Grounded 4 - Where is investment urgently needed in the energy transition?

To wrap up the Grounded Webinar series Director of Clean Futures Team at CEFC Bobby Vidakovic alongside Angela MacDonald-Smith from Australian Financial Review and Andrew Harpham from Frontier Economics came together to discuss which sectors needed investment urgently in energy transition.

Mr Vidakovic kicked things off by giving insight on what energy investment looks like today in Australia.

“Looking at the current state of play, one of the key factors that is driving the appetite for investors in renewable projects is the ability to connect, “ he said.

“Distributed solar still has a significant forecast in terms of going forward and we continue to expect to see that.”

In regards to the gas sector Mr Harpham said it has been a difficult decade, but recently there has been more people interested in investing in the energy source.

“There is reported to be a great deal of gas onshore in Victoria that can be produced cheaply,” he said.

“But you never know, economically, with gas.”

Despite the economic uncertainty around gas Mr Harpham said it is still an attractive choice as things like batteries give short term storage.

Ms MacDonald-Smith said there is still a good export demand for gas but due to COVID-19, has made this not an economically viable option at the moment .

“Australia is a high cost destination, high cost location for investments and operations. So if you look at export for LNG it’s pretty much on hold,” she said.

The possibility of the Australian Government subsidising the gas industry was another option Ms MacDonald-Smith suggested may have to happen during the energy transition.

Meanwhile, Mr Vidakovic tabled the idea of Australia developing more Renewable Energy Zones (REZ’s) to help drive investment into grid connectivity.

“There hasn’t really been a large scale REZ deployed in Australia,” he said.

“The market is really testing to see what these look like in terms of how they’re delivered, the commercial framework and the parties that are involved.

“But ultimately the REZ’s have been conceived as an area whereby there are strong levels of renewable resources...to then try and deliver a high scale efficient solution.”

The re-introduction of a carbon tax was brought up for discussion.

Ms MacDonald-Smith said it is very likely that businesses that are large carbon emitters were already planning for this and will most likely find ways to make the consumer pay for it.

“The companies have to take some of the risks of course but it’s the consumer who pays at the end of it.”

Given consumers want more energy efficient products, Mr Harpham said they should be the ones to pay.

“Assuming there’s no market failure resulting in efficient prices why wouldn't we” (the consumer), he said.

The final webinar covered a variety of interesting topics and was a great way to finish the Grounded series.