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.
The business case for renewable energy versus fossil resources is changing as the cost of gas and grid supplied electricity has increased while the costs of renewables continue to fall. Renewable energy can offer substantial cost savings compared with grid-supplied energy, while allowing 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, typically with solar PV, while wind energy and biomass/biogas are also widely used. Where carbon reduction rather than cost savings 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. It pays to seek expert advice from an independent provider or accredited system designer who can optimise overall energy and financial outcomes.
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. Grid-connected solar PV systems use an inverter to convert direct current (DC) from the panels into alternating current (AC) so the power generated is suitable for use in standard electrical infrastructure and appliances.
Solar PV 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 incentives may also be available in your area.
Most solar PV 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 PV 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 two factors that will determine cost savings from solar PV investment, so understanding energy consumption patterns is an important first step.
The Clean Energy Council accredits solar PV system designers who can assist businesses to understand options and optimise financial returns. If government rebates are available, it’s standard for solar PV providers or designers to access the incentives as part of the contracted services and factor them into the quoted costs.
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, and generally 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 progressively 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, while new intelligent turbines can collect and interpret real-time data to fine-tune wind plant flows and turbine configurations to maximise wind harvest.
While wind power is one of the major sources of renewable energy in the national grid, it’s generally not as cost-effective as solar PV for on-site generation. Rather, the purchase of offsite wind energy has become a preferred option for large companies who are seeking a reliable and consistent source of relatively 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, enabling operation on 100% renewable energy and avoidance of network outages.
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 carbon dioxide) created though animal digestion and organic decomposition 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 available 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 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 where water flow is reliable and demand is modest, such as for irrigation. Hydropower systems can also be used to store renewable energy by moving water uphill for later release, greatly increasing the value of hydropower by enabling responsive electricity supply during peak demand periods. The Snowy 2.0 scheme is an example of this large-scale hydro battery technology.
Geothermal energy harnesses the power of heat in the earth, typically using pumps to transfer heat from the stable temperature of the earth for the provision of building space conditioning, 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 and especially where the climate 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 available space and resources. A growing 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.
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, substantially improving overall business benefits. New storage and demand control technologies make it easier and cheaper for energy to be stored and used at different times.
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 for use at times when grid electricity would otherwise need to be purchased. Battery storage also lets a business access grid electricity when relatively inexpensive (off-peak), and provides back-up in the event of a power outage.
Lithium-ion is an increasingly 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 concerns about environmental impacts and expected material shortages, new technologies are being explored by Australian companies and universities to complement lithium-ion batteries in larger scale applications. These include the following:
Flow batteries – based on liquids, such as zinc-bromine, rather than solid materials, are nearing cost effectiveness.
High-capacity ultra’ capacitors – can overcome the limitations of lead-acid batteries and deliver high-performance levels under all charge conditions.
Sodium-ion batteries – use materials that are abundant and cheap with low environmental impact, and are being developed based on research at the University of Wollongong.
Gel-based zinc-bromine batteries – Australian company Gelion is developing these for residential and commercial applications with performance comparable with lithium-ion batteries.
Rechargeable vehicle batteries – at end-of-life can be used for certain applications where reduced capacity is acceptable by using new developments in battery management software, providing a solution to increasing concerns about the disposability of lithium-ion batteries.
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 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. ARENA and the CEFC have been actively supporting a number of concentrated solar projects in recent years.
Renewable Energy & Load Management – for Retail Businesses (PDF 1.6MB) University of Technology Sydney
Guide to installing solar PV for business and industry (PDF 1.6MB) Clean Energy Council
NSW Guide to Corporate Power Purchase Agreements (PDF 6.3MB) Energetics
Wind technologies Clean Energy Council
Solar thermal technologies Clean Energy Council
Hydroelectricity technologies Clean Energy Council
Solar thermal projects ARENA