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Renewable energy fast-track needed to prevent Aussie power price surge

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2023-07-19

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Australia must accelerate the development of renewable energy generation projects or face a significant increase in electricity prices for households and businesses, according to Guy Debelle, former deputy governor of the Reserve Bank.

Speaking at the Clean Energy Summit in Sydney, Debelle emphasised the need for action to meet the nation's net-zero targets and address the growing demand for electricity.

With coal currently providing over 60 percent of Australia's electricity needs, the country is actively working to reduce its reliance on this fossil fuel. Both the federal Labor government and the states have made efforts to establish policy frameworks and provide investment incentives.

However, Debelle, who now works with Fortescue Future Industries, stressed that it is crucial to move beyond policy discussions and focus on actual implementation.

Debelle stated, "I think we have good policy building blocks in place, but we really need to get on with delivering. Electricity demand is only going to increase... If supply doesn't keep pace, then there is only one outcome from an economic point of view, and that is prices go up."

The demand for electricity is expected to rise as companies transition to meet net-zero commitments and more Australians adopt electric vehicles. Australia has already experienced consecutive years of over 20 percent increases in electricity bills due to global energy crunches and the retirement of coal power stations.

While renewable energy generation has partially mitigated these effects, the country's transition is progressing slower than necessary.

The development of new renewable energy projects has been hindered by transmission concerns, particularly the need for more than 10,000 kilometres of high-voltage power lines across Australia's east coast. Community opposition has slowed down infrastructure development, although states have increased financial compensation offers. Compulsory acquisitions may be required to overcome resistance and provide renewable energy developers with grid supply security.

Daniel Westerman, CEO of the Australian Energy Market Operator, highlighted the critical risk of social acceptance during the transition away from fossil fuels. While acknowledging the vast economic opportunity Australia stands to gain, Westerman stressed the importance of managing the transition in an orderly manner.

Australia's challenges are further compounded by rising global competition, spearheaded by the United States. President Joe Biden's Inflation Reduction Act, supporting emissions reduction policies, has attracted significant capital and expertise to the United States, diverting potential investments from Australia.

Debelle expressed concern about the consequences of this trend, stating, "It is not just capital; it's expertise and people too. There are only so many people that know what they are doing in this space, and they are all heading to Texas and not coming here. That is where the opportunities are. We aren't going to wake up tomorrow as a green energy superpower."

Australia's window of opportunity to become a leader in green energy remains open, but urgent action and a concerted effort to develop renewable energy projects are necessary to prevent electricity prices from skyrocketing and secure the country's energy future.

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