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 found that in 2016, 47% of manufacturers have experienced an average energy price hike of 14% and this is only set to increase in 2017.
The report identifies the gas market as the main reason for such significant increases to grid electricity. With the decommissioning of old coal based generators that are unable to efficiently keep up with the sharp spikes of day-to-day demand, there has been an increasing emphasis on the use of more flexible gas fired generators. As a result, this structure places control of the whole energy market predominantly in gas.
While it is doubtful that this usage will change in the short-term, on the longer term, market forces and climate goals are likely to make conventional coal and, eventually, gas power unviable, and bring on lots of renewables – including solar.
Similarly, in a recent article with PACE, Executive General Manager of Solgen Energy Group, David Naismith says, “Fossil fuels should no longer be seen as a ‘competitor’ to renewable energy. Renewables have carved their own space and work in harmony alongside traditional energy. 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 hand is seeing the barriers for implementation falling away. This is primarily being driven by advances in technology, which is driving significant reductions in price to the cost of components as well as the increases to renewable energy targets set by governments. This has been key in placing solar on a level playing field with grid power. It has gone from an industry that wasn’t really financially viable in solving a problem other than green credentials to one that is becoming a critical part of any business’s energy mix.
As a result, there has been a significant increase in the uptake of commercial solar, particularly towards the end of 2016. With solar now having the potential to contribute considerably to a business’ return this may in turn increase the lifespan of many manufacturing facilities within Australia.