Industrial electricity costs could halve by sharing infrastructure

A report by Monash University’s Climateworks Centre suggests a rethink of how Australia’s industrial regions can make the transition to clean energy, where industries could share infrastructure and coordinate when and how they use electricity.

The result, it stated, is a cheaper, cleaner and more efficient energy system.

The report modelled two pathways: one where industries go at the transition alone and another where they work together, sharing infrastructure and coordinating energy use.

Climateworks Centre CEO Anna Skarbek AM said the difference is significant.

“Both pathways beat business as usual, and coordination delivers the lowest-cost outcome, with potential electricity savings of up to 50%, outcompeting business-as-usual Queensland grid prices from the early 2030s,” Skarbek said.

The report states that a coordinated approach to industrial transition:

• reduces infrastructure costs by up to 20% compared to going it alone;
• reduces electricity prices by up to 50% compared to Queensland’s current energy plans;
• avoids unnecessary infrastructure build-out — with less strain on nature and communities;
• cuts renewable energy curtailment by up to 40%, meaning less clean energy is wasted.
   

Using Gladstone as a case study, the approach can be rolled out across Australia’s industrial regions including Gladstone, Kwinana, Hunter, Whyalla and the Pilbara.

The findings come as aging industrial facilities such as Whyalla face rising costs and technical challenges, while Australia races to build enough renewable energy to meet its 82% renewable electricity target by 2030.

Energy Efficiency Council Head of Policy Jeremy Sung said Australia faces a critical decision in determining how to best build the energy infrastructure that will power the nation’s future economy.

“We can choose to build in an uncoordinated way and bear the extra costs, or optimise energy use to deliver infrastructure faster, cheaper and with lower impacts on the environment,” he said.

“A joined-up approach to developing energy infrastructure in Australia’s key industrial hubs makes complete sense.”

Australian Industry Group Director of Climate Change and Energy Tennant Reed said this work helps put industrial energy needs front and centre in electricity system development.

“The model outlined here, and tested on the case of key Gladstone industrial sites, points to extremely valuable savings,” he said. “Reducing what needs to be built through shared infrastructure slashes costs and should unlock faster regulatory approvals too. That’s a good recipe for competitiveness and unlocking growth.

“Energy system planning should take this perspective on board as fast as possible.”

Skarbek said the findings point to a shift in how Australia can power its industrial future.

“This approach shows future energy costs can be halved by treating industrial regions as a whole energy system — common use infrastructure, avoiding unnecessary construction, more flexible electricity use for when clean energy is most abundant, resulting in a cheaper, more efficient energy system,” Skarbek said.

Climateworks recommends developing Industrial Precinct Energy Plans (IPEPs) to complement national energy planning. These plans would establish a shared view of future regional electricity demand and identify the least-cost pathway for generation, storage and transmission, through opportunities for industries to share infrastructure and use energy more flexibly.

Dr Calvin Lee, lead author and Climateworks Centre Senior Project Manager, said IPEPs can increase investor confidence, support more informed land-use decisions and accelerate renewable energy deployment.

“Industry and renewable energy developers need to understand how much electricity will be required, when it will be needed and what infrastructure should be built,” he said. “IPEPs can provide that visibility, helping investment move forward while ensuring infrastructure is built and used as efficiently as possible.

“Getting this right in places like Gladstone not only lowers emissions, it supports the competitiveness, resilience and prosperity of Australia’s industrial regions.”

Read the full report by Climateworks Centre here.

Image credit: iStock.com/johavel