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Insight Series: As Australia’s energy sector heats up, change brings opportunity


The Greek philosopher Heraclitus once said There is nothing permanent except change. This maxim holds true 2,500 years after his death. In our present century, technology is changing how we live, work, and play at an accelerating rate. Population growth and spread are driving changes to urbanisation, infrastructure, and transport. Climate change is affecting how utility providers and retailers offer services. Customers are better informed than ever and their demands for seamless experiences and ethical and sustainable business practices are changing the retail game.

Every one of the forces changing our world is polarising to some degree. Few topics are more polarising in Australia than the future shape of its energy-generating methods.

It’s a complicated debate and one that is too often broken down into passionate and subjective arguments of good (renewables) vs bad (coal), or the other way around.

The reality is that everyenergy source has its pros and cons. Clearly, energy reliability and affordability are critical for all stakeholders. Yet the economic and environmental impact must also be considered to reach a pragmatic, balanced, sustainable solution. Mix these necessary outcomes with the average three or four-year term of government policymakers tasked with designing our path forward forever and it starts to become clear why confusion persists about which path Australia should take to secure its energy future.

The truth is there could be multiple paths forward, but who will take responsibility for the ultimate decision?

While confusion reigns, things are heating up in the energy industry.

Operators of the coal-fired plants which supply 75 percent of Australia’s current power face unenviable pressure to steer towards cleaner, renewable energy sources while literally “keeping the lights on” using ageing infrastructure. Increasingly, consumers want to invest in, and use, renewable energy sources without compromising too many of the comforts and conveniences they’ve become accustomed to from using traditional energy sources.

Meanwhile, tension between the energy industry and the government is palpable. The CEOs of AGL Energy and Stanwell Corporation quit earlier this year with comments by the outgoing CEOs apparently at odds with government-described timeframes on the retiring age of coal-fired plants. The traditional “gentailer” business model used by Australia’s energy giants for decades is shuddering under the rate of change blasting through the energy market on the back of large-scale wind and solar, battery storage solutions, and rooftop solar PV systems. Local media is full of arguments for, and against, using natural gas as a transition fuel.

Commitments from other countries, including the G7, to hard deadlines to reduce emissions are ramping up pressure on policymakers. In an unprecedented move that could have implications for every energy provider globally, a court in The Hague just ordered Dutch energy giant Shell to drastically cut its emission reduction targets and held the company responsible for the emissions of its consumers, dismissing Shell’s argument that governments alone are responsible for meeting Paris Agreement targets.

It’s a complex landscape. Yet for all the confusion, upheaval, and lack of clarity around the future, change creates opportunity.

However the Australian energy market evolves, one fact is certain: the shift to a low-carbon future will create opportunities as a new energy economy emerges.

Saltire Capital Partners are experienced at helping business navigate uncertainty to capitalise on market opportunities emerging from disruption. Contact us to learn more.

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