’d been told by scare-mongering politicians and industry association lobbyists such as the likes of the Australian Chamber of Commerce and Industry, the Minerals Council and the Business Council of Australia.

This year is shaping up as a challenging one for clean energy and businesses focused on making a profit by enhancing our future rather than degrading it. But at least one can point at tangible examples of things done in 2013 to illustrate that Australia can meet its energy needs while reducing the burden on future generations.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles