Manufacturers should explore a new approach to power says university expert

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Australian manufacturers are encouraged to review and optimise their power consumption and consider shifting to renewables.

Professor Ariel Liebman, Director of the Monash Energy Institute says there are two aspects to the energy crisis: cost and reliability, or availability. He encourages Australian manufacturers to review and optimise their power consumption and sourcing in the wake of the Australian Energy Market Operator’s recent warning of possible power interruptions across five Australian states and subsequent suspension of the National Electricity Market.

“In the short-term manufacturers can seek to manage their electricity demand more actively. In practice that means trying to be productive at lower demand times of day in response to price signalling, whether it’s through tariffs or real time pricing, which is the most beneficial through effectively exposing themselves to the wholesale market,” says Prof Liebman.

“If they have part of their load that they can delay or reschedule in advance to avoid times of high demand or high price they will save money and increase certainty.”

Prof Liebman acknowledges the need to trade off potential knock-on effects such strategies may have on business bottom lines, for example by requiring employers to pay penalty rates for operating at night-time and says that ultimately Australia needs to revise its approach.

“A different approach is required with more direct investment and management by governments. We need to get closer to stronger regulation like we had in 1998 before the state electricity generators, gas infrastructure and grids were corporatised and partially privatised. That was supposed to increase efficiency and decrease costs to consumers. We got the exact opposite.”

“Additionally, the current emergency situation could have been avoided if there was a consistent climate-energy policy for the last 10 years (including a proper price on carbon or similar regulations) that would have incentivised the investment in infrastructure including renewable energy generation as well as storage and transmission. The latter is needed to both underpin a faster transition to renewables and fortify the grid against external shocks.”

In the medium to longer term, Prof Liebman advocates for exploring energy conservation and a shift to renewables.

“We know now that renewables are cheaper than coal and gas. Manufacturers can protect themselves against the volatility and supply demand constraints of gas supply by electrifying as much as possible. Investing in rooftop solar and batteries and the like makes sense, along with entering into power purchase agreements with large providers exploring wind and solar.”

A new website launched this week, Energy Tips, provides energy saving tips for homes and offices.

The Australian Government’s Department of Industry, Science, Energy and Resources also provides advice on energy management for business and includes specific industry sector guides.