Australia's Renewable Energy Strategy: Economic Perspectives and Recommendations

This report examines Australia's commitment to renewable energy, analyzing the economic factors driving its transition from fossil fuels to cleaner sources. It explores the various types of renewable energy sources utilized, the government's initiatives to promote their adoption, and the economic implications of this shift. The report also delves into the cost concepts associated with renewable energy production, including capital costs, fixed operating costs, and variable costs. Finally, it provides recommendations for ensuring the continued growth and success of Australia's renewable energy sector.

Newspaper Analysis
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Table of Contents
Introduction.................................................................................................................................................3
1) Australia’s Stand on Renewable Energy..............................................................................................4
2) Evaluate your chosen topic from economic perspectives.....................................................................6
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9
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Introduction
In this report, the ways in which the renewable sources of energy are produced in Australia and
the reason for developing the strategy to use clean energy has been discussed. The report
contains the detailed explanation regarding the various initiatives taken by the government to
promote the use of renewable source of energy and the amount invested towards developing the
infrastructure required to develop and transmit energy to industries and household purposes.
There is also an explanation regarding the different types of costs involved in production of clean
energy and recommendations have been provided in the last part to continue the process of using
green energy in the region.
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1) Australia’s Stand on Renewable Energy
Renewable energy is generated from using the sources which do not get exhausted when used
continuously unlike fossil fuels which are getting scarce. The renewable sources which are being
used in Australia to generate power are solar, wind, hydropower, geothermal, bioenergy and tidal
energy. The increasing demand for energy because of increase in the population in the region led
to the use of fossil fuels such as coal and crude oil, which created numerous issues such as an
increase in pollution levels, degradation of natural environment and affecting the health of the
people. The following graphs indicate the degradation of quality of air in Sydney in 2016:
Figure 1: Wood Smoke Pollution in Sydney
Source: (Environment Protection Authority, NSW, 2017).
Hence, the government has taken various measures to counter this issue and considered the
option of using green energy in order to save the environment as well as the citizens from
hazardous smoke and chemicals.
As per the report published by Clean Energy Australia, the region generated 17.3 percent of
electricity by using a renewable source of energy and approximately 17,500 GWh of energy was
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generated in 2016. There is also an increase in the number of rooftop solar systems which is
estimated at 135,370 systems installed in 2016 and this is growing to be increased in 2017-18
since the Renewable Energy Target (RET) has been fixed at 33,000 GWh by the end of 2020
(Clean Energy Council, 2016). The investment in the renewable energy has increased and as per
the estimates, 11.07 billion Australian dollars have been invested which is twice the amount
invested in other sources such as natural gas, nuclear, and coal combined (Xinhua News, 2018).
By analysing these facts, it can be stated that Australia has initiated and developed a
comprehensive strategy to reduce carbon emissions and has directed its policies towards using
clean energy.
Figure 2: Renewable Energy Investment in Australia
Source: (ABC News, 2018)
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2) Evaluate your chosen topic from economic perspectives.
As per a report of ABC News, there are various projects which have been planned by the
government to replace the fossil fuel-based energy with that of renewable energy, such as,
setting-up of lithium-powered 100-MW battery in South Australia by Tesla and Aurora Solar
Plant in Port Augusta will provide the required energy for entire South Australia. These activities
will help the government to achieve the Renewable Energy Target which has been set to reduce
the use of fossil fuels (Taylor, 2018). This will ensure that the investors will be attracted towards
this sector and hence, there will be a gradual transformation where the investments in the
renewable sources will increase in future.
Cost Concepts in Renewable source of energy
Since the energy sector depends on the continuous improvements, a huge investment is made in
the research and development activities in order to generate and distribute the electricity
economically. The amount of energy produced depends on the level of technology used to
produce the energy and the capital invested towards solar panels, wind turbines as well as
operating and maintenance costs that have to be incurred to maintain these materials and
equipment. Hence, the costs can be divided into:
Capital costs: These costs vary according to the technology used and the size of the installation
of solar panels and turbines. These costs do not change with the volume of energy generated
which is stated in $/kW. The economies of scale for a renewable source of energy will be higher
at equipment manufacturing stage than that of electricity-generation sites, and the average costs
of generating energy do not decrease with the increase in the capacity (Owusu and Asumadu-
Sarkodie, 2016).
Fixed Operating Costs: These are the expenses incurred to generate the energy and these
expenses does not change with the amount of energy produced, such as rent paid for property,
leased payment towards equipment, salary, and wages, etc. These are expressed as ($/kW-year).
Variable Costs: These expenses vary according to the amount of energy produced and
expressed as ($/MWh). These expenses can be controlled by the firms by controlling the
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operations and hence, the management can take various decisions to minimise these costs. These
expenses can be transport costs, incentives provided to the staff, preventive maintenance
expenses, etc.
Recommendations
The use of alternative energy has changed the view of the investors since investing in non-
renewable sources of energy such as coal and crude oil has proved to be successful since large
companies generated huge revenues. This transformation can only be successful if the large
companies continue to invest in a renewable source of energy in order to continue the growth
trends and ensure reaching the Renewable Energy Target. Also, the cost of providing the
electricity has also been strategically planned since more energy costs will result in customers
availing the electricity from other sources as shown in the below diagram:
Figure 3: Costs of Renewable and Non-renewable energy
Source: (Parkinson, 2013).
At present, the coal and gas industry is facing a stiff competition from the renewable energy and
these industries may develop a new pricing strategy to combat this competitiveness. Hence, it is
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advisable to develop the required infrastructure in order to provide cheap energy for industries
and household purposes.
Conclusion
From this report, it can be concluded that the option of using the renewable source of energy has
been explored and developed by Australia which has resulted in increasing the investment in this
sector. The use of clean energy enables the region to grow and develop along with preserving the
natural environment and reducing the usage of fossil fuels. Also, the huge investments in this
sector will also help to minimise the costs of energy which benefits both the industries and
household since they will be able to avail the energy at lower costs. There is a positive outlook
for using clean energy because of dwindling coal and oil reserves in the world.
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References
 ABC News, 2018. Renewable energy investment in Australia, [Online] ABC News,
Available at: http://www.abc.net.au/news/2018-01-18/renewable-energy-investment-in-
australia/9339350, [Accessed: 7 April 2018]
 Clean Energy Council, 2016. Clean Energy Australia Report, [Online] Clean Energy Council,
Available at: https://www.cleanenergycouncil.org.au/policy-advocacy/reports/clean-
energy-Australia-report.html, [Accessed: 7 April 2018]
 Environment Protection Authority, 2017. Reducing wood smoke emissions, [Online]
Environment Protection Authority, Available at: https://www.epa.nsw.gov.au/your-
environment/air/reducing-wood-smoke-emissions, [Accessed: 7 April 2018]
 Owusu, P.A., and Asumadu-Sarkodie, S., 2016. A review of renewable energy sources,
sustainability issues and climate change mitigation, Civil & Environmental Engineering:
Review Article, Cogent Engineering, Vol. 3, No. 1, p.1167990
 Parkinson, G., 2013. Renewables now cheaper than coal and gas in Australia, [Online]
Renew Economy, Available at: https://reneweconomy.com.au/renewables-now-cheaper-
than-coal-and-gas-in-australia-62268/, [Accessed: 7 April 2018]
 Taylor, D., 2018. Renewable energy investment 'bonanza' is coming to Australia, experts
say, [Online] ABC NEWS, Available at:
http://www.abc.net.au/news/2018-01-15/renewable-energy-investment-bonanza-coming-
to-australia/9328638, [Accessed: 7 April 2018]
 Xinhua News, 2018. Investment in Australian renewable energy up 147 pct: UN report,
[Online] Xinhua News, Available at:
http://www.xinhuanet.com/english/2018-04/06/c_137092075.htm, [Accessed: 7 April
2018]
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