In 2021-2022, climate change events in Australia were in stark contrast to previous years. In the last two years, Australia experienced ‘once in 100-year’ flooding events several times in parts of Sydney, Northern NSW, and Queensland. In 2019, Australia recorded its driest year in 119 years and experienced one of the longest and most intense bushfire seasons on record. This shows the extreme nature of climate, as many of the same areas that suffered through horrific bushfires in 2019 and 2020 also dealt with the severe flooding events of 2022.
Apart from being ravaged by fire, flood, and Covid-19, Australia also suffered from a lack of climate change mitigation. The reason for this was a combination of factors, including politicians’ denial of climate change, a lack of ambition, and a failure to recommit to global green mechanisms.
Australia: Renewable Energy Snapshot
Despite the above impediments to installing renewables, the Australian renewable energy industry accounted for 32.5% of Australia’s total electricity generation in 2021, which represented an increase of almost 5% compared to 2020.
In the past five years, the proportion of Australia’s electricity that comes from renewables has almost doubled, increasing from 16.9% in 2017 to 32.5% this year. The growth in renewable energy generation has been most felt in the coal sector, which saw its share of total generation fall from 62% in 2020 to 59.1% in 2021. The growth of renewable energy in Australia in 2021 was again led by small-scale solar. The sector added 3.3 GW of new capacity during the year, representing the fifth year in a row that it has set a record for new installed capacity.
With a new Labor government now in office, the renewables targets are more ambitious, though they need to be backed up by policy changes and action. The Labor government’s pre-election commitment was to cut Australia’s greenhouse gas emissions by 43% below 2005 levels by the end of the decade, while boosting renewable electricity production to 82% of our electricity supply. At the time of writing this article, the federal government passed its Climate Change Bill in the lower house. This bill makes into law Labor’s 2030 target of a 43% reduction in greenhouse gas emissions on 2005 levels.
Market Convergence and Consolidation
In 2022, across the Australian market, there are some key trends we see continuing to evolve. With key energy players continue consolidating and acquiring smaller players, blurring the traditional lines of retail and wholesale businesses.
Fossil fuel generators are aggressively positioning themselves as key players in the utilities market through expansion into energy retail and partnerships with grid operators. In addition, large telco players such as Telstra are also diversifying their portfolio through energy investment, setting up a business to provide electricity retail services. Telstra acquired a retail energy license from the AER in October 2021, which with the likes of Ampol and Shell entering this market, will significantly increase retail competition in Australia. This will undoubtedly be a good outcome for consumers, with competition driving down energy prices.
In response to large shifts in convergence and consolidation, DNSPs (Distribution Network Service Provider) could form strategic partnerships with "new" retailers such as oil & gas players and explore new revenue streams, including EV charging, solar and home battery bundled services. Creating this new commercial partnership would disrupt incumbent retail players in a way not seen before in Australian utilities.
The World Energy Markets Observatory (WEMO) is Capgemini’s annual thought leadership and research report that tracks the development and transformation of electricity and gas markets in Europe, North America, Australia, Southeast Asia, India, and China.
