Breakfast of (renewable) champions

Rising power costs and an uncertain future in energy markets have hit many Australian businesses hard in recent months. For that reason alone, and for others besides, the moment has come for corporate Australia to step up its interest and investment in renewable energy.

By: ARENA

That was the overwhelming message at a breakfast event hosted by ARENA and the Clean Energy Council on Tuesday. Business leaders and renewable energy experts crammed into a Q&A session at Sydney’s Hilton Hotel, eager to find out what future partnerships might be possible.

CEC Chief Executive Kane Thornton said many businesses had watched unprepared as wholesale energy costs doubled or even tripled in recent months. “We find ourselves in an energy crisis,” he said.

But alongside soaring costs linked to wholesale gas prices there have also been steady reductions in the cost of renewable energy as technology improves and matures.

“The business of renewables is changing very rapidly before us,” Mr Thornton said. “Over the past five years the cost has tumbled.”

Within that framework, it makes sense that businesses would increasingly come to appreciate the potential advantages of renewable energy.

“Businesses were not prepared for the price shocks we’ve seen,” Mr Thornton said. “They want to take control of their energy supply.”

The business of renewables

ARENA Chief Executive Ivor Frischknecht echoed that view, as the agency used the breakfast to launch a report, carried out by market research firm Ipsos, that investigates lagging uptake of renewable energy by Australian corporates.

“You can actually lock in a fixed price that is lower than any future price out there,” Mr Frischknecht told his audience. “Why wouldn’t you do it?”

Consensus among the panellists was that business interest in renewable energy is starting to take off. It is not before time.  The report, The Business of Renewables, finds that Australia trails other nations when it comes to companies using renewable energy. It says that fewer than half of Australian companies are using renewables and, among those who are, only around ten per cent of energy use is provided by those sources.

There are still plenty of misconceptions, as the report makes clear. Those who do not use renewable energy cite high costs as a reason for their decision. But those who are using them say they enjoy cost savings and would like to expand their use. Read Adam Morton’s full analysis of the report and its findings HERE.

While interest in Australia has been a slow build until recently, the research shows greater uptake for renewable energy in American corporate culture. “It’s a market that has flourished in other parts of the world,” Mr Thornton said.

Just 100 global companies combined were self-generating 1.7 terrawatts of electricity, the CEC Chief Executive said – as much as half of Australia’s total energy system.

Phoning a friend

Interest is building closer to home, and there was optimism that increased uptake will soon follow. One corporate giant that is sticking its large toe in the renewables pool is Telstra. Appearing on the panel to launch the report, Nada Kalam from Telstra Energy was upfront about why the telco is pushing into renewable energy in a big way.

“We want to be forward planners in investing in renewable technology,” she said. “It’s good for the economy, it’s good for Telstra and it’s good for Australia.”

In Telstra’s case, this has resulted in a deal to build a 70MW solar farm near Emerald in North Queensland. The project, carried out in partnership with RES Australia is one of the first corporate PPAs in Australia.

A PPA, or power purchase agreement, is a long-term contract under which a company agrees to buy power direct from an energy generator, rather than a licensed utility. The agreements have become popular in other countries, particularly the United States, but are still in their infancy in Australia.

Under the deal, RES will invest around $100 million in building the facility, which will exclusively supply power to Telstra under a long-term contract.

For Telstra, which single-handedly uses one per cent of the Australian energy market, the appeal was simple: Moving towards a future in which more of its energy supply is predictable, stable and renewable.

“For us it was a risk management tool,” Ms Kalam said.

The experience of large corporate actors such as Telstra can be instructive not only for themselves but can set an example for others to follow, members of the panel agreed.

“I’m now hoping there will be a flood of other businesses that take lessons from companies such as Telstra,” Mr Thornton said.

New priorities

ARENA announced a new investment plan earlier this year featuring four new priorities that will guide the agency’s future investments and strategy. One of them focuses on improving energy productivity. Mr Frischknecht said that doing so within the industrial sector would be a particular focus for the agency. The report, and launch event, are important first steps in helping business leaders to understand the benefits of making the switch, he said.

“We hope to demonstrate how it’s done. Seeing a neighbour that has a system in place, or seeing a competitor that has a system in place, is a great way to motivate people.”

Paul Curnow, a partner at law firm Baker McKenzie, said many companies were held back from adopting renewable energy because sustainability experts who advocated for it were distanced within their organisation from those who actually hold the purse strings and make decisions around energy use.

“You see a lot of disconnect between those running renewables strategy in companies … and the CFO who has to sign off on it,” he said.

But Mr Curnow said at the very least renewables were now an important hedge for smart corporates, allowing them to reduce exposure to future price fluctuations of the sort that have rocked the energy market in recent times.

The final word in a stimulating panel discussion went to Telstra’s Ms Kalam. The closest thing on stage to a representative of the business world put the decision to shift to renewable energy in terms that any corporate leader could digest and approve of.

“Financially,” she said, “it just totally makes sense.”

This article was originally written by Daniel Silkstone, former Head of Content, ARENA.

ARENA