Thanks to a surge of over 200% in installed solar power generation capacity since 2018, Australia ranked sixth worldwide in terms of solar capacity in the previous year, marking its position as one of the globe’s fastest-expanding significant renewable energy contributors.
However, in order to reach its aim of being a net-zero carbon contributor by 2050, Australia has to alter its energy consumption trend, which continues to climb, contrasting with numerous counterparts that have managed to limit energy consumption in recent years. Australia’s overall electricity usage has swelled almost 8% over the last ten years, in contrast to declines of over 7% in France, Germany and Japan, and a 14% plunge in the United Kingdom, according to data from Ember.
The continuous upswing in Australia’s electricity demand has consequently implied that power generators need to maintain a high reliance on coal for electricity production, in addition to the recent increase in renewable energy sources. To meet emissions reduction objectives promptly, Australia’s energy consumption must diminish while clean energy resources continue to rise, which would allow power generators to shut down high-emission fossil fuel energy production systems ahead of the 2050 deadline.
Lowering overall electricity and energy consumption is a significant hurdle in every nation, but it is particularly challenging in Australia, which lags behind in electrifying transportation systems and frequently experiences long-lasting heatwaves that necessitate extensive air conditioner use. The transport sector consumes more energy than any other sector of the Australian economy, including industry, making up about 40% of total final energy usage as of 2020, according to the International Energy Agency (IEA).
The energy demand in the transport sector has also surged faster than other sectors, increasing by over 5% from 2010 to 2020 compared to the industry’s 1.3% increase over the same timeframe. In an effort to limit energy consumption, and cut down the country’s fuel import bill, which exceeded AUD $65 billion in 2022 alone according to the Australian Bureau of Statistics, the Australian government is eager to electrify vehicle fleets and is providing substantial incentives for electric vehicle acquisitions.
However, in 2022, electric vehicles constituted only 5.1% of total Australian car sales, as per the International Energy Agency (IEA). This is in contrast to 13% in New Zealand, 21% in the European Union, and a global average of 14%. More incentives for EV purchases are anticipated, but any quick uptake of EVs would only escalate overall electricity demand, adding further stress on power producers to augment electricity supplies.
Climate control for residential and commercial buildings is another significant energy demand driver in Australia, accounting for approximately 40% of total electricity consumption in the country. Australia faces severe weather conditions, especially heat waves which are projected to rise in occurrence, severity, and length in the coming decades due to climate change, according to the New South Wales government. To adapt, Australians are expected to increase their use of air conditioners during the hottest periods of the year, putting additional pressure on electricity systems.
To mitigate potential power shortages, Australian utility companies are anticipated to persist with the expansion of renewable energy supply capacity, possibly at a faster rate. Risk evaluation firm DNV estimates that electricity generation from solar and wind sources across the Oceania and Pacific region will rise from a 12% share currently to over 60% by 2050. Proposed extensions to battery systems capable of storing surplus renewable energy produced during the day for distribution to consumers overnight will offer additional support to the power system.
Nonetheless, Australian power generators appear destined to remain significantly dependent on coal for baseload electricity production for the foreseeable future, if not longer. That coal generation will continue to inflate the country’s emissions totals unless overall electricity consumption can be sustainably reduced, affording power producers the opportunity to decommission coal plants before the mid-century target.