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Will we miss out on the next multibillion dollar smart energy opportunity?

While Australia was a relative latecomer to the smart energy market over the last five years it has climbed quickly up the ladder and is now in the global top ten countries.

Close to 1.5 million households now have solar panels on their roofs and Australia is one of the leaders in the development of solar farms. This should have been a no-brainer since we are one of the countries with the highest amount of sunshine, but we were a bit slow to get that message.

One could argue that the reason for us finally waking up to this was the fact that the traditional energy companies doubled, and sometimes tripled, the cost of energy over the last decade. Unfortunately they did what all monopolistic companies tend to do when under pressure – tried to protect their incumbent business at all costs, rather than being smart and looking for different solutions to the problem. That resulted in what has been described as ‘gold-plating’ the old infrastructure. As a result a great deal of that money has been wasted in the sense that it has not resulted in providing the energy security that we need as a country.

The only reason for this has been a total lack of vision and direction from the government. Back in 2009 the energy industry was happy with an Emissions Trading System (ETS) as that provided them with a clear direction on how to move forward. Not everybody in the industry necessarily liked it but they all agreed that this scheme would give them the incentive to change their outdated business models and embrace new innovative ways to operate in a much smarter energy market.

While it all started with the then Prime Minister Rudd abandoning the ETS it has got many times worse under the current government, which doesn’t seem to have a clue on how to move forward in any coordinated and strategic way.

When the South Australian Government announced its solar battery plan, the Federal Government fumed about ‘socialist intervention’, ‘social nightmare’ and creating a ‘socialist paradise’. Yet weeks later they announced their own ‘socialist intervention’ – what is now called Snowy Mountains 2.0 – followed by the potential nationalisation of AGL’s Liddell power plant and intervention in the gas market, forcing operators to provide national supply before exporting. All haphazard interventions without any vision and without any national direction or national plan.

Wherever you sit in the energy market – based on federal government policy, or better the lack of it –  you would not have a clue where to invest next as this so-called liberal government will intervene at will without any strategy in place. Fortunately, with the assistance of more forward looking state and city government, many companies are simply ignoring the Federal Government and are heavily investing in smart energy solution.

Next opportunity: integrating the 1.5 million solar plants

This brings me to where the next smart energy opportunity lies and where Australia has the potential to take a leadership role – but where it most certainly will waste the opportunity because of policies that will probably work strongly against this.

Australia has now invested a staggering $9 billion in solar energy. Most of this money is invested by ordinary people, not companies. This is unique in the world. Australian consumers are now a sizable energy provider in their energy market. However, for political reasons the government refuses to build on this, let alone having any policy in place to tap into this resource.

The next big business opportunity in smart energy is to integrate these new energy sources, creating truly smart grids with effective and efficiency battery storage. Microgrids that could create self-sustainable energy hubs in local communities, suburbs, business parks, smart apartment buildings and so on are now well within commercial reach.

This would relieve the over-stretched old electricity infrastructure, which in the case of microgrids would only need to provide one link to the microgrid hub as a backup.  At the same time such a connection could deliver surplus energy from these smart energy communities to others who are still relying on the old grid. As smart energy solutions are now slowly becoming available on commercial terms (without subsidies) we will see further growth of these smart energy solutions and within the next few decades we will have totally resolved the current energy crisis.

Australia is perhaps best-positioned in the whole world to make this happen, but given the current government mismanagement of our national energy policy it is very unlikely that Australian companies will be given the opportunity to start on such projects, as it looks like government policies will be more used to actively stop that from happening.

Australia is the only country in the developed world where energy policies are totally dominated by party politics and party infighting – enormously frustrating for an industry that is ready to embrace change and use the golden opportunities that the country has to offer to become one of the smartest energy countries in the world. We have a fantastic new business opportunity at our doorstep, worth tens of billions of dollars but will we be able to grab this opportunity?

Republished with permission from Paul Budde Consulting blog

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