Energy Shock: What Is The Answer For Manufacturers’ Rising Electricity Costs?

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Around 47% of manufacturers have experienced an average price hike of 14% in 2016 and this is forecast to increase in 2017. What is the solution?

With the recent release of the Australian Industry Group’s report, Energy Shock: No gas, no power, no future?, it has been confirmed energy prices are set to rise for both electricity and gas – a cause for concern within the manufacturing industry. In particular, the report expresses that “companies in primary metals manufacturing, food manufacturing, basic chemicals and non-metallic mineral products (including building products) are particularly exposed to a double hit to their profitability from steep electricity and gas price increases.” It also reports that in 2016, 47% of manufacturers have experienced an average energy price hike of 14%, forecasted to increase even further in 2017.

The report identifies the gas market as the main reason for the significant cost increase of national grid electricity. With the decommissioning of old coal based generators that are unable to cater for the sharp spikes of day-to-day demand, the current strategy for electricity generation is to increase the use of gas fired generators. This shifts control of majority of the energy market to the gas sector.

It is doubtful that this national strategy will change in the short-term. In the long term, market forces and climate goals are likely to make conventional coal and, eventually, gas power unviable, shifting the focus to renewable energy generation, such as solar power.

Similarly, in an article with PACE, Executive General Manager of Solgen Energy Group, David Naismith says that realistically fossil fuels are no longer a direct competitor for renewable energy as, “Fossil fuels face far greater challenges than renewables, simply because they are reliant on a finite resource, uncertain markets and enormous amounts of infrastructure to deliver. That infrastructure requires significant maintenance just to keep it running each day. Solar power on the other hand, has no moving parts and simply does its thing with exceptionally low maintenance requirements.”

While fossil fuel based energy is seeing noticeable increases in production costs, solar on the other hard is seeing barriers becoming obsolete. This is primarily being driven by technology advancements, which result in significant cost reductions of key system components and increases to global renewable energy targets set by governments.

As a result, the industry’s advancement in recent years is placing solar on a level playing field with electricity supplied by the grid and has gone from an industry that was once purely based on sustainability and green credentials to providing significant reductions to operational costs for end users.

As a result, there has been a significant increase in the uptake of commercial solar, forecasted to accelerate further in 2017. With the potential to considerably increase a business’ returns due to reduced operational costs, solar power has the potential to increase the longevity of many manufacturing facilities within Australia.

Click here to discover how solar could be the answer for you.

Solgen Energy Group is a leading solar engineering, procurement and construction group, providing turnkey renewable solutions in the commercial and industrial sector. Their solar projects range from major rollouts for Adelaide Airport and the National Broadband Network (NBN) right through to agricultural projects in rural NSW.