Renewable energy

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Renewable energy is produced using natural resources that are abundant and able to be constantly renewed, including the sun, wind, water and trees. Australia has a wealth of renewable energy resources and many leading businesses are taking the initiative to invest in renewable energy generation.

Renewable energy can offer substantial cost savings compared with grid-supplied energy. It enables businesses to reduce emissions, enhance sustainability credentials and reduce exposure to future price volatility.

The most popular renewable energy option for Australian businesses is on-site generation. Solar PV, wind energy and biomass/biogas are widely used. Where carbon reduction is the main focus, many businesses opt to purchase a proportion of GreenPower through an energy retailer.

The costs and benefits of renewable energy investment can vary widely on a case-by-case basis. Seek expert advice from an independent provider or accredited system designer who can optimise energy and financial outcomes.

Solar PV

Solar photovoltaic (PV) power uses crystalline cells that harness sunlight to drive an electrical current, to be used on site or exported to the grid.

Australia has the highest uptake of solar globally. As of 31 January 2022, over 3 million rooftop solar PV systems have been installed nationwide.

Solar has proven to be a reliable and effective means to reduce energy bills. Installations may require a large up-front investment with a payback period of around 5 to 7 years, although loans can usually be met from the savings in energy bills. Rebates and assistance may also be available in your area.

Most solar systems use solar power onsite first. When the panels are producing less than needed, the balance is drawn from the grid. Conversely, any excess generation is typically sold into the grid at a much lower price than it would cost to purchase.

Solar is particularly viable for businesses with high amounts of daytime electricity usage and suitably large areas of sunshine-exposed roof. The load profile and electricity tariff are the main factors that will determine cost savings from solar investment.

The Clean Energy Council accredits solar PV system designers who can help businesses to optimise financial returns. If government rebates are available, providers or designers factor them into their quoted costs.

See the Clean Energy Council guide to installing solar panels for business.

See the Case studies page for examples of successful solar installation.

Battery storage

Renewable energy can be stored in many forms, offering businesses a number of advantages. Battery storage allows for an increase in the capacity of onsite renewables when grid electricity would otherwise need to be purchased. Battery storage also lets a business access grid electricity when relatively inexpensive (off-peak). It provides back-up in the event of a power outage.

Lithium-ion is a widespread rechargeable battery technology, powering everything from smartphones to grid scale storage facilities. Use in commercial and transport applications is expected to become cost-effective within the next few years.

Due to evolving needs for energy storage, new technologies are being explored by researchers and industry to complement lithium-ion batteries. This includes new battery chemistries and a range of emerging flow battery technologies such as vanadium, zinc-bromine, iron, and more. There is also significant interest in other forms of energy storage, including thermal storage and mechanical storage technologies.

See the CEC guide to installing a battery storage system.

Wind

Wind power uses turbines to convert kinetic wind energy into electricity. Wind energy is responsible for producing more than 30% of renewable power across Australia. It remains the cheapest source of large-scale renewable energy.

Continuous innovations in design have kept wind power at the forefront of the renewable energy wave. Turbines have become more efficient, with rotor diameters and hub heights increased to capture more energy per turbine.

Large blades are made lighter to reduce aerodynamic and gravity loads and materials costs. New intelligent turbines can collect and interpret real-time data.

While wind power is a major source of renewable energy in the national grid, it’s not as cost-effective as solar PV for on-site generation. The purchase of offsite wind energy is the preference for large companies seeking a consistent source of cheap, renewable energy.

Onsite wind power can be used to bolster solar PV installations in certain industrial applications. For example, 2 Western Australian mining companies have recently added wind turbines to their solar PV array. This enables operation on 100% renewable energy and avoidance of network outages.

Bioenergy

Bioenergy is produced through the combustion or breakdown of any biological matter. Biomass can be burned directly, or heated and turned into natural gas. Biogas (methane and CO2) can be captured and used to produce electricity and heat for industrial processes.

Bioenergy is economically and technologically proven and can help reduce waste and carbon emissions. The main application for bioenergy is where low-cost biomass is close to the point of energy demand. Relevant industry sectors include food, pulp and paper, and dairy manufacturing.

Biomass can also be used as a feedstock in the production of liquid biofuels such as ethanol, as well as low-carbon diesel and aviation fuels.

Hydropower

Hydropower harnesses the power of moving water, and is an advanced and mature renewable energy technology. Hydropower accounted for around 7.5% of Australia’s overall electricity supply in 2018.

A typical hydroelectric generator uses a dam on a river, capturing the energy of pressurised water as it rushes downhill through large turbines. Smaller scale systems, placed directly into rivers, offer potential expansion of hydropower production.

Hydropower systems can also be used to store renewable energy by moving water uphill for later release. The Snowy 2.0 scheme is an example of this large-scale hydro battery technology.

Geothermal

Geothermal energy harnesses the power of heat in the earth. Pumps or metal poles transfer heat from the stable temperature of the earth for HVAC, water heating and other services. The stable earth temperature provides a source for heat in winter and a means to reject excess heat in summer.

Due to the costs of excavation and infrastructure, for most applications, geothermal heat pumps are not as cost-effective as air sourced heat pumps.

Retrofitting geothermal energy systems is also relatively difficult, and is ideally implemented at the design and build stage. Geothermal heat pump benefits are greatest in climates with similarly sized annual heating and cooling loads. This is especially useful where the temperature gets too cold for air-to-air heat pumps to work effectively.

Suitable applications include schools, hospitals, and hotels. Geothermal energy has also been used in Australia to provide heating to council swimming pools.

Industrial businesses tend to produce large amounts of excess heat that can be easily recovered, meaning access to geothermal heat has limited benefit in most cases. Underground mines with easy access to low-temperature geothermal resources can, however, cost-effectively recover heat to improve site efficiency by providing for onsite heating and cooling needs.

Power purchase agreements

On-site renewable energy generation is often limited by space and resources. A number of businesses are turning to power purchase agreements (PPAs) to directly procure off-site renewable energy generation.

PPAs are arrangements in which a provider pays for and owns the renewable energy system, but sells the energy it produces to businesses at a lower rate than energy from the grid. This allow businesses to obtain renewable energy at cheaper than retail rates without needing to purchase a system themselves.

PPAs also offer energy price security through a fixed pricing contract and are therefore well suited to meeting large, long-term energy demands over 10 to 15 years. Electricity bill savings of up to 40% may be possible with well negotiated PPAs, which can also help to market green credentials.

A successful PPA requires an in-depth understanding of the energy market and industry players. Expert assistance is advised.

Financing renewables

While upfront purchase of renewables can offer many businesses substantial financial benefit, lack of capital and other investment barriers can prevent action. Financing solutions exist to help businesses overcome these barriers and realise the benefits of increased use of renewable energy.

The Clean Energy Finance Corporation (CEFC) works with banks and other financiers to deliver attractive financing solutions at better than market rates. Many companies also offer structured finance solutions for businesses that wish to install solar PV.

Where the business owner does not own the building or grounds, there may be an option of establishing an agreement with the building owners to implement onsite renewables as part of the lease terms. The Australian Government has a range of resources on green leases available.

See Grants and funding for more information.

Demand side integration

When planning renewable energy investments, innovative companies are adopting a comprehensive strategy that incorporates energy demand side considerations alongside renewable energy supply options.

Energy efficiency, demand management, load shifting, and electrification can be all be employed to shape energy demand to better match renewable energy output. New storage and demand control technologies make it easier for energy to be used at different times.

Innovations

Renewable hydrogen

Renewable hydrogen is produced by splitting water (by electrolysis) into separated hydrogen and oxygen molecules. Hydrogen is widely used in several industry sectors, generally requiring non-renewable natural gas for its production.

Renewable hydrogen is beginning to reach cost parity with fossil fuels, due largely to recent improvements in electrolysers. When electrolysed by low-cost renewable energy such as excess solar PV generation, hydrogen could become a cost-effective and sustainable replacement for natural gas.

Hydrogen from renewables could replace fossil fuel-based feedstocks in high-emission applications. It could also be used to reduce emissions from industrial processes that need gas to create high temperatures, such as steel and cement production.

Concentrated solar

Concentrated solar refers to a range of technologies that use large reflectors and lenses to concentrate solar energy for usable heat. The heat produced from concentrated solar can be used directly for industrial processes, or to produce electricity with steam-driven turbines.

The heat can also be stored so that energy can be available at all times, not just when the sun is shining. Thermal storage, for example in molten silicon or salts, has the potential to improve the economics of concentrated solar by allowing the production of renewable electricity at times of highest grid demand.

Australia is well placed to take advantage of concentrated solar technologies, due to abundant sunshine, space, and technical knowledge. Concentrated solar is likely to become increasingly viable in manufacturing where other forms of renewables are not able to provide the high temperatures needed for common industrial processes. The CEFC and Australian Renewable Energy Agency (ARENA) have been actively supporting a number of concentrated solar projects in recent years.

Virtual power plants and automated trading

A virtual power plant is a network of renewable energy generation and storage connected using software. Virtual power plant start-ups offer a range of energy optimisation services to their subscribers. The latest technology uses customised algorithms, ledger systems and AI forecasting to facilitate optimal trading of surplus electricity. This enables mutually beneficial transactions for sellers and buyers.

Second generation biofuels

Also referred to as advanced biofuels or renewable fuels, second generation fuels are low emission products made from waste biomass. They are chemically identical to conventional fuel. In future this could reduce the need for fossil fuels used in existing heavy-duty industrial equipment and transport fleets. There is significant research worldwide into the development of cost-effective second-generation biofuels.

First Nations Clean Energy Network

The First Nations Clean Energy Network is a network of key stakeholders working in partnership to ensure First Nations communities share in the benefits of the clean energy boom.

The network is made up of First Nation people, communities and organisations collaborating with industry, investors, academics, and legal and technical experts. Its priorities are to:

support community-owned renewable projects to deliver lower-cost, reliable energy
power job opportunities and strong economies so First Nations people can live and work on Country
form strong industry partnerships, sharing the benefits of a renewable future.

To find out more and get involved visit the First Nations Clean Energy Network website.

Green leases

Australia’s Bioenergy Roadmap (ARENA) Australian Government

Australian Renewable Energy Agency (ARENA) Australian Government

Business Renewables Centre Australia

Clean Energy Finance Corporation (CEFC) Australian Government

Concentrated solar thermal (ARENA) Australian Government

Hydroelectricity technologies Clean Energy Council

New age for industry, powered by renewable energy - Episode 6 of ReWired podcast (ARENA) Australian Government

NSW Guide to Corporate Power Purchase Agreements (PDF 6.30 MB) Energetics

Off-Grid Guide to Solar Intyalheme Centre for Future Energy

Plug in: Energy tech guide Energy Consumers Australia