Renewable Energy and its Economic Significance in Australia

This report discusses the economic significance of renewable energy in Australia with the help of microeconomical concepts. It also provides recommendations for policymakers to develop and generate more renewable energies in future.

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
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Author Note

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Executive summary:
Renewable energy has captured a significant position in Australian economy. The cost price
of this product is decreasing continuously. Consequently, coal-power stations of this country
can affect adversely. Moreover, this renewable energy sector has generated employment
opportunity within this country. The report has discussed those concepts with the help of
some newspaper articles.

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Table of Contents
Introduction:...............................................................................................................................3
Outline of the article:.................................................................................................................3
Economic discussion:.................................................................................................................4
Recommendations:.....................................................................................................................6
Conclusion:................................................................................................................................7
References:.................................................................................................................................8

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Introduction:
During the 21st century, Australia has earned significant position for producing
renewable electricity. The chief sources of this country’s renewable energy are water, wind
and sun (Vieira, Stewart, Lamberts and Beal 2018). Hence, by analysing some newspaper
articles with the help of microeconomical concepts, this report has tried to focus on this
specified sector. Moreover, it has also provided some recommendations, which can help the
policymakers of this country to develop and generate more renewable energies in future. At
the end, this report has provided a brief overview of the entire discussion.
Outline of the article:
According to the Sydney Morning Herald, decreasing costs of renewable energy can
help this sector to develop further. Moreover, this phenomenon can lead the new coal power
stations in an unstable position. The prices of renewable energies have decreased
significantly because of the cheaper costs of wind and solar power generators compare to the
thermal power stations along with the gas-fired (Latimer 2018). Consequently, this
decreasing costs for generating renewable energies along with battery power have changed
the pattern of electricity sector of Australia.
In addition to this, the renewable energy sector has generated huge job opportunities
in this country. According to the Guardian, Queensland has provided jobs to almost 6500
people in August 2017 (Abs.gov.au 2018). Based on this figure, it can be stated that the large-
scale projects that are going to produce solar and wind powers in Queensland, can experience
significant growth. Moreover, renewable have increased the share of national power of
Australia to 19.5% in August 2017 while this amount of share has remained at 17.2% in
2016-17 (Robertson 2018).

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Figure 1: State wise annual direct full-time employment of in Australia
Source: (Abs.gov.au 2018)
Economic discussion:
The renewable energy of Australia can be described with the help of both macro and
microeconomical concepts, which are, demand and national income.
Shift in demand for coal power station: As both renewable resources and fossil fuels generate
energies, they can be described as substitute products. Hence, decrease in prices of renewable
energies can lead the demand for those products to increase further (Ugochukwu, Hobbs,
Phillips and Kerr 2018). Consequently, the demand for thermal power can decrease in
markets.

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Figure 2: Shift in demand for coal-power station
Source: (created by author)
Figure 2 has represented a negatively slopped demand curve for renewable energy. As
price has decreased by P0P1 unit, the demand for this product has increased by Q0Q1 unit.
Consequently, the demand for thermal energy has decreased by E1E0 amount while its price
has remained at initial level, P.
National income: Renewable energy has also generated huge employment opportunity in
Australia and this in turn has helped the country to increase its national income. This
phenomenon can be described with the help of aggregate supply curve and aggregate demand
curve of Australia. Aggregate demand of a country can increase by large extend when people
have started to consume more amount of output. This in turn has helped the price level of
Australia to increase more (Nolte and Ostermeier 2017). Therefore, the national income of
this country has also increased.

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Figure 3: Increase in national income of Australia
Source: (created by author)
According to figure 3, the aggregate demand curve of Australia has increased from
AD1 to AD2 and this in turn has helped the country’s national income to increase from Q0 to
Q1.
Recommendations:
The government can invest more money to produce large amount of renewable
energy. This further can help renewable energy producing companies to enjoy large scale of
economies. Moreover, by increasing large amount of energies from sun and wind, the
environmental policymakers can reduce the level of pollution in within the country.
In addition to this, the government can also help this sector to export excess amount
of renewable energy to its neighbour countries. By doing to, the amount of net export of
Australia may increase further. This can help the concerned country’s national income to
increase by large extend. Moreover, by receiving subsidy, the production cost of companies
may be decreased. Hence, those companies can charge lower prices for renewable energy in
both foreign and domestic markets. This in turn can lead the demand for renewable energy to
increase more compare to the energy that has generated from coal-power station.

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Conclusion:
In conclusion, it can be stated that renewable energy has received huge economical
significance for Australia. Decreasing production cost of renewable energy has helped people
to consume this product by large amount. However, coal-power stations may affect adversely
for this phenomenon. On the other side, renewable energy has generated huge employment
opportunity. Consequently, the national income of this country can increase significantly.
Hence, to develop this sector, the government can provide subsidy to the producers of
renewable energy.

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References:
Abs.gov.au. 2018. 4631.0 - Employment in Renewable Energy Activities, Australia, 2015-16.
[online] Available at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/4631.0 [Accessed 24 Apr.
2018].
Latimer, C. 2018. Falling renewable costs 'chilling' for fossil fuels. [online] The Sydney
Morning Herald. Available at: https://www.smh.com.au/business/the-economy/falling-
renewable-costs-chilling-for-fossil-fuels-20180329-p4z6vb.html [Accessed 24 Apr.
2018].- one of the main article
Nolte, K. and Ostermeier, M., 2017. Labour Market Effects of Large-Scale Agricultural
Investment: Conceptual Considerations and Estimated Employment Effects. World
Development, 98, pp.430-446.
Robertson, J. 2018. Queensland is leading source of renewable energy jobs, report says.
[online] the Guardian. Available at:
https://www.theguardian.com/australia-news/2017/sep/21/queensland-is-leading-source-
of-renewable-energy-jobs-report-says [Accessed 24 Apr. 2018].- one of the main article
Ugochukwu, A.I., Hobbs, J.E., Phillips, P.W. and Kerr, W.A., 2018. Technological Solutions
to Authenticity Issues in International Trade: The Case of CITES Listed Endangered
Species. Ecological Economics, 146, pp.730-739.
Vieira, A.S., Stewart, R.A., Lamberts, R. and Beal, C.D., 2018. Residential solar water
heaters in Brisbane, Australia: Key performance parameters and indicators. Renewable
Energy, 116, pp.120-132.