Shifting to Solar Offers Practical Benefits for Economic Recovery

As Australia eases out of lockdown, people are turning their attention towards propositions on how best to restabilise the economy. Others have taken this opportunity to voice their concerns regarding the ecological welfare of the nation. This article will discuss how solar energy provides businesses with optimism in the face of economic and environmental uncertainty.



Proposing a Change of Pace

This year has brought about various unforeseen conditions both on national and international scales. The effects of these conditions have been felt by citizens all over the world, however with the recent reductions in case rates and community restrictions we can now turn our attention towards resuming business as normal. In fact, “as normal” is just the beginning for some; various organisations and individuals are uniting to treat this hardship as an opportunity for economic and sustainable development. In light of the current circumstances, alternative methods of energy supply are being considered in order to aid in repairing Australia’s economy. Over the past month, discourse on this topic has become more prominent as the time for action grows nearer.


Businesses, unions, and environmental advocacy groups have all expressed their desire for a sustainability-focused economic recovery following the pandemic. Australian Industry Group’s CEO, Innes Willox, has identified post-COVID economic recovery and reaching net-zero emissions by 2050 as two of Australia’s greatest challenges. Willox and Australian Renewable Energy Agency’s chairman, Martijn Wilder, therefore propose these would be best addressed together. Recent renewable energy market trends are evidence that resolutions to these issues can not only be complementary to one another, but one in the same. A priority in establishing Australia’s recovery is through effective cost reductions, especially within the energy sector.


The Clean Energy Council's A Clean Recovery plan outlines their proposal to stimulate the economy and generate employment across Australia, whilst simultaneously improving national carbon emissions and sustainability. Much of this plan involves increasing both various industries’ capacity for electric operations and broad renewable energy provision, particularly in solar.


Solar

There are 4 core reasons why a shift to solar energy offers substantial benefits: it has seen healthy market growth; it is a low-cost substitute to conventional energy; it is both economically and environmentally sustainable; and it is a strategically sound decision for businesses.


Healthy market growth

Interestingly, sizeable reductions in emissions from the Australian electricity sector have been observed this year. A primary assumption could be made that this is due to reduced energy consumption as a result of suspended activity in physical workplaces, however the findings reveal more optimistic implications. Despite the lockdown, industrial and business power supply has largely remained uninterrupted, and household consumption has increased whilst people work from their homes. Most of the fall in emissions therefore can instead be attributed to the expansion of renewable energy supply. Solar in particular has experienced significant improvements in capacity and provision of electricity: output from solar farms alone has increased by 55% since 2019’s first quarter.

A study published in April by the Australian Energy Market Operator (AEMO) found a rapid increase in renewable energy capacity within the electrical grid. According to the National Electricity Market (NEM) renewables currently capture 26% of the grid, however AEMO’s study shows a 75% capacity can be sustained. This means increased renewable energy consumption is currently a viable alternative. As such, AEMO has called for relevant changes to be made before 2025 in order to capitalise on this opportunity. In terms of new generation capacity added per annum, solar photovoltaic (PV) technology is seeing the most growth, as evidenced in Figure 1.

Figure 1: Global net new capacity additions 2015–2018 illustrating the dominance of PV


Affordable cost

Solar has seen impressive market growth over the past few years, and with it has come an unprecedented fall in cost. Solar’s price drop over the previous decade has already exceeded expectations, reaching as low as half the forecasted rates, and it is estimated to continue falling whilst demand and supply increase. It is presumed that these prices will be low enough within the coming years that solar energy will no longer require subsidising to remain competitive. With continued investment and production in the solar industry, consumers can expect greater cost savings as economies of scale take effect in the manufacturing processes.


Sustainable

Solar-sourced energy is a resource which is both environmentally and economically sustainable. Whilst many methods of energy are extracted from finite resources, solar’s core source of energy can reasonably be considered as a limitless supply source. This is especially true in a country such as Australia, which has comparatively high sun exposure. Australia’s sunny environment enables the energy used in panel manufacturing to be recovered within 2 years, whilst panels themselves have a lifetime of up to 30 years. Furthermore, the materials required for solar panel system construction are recyclable, therefore adding to the lifetime of minerals harnessed during production.

Rooftop panel systems require no additional land use, are quick and easy to install and dismantle, and impose no externalities upon their surrounding environment. Furthermore, the supply of energy does not require transportation, which results in additional costs and carbon emissions. As an added benefit, solar energy has the unique trait of being resistant to dramatic social change. Rooftop systems in particular provide security in their widespread implementation and access. The result of this could mean greater fluidity between systems and local power grids whereby power supply is more passively provided rather than requiring staggered extraction and processing.


Strategically advantageous

Importantly for businesses is that investors are beginning to turn their attention towards companies which have made commitments to do their part in working towards net-zero emission operations. This would be especially beneficial for young and growing businesses looking to raise capital, thus stimulating the economy in the process. Turning towards renewables such as solar not only directly reduces costs and emissions, but improves an organisation’s reputation and appeals to the rapidly shifting priorities of modern investors.

A simple alternative to the outright purchase of solar systems which provides a smooth transition into renewable energy consumption, without steep entry costs, is through the utilisation of Solar Power Purchase Agreements (Solar PPAs).


Solar PPAs

Investing in solar energy can be a daunting process for businesses when faced with initial investment costs. Alternatively, Solar PPAs offer a flexible and cost-effective method by which consumers may participate in and enjoy the benefits of the growing solar energy industry. Energy Terrain’s Solar PPAs offer the ability for businesses to utilise cleanly sourced energy in their operations without requiring additional obligations in the form of installation, maintenance, and upfront capital investment. Instead, these will be managed by Energy Terrain in order to provide our clients with the smoothest transition possible.


Clients are also entitled to government incentives, renewable energy credits and, as an additional benefit, any excess energy generated by Energy Terrain’s Solar PPA systems can be sold by our clients to licenced retailers, and redirected to the local power grid. This not only offsets a portion of the service rates, but allows clean energy access to be extended to the wider community.


Please review our article What is a Solar PPA? for further information on how Solar PPAs work and what they can offer to your business.

Click here to discover what benefits Solar PPAs can provide for your new, growing, or established business.

References


Australian Energy Market Operator 2020, Renewable Integration Study: Stage 1 report, viewed 20 September, https://www.aemo.com.au/-/media/files/major-publications/ris/2020/renewable-integration-study-stage-1.pdf


Blakers, A 2020, ‘Really Australia, it’s not that hard: 10 reasons why renewable energy is the future’, The Conversation, 29 May, viewed 19 September, https://theconversation.com/really-australia-its-not-that-hard-10-reasons-why-renewable-energy-is-the-future-130459


Blakers, A, Stocks, M, Lu, B, Cheng, C & Stocks, R 2019, ‘Pathway to 100% Renewable Electricity’, IEEE Journal of Photovoltaics, vol. 9, no. 6, pp. 1828-1833, doi: 10.1109/JPHOTOV.2019.2938882


Clean Energy Council 2020, A Clean Recovery, viewed 25 September, https://www.cleanenergycouncil.org.au/advocacy-initiatives/a-clean-recovery


Jotzo, F & Prasad, M 2020, ‘Yes, carbon emissions fell during COVID-19. But it’s the shift away from coal that really matters’, The Conversation, 15 May 2020, viewed 19 September, https://theconversation.com/yes-carbon-emissions-fell-during-covid-19-but-its-the-shift-away-from-coal-that-really-matters-138611


Morgan, E & Long, S 2020, ‘Coronavirus economic recovery committee looks set to push Australia towards gas-fired future’, ABC News, 13 May 2020, viewed 18 September, https://www.abc.net.au/news/2020-05-13/coronavirus-recovery-to-push-australia-towards-gas-future/12239978


Morton, A 2020, ‘Australia’s electricity grid could run with 75% renewables, market operator says’, The Guardian, 20 April 2020, viewed 20 September, https://www.theguardian.com/australia-news/2020/apr/30/australias-electricity-grid-could-run-with-75-renewables-market-operator-says


Parkinson, G & Vorrath, S 2020, ‘The future of solar power: From unbelievably cheap to insanely cheap’, Renew Economy, 18 May 2020, viewed 18 September, https://reneweconomy.com.au/the-future-of-solar-power-from-unbelievably-cheap-to-insanely-cheap-77615/


Whitehead, J, Wilson, A, Ashwood, P, Rekker, S & Saha, TK 2020, ‘In a world first, Australian university builds own solar farm to offset 100% of its electricity use’, The Conversation, 23 July 2020, viewed 19 September, https://theconversation.com/in-a-world-first-australian-university-builds-own-solar-farm-to-offset-100-of-its-electricity-use-142972


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