The clean energy transition is here – but how are manufacturers affected?

During the sessions of the Clean Energy Council’s Australian Clean Energy Summit 2019, at the International Convention Centre (ICC), Sydney, across two days and numerous panel sessions, the consensus was clear, clean energy is here, and now is the time to get onboard. According to Robyn Denholm, chairman at Tesla, we are “at the tipping point of having sustainable energy solutions that are better for the environment and better for an economic point of view.”

If this seemed like a hurdle to overcome, the next will be even higher. Switching our energy network from one catered to a small number of large power stations to one that connects numerous distributed small-scale power stations ranging from wind farms to rooftop solar will involve a greater jump.

On the one hand, this creates a challenge for manufacturers. New kinds of electricity agreements will need to be sought with energy providers as the landscape at a retail level opens up to newer and niche entrants. Changes in rules, such as the proposed demand response mechanism, also allows for manufacturers to enter into the electricity market, but does require trust between manufacturers and energy suppliers. In addition, manufacturers who produce electricity, either through rooftop solar or other methods, will have to contend with the lowering of the marginal cost of renewables.

Overall, however, the opportunities outpace the costs. In the field of the construction of renewable energy technologies, there is a need for manufacturers to produce the solution that the energy market requires when the equivalent of 14 Hazelwood power stations retire, according to Catherine Tanna, managing director of Energy Australia.

Those manufacturers who are able to develop technologies that utilise the fruits of digitalisation and connectivity, will have even greater advantages in a more complex energy marketplace. As Shekar Kamath, GM business development at Utopus Insights, a software company owned by wind turbine manufacturer Vestas, highlighted, through machine learning and artificial intelligence, systems that can predict the needs of the network will have a competitive advantage.

Outside of energy generation, products such as electric vehicles and battery storage will see increased investment as the uptake of renewables increases. Furthermore, the potential of hydrogen capture, storage, and distribution is the next frontier, and that energy source can also be used for energy intensive activities such as the heating required by heavy industry.

What lies in the background to this environment of disruption is the role of government and regulators in managing this transition, both for energy producers and consumers. While NSW Energy and Environment Minister, Matt Kean, highlighted that government should not pick winners, and that “economics are decarbonising the grid”, his Victorian counterpart Lily D’Ambrosio countered that “it’s palpable that the transition to a clean energy future cannot be made without government leadership.”

With no attendee waiting with baited breath for a federal government response, the smoothness of the transition to clean energy will be up to the states and industry. As D’Ambrosio put it, all should be prepared for a clean energy future.

“Are we ready? We better be.”