Market Study

/////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// TRANSITION IN State of Play 2020

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Flanders Investment & Trade Autstralia Pty Ltd 103/838 Collins Street Docklands VIC 3008 Australia T. +61 3 96 14 09 80 E. @fitagency.com

www.flandersinvestmentandtrade.com TABLE OF CONTENTS

1. FOREWORD ...... 4 COVID-19 impact 5 2. AUSTRALIAN MACRO-FACTOR ANALYSIS ...... 6 DEMOGRAPHIC FACTORS 6 ECONOMIC FACTORS 7 3. ENERGY MARKET (GENERAL STATISTICS - SNAPSHOT) ...... 8 ENERGY GENERATION 8 8 ENERGY COSTS 9 4. ENERGY DISTRIBUTION ...... 10 ENERGY NETWORKS 10 TRANSMISSION 11 4.2.1 Major Electricity transmission players 12 ELECTRICITY DISTRIBUTION 14 4.3.1 Major Electricity distributors 14 ELECTRICITY (AND GAS) RETAILING 16 4.4.1 Electricity retailing 16 4.4.2 Major Electricity retailers 17 4.4.3 Gas Retailing 18 4.4.4 Major Gas retailers 19 EVOLUTION OF THE ENERGY GRID 20 4.5.1 Integrated System Plan (AEMO) 21 5. FOSSIL ENERGY ...... 23 BLACK COAL 23 5.1.1 Major black coal players 23 BROWN COAL 25 5.1.1 Major brown coal players 25 5.1.2 Coal-fired 26 LIQUEFIED 27 5.2.1 Major LNG players 28 PETROLEUM 29 5.3.1 Major petroleum players 30 6. ...... 32 OVERVIEW 32 6.1.1 Renewable Energy Target 32 SOLAR 33 6.2.1 Large-scale outlook 33 6.2.2 Small-scale outlook 35 6.2.3 Major players 38 WIND (ONSHORE) 39 6.3.1 Major Wind energy players 41 6.3.2 Major players for Construction 42 HYDRO 44 6.4.1 Major Hydro energy players 45 BIOENERGY 46 6.5.1 Landfill waste levies 48 6.5.2 Bio-energy players 48 ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 2 of 88 Energy Transition in Australia

BLUE ENERGY 49 6.6.1 Major Blue Energy players 49 PROSUMERS AND DISTRIBUTED ENERGY RESOURCES 51 6.7.1 “Prosumers” 51 6.7.2 Distributed energy resources 51 6.7.3 Virtual Power Plant 52 6.7.4 Renewable Energy in the building industry 53 7. ENERGY TRANSITION TO CLEAN ENERGY ...... 54 FEDERAL GOVERNMENT 54 STATE AND TERRITORY GOVERNMENTS 55 7.2.1 Australian Capital Territory (Canberra) 56 7.2.2 () 56 7.2.3 (Darwin) 57 7.2.4 () 57 7.2.5 () 58 7.2.6 (Hobart) 58 7.2.7 (Melbourne) 59 7.2.8 () 59 8. STRATEGIC PRIORITIES | EMERGING TECHNOLOGIES ...... 60 PRIORITIES 60 8.1.1 Australian Energy Market Operator’s vision 60 STORAGE 61 8.2.1 Services (revenue models) 62 HYDROGEN 62 8.3.1 State Governments’ commitment to green hydrogen 64 CARBON CAPTURE AND STORAGE / UTILIZATION 67 WASTE-TO-ENERGY AND CIRCULAR ECONOMY 67 8.5.1 Waste export ban 67 8.5.2 National Waste Policy and beyond 69 8.5.3 Waste-to- 69 8.5.4 Circular economy 72 OFF-SHORE WIND 74 8.6.1 Star of the South offshore wind project 75 9. FUNDING ...... 76 9.1.1 Clean Energy Finance Corporation 76 9.1.2 Australian Renewable Energy Agency 77 10. PROJECTS in CONSTRUCTION AND COMMITTED ...... 78 10.1.1 10 major projects in construction or due to start (by MW) 79 11. MAJOR INDUSTRY STAKEHOLDERS ...... 82 12. BIBLIOGRAPHY ...... 87

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 3 of 88 1. FOREWORD

As fossil electricity generation is a highly emissions-intensive process, it has prompted the Federal Government to intervene in the industry, with also several State Governments implementing renewable energy policies. At the Federal level, political difficulty has led to several failed attempts to regulate the industry over the past years: these attempts include the carbon tax, the Finkel Review clean energy target and the National Energy Guarantee. However, in May 2020 the Government finally released the discussion papers for a national Energy Technology Investment Roadmap that will drive investment in low emissions technologies.

Australia’s supply mix, networks and wholesale market need to undergo a significant and well-planned transition to harness the potential economic benefits of moving to a more reliable and a more renewable future. Failure to reform the energy market to ensure key energy infrastructure investment decisions are made in the short term could push Australia into a disruptive energy future.

In general, demand for electricity generation (above all black coal and brown coal) is in structural, but slow decline: the rising cost efficiency of renewable forms of energy, staunch environmental to new coal mines and regulatory changes regarding carbon emissions are all significant impediments to the industry's growth. Investment in new fossil fuel generation plants has waned over the past five years due to regulatory uncertainty, while most new generation investment has been directed to wind and solar plants. Furthermore, energy usage per capita has fallen over the past decade due to increased energy efficiency of appliances, the uptake of photovoltaic solar panels and other measures, which have reduced long-term demand for fossil fuel generated power.

Energy was firmly on the agenda at the May 2019 federal election, with the two major political parties taking up vastly different positions on energy and . A notable shift in public sentiment occurred towards the end of 2019 as devasting bushfires swept across much of the country. Pressure mounted on the government to acknowledge the growing impact of climate change and take meaningful action to reduce Australia’s carbon emissions.

With regard to renewable energy, 2019 was another year of extraordinary growth as State governments, industry and communities embraced the transition. There were 34 large-scale projects completed in 2019, increasing Australia’s large-scale renewable energy capacity by 2.2 GW and generating $4.3 billion in investment. Renewable energy was responsible for 21% of Australia’s total electricity generation in 2019, an increase of 2% on 2018. For a brief period, renewables passed the 50% mark of total generation in the National Electricity Market in November.

The wind sector had its best ever year in 2019, with 837 MW of capacity added across 8 new wind farms. For the first time, wind overtook hydro as Australia’s leading clean energy source, accounting for more than 35% of Australia’s renewable energy generation. Records were also broken across the board in solar as the large, medium and rooftop sectors installed more capacity than ever before. The large-scale solar sector saw 1,416 MW of new capacity added in 2019 across 27 solar farms, while the rooftop solar industry smashed last year’s record of 1.6 GW to break the 2 GW milestone for the first time. Hydro power contributed 25.7% of Australia’s renewable energy generation.

However, despite all the records broken in 2019, ongoing uncertainty threatens to slow the industry’s momentum: lack of a confirmed national on top of transmission and connection challenges resulted in new investment commitments falling by around 50% in 2019, from $10.7 billion in 2018 to just $4.5 billion in 2019.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 4 of 88 Energy Transition in Australia

Some of the challenges currently affecting the industry can be linked to the fact that transmission investment has failed to keep pace with the industry’s rapid growth. If left unresolved, these issues threaten to undermine investment confidence and severely slow the construction of much needed new clean energy capacity.

Australian States and Territories continued to fill the gap of a Federal policy in 2019. The ACT became just the eighth major jurisdiction in the world to generate 100% of its energy from renewable sources, while South Australia continues to push ahead with its renewable transition, as more than 50% of the State’s electricity came from renewables in 2019 and it is now aiming to source 100% of its power from clean energy by 2030.

The hydrogen industry made significant progress in 2019, with the Council of Australian Governments Energy Council agreeing in November to back $370 million of hydrogen projects under the National Hydrogen Strategy. The outlook for green hydrogen is positive also because it is included in the Energy Technology Investment Roadmap discussion papers as one of the “candidates” to deliver the Government’s “technology, not taxes” approach to reducing emissions.

COVID-19 IMPACT

The coal mining industry is expected to be significantly affected by the consequences from COVID-19. China is one of the largest export markets for Australian coal, where it is primarily used in the production of steel. Quarantine measures in China and throughout the global economy have disrupted supply chains, hindering manufacturing activity and lowering demand for steel. As a result, China is expected to demand less black coal from Australia in 2020, leading to a decline in export prices. China may also seek to increase reliance on its own coal production, in an effort to stimulate its economy amid a downturn from COVID- 19. The capacity for Australian exporters to redirect sales to alternative markets is limited, particularly given the ongoing shift towards renewable energy sources.

Over the long term, a significant decline in oil prices associated with the outbreak of COVID-19 may cause demand for coal to decline, as oil and coal are partial substitutes in energy generation. Despite a probable recovery in the global economy as the effects of COVID-19 fades, oil prices may remain low for an extended period.

Restrictions implemented in response to the COVID-19 virus outbreak are altering demand for industry services. The closure of many businesses and growth in the number of Australian's working from home due to social distancing regulations have led to a drop in demand from commercial clients. Therefore the slowdown in the domestic manufacturing sector is reducing demand for electricity.

The drop in the domestic price of natural gas is expected to encourage consumers to use gas products over those requiring electricity. However, natural gas is an imperfect substitute for electricity, as it can only be used for heating and cooking purposes.

Overall, the decline in the electricity service price is expected to reduce returns on investment for renewable electricity projects, and contribute to increased demand for fossil fuel electricity.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 5 of 88 2. AUSTRALIAN MACRO-FACTOR ANALYSIS

To gain a better understanding of the Australian , a preliminary overview of local key macro-factors is useful to understand the demographics of the population and the financial status (before COVID-19 impact) that influences the interest for and adoption of new sources of energy.

DEMOGRAPHIC FACTORS

As at 30 September 2019, Australia’s preliminary estimated resident population (ERP) amounted to 25,464,116 people. The annual growth was 371,100 people (1.5%): 37.5% was due to natural increase, and 62.5% was due to net overseas migration.

Australia’s ERP 31/12/2019 (Australian Bureau of Statistics, 2019)

Despite the fact that Australia is a vast geographical area, approx. 90% of Australian population lives in urban areas, with 67% living in capital cities:

Australia’s Regional Population Growth 2018-2019 (Australian Bureau of Statistics, 2019)

Just over 17 million people live in Australia's capitals (+303,100 people during 2018-19). Capital city growth accounted for 79% of Australia's total population increase in the year ending 30 June 2019. Melbourne's population grew by 113,500 to reach 5 million residents during 2018-19. This was the largest growth for any capital city, and was followed by Sydney (up 87,100 people), Brisbane (52,600) and Perth (27,400). Melbourne also had the highest growth rate (2.3%), ahead of Brisbane (2.1%) and Sydney (1.7%). ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 6 of 88 Energy Transition in Australia

The population of Australia consists of a unique composition. In 2018, there were 7.3 million migrants living in Australia. This means that 29% of the population was born abroad. The majority of the migrants are born in the following countries: a] England - 992,000 people; b] China - 651,000 people; c] India - 592,000 people; d] New Zealand - 568,000 people.

The median age of the Australian population has increased by two years over the last two decades, from 35 years at 30 June 1998 to 37 years at 30 June 2019. live longer than ever before, but half of the population lives with at least one chronic condition. Many of these chronic conditions such as overweight and obesity, insufficient physical activity and alcohol consumption are related to lifestyle factors.

ECONOMIC FACTORS

Australian GDP has grown for the last 28 years, with a growth rate above the OECD average, confirming the successful transition from the largest resources and mining investment boom in Australian history to a broader-based growth. Official data reveals that GDP growth reflected the strong performance of 15 out of 20 industries, with Health and Education (13% industry share of output), Mining (10%), Finance (9%), Construction (8%) and Manufacturing (6%) and professional scientific and technical services performing greatly.

• Estimated GDP of $1.89 trillion as of 2019 (14th GDP global rank), with estimated growth of 1.7% in 2019. For 2020, due to the recent bushfires and the restrictive measures related to COVID-19, the expectation is of a recession with the Q1 down by 0,3% and a much steeper drop in Q2. IMF projected a 6,7% GDP contraction for 2020 (and a 6,1% increase in 2021) • 0.25% (following recent Australia’s central bank cut due to COVID-19) • Unemployment rate 6.2% (this is unfortunately predicted to grow by the end of 2020) • Inflation rate 2.2% • Average weekly earnings $1,257 with a household saving ratio of 5.5% https://rba.gov.au/snapshots/economy-indicators-snapshot/ (Reserve Bank of Australia, 10 June 2020)

Exchange rate Euro: 0.6146 (in Units of foreign currencies per ) on 2 July 2020) https://rba.gov.au/statistics/frequency/exchange-rates.html

The Australian cost of living stands as one of the highest with a Consumer Price Index (CPI) of USD 110 (in Belgium USD 104): as a practical example, compared to an USD 123 value shopping basket in Australia, you can buy the same products in Belgium for only USD 100 (approx. € 115 versus € 93). This is also an indication of the Purchasing Power, which is worth USD 1.45 in Australia and USD 0.8 in Belgium (OECD, 2017).

Australia’s political stability, transparent regulatory system, and sound governance frameworks underpin its economic resilience. Ranked in the global top five on the Index of Economic Freedom, Australia’s effective governance provides multinationals with a safe, secure business environment, offering: • A business environment that is ranked 15th out of 190 economies for ease of doing business; • A robust regulatory system noted for its strong finance and banking regulations; • A competitive remuneration for professionals; • A high purchasing power; • A quality of life that is rated the 7th highest in the world.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 7 of 88 3. ENERGY MARKET (GENERAL STATISTICS - SNAPSHOT)

ENERGY GENERATION

According to the latest official release from the Department of Industry, Science, Energy and Resources providing estimates for 2018-19 and calendar year 2019, total electricity generation (including by power plants and by businesses and households for their own use) was estimated to be 265,117 GWh.

Fossil fuel sources contributed 209,636 GWh (79%) of total electricity generation in 2019, a decrease of 2% compared with 2018. Nevertheless, the data demonstrate the importance of coal-fired generation, which continues to be an essential part of Australia’s energy mix, representing 56% of total generation in 2019. Gas-fired generation grew to account for 21%, driven largely by growth in New South Wales, Victoria and South Australia.

Renewable sources contributed 55,481 GWh (21%) of total electricity generation in 2019, an increase of 2% compared with 2018. The largest source of renewable generation was wind (7% of total generation, proportionally up 19% on 2018) followed by solar (7%, with large-scale solar presenting the largest increase up 135%, followed by small-scale solar up 25%, in addition to solar rooftops) and hydro (5%).

ENERGY CONSUMPTION

Electricity consumption is the percentage of electricity that is consumed nationally, and is measured in petajoule (Government of Australia, 2019). According to the latest Australian Energy Statistics (September 2019), Australia’s energy consumption rose by 0.9% (52 petajoules) in 2017–18 to reach 6,172 petajoules. This compares with average growth of 0.6% a year over the past ten years.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 8 of 88 Energy Transition in Australia

ENERGY COSTS

Network prices vary between regions and cover the cost of a vast array of services designed to ensure the safe and reliable supply of energy to households and businesses. The other components of energy bills are wholesale costs, retail charges and environmental costs.

Gas and electricity network prices have been falling across the country since 2015: average electricity network prices are down more than 13% and gas distribution prices fell 10% between 2015 and 2017 to make up 35% of an average residential gas bill.

In May 2020 wholesale electricity prices across the National Electricity Market fell to their lowest as gas prices continued on the downward path established in 2019. The dedicated webpage of Australian Energy Market Operator indicates current average price of electricity in the NEM.

The downward trend was the direct result of reduced costs for gas and coal generators, which meant they could offer electricity into the wholesale market at lower prices. There was also an increase in the amount of low priced solar generation coming into the market.

Levelized cost of electricity are transitioning, but they have been presenting a decreasing trend in the last ten years, with the expectation that it will generally continue in the next ten as well.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 9 of 88 4. ENERGY DISTRIBUTION

ENERGY NETWORKS

Australia’s energy networks comprise the transmission towers, substations, poles, wires and pipes which supply gas and electricity to almost every household and business in the country. This vital infrastructure is owned and managed by a mix of private and government-owned organisations which are responsible for the security and reliability of Australia’s energy supplies.

The energy network evolved into the National Electricity Market (NEM) that was created in 1995, following the formal adoption by the Council of Australian Governments of a national competition policy. The previously vertically integrated generation, transmission, distribution and retail functions were separated. The generation and retail sectors transitioned to competitive markets and the transmission and distribution businesses became regulated. Only Western Australia and Northern Territory remain separate from the interconnected NEM.

There are 22 electricity and gas network businesses in Australia with a mix of public and private ownership. Australian energy networks are natural monopolies subject to strict economic regulation. In most cases, they are governed by the National Electricity Rules which are made by the Australian Energy Market Commission under the National Electricity Laws. All major Australian gas networks are governed by National Gas Rules.

The revenue most energy networks are allowed to earn (and therefore the prices they charge) is governed by the Australian Energy Regulator and is set every five years. Western Australia has a similar structure regulated by its Economic Regulation Authority.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 10 of 88 Energy Transition in Australia

ELECTRICITY TRANSMISSION

Transmission networks transport high-voltage electricity from generators to distribution networks and directly to large industrial users. Transmission networks are highly regulated geographic monopolies, with only one major enterprise in each state. The Australian Energy Regulator oversees most of the industry's operations and sets revenue determinations for five-year periods for individual entities. The AER uses forecast network expansion requirements, existing networks' maintenance needs and the rate of return for industry players to make revenue determinations.

As demand for centrally generated electricity has declined over the past five years, due to the rollout of energy efficiency programs and greater household use of solar panels, the AER has responded by reducing the maximum allowed revenue for many industry operators. Industry revenue decreased at an annualised 3.5% over the five years through 2018-19, to $3 billion.

Industry revenue is anticipated to stabilise with the AER allowing for moderate revenue growth for most industry players. However, revenue is projected to decline significantly in 2022-23 and 2023-24 as the AER has announced its intention to cut maximum allowed revenue in the next round of revenue determinations. Industry revenue is projected to decline at an annualised 1.1% over the five years through 2023-24, to $2.9 billion.

Thanks to the connection of the networks of the Australian states, now the East coast can benefit from the longest interconnected electricity system in the world.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 11 of 88 4.2.1 Major Electricity transmission players

Queensland Electricity Transmission Corporation (Powerlink) Address: 33 Harold Street, Virginia (Brisbane) QLD 4014 Tel: +61 7 3860 2111 Website: www.powerlink.com.au About: Queensland Electricity Transmission Corporation Limited, trading as Powerlink (owned by the ), owns, develops, operates and maintains the electricity transmission network in Queensland. Powerlink operates over 15,000 circuit kilometres of high-voltage transmission lines, primarily transmitting electricity for Energy Queensland and , which supply power to over two million customers. Powerlink is a regulated monopoly business. Market Share: 28,4%

NSW Electricity Networks Operations (TransGrid) Address: 180 Thomas Street, Sydney NSW 2000 Tel: +61 2 9284 3000 Website: www..com.au About: NSW Electricity Networks Operations Holdings Pty Ltd, trading as TransGrid, operates and maintains high-voltage electricity transmission networks in New South Wales and the Australian Capital Territory, through approximately 13,000 circuit kilometres of transmission lines. The company's maximum possible revenue is set by the Australian Energy Regulator. Market Share: 24,3%

AusNet Services Address: 2 Southbank Boulevard, Southbank (Melbourne) VIC 3006 Tel: +61 3 9695 6000 Website: www.ausnetservices.com.au About: AusNet Services Ltd is a foreign-owned company (shareholders include Singapore Power Limited and the State Grid Corporation of China) that transmits and distributes electricity and gas in Victoria, through over 6,500 circuit kilometres of high-voltage power lines, and over 13,000 towers. AusNet transports energy from generation sources through 55 terminal stations into Victoria's five low-voltage distribution networks. The company transmits power to approximately 720,000 properties in North-East Melbourne and across Eastern Victoria. Market Share: 20,2%

ElectraNet Address: 52-55 East Terrace, Adelaide SA 5000 Tel: +61 8 8404 7966 Website: www..com.au

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 12 of 88 Energy Transition in Australia

About: ElectraNet Pty Ltd is a foreign-owned company (consortium of foreign companies: State Grid Corporation of China, YTL Power Investments, and Hastings Funds Management) that operates and manages the electricity transmission system in South Australia. ElectraNet's transmission system comprises a network of approximately 5,600 circuit kilometres of transmission lines, 91 high-voltage substations, and associated monitoring, controlling and switching operations. ElectraNet operates in the National Electricity Market (NEM) and is regulated by the AER. The transmission system operated by ElectraNet is linked to the eastern states' electricity networks through the with Victoria (in December 2016, a network fault in the Heywood interconnector contributed to a blackout in South Australia, prompting an inquiry into the reliability of the national grid). Market Share: 10,6%

Electricity Networks Corporation (Western Power) Address: 363 Wellington Street, Perth WA 6000 Tel: +61 8 9326 4911 Website: www.westernpower.com.au About: Electricity Networks Corporation, trading as Western Power, is a state-owned corporation that transmits and distributes electricity in South-West Western Australia. WA has two transmission networks: South-West Interconnected System and the North-West Interconnected System. Western Power is connected to the SWIS, rather than the NEM, and is the only major player not regulated by the AER. The SWIS encompasses 261,000 square kilometres in Western Australia and Western Power transmits and distributes electricity to over 900,000 residential customers and nearly 100,000 businesses. Market Share: 9%

Tasmanian Networks (TasNetwork) Address: 1-7 Maria Street, Lenah Valley (Hobart) TAS 7008 Tel: +61 1300 361 811 (use limited within Australia) Website: www..com.au About: State-owned Tasmanian Networks Pty Ltd, trading as TasNetworks, operates electricity transmission and distribution networks in Tasmania. The entity commenced operations in 2014, following the merger of transmission company and distribution network operator . Tasmania joined the NEM in 2005 and became fully connected through the interconnector in April 2006. TasNetworks is regulated by the AER and operates a transmission network of more than 3,500 circuit kilometres, 49 transmission substations and 7 switching substations. Market Share: 6,2%

Competitive landscape The Electricity Transmission industry exhibits high market share concentration, with the industry's four largest players, Powerlink, TransGrid, AusNet Services and ElectraNet, accounting for over 80% of total revenue. Industry participation is limited by the narrow scope of industry services, the extremely high costs associated with establishing new electricity transmission assets, and the government regulation and ownership of existing assets. As the industry's main assets are natural monopolies, each state only has one service provider. As a result, market share concentration has remained steady.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 13 of 88 ELECTRICITY DISTRIBUTION

Australian distribution networks are built and regulated to ensure a safe and reliable supply of electricity, even during peak demand periods in summer. Network operators have extended their networks substantially over the past decade, to account for potential rises in peak electricity demand. Regulators allow industry operators to generate a return on their capital so they can pay debt and equity holders. Historically, the amount of revenue that regulators have permitted the industry to capture from users has been proportional to the size of the industry's capital base. Industry revenue decreased at an annualised 2.3% over the five years through 2018-19, and it declined by 1.7%, to $14.4 billion, in 2019.

The industry is projected to continue changing over the next five years. New AER revenue determinations and regulatory periods will be introduced, influencing industry revenue for monopoly electricity distributors. The uptake of solar panels among households and potential improvements in battery technology will likely reduce demand for centrally generated electricity. Investment in distribution networks is anticipated to shift as a result of changes to the AER's reliability targets. Industry revenue is projected to increase at an annualised 1.7% over the five years through 2023-24, to $15.7 billion.

4.3.1 Major Electricity distributors

Energy Queensland Address: 26 Reddacliff Street, Newstead (Brisbane) QLD 4006 Tel: +61 7 3364 4000 Website: www.energyq.com.au About: Incorporated in 2016, Energy Queensland Limited is a government-owned entity operating as an electricity distributor in metropolitan and rural areas, operating the assets of Corporation Limited (electricity retail and electricity-related contracting) and Limited (electricity distribution network in South East Queensland, with a network spanning 53,000 circuit kilometres, including 288 substations and serving over 1.4 million household and commercial customers). Market Share: 25,7%

Ausgrid Address: 570 George Street, Sydney NSW 2000 Tel: +61 2 4951 9555 Website: www..com.au About: Ausgrid is a partially privatised entity (NSW State Government sold 50.4% of the company to a consortium of IFM Investors and AustralianSuper) that owns and manages the electricity distribution network in Sydney, the and the Central Coast in New South Wales.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 14 of 88 Energy Transition in Australia

Ausgrid operates a network of more than 200 large electricity substations, 500,000 power poles, 30,000 small distribution substations and almost 50,000 kilometres of below- and above-ground electricity cables. These systems connect to over 1.7 million customers. In addition, Ausgrid, which operates also more than 250,000 streetlights, invested in a $500 million electricity-metering project (partially funded by the Federal Government under the Smart Grid, Smart City program). Market Share: 17,6%

Endeavour Energy Address: 51 Huntingwood Drive, Huntingwood (Sydney) NSW 2148 Tel: +61 2 9853 6666 Website: www.endeavourenergy.com.au About: 's distribution territory covers 24,800 square kilometres of , the Illawarra, the Southern Highlands, the Blue Mountains and the South Coast of New South Wales. The company services over 950,000 electricity customers through a network including 186 major substations and over 416,000 power poles. Market Share: 10,1%

Essential Energy Address: Port Macquarie (Sydney) NSW 2444 Tel: +61 2 5525 4500 Website: www.essentialenergy.com.au About: Essential Energy is a New South Wales state-owned corporation that owns and maintains an electricity distribution network in regional NSW and areas of Southern Queensland. The company's network supplies over 800,000 homes and businesses in these regions, operating over 200,000 kilometres of powerlines and over 300 distribution substations that supply power to 95% of New South Wales and parts of southern Queensland. Market Share: 9%

Electricity Networks Corporation (Western Power) Address: 363 Wellington Street, Perth WA 6000 Tel: +61 8 9326 4911 Website: www.westernpower.com.au About: Electricity Networks Corporation, trading as Western Power, provides electricity distribution services in the South West Interconnected System (SWIS). Western Power transports electricity from generators to customers, and maintains and upgrades the transmission and distribution networks in the SWIS. Western Power is the only major player not regulated by the Australian Energy Regulator. Market Share: 8,6%

Victoria Power Networks (Powercor and CitiPower) Address: 40 Market Street, Melbourne VIC 3000 Tel: +61 3 9683 4444 Website: www.powercor.com.au

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 15 of 88 About: Victoria Power Networks Pty Ltd owns two (out of five) electricity distribution businesses in Victoria: Powercor and CitiPower. Hong Kong-based firms Cheung Kong Infrastructure Holdings and Power Assets Holdings Limited together own 51% of Victoria Power Networks, while Group, an Australian ASX-listed infrastructure trust, owns the remaining 49%. Market Share: 6,7%

Competitive landscape The industry displays a moderate level of market share concentration. In 2018-19, the industry's four largest players accounted for over 60% of total revenue. State and Territory Governments still play a large role in electricity distribution and industry operators are structured to cater to specific geographic areas. This trend limits the market share that any company can hold in the industry, while also resulting in a small number of medium-sized operators. Moderate privatisation limits the industry's market share concentration, as many industry assets cannot be acquired. Victoria and South Australia have privatised their distribution networks by selling and leasing former State Government assets. In these States, joint ownership structures also obscure concentration in these markets. Although six networks operate in Victoria and New South Wales, three entities dominate these states. The Queensland State Government's merger of Ergon Energy and ENERGEX into a single entity has increased market share concentration in the industry over the past five years.

ELECTRICITY (AND GAS) RETAILING

4.4.1 Electricity retailing

Industry revenue rose significantly over the two years through 2017-18, due to an increase in operators passing on purchase costs to customers. Rising gas costs due to the liquefied natural gas export boom in Queensland have contributed to increased gas-fired generation costs over the past five years.

Several power stations across Victoria and South Australia closing down, along with a period of uncertainty reducing investment in replacing power plants, caused wholesale prices to spike across the National Electricity Market in the Eastern and Southern parts of Australia. Industry revenue decreased by 4.9% in 2018-19 as supply tensions eased and wholesale prices declined. Overall, revenue rose at an annualised 2.2% over the five years through 2018-19, to $46.6 billion.

Industry revenue is forecast to decline over the next five years, as pressure on wholesale prices will likely ease. However, shifting regulation and policy in the industry and in related sectors is likely to create an uncertain operating environment. Resuming carbon pricing or introducing an emissions trading scheme would likely drive up both electricity prices and industry revenue. Increased household uptake of solar panels may also present a challenge for electricity retailers, because demand for and consumption of electricity from the grid would be likely to decline as a result. Overall, industry revenue is projected to fall at an annualised 2.6% over the five years through 2023-24, to $40.7 billion. ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 16 of 88 Energy Transition in Australia

Major markets:  Commercial and services 37,2%  Households 33,7%  Manufacturers 24,6%  Other 4,5%

4.4.2 Major Electricity retailers

Origin Energy Address: 264-278 George Street, Sydney NSW 2000 Tel: +61 2 8345 5000 Website: www.originenergy.com.au About: Limited is a vertically integrated energy company that supplies approximately 4.2 million customers with electricity, gas and liquefied petroleum gas. The company's presence in retail electricity markets has expanded since acquiring Victorian retailers in the early 2000s. Over the past five years, the number of Origin electricity customers has declined from 2.88 million in 2013-14, to 2.66 million in 2017-18 (latest available data). Total electricity sold decreased from 39.1 TWh in 2013-14, to 37.5 TWh in 2017-18. Market Share: 19,5% retailing

AGL Energy Address: 200 George Street, Sydney NSW 2000 Tel: +61 2 9921 2999 Website: www.agl.com.au About: AGL Energy Limited is vertically integrated across the chain and has more than 3.6 million customers. AGL Energy operates the 2,640 MW Bayswater and 2,000 MW . AGL has committed to close Liddell Power Station in 2022, and cease coal-fired generation by 2050. AGL launched the Powering Australian Renewables Fund (PARF) financing initiative, that aims to develop and own 1,000 MW of large-scale renewable generation assets. Market Share: 12,1% retailing

EnergyAustralia Address: 385 Bourke Street, Melbourne VIC 3000 Tel: +61 3 8628 1000 Website: www..com.au About: EnergyAustralia Holdings Limited (owned by Hong Kong-based CLP Holdings Ltd) entered the electricity supply subdivision in 2001 after it acquired a majority stake in the Yallourn power plant in Victoria and then in 2013 it purchased EnergyAustralia from the NSW Government (EnergyAustralia had 1.7 million electricity and gas customers across Eastern Australia as at November 2017). EnergyAustralia operates 495 MW of wind, 1,589 MW of gas, and 2,880 MW of coal-fired generation capacity. Market Share: 9,4% retailing

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 17 of 88 ERM Power Address: 123 Eagle Street, Brisbane QLD 4000 Tel: +61 7 3020 5100 Website: www.ermpower.com.au About: ERM Power Limited started its electricity retailing business in 2008, supplying major companies and small businesses across Australia with electricity. Market Share: 6% retailing

Electricity Generation and Retail Corporation (Synergy) Address: 363 Wellington Street, Perth WA 6000 Tel: +61 8 6212 2222 Website: www.synergy.net.au About: Electricity Generation and Retail Corporation, trading as Synergy, is the state-owned monopoly provider of electricity in the South West Interconnected System (SWIS). Another state-owned company, Electricity Networks Corporation (trading as Western Power), manages the electricity distribution network in the SWIS. A third state-owned company, Horizon Power, provides electricity outside the SWIS in Western Australia. Horizon Power is fully vertically integrated, owning its electricity distribution network. Any customer that uses less than 50 megawatt-hours of electricity per year is compelled to use Synergy as its retailer (for the SWIS). Market Share: 5,5% retailing

Competitive landscape Large, vertically integrated energy companies dominate the industry, with no standalone or second-tier retailers generating more than 5% of industry revenue. Standalone retailers tend to be based on state- owned or formerly State-owned generation and distribution businesses that have expanded into retailing. Examples include Aurora Energy in Tasmania and ActewAGL, a joint venture operating in the Australian Capital Territory. New South Wales' Red Energy operates in multiple States, as does Melbourne-based . Small retail-only participants are mostly active in Victorian and South Australian markets.

4.4.3 Gas Retailing

The industry is expected to grow at an annualised 0.7% over the five years through 2019-20, to $11.5 billion. This growth is primarily due to domestic gas prices rising over the three years through 2018-19. The development of LNG export facilities (please read Chapter 5.2) in the first half of the past five years has caused a significant share of Australian gas production to be shipped overseas. As a result, domestic supply on the Eastern seaboard has been threatened by LNG exporters. This trend has led to significant price growth. However gas prices are decreasing in 2020, due to growth in global supply and regulation in Western Australia that imposed minimum domestic supply volumes. In 2019-20, industry revenue is forecast to fall by 3%.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 18 of 88 Energy Transition in Australia

The domestic price of natural gas is expected to rise slightly over the next five years. As domestic prices usually ease as gas supply rises, LNG exporters are anticipated to continue to allocate a greater share of production for the domestic market, in an effort to prevent market intervention by the Federal Government. Domestic consumption of natural gas is forecast to decline as households transition to more energy-efficient technologies. In addition, demand from gas-fired power stations is also forecast to decline as renewable energy infrastructure is developed. Industry revenue is forecast to decline at an annualised 0.2% over the five years through 2024-25, to $11.4 billion.

4.4.4 Major Gas retailers

Note: The gas retail and distribution functions are separated by regulation, with different firms performing these activities.

AGL Energy Address: 200 George Street, Sydney NSW 2000 Tel: +61 2 9921 2999 Website: www.agl.com.au About: The retail energy segment of AGL Energy Limited buys gas and on sells these utilities to residential and small-business customers. AGL has over 1.4 million gas customers. The company started supplying natural gas to Western Australian customers in 2017. In 2015, AGL signed a gas supply agreement with Santos, the operator of the Gladstone liquefied natural gas export project, to provide 5.8 billion cubic meters of natural gas to GLNG from 2017 to 2029. A LNG terminal at Crib Point, Victoria, operational in early 2023, will enable AGL to source natural gas from suppliers in Western Australia and the Northern Territory. Market Share: 19,9%

Origin Energy Address: 264-278 George Street, Sydney NSW 2000 Tel: +61 2 8345 5000 Website: www.originenergy.com.au About: Origin Energy Limited is a major gas retailer that supplies customers in Victoria, New South Wales, South Australia and Queensland. Since the commencement of LNG exports, Origin has encountered difficulty in securing sufficient gas to meet demand from large customers. In 2017, Origin and APLNG reached an agreement to significantly boost the supply of natural gas to the domestic market, to reduce price pressure on the Eastern seaboard. Market Share: 14,9%

EnergyAustralia Address: 385 Bourke Street, Melbourne VIC 3000 Tel: +61 3 8628 1000 Website: www.energyaustralia.com.au About: EnergyAustralia Holdings Limited delivers electricity and gas to over 2.6 million customers. In 2018, EnergyAustralia entered into a 12-month partnership with Japan-based Toyota Tsusho to exchange energy-efficient technologies sold in their home countries to customers in Australia and Japan. Market Share: 13,9%

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 19 of 88 SGSP Australia Assets (Jemena) Address: 567 Collins Street, Melbourne VIC 3000 Tel: +61 1300 137 078 (use limited within Australia) Website: www.jemena.com.au About: SGSP Australia Assets Pty Ltd (owned by Singapore Power International and State Grid Corporation of China) comprises two distinct operating businesses: assets business Jemena and services business Zinfra. Jemena Gas Network (regulated by the AER) consists of 25,000 kilometres of gas distribution pipes in New South Wales, The company also operates gas transmission pipelines in Victoria, Queensland and New South Wales. Market Share: 5,5%

Competitive landscape In terms of gas retail, industry concentration is at medium level. The three largest energy companies, AGL Energy, Origin Energy and EnergyAustralia dominate the Eastern seaboard, providing bundled gas and electricity packages. In contrast, industry concentration in gas distribution is at a high level, a consequence of the natural monopoly characteristics of capital-intensive distribution networks. Overall, the gas supply industry has a moderate level of concentration, with the largest four players controlling approximately 54% of the market. This share has increased over the past five years due to acquisitions and growth in customer numbers among the major players. This trend is projected to continue as the major players increase their market shares further. The industry is more concentrated within particular geographic regions due to limited numbers of industry operators.

EVOLUTION OF THE ENERGY GRID

As ageing coal-fired generation is retired, it will increasingly be replaced by wind and solar in different locations. Updated transmission networks will be needed to move power around the system locally and interstate, as increasing the capacity of existing transmission interconnectors or high voltage lines can lead to more customers accessing cheaper and more reliable electricity.

Reform in the transmission network access would help in avoiding blackouts and unplanned failure events (i.e. the repeated problems with the Basslink interconnector between Tasmania and Victoria in 2015 and 2019), providing generators with greater certainty that they will be able to export energy (projecting profitability not at risk), and reducing the financial and risk burden on consumers in funding new transmission investments.

Australian is evolving fast as new generation in geographically diverse locations is producing challenges coming from decentralization, with a possible shift from synchronous to non- synchronous generation.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 20 of 88 Energy Transition in Australia

4.5.1 Integrated System Plan (AEMO)

As the nature of electricity generation changes with the integration of smaller but more numerous renewable generators, the transmission network has not kept pace with the transition. Therefore 2019 saw a heightened focus on how the transmission network could be transformed in accordance with the evolving electricity system.

The Australian Energy Market Operator manages electricity and gas systems and markets across Australia, and it is responsible for the Integrated System Plan: the ISP is a whole-of-system plan that provides an integrated roadmap for the efficient development of the National Electricity Market over the next 20 years. It takes into consideration the opportunities provided from existing technologies and anticipated innovations in Distributed Energy Resources, large-scale generation, networks and coupled sectors such as gas and transport. Intended to be updated every two years, AEMO released a draft 2020 ISP in December 2019 that details tranches of transmission development with key highlights being:  Nationally significant and essential investments are necessary in the electricity system  Distributed energy generation capacity expected to double or even triple by 2040  Over 30 GW of new grid-scale renewables needed by 2040  Approx. 15 GW or 63% of coal-fired generation will reach end of life and likely retire by 2040  5 - 21 GW of new dispatchable resources are necessary to support the new grid-scale renewables by 2040

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 21 of 88 To support turning the ISP into action, the Board (ESB) has developed a set of reforms to the National Electricity Rules intended to streamline the regulatory processes for key transmission projects identified in the ISP.

The ESB consulted on these ‘actioning the ISP’ rules throughout 2019 and intends to present the rules package to the COAG Energy Council in 2020 for approval.

Simultaneously with this on the ISP, there are several regulatory approval processes recently completed or underway for transmission upgrades and new interconnectors. Regulatory approval processes have been completed for the Western Victoria Transmission Network Project and Project EnergyConnect, a new interconnector between South Australia and NSW. Regulatory approval processes are also currently underway for minor updates to the existing Queensland to NSW interconnector, Victoria to NSW interconnector and the , the second cable connecting Victoria to Tasmania. Moreover, the Victorian Government has introduced legislation that will allow it to fast-track projects like grid-scale batteries and transmission updates.

In late 2019, the Federal Government announced a new $1 billion Grid Reliability Fund to be administered by the Clean Energy Finance Corporation (a corporate Commonwealth Entity with the unique role to increase investment in Australia’s transition to lower emissions): the fund can be used to support transmission infrastructure, as well as new energy generation and storage.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 22 of 88 Energy Transition in Australia

5. FOSSIL ENERGY

BLACK COAL

Australia is one of the world's lowest cost producers and a major black coal exporter. Domestic reserves exceed domestic demand, are high grade and economical to access. As a result, exports account for a large share of industry revenue, that increased at an annualised 10.4% over the five years through 2018- 19. Tighter production regulations in China contributed to world coking prices increasing over the three years through 2018-19. Australia's proximity to key export markets, such as China, India and Japan, and abundance of high-grade metallurgical coal resources, enabled the industry to benefit from this trend. Industry revenue grew by 10.2% in 2018-19, to $78.9 billion.

Industry revenue is projected to decline over the next five years. Competition from Colombia, South Africa and Indonesia is anticipated to intensify over the period, as these countries increase export volumes of black coal. Domestic demand is also anticipated to decline over the next five years, as firms in the “fossil fuel electricity generation” industry move towards renewable energy alternatives. Despite this, the Australian Dollar is projected to remain low over the next five years, which will likely keep Australian black coal affordable in export markets and benefit the industry's competitive position. Overall, industry revenue is forecast to fall at an annualised 5.9% over the five years through 2023-24, to $58.1 billion.

Major markets:  Coking coal export 53%  Steaming coal export 33,2%  Domestic electricity generators 11,6%  Other domestic industries 1,2%

5.1.1 Major black coal players

BHP Group Address: 171 Collins Street, Melbourne VIC 3000 Tel: +61 3 9609 3333 Website: www..com About: BHP Group Limited generates revenue from exploring, developing, producing and processing minerals, oil and gas. BHP Group operates in the industry through its coking and steaming coal mining operations. BHP Group divested some of its assets into the spin- off company , while it retained Queensland Coal and NSW Energy Coal. Most of BHP Group's Australian coal output comes from its Queensland Coal assets, that comprises two joint ventures (BHP Mitsubishi Alliance and BHP Mitsui Coal).

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 23 of 88 BHP Group has a 50% stake in BMA and an 80% stake in BMC. Combined, the joint ventures provide BHP Group with a production share from eight coking coal mines in the , QLD. The company also operates New South Wales Energy Coal, which includes a steaming coal mine in the Hunter Valley, NSW. BHP Caval Ridge Southern Circuit includes an 11-kilometre conveyor system that can transport coal from the Peak Downs mine to the coal handling plant. In 2018, BHP signed a $1.2 billion deal with Thiess to expand the Mt Arthur Coal operation in NSW. BHP's total metallurgical coal production, including production attributable to joint venture partners, increased from 45.1 million tonnes in 2013-14 to 42.4 million tonnes in 2017-18. Market Share: 15,9%

Glencore Operations Australia Address: 1 Macquarie Place, Sydney NSW 2000 Tel: +61 2 8247 6300 Website: www.glencore.com.au About: Glencore Operations Australia Pty Limited mines and explores for coal with interests in 16 operational open-cut and underground coal mines in New South Wales and Queensland. In 2013, the company acquired a stake in Queensland's Clermont open-cut steaming coal mine, which it purchased from . The company mines hard coking coal, semi-soft coking coal and steaming coal through its interests in the industry. Glencore supplies Australian semi-soft coking coal to companies in various Asian steel industries. In 2018, Glencore acquired Rio Tinto's three coal mines in Queensland, Mitsubishi Corporation's 31.4% stake in the Clermont coal mine and 10% stake in the Ulan coal mine in Queensland. Market Share: 14,2%

Yancoal Australia Address: 201 Sussex Street, Sydney NSW 2000 Tel: +61 2 8583 5300 Website: www.yancoal.com.au About: Yancoal Australia Limited (branch of a state-owned coal mining company based in China) operates five coal mines throughout Queensland, Western Australia, and New South Wales. The company has a joint venture interest in Queensland's Middlemount coal mine, which is operated by Peabody Energy. Yancoal manages the Cameby Downs (QLD) and Premier (WA) coal mines on behalf of its majority shareholder Yanzhou Coal Mining Company Limited. Yancoal also manages the Ashton and Austar mines on behalf of Watagan Mining Company Pty Ltd. In June 2017, Yancoal entered into an agreement to purchase the Hunter Valley, Mt. Thorley, and Warkworth coal mines from Rio Tinto. Market Share: 8,3%

Competitive landscape The largest players in the Black Coal Mining industry are multinational companies that generally operate in many industries across the Mining division. Several other companies with a market share of less than 5% operate in the industry, including Anglo American Australia, Peabody Energy, and Whitehaven Coal. Additional market share is attributable to players that maintain stakes in industry establishments, but do not operate them, such as Mitsubishi Corporation that has a significant interest in the industry through its stakes coal mines that are operated by BHP Group. ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 24 of 88 Energy Transition in Australia

BROWN COAL

Deposits in Australia are abundant, cheap to access and occur so close to the earth's surface that some industry participants use bulldozers to clear away overburden. As it stands, the Brown Coal Mining industry's activities are limited to supplying the fossil fuel electricity generation industry. Miners have been unable to develop export markets, as brown coal is too heavy, unstable and low in energy value to make it economically viable to transport overseas. Brown coal also has limited use in other domestic applications. The industry's major players are vertically integrated mine operators and electricity generators that operate power stations located close to their coal mines. The industry's revenue fell at an annualised 9.2% over the five years through 2018-19, to $658.2 million.

Demand for brown coal in the downstream fossil fuel electricity generation industry is projected to remain subdued over the next five years. As a result, industry revenue is forecast to decline at an annualised 0.5% over the five years through 2023-24, to $640.3 million.

5.1.1 Major brown coal players

AGL Energy Address: 200 George Street, Sydney NSW 2000 Tel: +61 2 9921 2999 Website: www.agl.com.au About: AGL Energy Limited is a vertically integrated electricity generator and retailer that operates in a range of Australian energy industries. AGL Energy operates in the industry through its Loy Yang brown coal mine that operates a power station near Traralgon, VIC. AGL Energy's brown coal mine produces approximately 30 million tonnes of coal each year. This output is then used to power the Loy Yang A and Loy Yang B power stations. Chow Tai Fook Enterprises, which owns Energy, acquired the Loy Yang B power station in January 2018. In June 2018, AGL Energy received regulatory approval from the Victorian state government to extend its brown coal mining licence until 2065. The Loy Yang A power station is expected to close by 2048, while the brown coal mine is to be rehabilitated after this event. Market Share: 62,5%

EnergyAustralia Address: 385 Bourke Street, Melbourne VIC 3000 Tel: +61 3 8628 1000 Website: www.energyaustralia.com.au About: EnergyAustralia Holdings Limited (a subsidiary of Hong Kong-based CLP Holdings Ltd) has a presence across a range of energy-generating and -retailing industries in Australia.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 25 of 88 EnergyAustralia operates in the industry through its brown coal mine adjacent to the in the , VIC. The mine is an open-cut brown coal mine and produces approximately 18 million tonnes of brown coal per year. The Yallourn power station is a brown coal-fired station. Brown coal is used to boil water and the resulting steam powers turbine generators that have a capacity of 1,480 megawatts of electricity. The firm believes the mine has enough brown coal reserves to meet demand at the Yallourn power station until 2032. Market Share: 37,5%

Competitive landscape The industry displays a high market share concentration. Five enterprises operated brown coal mines in Australia over the period, until Alcoa, Alinta Power and Engie exited the industry. Two Victorian mine operators and power generators, AGL Energy and EnergyAustralia, now account for all brown coal output in Australia.

5.1.2 Coal-fired electricity generation

The Australian electricity system was founded on centralised, carbon-intensive coal-fired generation. The average lifetime of a coal powered plant is 29 years although its design life is 40 to 50 years. About three-quarters of Australia’s coal-fired power stations are operating beyond their original design life and some have had extensive refits. Since 2016, 2.8 GW of coal capacity has retired including Victoria’s Hazelwood Power Station, decommissioned in 2017 because it was not economically viable and had reached the end of its productive life. In early 2019, AGL’s generator at Loy Yang A brown coal-fired power station unexpectedly tripped offline. It is also expected that Yallourn power station could close much sooner than its scheduled 2032 retirement.

According to Australian Energy Market Operator’s Integrated System Plan (Chapter 4.5.1), it is expected that 14 GW of coal-fired generation will reach the end of its technical life and retire by 2040, as shown in the figure below. Those retiring currently generate 70 TWh, which is equivalent to one-third of current total National Electricity Market consumption.

National Electricity Market: coal plant closures (coal-fired generation remaining as power stations retire) Source: Australian Energy Market Operator

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 26 of 88 Energy Transition in Australia

The closure of some coal plants creates the possibility to diverse supply resources, shifting from a centralized network to a decentralized one, eventually allowing for a greater opportunity for renewable energy.

LIQUEFIED NATURAL GAS

Australian liquefied natural gas (LNG) exports have increased from 15.4 million tonnes in 2009-10 to an estimated 74.8 million tonnes in 2019-20. Industry revenue has increased at an annualised 23.8% over the five years through 2019-20, to total $53.6 billion.

The wave of project development that occurred across the industry over the past decade has now concluded. Ten LNG facilities are operational in 2020, including the Prelude and Ichthys projects, which shipped their first cargoes in 2018-19. Together, the industry's ten LNG projects have an annual of 88 million tonnes per year. Industry revenue increased by 6.4% in 2019, as the Prelude and Ichthys projects ramp up production.

A collapse in LNG export prices has affected the industry over the past five years, causing losses over the two years through 2015-16. Profit has since improved as global LNG prices recovered. Lower export prices have particularly affected establishments in Queensland, which rely on more expensive coal seam gas extraction.

In 2019-20, Australia reached the end of a massive boom that resulted in over $200 billion of investment in LNG projects over the past decade. The first LNG project in Australia was the North West Shelf project, which was completed in 1989 and is currently operated by .

Global demand for LNG is forecast to continue increasing over the long term, as developed economies transition towards renewable energy. Natural gas is an ideal fuel for use with intermittent renewable generation, as it can be quickly dispatched, is easily transported, and emits less than half of the emissions of coal-based power. Industry revenue is projected to decrease at an annualised 1.6% over the five years through 2024-25, to $49.5 billion. Increased LNG production from other countries is anticipated to increase external competition.

Major destination markets:  Japan 53%  China 33,2%  South Korea 11,6%  Other 1,2%  Singapore 1%

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 27 of 88 5.2.1 Major LNG players

Chevron Australia Holdings Address: 250 Saint George's Terrace, Perth WA 6000 Tel: +61 8 9216 4000 Website: www.australia.chevron.com About: Chevron Australia, through its predecessor company Standard Oil, has operated in Australia since the early 1950s. Chevron Australia employed close to 2,300 staff as at December 2018. Chevron has stakes in three industry establishments. Since 1987, Chevron has had a one-sixth stake in the North West Shelf Gas project (operated by Woodside), which has a nameplate capacity of 16.9 million tonnes per year. Chevron is the operator of the Gorgon LNG project and maintains the largest stake in the project at 47.3%. The Gorgon project has a nameplate capacity of 15.6 million tonnes per year and shipped its first cargo in March 2016. Chevron is also the largest stakeholder and operator of the Wheatstone LNG project, with a 64.1% share of the joint venture. Market Share: 24.4%

Shell Energy Holdings Australia Address: 562 Wellington Street, Perth WA 6000 Tel: +61 8 9338 6600 Website: www.shell.com.au About: Shell Energy Holdings Australia Limited (Shell) is a publicly traded company that owns and operates the Australian operations of the global petroleum giant, Royal Dutch Shell plc. Shell maintains interests in four LNG projects. The company owns one-sixth of the North West Shelf Gas project. The company also owns 25% of the Gorgon LNG project, which began production in March 2016. In February 2016, Royal Dutch Shell plc acquired BG Group plc, which was the majority owner and operator of the Queensland Curtis LNG facility. This provided Shell with a 50% stake in train one of QCLNG, and a 97.5% stake in train two of the project. Shell also owns 67.5% of the Prelude floating LNG project, which is the first floating LNG project in Australia. The Prelude project was completed in June 2019. Market Share: 13,5%

Woodside Petroleum Address: 240 St Georges Terrace, Perth WA 6000 Tel: +61 8 9348 4000 Website: www.woodside.com.au About: Woodside Petroleum Ltd is a publicly traded Australian oil and gas exploration and production company. Until November 2017, Woodside Petroleum was partially owned by Royal Dutch Shell plc. Woodside Petroleum has stakes in three Australian LNG projects. Woodside has a one-sixth stake in the North West Shelf Gas project and is also the operator of this joint venture. Woodside also maintains a 90% stake in the Pluto LNG project, which commenced production in June 2012. Woodside maintains a 13% stake in the Wheatstone LNG project, which was completed in October 2017. Market Share: 9,1%

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 28 of 88 Energy Transition in Australia

ConocoPhillips Australia Gas Holdings Address: 53 Ord Street, West Perth WA 6005 Tel: +61 8 9423 6666 Website: www..com.au About: ConocoPhillips Australia Gas Holdings Pty Ltd maintains stakes in two industry-specific LNG projects. The company maintains a 56.9% stake in the Darwin LNG project, which began operations in January 2006, and is also the operator of this joint venture. The Darwin LNG project is supplied by the Bayu-Undan gas field, which is expected to be depleted by 2022-23. However, this project may remain operational if it continues to be supplied by other gas fields. ConocoPhillips also owns a 37.5% stake in the Australia Pacific LNG (APLNG) project, which is operated by Origin Energy Limited. APLNG was completed in June 2016. In October 2019, ConocoPhillips announced the sale of the Darwin LNG plant to Santos. This sale is expected to be completed in the third quarter of 2020. Market Share: 6,9%

INPEX Australia Address: 100 St Georges Terrace, Perth WA 6000 Tel: +61 8 6213 6000 Website: www.inpex.com.au About: INPEX Australia Pty Ltd is the operator of the Ichthys LNG joint venture (INPEX owns 62.3% of the project) that has a nameplate capacity of 8.9 million tonnes. The project shipped its first LNG cargo in October 2018. INPEX also maintains an 11.4% ownership of the Darwin LNG project, which is operated by ConocoPhillips. Market Share: 5,7%

Competitive landscape The industry's major players operate eight of the ten industry establishments. The final two projects are the APLNG LNG project, which is operated by Origin Energy Limited, and the GLNG project, which is operated by Santos Ltd. Origin owns 37.5% of the APLNG project, which has a nameplate capacity of 9 million tonnes. Santos owns 30% of the GLNG project, which has a nameplate capacity of 7.8 million tonnes. Due to the minor share of ownership by Origin and Santos, the total industry market shares of these companies are below 5%. Although the industry's seven players operate all industry establishments, only 66.7% of the revenue generated by these facilities is attributable to these players. The remaining 33.3% is attributable to minor joint venture partners that own stakes in LNG facilities, but do not operate in any capacity. Most of these joint venture partners are subsidiaries of LNG customers in the Asian market.

PETROLEUM

Crude oil purchase costs, in conjunction with fluctuations in the value of the Australian dollar, contributes to significant revenue volatility. Declines in refinery output and surging import penetration have negatively affected the industry over the past five years. Consequently, industry revenue is expected to decline at an annualised 2.3% over the five years through 2019-20, to $20.5 billion. This includes an anticipated revenue decline of 3.5% in 2020, partly due to falling crude oil prices. The industry's productive capacity has significantly declined over the past decade.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 29 of 88

The industry competes with imported refined fuel products for shares of end markets, and has lost ground progressively over the past decade. Sophisticated refineries that have opened in the Asia-Pacific region have outperformed many Australian firms due to their greater scale, lower costs and more favourable regulatory environment. These competitors have been producing fuel that meets Australian standards, eroding a traditional barrier to entry for foreign-refined.

The industry's performance is forecast to slightly decline over the next five years. Imports are projected to grow over the period and offset these price increases. Industry profit margins are anticipated to remain low, but are likely to slightly increase as underperforming firms continue leaving the industry. Industry revenue is forecast to decrease at an annualised 0.6% over the five years through 2024-25, to $19.9 billion. Revenue declines for the Petroleum Refining and Petroleum Fuel Manufacturing industry is expected to be revised down significantly in 2020 due to the world price of crude oil plummeting because of COVID- 19 related restrictions.

Major products:  Automotive petroleum 38,3%  Diesel 31%  Aviation turbine fuel 13,6%  Other 17,1%

5.3.1 Major petroleum players

BP Australia Investments Address: 360 Elizabeth Street, Melbourne VIC 3000 Tel: +61 3 9268 4111 Website: www.bp.com/en_au/australia About: BP Australia Investments Pty Ltd manufactures petroleum products at its refinery in Western Australia. In addition to petroleum refining, the company operates in upstream oil industries and markets fuel through its network of service stations. BP's refinery in Kwinana (Western Australia) is the only refinery in the state and the largest in Australia. The refinery can produce a range of petroleum products. BP closed its refinery at Bulwer Island (Queensland) in June 2015. BP Australia underwent a major investment phase over the decade through 2005, as the company upgraded its refineries. In May 2017, BP Australia completed an $80 million maintenance project on the Kwinana refinery. Market Share: 32,5%

Caltex Australia Address: 2 Market Street, Sydney NSW 2000 Tel: +61 2 9250 5000 Website: www.caltex.com.au

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 30 of 88 Energy Transition in Australia

About: Caltex Australia Limited derives revenue from sourcing, refining, wholesaling and retailing petroleum. It operates a refinery in Queensland, which produced 6.2 billion litres of fuel in 2018. This represents the highest volume of fuel output in half a century. Approximately 35% of the fuel sold by Caltex is produced at the Lytton refinery. Caltex also operated a refinery in Kurnell, Sydney, before closing and converting it to a fuel import terminal in October 2014. Caltex stated it had also reached an agreement with Chevron regarding transport fuel imports of petrol, diesel and jet fuel. Market Share: 22,4%

Viva Energy Holding Address: 720 Bourke Street, Docklands (Melbourne) VIC 3008 Tel: +61 3 8823 4444 Website: www.vivaenergy.com.au About: Holding Pty Ltd has sold Shell products under licence in Australia since August 2014. In early 2014, Shell announced the sale of its , VIC, refinery and retail service station network to global oil trading company Vitol, which set up Viva Energy to operate these businesses. In December 2016, Viva Energy announced that it had acquired Shell's local aviation fuel business, and has since announced a $100 million investment to grow the company's exposure to the Australian jet fuel market. Viva Energy's Geelong refinery supplies over half of Victoria's fuel, and over 10% of the total fuel supply in Australia. The company operates over 1,250 service stations across the country. Fuel manufactured at the Geelong refinery is sold through the Shell Coles Express network, Shell service stations, and Liberty service stations. Market Share: 21,1%

ExxonMobil Australia Address: 12 Riverside Quay, Southbank (Melbourne) VIC 3006 Tel: +61 3 9270 3333 Website: www..com.au About: ExxonMobil owns an oil refinery near Melbourne, while a second refinery near Adelaide was closed in 2009. In May 2016, ExxonMobil announced plans to increase the Altona refinery's operational capacity from 80,000 barrels per day to 90,000 barrels per day. These upgrades have also improved the plant's energy efficiency by recovering an additional three megawatts of waste heat. In June 2018, ExxonMobil announced a $50 million investment in the Altona refinery that would increase crude oil storage capacity. ExxonMobil Australia Pty Ltd sells Mobil-branded at 7-Eleven Australia's retail network. Market Share: 17%

Competitive landscape While the four major players dominate the industry, multiple small firms also operate in the industry. However, the revenue generated by these firms is expected to account for less than 5% of industry revenue in 2020. These firms are typically located in remote areas, where producing fuel is more economical than transporting it from national distributors.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 31 of 88 6. RENEWABLE ENERGY

OVERVIEW

Another year of extraordinary growth saw records tumble in 2019 as State Governments, industry and communities embraced the transition to clean energy. Australia's large-scale renewable energy capacity increased by 2.2 GW across 34 projects in 2019, with large-scale solar making up more than two-thirds of this new capacity. The rooftop solar juggernaut also continued as the industry's 2.2 GW of installed capacity smashed the previous year's record of 1.6 GW. This extra capacity increased renewable energy's contribution to Australia's total electricity generation to 24% (annual average 2019-2020), a growth of 2.7% on 2018.

For the first time, wind overtook hydro as Australia's leading clean energy source, accounting for more than 35% of Australia's renewable energy generation, as 837 MW of new capacity was installed across eight new wind farms. Hydro power was second, contributing 25.7%. This was lower than previous years due to the ongoing impact of the drought in eastern Australia and the massive growth experienced by wind and solar.

At the end of 2019, 11.1 GW of new generation was under construction or financially committed, representing $20.4 billion in investment and more than 14,500 jobs

Source: Green Energy Markets (All-Energy Australia, October 2019)

6.1.1 Renewable Energy Target

The Renewable Energy Target is an scheme designed to reduce emissions of greenhouse gases in the electricity sector and encourage the additional generation of electricity from sustainable and renewable sources. The Renewable Energy Target works by allowing both large-scale power stations and the owners of small- scale systems to create large-scale generation certificates and small-scale technology certificates for every MW/h of power they generate. Certificates are then purchased by electricity retailers (who supply electricity to householders and businesses) and submitted to the Clean Energy Regulator to meet the retailers' legal obligations under the Renewable Energy Target. This creates a market which provides financial incentives to both large-scale renewable energy power stations and the owners of small-scale renewable energy systems.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 32 of 88 Energy Transition in Australia

Small-scale technology certificates can be created following the installation of an eligible system, and are calculated based on the amount of electricity a system produces or replaces (that is, electricity from non- renewable sources).

The introduction of the target initiated Australia’s by providing the certainty that has enabled wind and solar to progress from one of the most expensive kinds of power generation to the cheapest. In the process, the RET has reduced the emissions from Australia’s electricity sector more than any other policy, delivered tens of billions of dollars in investment.

In September 2019, the Clean Energy Regulator announced that the RET was officially met. The completion of the RET more than a year ahead of schedule was a remarkable achievement. Now that the RET has been fulfilled, questions have inevitably begun to turn to what’s next. The continued absence of an approved national policy to replace the RET leaves clean energy, and the energy industry as a whole, in a state of uncertainty at a time when investment in new generation should be increasing to replace the ageing fleet of coal-fired power stations and meet Australian emissions reductions commitments.

SOLAR

6.2.1 Large-scale outlook Industry firms supply electricity to the wholesale market using large-scale photovoltaic generation systems, or solar thermal systems (note: PV systems with a generation capacity of less than 5 MW are excluded from the industry). Industry revenue was estimated to grow at an annualised 102.8% over the five years through 2020, to total $298.3 million. This growth has been driven by the development of a multitude of large-scale solar farms, which have increased industry generation capacity from less than 50 MW in 2014 to over 3,600 MW in 2019. Industry generation capacity is expected to continue growing in the current year, as an increasing number of solar projects come online. Industry revenue is projected to increase by 18.2% in 2020. The slower growth in the current year is attributable to the expected decline in wholesale electricity prices.

The industry's rapid growth over the past five years is partly attributable to a high level of industry assistance. Various State and federal policies, particularly the Renewable Energy Target, have helped private firms to overcome significant barriers to entry. Cheap debt funding from the Australian Renewable Energy Agency and Clean Energy Finance Corporation has helped firms meet high upfront development costs. The market for large-scale generation certificates (LGCs), as part of the RET, has also provided a major source of revenue for industry firms. Overall, industry assistance has created the potential for high profit margins for players, which has attracted a large number of new entrants.

The industry is forecast to continue growing strongly: revenue is anticipated to increase at an annualised 14.1% over the five years through 2024-25, to total $576.1 million. Growth in industry generation capacity is projected to be partly counteracted by lower prices for electricity and LGCs.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 33 of 88 New industry projects are likely to focus on developing large-scale energy storage infrastructure in conjunction with solar farms.

Electricity wholesale prices are forecast to continue declining from their 2018-19 peak over the next five years. Several renewable energy projects are likely to come online over the period, with this expansion in capacity anticipated to increase Australia's electricity supply, and exert downward pressure on prices. As renewable capacity increases, the price of LCGs is projected to continue declining. Additionally, the Federal Government's Renewable Energy Target of sourcing 33,000 GWh of Australia's electricity usage from renewable sources, was met in late 2019. As demand for LCGs remains flat, and renewable electricity supply continues to grow, the price of LGCs is anticipated to gradually decline.

The price for Solar energy could vary from State to State, as indicated in the following diagram.

Source: Green Energy Markets (All-Energy Australia, October 2019)

Australia's ageing fleet of coal fired power stations is projected to deteriorate over the period (Chapter 5.1.2), boosting the attractiveness of solar farms to policy makers and investors. Major electricity retailers are forecast to replace coal fired power stations with renewable projects, to increase reliability and reduce costs over the period. For example, AGL Energy is forecast to decommission the Liddell power station by 2023. This facility is anticipated to be replaced by a combination of wind, solar and battery infrastructure. Over the next five years, renewable sources of energy are projected to account for an increasingly large share of national energy production.

As a result of the forecast increase in participation, the industry's level of market share concentration is projected to decline. New operators are anticipated to sign electricity off-take agreements with downstream retailers to secure funding for construction. New transmission lines are likely to be developed to connect solar farms to the national grid.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 34 of 88 Energy Transition in Australia

Examples of performing Large-scale Solar Farms

6.2.2 Small-scale outlook

2019 was another record year for Solar PV in Australia and the market is on track to have more than 2,400 MW of rooftop Solar PV installed (excluding utility scale projects). Commercial installations are expected to account for 640 MW or 20% of the total.

Source: Green Energy Trading (All-Energy Australia, October 2019) Note: Residential – systems installed up to 15 kW, Commercial – systems installed between 15 kW and 100 kW, Small power stations – systems above 100 kW (to be registered as power stations under the Renewable Energy Target), Utility-scale – systems installed greater than 5 MW

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 35 of 88 As per the following diagrams, small-scale PV is continuing to surge: the PV market had been flat or falling from 2014 to 2016, but it indicated an increase in activity since Q4 2016. Amongst the possible reasons are the rise of wholesale power prices, the reduced deeming each year, the fall of installation cost and the increasing size of the residential systems.

Source: Green Energy Trading (All-Energy Australia, October 2019)

Over the past five years, all State and Territory governments have provided feed-in tariffs for households, encouraging the uptake of solar panels. However, reductions in subsidies and feed-in tariffs have reduced the economic value of solar panels, leading to a slower rate of annual installations.

Industry revenue has fluctuated significantly over the past five years, as households have rushed to install systems ahead of changes to subsidies. This trend has resulted in peaks and troughs in industry activity. Solar Panel Installation Industry revenue is expected to rise at an annualised 3.4% over the five years through 2020, to $1.8 billion. Industry revenue fell in 2013-14 and 2015-16 due to reductions in subsidies and declines in the price of solar panels. Industry revenue is set to fall by 4.1% in 2020, as solar panel prices decline. Demand for solar installations from households is also expected to decrease in the current year, in response to falling electricity prices.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 36 of 88 Energy Transition in Australia

Industry revenue is projected to decline over the next five years, due to government subsidy withdrawal, ongoing declines in the overall cost of solar systems and decreases in the cost of substitute energy available to households. Consequently, industry revenue is forecast to fall at an annualised 1.2% over the five years through 2024-25, to $1.7 billion. The industry's revenue volatility is anticipated to decline over the next five years, as households begin to adopt solar panels based on cost benefit rather than government subsidies.

Product segmentation:  Systems up to 9,5 kW 51,4%  Systems from 9,5 kW to 25 kW 23%  Systems from 25 kW to 100 kW 25,6%

The Solar penetration rate, representing the cumulative proportion of residential systems installed as a proportion of owner occupied houses, is steadily increasing.

With regard to other source of energy, there are differences in the way States have embraced the trend, with New South Wales and Queensland leading Australia in the installation of new small-scale solar systems (Victoria has declined due to solar program cap). However, there is an expectation of a reduction of installations, as the market is reaching saturation and the value of exported electricity is reducing.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 37 of 88 6.2.3 Major Solar energy players

Wirsol Energy Address: 39 East Esplanade, Manly (Sydney) NSW 2096 Tel: +61 2 8459 9700 Website: www.wirsol.com.au About: German-owned subsidiary Wirsol Energy Pty Ltd operates five solar farms, all of which have been developed over the past five years. The company entered the industry in 2018 through the completion of the , that has a capacity of 60 MW and is accompanied with a 25 MW Tesla battery system. The company also completed the Whitsunday and Hamilton solar farms, each with a capacity of 69 MW. These three establishments were financed through a joint venture deal with Edify Energy Pty Ltd, representing Australia's largest single solar project financing deal. Market Share: 20,9%

AGL Energy Address: 200 George Street, Sydney NSW 2000 Tel: +61 2 9921 2999 Website: www.agl.com.au About: AGL Energy Limited operates in the industry through the Nyngan and Broken Hill solar farms, with a capacity of 102 MW and 53 MW respectively. Market Share: 16,9%

FRV Services Australia (Fotowatio Renewable Ventures) Address: 39 Martin Place, Sydney NSW 2000 Tel: +61 2 8257 4700 Website: www.frv.com/en/tag/australia About: FRV Services Australia Pty Ltd, operating as Fotowatio Renewable Ventures, is a global developer of renewable energy infrastructure operating through its Clare (capacity of 128 MW), Moree (capacity of 56 MW) and (capacity of 20 MW) solar farms. The company is expected to begin operations at its Winton and Goonumbla solar plants in 2020. Market Share: 11,8%

Neoen Australia Address: 227 Elizabeth Street, Sydney NSW 2000 Tel: +61 2 9269 0170 Website: www..com/en About: French-owned subsidiary Neoen Australia Pty Ltd operates six solar farms in Australia, including the DeGrussa solar farm (operated by Juwi Renewable Energy Pty Ltd), the Parkes solar farm (capacity of 66 MW), the Griffith solar farm (capacity of 36 MW), the South Keswick and Narromine solar farms (combined capacity of 29 MW), the (capacity of 150 MW), while the began commercial operations in 2019. Market Share: 8,9%

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 38 of 88 Energy Transition in Australia

Enel Green Power Australia Address: 100 Barangaroo Avenue, Sydney NSW 2000 Tel: +61 2 9164 9400 Website: www.enelgreenpower.com/countries/oceania/australia About: Enel Green Power Australia Pty Ltd, local subsidiary of Italian Enel, operates the Bungala solar project, which is the largest solar project in Australia and it is split into two stages of 137.5 MW capacity, leading to a total generation capacity of 275 MW. The company is expected to complete its third solar farm in Cohuna in 2020. Market Share: 7%

Competitive landscape The Solar Electricity Generation industry displays a moderate level of market share concentration, as the four largest operators are expected to account for 58.4% of industry revenue. As the industry is still in its growth phase, its market share concentration has been dominated by the few operators that have been able to complete their projects before other players. As additional capacity been brought online by industry entrants, market share concentration has significantly declined.

With regard to solar panel installation, industry operators tend to be small businesses that operate in single geographic areas. Some of them install solar panels on behalf of the major energy retailers (i.e. Origin Energy, AGL and EnergyAustralia). The Clean Energy Council approves solar retailers and installers, and maintains a database of approved businesses. Although most industry firms operate in specific geographic regions, a small number of national operators exists. National operators include Bradford Energy, Solarhub, Epho Pty Ltd, Photon Energy, and several others. No firms are expected to account for more than 2% of industry revenue in 2020.

WIND (ONSHORE)

High wholesale electricity prices, favourable industry assistance programs and increasing profitability have attracted new firms to the industry, with revenue expected to increase at an annualised 3.1% over the five years through 2020, to reach $1.2 billion. This includes an estimated decline of 23.7% in the current year, due to a strong drop in the South Australian wholesale price of electricity.

As investments in wind farms have grown over the past five years, at December 2019, there was 6,279 MW of installed capacity and a further 21,845 MW of capacity was proposed or committed to the electricity sector in Australia as of February 2020. At the end of 2019 there were 101 wind farms in Australia, most of which had turbines from 1.5 MW to 3 MW. In addition, 30 projects with a combined installed capacity of more than 5,500 MW are either under construction or committed to be built in 2020- 2021 having reached financial closure.

For the first time, wind overtook hydro as Australia's leading source of clean energy in 2019, supplying 35.4% of the country's clean energy and 9.5% of Australia's overall electricity. In 2019 over 837 MW of wind energy was installed, making it the best ever year for the sector.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 39 of 88

The industry has benefited from the Renewable Energy Target scheme, which has provided a secondary source of revenue through the market for large-scale generation certificates (LGC). The price of LGCs has increased significantly, as RET obligations have forced electricity retailers to source 18.6% of their total electricity sales from renewable sources in 2019.

Industry revenue is anticipated to continue rising over the next five years, as growth in production capacity is counteracted by declining wholesale electricity and LGC prices. Strong demand for sustainably produced energy, and relatively high profitability, is expected to encourage growth in industry participation over the period. Overall, industry revenue is expected to increase at an annualised 3.1% over the five years through 2024-25, to reach $1.4 billion.

As Australia has abundant wind resources, which can be reliably used in conjunction with dispatchable power sources (i.e. pumped hydro or batteries), investment to harness these resources is projected to continue rising over the next five years.

Major markets segmentation:  Electricity retailers 27,2%  Commercial and services sectors 18,6%  Household 16,8%  Manufacturers 16,3%  Mining firms 10,2%  Utility providers 9%  Other sectors 1,9%

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 40 of 88 Energy Transition in Australia

6.3.1 Major Wind energy players

AGL Energy Address: 200 George Street, Sydney NSW 2000 Tel: +61 2 9921 2999 Website: www.agl.com.au About: AGL operates several wind farms throughout Australia, including the Macarthur and Oaklands Hill facilities in Victoria, and the Wattlepoint and Hallett facilities in South Australia. AGL also operates the Silverton facility in New South Wales, which was activated in 2018. The company is also currently developing the Coopers Gap facility in Queensland, which is expected to be the largest wind farm in Australia when it comes online in late 2020. In 2016, AGL announced that it had established an independent, unlisted fund called Powering Australian Renewables Fund (PARF) to own a portfolio of renewable assets and provide an opportunity for investment in renewable energy projects. For example, the Silverton and Coopers Gap wind farms were funded through the PARF. Market Share: 31,7%

Infigen Energy Address: 56 Pitt Street, Sydney NSW 2000 Tel: +61 2 8031 9900 Website: www.infigenenergy.com About: runs seven wind farms across Western Australia, South Australia and New South Wales. Lake Bonney, Infigen Energy's most significant wind farm, operates 112 turbines with a total installed capacity of 278.5 MW. Infigen Energy also maintains the Alinta wind farm in Western Australia, and the and in New South Wales. Infigen also owns the (that has a power purchase agreement with EnergyAustralia) in New South Wales. Market Share: 16,2%

Pacific Hydro Address: 474 Flinders Street, Melbourne VIC 3000 Tel: +61 3 8621 6000 Website: www.pacifichydro.com.au About: Pty Ltd (portfolio of 880 MW installed capacity across Chile, Australia and Brazil) operates over 480 MW of installed wind and hydro capacity in Australia. In 2012, the company expanded into the Electricity Retailing industry through a new subsidiary, Tango Energy Pty Ltd. In 2016, Pacific Hydro was acquired by the Chinese State Power Investment Corporation (SPIC). Pacific Hydro owns the Codrington, Challicum Hills, Portland (capacity of 179 MW) and Yaloak wind farms in Victoria, the in New South Wales, and the in South Australia. Market Share: 7,3%

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 41 of 88 Acciona Australia Address: 360 Elizabeth Street, Melbourne VIC 3000 Tel: +61 3 9027 1000 Website: www.acciona.com.au/business-divisions/energy About: ACCIONA is one of the main renewable energy operators in the world, with more than 10,000 MW installed for the company in five clean technologies (wind, solar PV, solar thermal, hydro and ). As a wind power operator, the company developed its own -generator technology, which capped its success by agreeing to merge with the German company Nordex in 2016. ACCIONA in Australia has a total installed capacity of 402 MW and is currently building a fifth wind farm in Mortlake, Victoria.

Neoen Australia Address: 227 Elizabeth Street, Sydney NSW 2000 Tel: +61 2 9269 0170 Website: www.neoen.com/en About: French-owned subsidiary Neoen Australia Pty Ltd owns the Bulgana (capacity of 194 MW) and the Hornsdale (capacity of 315 MW) wind farms. The is also collocated with the (more information in Chapters 7.2.5 and 8.2), the largest lithium-ion battery in the world built by Tesla. The battery was completed in December 2017.

Competitive landscape The industry exhibits a moderate level of market share concentration, with the five largest operators expected to account for approximately 60% of total revenue in the current year. Due to current regulation and policy, which provide significant assistance to industry firms, many players active in other areas of the electricity sector have been investing in renewable generation. This trend has resulted in more operators entering the industry through small-scale projects and joint ventures over the past five years.

6.3.2 Major players for Wind Farm Construction

Vestas Australian Wind Technology Address: 312 St Kilda Road, Southbank (Melbourne) VIC 3006 Tel: +61 3 8698 7300 Website: www.vestas.com About: Vestas Australian Wind Technology Pty Limited, a subsidiary of the Denmark-based Vestas Wind Systems A/S, typically contracts under joint venture arrangements with local construction firms to supply the design and equipment installation on major wind farm developments. The company is involved in retailing, servicing and maintaining wind turbine systems across the company's operations in Australia and New Zealand. Vestas operated in a consortium with Zenviron to construct the 228MW Lal Lal Wind Farm (completed late 2019), which comprises 60 turbines and will power approximately 95,000 homes in the region. Vestas also recently worked with Zenviron on the 54MW Salt Creek Wind Farm in Victoria (completed mid-2018) and the 270MW near Glen Innes in New South Wales (completed October 2018). Market Share: 20,4%

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 42 of 88 Energy Transition in Australia

Monadelphous Group Address: 59 Albany Highway, Victoria Park (Perth) WA 6100 Tel: +61 8 9316 1255 Website: www.monadelphous.com.au About: Monadelphous Group Limited is one of Australia's leading engineering and construction firms. In 2016 the company entered into a joint venture with the Sydney-based ZEM Energy Holdings Pty Limited, that has extensive experience in delivering large-scale wind and infrastructure developments: the joint venture operates as Zenviron Pty Ltd. In addition to the projects with Vestas, Zenviron is currently nearing completion of the 134MW Crudine Ridge WF in regional New South Wales. In October 2018, Zenviron announced it secured the second contract on the $370 million Moorabool WF for Goldwind Australia in regional Victoria. Market Share: 19,5%

Civil & Allied Technical Construction (CATCON) Address: 598-600 South Road, Angle Park (Adelaide) SA 5010 Tel: +61 8 8347 1888 Website: www.catcon.com.au About: Civil & Allied Technical Construction Pty Ltd (CATCON) has significant role in the Wind Farm Construction industry following its joint ventures with General Electric Company: GE- CATCON benefits from GE providing the turbine technology and CATCON completing much of the site construction, foundations and tower erection. CATCON has worked on stages of wind projects at Snowtown II WF and Hornsdale WF (providing foundation design and construction, crane hardstands, road access, foundation interface grouting, substation foundations and constructing operation and maintenance facilities) in South Australia; Gunning WF and Gullen Ridge WF in New South Wales; and Coonooer Bridge WF in regional Victoria; as well as a range of solar power projects. GE-CATCON provided complete engineering, procurement and construction (EPC) on several major projects, including the 119 MW in South Australia, the 113MW Bodangora WF and 200MW Silverton WF in New South Wales; and the 453MW Coopers Gap WF in Queensland. Market Share: 13,3%

Downer EDI Address: 39 Delhi Road, North Ryde (Sydney) NSW 2113 Tel: +61 2 9468 9700 Website: www.downergroup.com About: Downer EDI Limited is an engineering and infrastructure management company operating in the industry through its renewable energy business, which provides design, building and maintenance services for wind farms and wind turbine sites, with key capabilities in consulting, environmental and social management services, construction and operations maintenance. The renewables business also services solar farms, landfill methane generation plants, sugar cane waste (bagasse) fired plants and other biomass- fired cogeneration plants. Downer EDI has been involved in constructing over 15 wind farm projects since 2003, including some of the nation's largest projects. In several of these projects, Downer worked with consortium partners, such as GE Australia.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 43 of 88 In 2017, Downer completed construction of the 240 MW Ararat WF in Victoria, with a contract value of $130 million. This project involved constructing a transmission network, civil and electrical infrastructure, and erecting approximately 75 wind turbine generators. Downer has recently been involved in the joint venture with Vestas to construct the 181MW Mt Emerald WF in Queensland. Downer has had difficulties constructing the 226MW Murra Warra WF (Stage 1) in Victoria. The wind farm is being developed in two stages, with the first stage scheduled to be operational by late 2019. Stage 2 is projected to commence operations in mid-2020. However, Downer's technology partner on the project, Senvion Australia, was forced to exit the arrangement when its parent filed for insolvency in the German courts. Downer has taken responsibility for the completion of the development, and most of the 61 turbines for Stage 1 became operational by late 2019. Market Share: 10,4%

Competitive landscape The Wind Farm Construction industry exhibits a moderate level of market share concentration, which has increased substantially in recent years due to the tendency for the largest players to construct the large- scale wind farms. During 2019-20, the four largest players in the industry are expected to contribute about 63.6% of industry revenue. The number of total industry competitors is limited, totalling approximately 40 enterprises in 2019-20.

HYDRO

The industry's performance is largely tied to trends in wholesale electricity prices, particularly in New South Wales and Tasmania, where most large-scale assets are located (State-owned operators Limited and ). Most industry activity occurs within the National Electricity Market, which covers Eastern and Southern Australia. Industry revenue is expected to grow at an annualised 21.2% over the five years through 2019-2020, to total $1.3 billion. The industry has been highly volatile over the past five years, driven by significant fluctuations in wholesale electricity prices. In addition, several revisions to environmental and energy policies have further contributed to volatility.

The Basslink Interconnector, which connects Tasmania to Victoria and consequently the NEM, was shut down for over six months during 2015-16. This coincided with weak rainfall at Hydro Tasmania's power plants during the year, leading to a shortfall in electricity supply in Tasmania. As a result, wholesale prices almost tripled in Tasmania and industry revenue skyrocketed by 166.6% in 2015-16. Over the three years through 2019-20, revenue grew as wholesale electricity prices across the NEM reached record levels. In 2020, revenue is expected to fall by 13.2% as wholesale electricity prices decrease, and so industry revenue is projected to decline at an annualised 0.9% over the five years through 2024-25, to $1.2 billion.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 44 of 88 Energy Transition in Australia

Structural changes affecting energy production in Australia are anticipated to influence the Hydro- Electricity Generation industry over the next five years. The Federal Government's plan to expand the Snowy River Scheme (known as Snowy 2.0) will mark the first significant large-scale expansion in the industry for decades. A feasibility study was undertaken to determine whether the expansion, which would use pumped-storage technology, is economically viable. The project received a final investment decision in December 2018, and is expected to be completed in 2025.

Changes in regulatory policy are also likely, particularly as the Renewable Energy Target expires in 2020. Wholesale electricity prices are forecast to decline over the five years through 2024-25, but from a high base.

6.4.1 Major Hydro energy players

Hydro-Electric Corporation (Hydro Tasmania) Address: 4 Elizabeth Street, Hobart TAS 7000 Tel: +61 3 6230 5111 Website: www.hydro.com.au About: Hydro-Electric Corporation, which trades as Hydro Tasmania, is owned by the . The company is the largest producer of renewable . Hydro Tasmania has interests in hydro and wind energy generation and sells electricity to the National Electricity Market (NEM). Hydro Tasmania currently produces more than a third of the renewable energy traded on the NEM. The company also owns an electricity and gas retailer, Momentum Energy, which allows the company to provide energy to interstate markets. The firm's power plants produce approximately 9,000 GW hours of electricity annually at its 30 power plants combined, using water from six major catchments in Tasmania. The company's largest hydro-electric power plants include its Gordon-Pedder, Poatina and Reece facilities, which have a generation capacity of 450, 363 and 244 MW, respectively. Hydro Tasmania supplies electricity for the wholesale market in Tasmania and for export to Victoria along the Basslink Interconnector, a high-voltage transmission line. Market Share: 54,2%

Snowy Hydro Address: Monaro Highway, Cooma (Sydney) NSW 2630 Tel: +61 2 6453 2888 Website: www.snowyhydro.com.au About: Snowy Hydro Limited is owned by the Federal Government that manages the Snowy Mountains Hydro-Electric Scheme. Snowy Hydro also has a retail presence through its subsidiary Red Energy, which sells electricity and gas in Victoria, South Australia, Queensland and New South Wales. The company also has interests in the Fossil Fuel Electricity Generation industry through numerous gas-fired power stations. The is a large network of hydro-electric power plants in NSW, that includes sixteen dams and nine main power stations, with 4,100 MW energy generating capacity. The Snowy Mountains Scheme is an important source of high-priced peak load power. After much trialing, the company started a cloud-seeding program in 2013, designed to increase snowfall in the Snowy Mountains and increase the water available to the system. Market Share: 36,2%

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 45 of 88 AGL Energy Address: 200 George Street, Sydney NSW 2000 Tel: +61 2 9921 2999 Website: www.agl.com.au About: AGL Energy operates in the industry through its hydro-electric power plants in Victoria and New South Wales. Many of these facilities were developed following the establishment of the Renewable Energy Target. AGL Energy operates eleven hydro-electric generating plants, with seven facilities in Victoria and four plants in New South Wales. Most of the company's output comes from its Dartmouth, Kiewa and Eildon power plants across Victoria. Market Share: 7,5%

Competitive landscape The limited number of economically viable sites for development of large-scale hydro-electric plants is the primary reason for the industry's high concentration. The industry's four largest players (including CleanCo Queensland Limited, a Queensland Government-owned company operating three hydro power stations) are expected to account for over 95% of total revenue in 2019-20.

BIOENERGY

Bioenergy is one of world’s primary sources of renewable energy, with a long track record of cost- effectively reducing carbon emissions, improving energy productivity and generating reliable baseload renewable energy. But these technologies are not widely deployed in Australia, contributing only 0.9% of Australia’s electricity output in 2019.

According to a market study prepared by KPMG on behalf of Bioenergy Australia in 2018, there were 222 operating bioenergy plants and additional 55 projects were either under construction or within the feasibility stage of development. Collected data showed that out of the 222 operating projects, 165 produced electricity: 40 generated over 5 MW and 62 generated between 1 MW to 5 MW. There were 14 projects that produced bioproducts (fuel, wood pellets for export, chemicals etc.) and 43 producing ‘other’, which include flaring projects and biogas to support behind the meter operations (mostly flaring methane from municipal waste sites). The pictures below indicate the operating bioenergy projects by State / Territory and feedstock, and the segmentation by technology, feedstock and end-use, as at September 2018.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 46 of 88 Energy Transition in Australia

Source: Bioenergy State of the Nation Report 2018, KPMG

The Federal Government’s commitment to the future of Australia’s bioeconomy has been proven by the developing of a roadmap for Australia's bioenergy future. Therefore at the request of the Government, the Australian Renewable Energy Agency has started to develop the roadmap to help prepare the next series of investment and policy decisions in the bioenergy sector) and has called for public submissions on how Australia can build its bioenergy sector and strengthen the country’s energy security. Over the past 8 years, ARENA has provided approximately $118 million in funding towards bioenergy projects, including electricity and biogas production, biofuels, efficient feedstock harvesting technology and projects that aim to capture energy from a range of waste materials.

In May 2020, leading energy infrastructure company, Jemena, called for a national approach to green accreditation for renewable gases, such as biomethane and hydrogen, as part of its submission to the Australian Renewable Energy Agency Bioenergy Roadmap. A certification system would enable customers to purchase verified and accredited zero emission gas as is currently the case for renewable electricity.

According to Jemena, several green hydrogen gas trials have commenced for domestic and international markets across the nation, including the Western Sydney Green Gas project, in which the first electrolyser in New South Wales will be installed later this year: this technology utilises solar and wind power to create carbon neutral hydrogen gas, which is stored in the Jemena Gas Network, making it accessible to homes, business and the vehicle industry.

The major challenges the industry has to face in order to further grow are mostly related to industry policies, and they could be listed as follow:  Absence of specific national targets for biogas production (Clean Energy Council suggested targets for electricity generation from bioenergy in general, 2,413 GWh by 2020 and 55,815 GWh by 2050);  Absence of a regulatory framework and a national target for biomethane production;  Financial uncertainties associated with power exported to the grid;  Gaseous fuel tax, as Compressed Natural Gas and Liquified Natural Gas are taxed by the Australian Taxation Office, regardless if they are from renewable or fossil sources;

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 47 of 88  Digestate regulations, as there is a lack of consistent national regulation for the digestate, which can be classified as a waste, a biosolid or a compost depending on the States and on the level of treatment done on the digestate;  Landfill waste levies.

6.5.1 Landfill waste levies

In Australia landfilling comes at a cost that has been valued at approximately $120/tonne of waste after taking into account post-closure remediation and replacement costs. Landfill sites also incur environmental and social costs of GHG emissions and odour release. As a consequence, several States have put in place waste levies to recover landfill costs: for the States where waste levies are available, they act as an imperative economic driver providing an additional source of income and enhancing the viability of biogas projects. (as outlined in the figure below). The development of the biogas sector could benefit from more uniform levies between the States.

Source: ENEA Consulting and Bioenergy Australia, “Biogas opportunities”

6.5.2 Bio-energy players

Inoplex Address: 8 Wagtail Drive, Peregian Beach (Brisbane) QLD 4573 Tel: +61 1300 113 782 (available in Australia) Email: Online form Website: www.inoplex.com.au About: Inoplex is a privately owned Australian bioenergy company considered one of the market leaders in biogas generators in Australia, as their biogas engines run on a wide range of biogas qualities and are combined with high quality heat exchangers and inverter generators.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 48 of 88 Energy Transition in Australia

Veolia Address: 65 Pirrama Road, Pyrmont (Sydney) NSW 2009 Tel: +61 2 8571 0000 Website: www.veolia.com/anz/our-services/our-services/energy-services/waste-energy/biomass About: In Australia and New Zealand, Veolia’s integrated biomass-fired plant solutions provide reliable on-site power and steam generation that include fuel security and long-term operation and maintenance agreements backed by performance guarantees on the biomass, electricity and supplies. Veolia helps clients secure the supply of biomass, whether it be from feedback or operations, by sourcing and delivering wood waste at the site on an annual basis and guarantee the biomass security supply during the contract period. In addition, Veolia’s biomass-to-energy cycles can play an important social role in the generation of local wealth by activating and engaging a pool of local partners (i.e. forest-related companies, timber and wood recycling companies, sawmills, etc.).

BLUE ENERGY

Australia has some of the best wave energy resources in the world and it’s estimated that wave power has the potential to play a large part in Australia’s future energy mix by 2050. However, to reach that point, three key knowledge gaps must be addressed: a] limited knowledge of the resource, including its temporal and spatial variability and its spectral characteristics; b] difficulty accessing spatial information identifying multiple designated marine management regimes of Australian marine territories; c] limited evidence-base and methodology for assessing impacts of wave energy extraction on the marine and coastal environment in Australia.

Australia has a number of innovative technologies in both wave and tidal energy, but the main challenges are capital cost / project financing and environmental impact / withstanding damage from harsh ocean conditions. The Australian Renewable Energy Agency has provided funding support for 14 ocean projects, working with the ocean energy industry, sharing lessons from Australian wave energy projects and supporting activity to advance the sector through R&D and demonstration projects. This enables potential investors to identify sites for further investigation, and policymakers to have better information regarding the potential for ocean energy to contribute to Australia’s energy mix.

6.6.1 Major Blue Energy players

Bombora Wave Power Address: 9 De Laeter Way, Bentley (Perth) WA 6102 Tel: +61 438 959 912 Website: www.bomborawave.com About: Founded in 2012 in Perth, Bombora is an award-winning ocean energy company, operating also in Wales and currently progressing the 1.5 MW mWave Pembrokeshire Demonstration Project. Bombora can deliver wave energy as a true alternative to complement today’s renewable energy mix.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 49 of 88 Carnegie Clean Energy Address: 21 North Mole Drive, North Fremantle (Perth) WA 6159 Tel: +61 8 6168 8400 Website: www.carnegiece.com About: Founded in Western Australia, Carnegie Clean Energy is the owner and developer of the CETO Wave Energy Technology intellectual property and is a global leader in the emerging wave energy industry, being the only company to have operated a grid-connected wave energy array over four seasons.

MAKO Energy Address: 95 Pitt Street, Sydney NSW 2000 Tel: +61 439 876 116 Website: www.mako.energy About: MAKO Energy designs and manufactures a range of hydrokinetic turbines capable of operating in a variety of flow rates, making them deployable in the greatest range of locations around the world. The Sydney-based engineering team has focused on developing a complete tidal energy system comprising preliminary resource assessment, turbine solutions and performance monitoring.

Wave Swell Energy Website: www.waveswell.com About: Wave Swell Energy Ltd is an unlisted Australian public company that has developed a proprietary technology that converts wave energy into . The WSE technology produces clean, sustainable electricity without the use of any oil or other contaminants and there are no moving parts in the water, as the devices can be re-floated and towed to another location. Its wave energy technology is trailing in the ocean off King Island, Tasmania, where it has been integrated with existing wind, diesel and solar resources.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 50 of 88 Energy Transition in Australia

PROSUMERS AND DISTRIBUTED ENERGY RESOURCES

6.7.1 “Prosumers” What were once networks of poles and wires operating one way electricity supply to a customer are evolving into a two-way system, where consumers can export power to the grid via their own mini generation systems (i.e. rooftop solar and, increasingly, batteries). There has been enormous growth in household solar: in 2008, there were just 14,000 solar PV systems installed on Australian rooftops, while today there are more than 2 million (Chapter 6.2.2). This change poses significant opportunities, but also challenges for networks to manage the safe and reliable integration of all these Distributed Energy Resources into the grid.

The new figure of the “prosumer” is defined as “someone who both consumes and produces electricity and/or provides services to the grid”. As smart meters are rolling out across Australia, consumers have access to data to make better decisions to generate and sell their own power and actively monitor / manage energy use. Of course, there are rural and regional areas with poor mobile coverage, there are other areas where offering smart meters would be “uneconomic” and some consumers might present lack of financial and digital literacy.

6.7.2 Distributed energy resources

Distributed Energy Resources is the name given to renewable energy units or systems that are commonly located at houses or businesses to provide them with power. Another name for DER is “behind the meter” because the electricity is generated or managed ‘behind’ the electricity meter in the home or business. Common examples of DER include rooftop solar PV units, battery storage, thermal energy storage, electric vehicles and chargers, smart meters, and home energy management technologies. Distributed Energy Resources are changing the way Australia produces and manages electricity: rather than electricity being generated by large, centralised power stations, it is now starting to come from many places including millions of homes and businesses. The demand for DER in Australia is also expected to grow, with the Electricity Network Transformation Roadmap estimating that by 2050 DER may contribute up to 45% of Australia’s electricity generation capacity.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 51 of 88 This means that the organisations responsible for managing the electricity system have a massive challenge to ensure that it all works together and the electricity grid remains stable. In 2018, ARENA established the Distributed Energy Integration Program (DEIP), a collaboration of Government agencies, market authorities, industry and consumer associations with the shared aim of maximising the value of customers’ DER for all energy users. The DEIP supports information exchange and collaboration on DER issues, enabling a more efficient identification of knowledge gaps and priorities, and accelerating reforms in the interest of customers. ARENA is also providing funding support for projects that demonstrate how the effective use of distributed energy resources can help Australia transition to a secure and reliable grid with a high share of renewables. In 2019, ARENA awarded $9.6m in funding for 12 DER research and demonstration projects to develop new ways to understand and manage the effect of high levels of DER in different parts of the electricity grid. The projects examine how grids can connect more DER cheaper and faster while reducing costs and operations within the technical limits of the power system. This investment is helping networks, retailers, Government and system operators understand and overcome the technical and commercial challenges of managing a grid with a large share of DER.

6.7.3 Virtual Power Plant

If properly managed, solar and storage systems can work together as Virtual Power Plants, reducing the need for investment in poles and wires infrastructure, which will ultimately save customers money on power bills. In Australia, VPPs are typically focused on coordinating Distributed Energy Resources (rooftop photovoltaic systems, battery storage and controllable load devices, such as air-conditioners or pool pumps), through the market, to deliver the types of services that would traditionally be performed by centralised thermal power plants.

The Virtual Power Plant demonstration in Australia shows financial and network value of home batteries. For example, home batteries in South Australia have been delivering significant revenues from their first six months of participation in a virtual power plant to help balance the grid, even with only an initial 1 MW – 2 MW of aggregated customer systems participating.

The Australian Energy Market Operator, which covers large portions of the South Eastern and Western parts of the country, released an initial report on its VPP Demonstration Programme, based on data collected from July 2019 onwards. With the first rollout of the VPP trial in the state of South Australia, the services provided an initial 1 MW of systems expanded to 2 MW in November 2019.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 52 of 88 Energy Transition in Australia

The applications served mainly covered frequency regulation and also dealt with imbalances caused in the energy market that include negative pricing, which can occur when the system has an oversupply of resources. While VPPs have been in use for many years, the enabling of home batteries, which can act bi- directionally and feed in energy to the grid as well as take energy out, is the key to this new configuration from a network point of view.

The VPP operators are also responsible for deciding how revenues generated are shared with customers. For example, systems were offered to customers via retail partner Energy Locals, with consumers receiving discounts on their purchases in return for some of the batteries’ capacity being made available for those network-balancing services. According to Energy Locals’ website, this means that with Government rebates being offered, customers can save as much as 35% from the list price.

6.7.4 Renewable Energy in the building industry

Buildings represent 23% of all emissions in Australia and they account also for more than half of Australia’s electricity consumption and are a major driver of peak demand for electricity. On-site renewable energy generation coupled with energy efficiency, smart building controls and energy storage can help reduce the load buildings place on the electricity grid, improve grid management and help reduce energy costs for households and businesses.

Source: Green Building Council of Australia

Renewable energy and related technologies relevant to the Australian built environment include: building integrated PV systems, hot water systems and solar heating and cooling systems, and energy storage systems (such as batteries and thermal storage including hot water storage and storage of warmth and “coolth” in building structures).

As around 160,000 new detached or semi-detached dwellings are built in Australia each year, Sustainability Victoria is running the “Zero Net Carbon Homes” pilot program: an initiative to drive the uptake of energy efficient and sustainable design features to minimise energy consumption and improve thermal comfort levels. The final goal is to reduce the demand on the grid and significantly reduce energy bills for homeowners. According to the project, residential building company is building 49 townhouses to demonstrate the feasibility of achieving zero energy homes at scale: each of the townhouses has been designed with a minimum 7- star energy rating (indicating a very high energy efficiency), has a minimum of 3.8-5 kW rooftop solar array, 10 kWh home battery storage, real-time smart home energy monitoring, upgraded wall and roof insulation, double glazed windows and energy efficient electric appliances, heating, cooling, lighting and hot water systems.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 53 of 88 7. ENERGY TRANSITION TO CLEAN ENERGY

FEDERAL GOVERNMENT

Australia commenced its energy transition in the early 2000s with legislation of a national Mandatory Renewable Energy Target (MRET Review Panel, 2003). This target, while small (only 2%), was rapidly achieved and later expanded to a 20% target by 2020 and late 2019 the Clean Energy Regulator announced that enough capacity has been approved for the target to be met.

In May 2020 the Federal Energy Minister released the discussion papers for the long-awaited energy technology investment road map: after years of policy paralysis on energy and climate, with everything seen through the "coal vs renewables" paradigm, the road map tries to clear up once and for all that renewable energy will provide the backbone of Australia's power system in the second half of the century.

Coal, which is now responsible for 56% of Australia's electricity generation, is only mentioned 20 times in the 93-page discussion paper and almost in passing. Anyway, it's too early to tell whether the cursory reference to the importance of coal will be enough to appease the pro-coal supporters in the Coalition Government, who want the Federal Government to underwrite a new coal-fired power station in North Queensland or extend the life of AGL Energy's Liddell power station in NSW. Right now, coal-fired power offers stable generation, but gas would play an more important part in "balancing" renewable energy sources, providing back-up for intermittent solar and wind. Flexible gas capacity will continue to play a crucial role in supporting variable renewable energy, alongside continuing growth in energy storage, demand management and innovative grid technologies as alternatives. As the world's largest LNG exporter, all of these factors will have implications for Australia's domestic gas market and export opportunities over the long term.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 54 of 88 Energy Transition in Australia

For Federal Energy Minister Angus Taylor, technology is the magical wand that will help drive Australia's energy transition. Therefore the road map outlines 140 potential technologies (including hydrogen, pumped hydro, large-scale batteries and carbon capture and storage), which will help transform Australia's economy to a low-emissions future. But sceptics worry about how much reliance can be put in emerging technologies such as hydrogen, which are yet to be commercially viable (i.e. Minister's end goal of hydrogen for under $2 a kilogram seems a long way off). The document also says that over the long term there should be investment in building new "export-facing" industries such as carbon capture and storage, a controversial technology which Minister Taylor said had great potential in the industrial sector. Moreover, the paper describes emerging nuclear technologies such as small modular reactors as having "potential”, but cost, environmental and social factors would determine whether they would go ahead.

For many, the discussion paper is a final concession that renewable energy is the future of the energy grid come 2050. Nevertheless, it will be existing technologies such as gas, that will help Australia reach its end goal of 26-28% reduction in carbon emissions on 2005 levels by 2030. Several industry commentators say the road map has the potential to be the making of a long-term energy and climate policy, but a mechanism such as carbon pricing or net zero emissions target should drive the transition and an investment framework would give investors confidence to deliver these technologies on the ground. Further analysis of the roadmap in Chapter 8.

In order to reach Paris climate targets, the road map expands the focus from the energy sector to transport, agriculture and industry. The technology road map says electric vehicles, hybrids and alternative fuels would help boost road transport efficiency and reduce emissions, but they might not be ready until the next decade. In the agriculture sector, there are opportunities to improve soil carbon levels and livestock productivity as well as deploying technologies to enhance fertiliser use, carbon storage in vegetation and improve fire management.

STATE AND TERRITORY GOVERNMENTS

In 2019 the electricity generation scenario showed a diverse status according to the level of adoption of renewable energy sources from each State, as indicated in the picture below, and consequently the States and Territories announced new energy policies and launched new targets in the last years.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 55 of 88 7.2.1 Australian Capital Territory (Canberra)

The ACT has delivered on its ambitious target to generate 100% of its energy needs from renewable sources. It’s only the eighth major jurisdiction in the world to do this, and the first outside Europe. To maintain its 100% renewables position, the ACT launched an additional reverse auction for largescale renewable technology in late 2019. The reverse auction is open to all types of renewable energy projects, with capacities starting at 200 MW for wind and 250 MW for solar. To move towards its target of zero net emissions by 2045, the ACT is now focusing on the two largest sources of emissions: transport (60%) and gas usage (22%). The government will commit to using renewable electricity in all new public buildings and change laws so that it’s no longer compulsory for new suburbs to connect to gas.

7.2.2 New South Wales (Sydney)

By failing to set a renewable energy target, New South Wales could fall short of its 2050 zero net emissions target. And with only 19% of the state’s energy coming from renewable sources, NSW is falling well behind most other States. The NSW Government released its Electricity Strategy in late 2019, with a focus on affordable electricity and a secure energy supply. It includes a plan to create a renewable energy zone – with 3,000 MW of renewables investment – which could start to close the gap on the state’s emissions target.

The NSW and Federal Governments have agreed to share the financial responsibility (up to $102 million) to upgrade the Queensland-NSW interconnector. As older power stations are decommissioned, the interconnector will have the capacity to transfer 190 MW of Queensland power to ensure a reliable energy supply for NSW and the ACT. This project is a priority under the NSW Government’s Transmission Infrastructure Strategy, with plans to kick off construction in 2021 following regulatory approval.

A new 900 km interconnector between NSW and South Australia, with an additional line into Victoria, is also awaiting regulatory approval. ElectraNet and Transgrid are working together on the interconnector, called Project EnergyConnect, to deliver energy security, reduced prices and economic benefits for the states.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 56 of 88 Energy Transition in Australia

7.2.3 Northern Territory (Darwin)

The Territory remains committed to gas exports and onshore fracking, which doesn’t necessarily align with its renewable energy targets. Therefore, despite a Roadmap to Renewables aiming to source 50% of its power from renewables by 2030, progress has been slow so far, with just 4% of the State’s electricity sourced from renewables. But in September 2019, the NT released its response for action plan, that addresses climate risk and sets a 2050 zero net emissions target with a focus on solar. A proposal from the Water and Power Corporation seeks to impose strict conditions on new solar projects, which would make them unviable by adding as much as 30% to owner costs (the proposal would also retrospectively apply to existing projects).

Construction has begun on the NT’s largest solar farm with battery storage: the 25 MW Katherine Solar Farm will include 100,000 panels and be able to generate approximately 700,000 MWh of power each year. Sun Cable’s Australia/Singapore power link has been recognised with major project status due to its likely significant contribution to regional economic development: this $20 billion project includes provisions for a 10 GW solar farm and 20-30 GWh storage facility. It’s the largest solar farm under development in the world. The electricity will supply the Darwin and Singapore markets with export via a 4,500 km transmission network.

7.2.4 Queensland (Brisbane)

Queensland’s newest publicly owned energy company, CleanCo, started trading on the National Electricity Market on 31 October 2019. It was a step in the right direction towards Queensland’s 50% renewable energy target, but it still has a lot of work to do if it is to achieve the target by 2030. CleanCo is part of a Government mandate to support 1,000 MW of new renewable generation by 2025. Legislative change saw foundation assets owned by CS Energy and Stanwell – with the capacity to generate 1,120 MW – transferred to CleanCo. CleanCo is now responsible for the Renewables 400 procurement program, a reverse auction to build 400 MW of new renewable energy and storage projects in Queensland.

Electricity supply well above demand resulted in Queensland experiencing negative electricity prices several times towards the end of 2019. This was attributed to strong solar generation and an outage of the interconnector with New South Wales.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 57 of 88 7.2.5 South Australia (Adelaide)

Already generating 50% of power from wind and solar, the state is now aiming to source 100% of its electricity from renewable energy by the end of the decade. Once reliant on coal, gas and imported power generation, SA now has more than 2,675 MW of large-scale wind, solar and storage. The recent push to renewable energy led to South Australia having the lowest electricity spot prices in the country for the latter part of 2019.

The state is exploring hydrogen generation, with its wind and solar resources enabling it to generate, use and export 100% renewable hydrogen (more in Chapter 8.3.1). SA is also trialing smaller projects such as the 30 MW hydrogen electrolyser in Port Lincoln. A bigger hybrid project incorporating wind, solar and hydrogen is on the horizon at Neoen’s Crystal Brook project: it will be a super hub consisting of 125 MW of wind, 150 MW of solar, 130 MW of battery storage and 50 MW of hydrogen. In November 2019, Neoen also announced plans to expand the Hornsdale Power Reserve by 50%: the 50 MW/64.5 MWh upgrade will be able to manage 50% of SA’s inertia needs and help the state towards its 100% renewable energy target (construction has already commenced on the project, with completion expected in the second half of 2020).

The new SA-NSW interconnector was given major project status by the SA Government: called Project EnergyConnect, the new interconnector will deliver benefits to South Australia, including cheaper power prices, improved reliability and opportunities to export renewable energy.

7.2.6 Tasmania (Hobart)

Tasmania’s Battery of the Nation vision could see the State making a greater contribution to the National Electricity Market. Marinus Link, an additional transmission cable across the , is an important part of the Battery of the Nation strategy, as the cable will help to reduce power prices and improve electricity reliability. Research has found a 1,500 MW link is technically feasible and commercially viable (if it proceeds, it could be operational by 2027).

The Granville Harbour Wind Farm is now sending power to the grid, with 31 turbines completed and a 30% increase to wind power capacity: this $280 million project takes advantage of the strong winds coming off the Southern Ocean. UPC Renewables has proposed the construction of two massive onshore wind farms in Northern Tasmania that could jointly provide up to 1 GW (the two wind farms, which may also include solar, will seek development approval during 2020 with the goal of starting construction by the end of 2021).

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 58 of 88 Energy Transition in Australia

7.2.7 Victoria (Melbourne)

Victoria’s 50% renewable energy target by 2030 became law in October 2019, amending the previous 2017 Act.

The Victorian Government has asked the Federal Government to fast-track investment in the KerangLink transmission line between NSW and Victoria: KerangLink will give Victoria greater access to energy generation from NSW, including the Snowy 2.0 pumped hydro project, which will be especially important if any of Victoria’s coal-fired power plants close earlier than expected.

The Victorian Government abruptly froze rebates under its Solar Homes Program in April 2019 after a stronger than expected response to the program. This decision created significant challenges and when the program was reopened in July with a monthly rebate limit, available rebates were exhausted in less than an hour.

7.2.8 Western Australia (Perth)

Western Australia is one of only two states without a renewable energy target, but there was increasing activity in the renewable space, with several new wind and solar projects coming online or breaking ground in 2019.

APA Group opened its $40 million Badgingarra Solar Farm in December 2019: the 19.25 MW project is expected to save more than 8.5 million tonnes of greenhouse gases over the next 25 years and power 220,000 homes each year. South Energy is making a foray into the WA renewables market with proposed solar farms at Waroon ($250 million Waroon project for 183 MW that will include 488,800 solar panels and a 20 MW battery and is expected to be completed in 2022) and Benger (100 MW thanks to 265,000 solar panels and a 10 MW battery). The State’s first grid-scale solar farm, Greenough River, is adding 30 MW of solar to its capacity (electricity generated by this project is sold to WA’s Water Corporation for its desalination plant).

The WA Government introduced its $10 million Renewable Hydrogen Fund in 2019 (more in Chapter 8.3.1): grants of between $300,000 and $3 million will be provided for studies, setting up demonstrations or for new capital works projects; regional areas have $7 million earmarked for projects, while $1 million has been allocated for research into administration and regulatory reforms. It won’t just be generating hydrogen for export, with the WA Government prioritising projects using hydrogen in regional areas, mixing it with mains gas supplies and using it for transport fuel.

The proposed Asian Renewable Energy Hub has again grown in scope to 15 GW of wind and solar capacity: the project is positioning itself for the renewable hydrogen export market with potential to generate 50 TWh per year.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 59 of 88 8. STRATEGIC PRIORITIES | EMERGING TECHNOLOGIES

The recently released discussion papers related to the national Energy Technology Investment Roadmap (Chapter 7.1) has the objective to drive investment in low emissions technologies to strengthen the economy and support jobs and businesses. This is a key priority on the road to recovery from COVID-19 and represents the next step in the government’s “technology not taxes” approach to reducing emissions. The roadmap focuses on:  Developing technologies that will support jobs growth;  Backing new industries that will help regional communities and local economies to prosper;  Putting Australia at the forefront of research and development;  Maintaining Australian track record of reducing global emissions.

The roadmap provides a framework for setting economic stretch goals for priority technology (for example, bringing the cost of green hydrogen production under $2 a kilogram) to accelerate the competitiveness of priority technologies with higher emissions alternatives. Each priority technology will have its own goal, to be developed in partnership with industry and stakeholders. According to Australia’s climate action agenda, there is enormous potential in technologies like hydrogen, carbon capture and storage, soil carbon sequestration, biofuels, resources and energy exports to reduce emissions while strengthening the economy.

PRIORITIES

8.1.1 Australian Energy Market Operator’s vision

The AEMO 2020–23 Corporate Plan indicates the following (quite generic though) pillars. 1. Reliable and secure system operations: to maintain high-reliability operation of energy systems while adapting to anticipated changes in generation, and improve forecasting services; 2. Future system design: to facilitate among stakeholders an orderly transition to a fit-for-purpose future system through actions like the development of Integrated System Plan and integrate planning across electricity, gas and transport; 3. Adaptive markets and regulations: to implement new approved market requirements, also by working with the Energy Security Board and the Australian Energy Market Commission (AEMC) to evolve rules and market designs; 4. Consumer engagement and access: to empower individuals to exercise choice in the energy market, also by improving public data on choices and outcomes and facilitating energy plan comparisons; 5. Digital and data: to deliver a modern digital platform that will unlock new value for consumers, improve data access, choice and user experience, and enable flexibility and new services.

However, the Australian Energy industry is clearly pointing at strategic priorities such as energy storage, green hydrogen, waste-to-energy / circular economy and off-shore wind.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 60 of 88 Energy Transition in Australia

STORAGE

The energy storage sector is also starting to pick up momentum, with 22,661 small-scale batteries installed in 2019, taking Australia’s household storage capacity past 1 GWh for the first time. And with a further 15 utility-scale batteries under construction and several other projects financially committed at the end of 2019, 2020 promises to be a breakthrough year for batteries in Australia.

State-based programs continue to drive this growth, with South Australia’s Home Battery Scheme leading the way. Despite slower than expected uptake and claims that battery prices are still beyond the average homeowner’s reach, the Government remains confident that the scheme will reach its goal of 40,000 battery installations in four years. The scheme provides a subsidy of up to $6,000 towards the installation of a battery, which is approximately a quarter of the cost of a standard battery installation.

The pilot of Victoria’s Solar Battery Rebate was expanded to more than 100 postcodes in 2019 due to a sluggish initial response from consumers, and next release of battery rebates is in July 2020. Progress towards the Victorian Government’s target of 10,000 subsidised battery systems installed via the Solar Homes program (with special assistance in COVID-19 time) over 10 years is expected to ramp up as battery costs and barriers to ownership decrease.

A barrier to ownership was the lack of a consistent national standard to provide battery installers with a consistent set of rules to work to, but the new battery installation standard AS/ NZS 5139 was released in October 2019.

The integration of batteries into Virtual Power Plants will play a crucial role in the renewable energy future by providing better outcomes for consumers and supporting local and regional electricity grids. The Australian Energy Market Commission and the Australian Energy Market Operator have already begun planning for a future in which VPPs play a key role in creating a two-sided national energy market that will enable increased consumer participation. More information about VPP in Chapter 6.7.3.

Fifteen large-scale batteries were under construction at the end of 2019, many of which are co-located with solar and wind farms. This is an increasingly common trend as developers look to maximise returns from their wind and solar projects.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 61 of 88 At the moment, the Hornsdale Power Reserve (located in South Australia) is the biggest utility-scale battery and Neoen announced the size of the world’s largest battery (energy 129 MWh, power 100 MW) will be expanded by 50% (64.5 MWh / 50 MW). Supported by Tesla, the project is expected to further showcase the benefits that grid-scale batteries can provide to the National Electricity Market. In January 2020, Vena Energy announced that it would construct a 150 MWh / 100 MW battery at its Wandoan South Solar Farm in Queensland. When completed in mid-2021, the battery will the largest in Australia, and Vena Energy indicated that it may look to expand the battery to up to 450 MW of storage capacity in future. In April 2020, Neoen confirmed plans to build the new world’s largest battery near Geelong, Victoria: the battery will be charged from the grid and then act as a backup when demand soars. The proposed $300 million battery will likely be capable of storing more than 500 MWh of power, and deliver an output at least four times as great as the Tesla battery at Neoen’s existing Hornsdale Wind Farm in South Australia.

8.2.1 Energy Storage Services (revenue models)

Energy Storage as a Service (ESaaS) allows a facility to benefit from the advantages of an energy storage system by entering into a service agreement without purchasing the system. The operation of the ESaaS system is a unique combination of an advanced battery storage system, an energy management system, and a service contract which can deliver value to a business by providing reliable power more economically. Recent examples are: a] Genex has signed energy storage services agreement with Energy Australia for the 250 MW Kidston Pumped Storage Hydro Project; b] Vena Energy Australia is negotiating an energy storage services agreement with AGL to sell the storage capacity of a 100MW Battery Energy Storage System at Wandoan.

HYDROGEN

In the last two years, hydrogen as an has gained renewed interest in Australia. This has been ignited by policy-driven demand in the Asia Pacific and low-cost renewables. The Japanese and South Korean governments have published strategies for moving towards a hydrogen economy with roadmaps and targets for hydrogen import. Initially, the University of Queensland took the spotlight when the first production and export of green hydrogen from Australia to Japan was achieved in March 2019, and the Japanese conglomerate JXTG used the University’s facilities to extract hydrogen from water.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 62 of 88 Energy Transition in Australia

The Council of Australian Governments Energy Council launched the National Hydrogen Strategy in November 2019 as part of a commitment to energy security, reliability and affordability for all Australians. The strategy maps Australia’s path to be an industry leader by 2030 by developing a clean, innovative, competitive and safe hydrogen industry for both domestic and export use. Between 2015 and 2019, the Australian Government committed over $146 million to hydrogen projects, that are helping to learn more about how hydrogen can form part of Australia's energy mix to drive down prices and emissions. In May 2020, the Australian Government established a $300 million Advancing Hydrogen Fund to support hydrogen-powered projects (read more in Chapter 9.1.1).

A key element is to create hydrogen hubs – clusters of large-scale demand: these may be at ports, in cities, regional or remote areas, and will provide the industry with its springboard to scale. Hubs will make the development of infrastructure more cost-effective, promote efficiencies from economies of scale, foster innovation, and promote synergies from sector coupling. These will be complemented and enhanced by other early steps to use hydrogen in transport, industry and gas distribution networks, and integrate hydrogen technologies into the Australian electricity systems in a way that enhances reliability.

The Strategy also aims at securing the investment to develop a globally competitive hydrogen export industry that could be worth up to an estimated $26 billion a year by 2050.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 63 of 88 Australian interest in Clean Hydrogen has been bolstered by the falling costs to produce and use hydrogen. Over the past decade, for example, the cost of generating electricity from wind has fallen by about 70%, and from solar PV by about 80%. The cost to make a hydrogen fuel cell, meanwhile, has fallen by about 60% since 2006. With foreseeable technology improvements and higher manufacturing volume, it is anticipated that the cost of fuel cells might fall by about another 30% by 2025. The cost of storing hydrogen will also become cheaper with scale, technology and efficiency improvements (by up to 40% as ammonia and up to 80% as liquid hydrogen). As costs fall, clean hydrogen will become increasingly competitive: when and where this occurs will also depend on factors such as the cost of its alternatives.

This will vary across different uses of hydrogen: in certain sectors, notably transport and industrial uses, the cost gap with other fuels is narrow and competitiveness in Australia appears likely within a decade, as shown in the picture above indicating the estimated cost of hydrogen against alternative technology for major applications in 2030.

8.3.1 State Governments’ commitment to green hydrogen

Every State and Territory in Australia has regions with excellent prospects for hydrogen production. Through the National Hydrogen Strategy, all of Australia's Governments are committing to remove barriers to industry development, thanks to nationally consistent and smart regulation, enhanced engagement with customer countries. The Federal Government will track progress and monitor local and overseas emerging industry changes so that all jurisdictions can respond to market developments.

New South Wales is already home to an established hydrogen-based industry and the NSW Government is aware of the high level of investor interest in its hydrogen industry and is assessing the development of supporting infrastructure and capabilities which would eventually underpin a larger scale hydrogen sector, including an export market for North Asia and beyond.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 64 of 88 Energy Transition in Australia

The NSW planning system provides a coordinated framework for State significant projects, including most large hydrogen projects: the establishment of Special Activation Precincts (SAPs are one of the focus areas of the $4.2 billion Snowy Hydro Legacy Fund) in NSW offers a mechanism that can align with the development of hydrogen hubs in regional areas. Examples:  the Jemena Western Sydney Green Gas Project that involves designing and constructing a Power- to-Gas facility which will convert solar and wind power into hydrogen via electrolysis;  “Project NEO” from Infinite Blue Energy, that in May 2020 has revealed a new strategy to transition large fossil fuel users in NSW to green hydrogen to assist the state’s companies to de-carbonise. The initial target for this project is 1 GW of 100% Green Hydrogen reliable baseload power via a combination of solar PV, wind turbines and hydrogen fuel cell technology. Project NEO, which will commence with a feasibility study and detailed design by the end of 2021, is focused on transitioning the traditional reliance on coal fired and/or gas fueled electricity to green hydrogen- generated baseload electricity.

Local governments and community groups across Victoria have already identified opportunities for hydrogen-based projects on a local and regional level. The Victorian Hydrogen Investment Program is supporting the development of a green hydrogen industry through market testing, policy development and a targeted investment program. The world’s first fully integrated Hydrogen Energy Supply Chain pilot project in Victoria is demonstrating a full supply chain starting with hydrogen production from brown coal in the Latrobe Valley and ending with its transportation to Japan. The four year (2018–2021) HESC pilot project includes the transportation of liquified hydrogen in a world-first, purpose-built liquified hydrogen carrier. The delivering consortium consists of Kawasaki Heavy Industries, Electric Power Development Co., Iwatani Corporation, Marubeni Corporation, Sumitomo Corporation and AGL. A commercial HESC requires a low-CO2 hydrogen energy supply chain, with the carbon sequestration solution provided by the CarbonNet project (described in Chapter 8.4).

The Queensland Hydrogen Industry Strategy (2019–2024) sets a vision that ‘by 2030, Queensland is at the forefront of renewable hydrogen production in Australia, supplying an established domestic market and export partners with a safe, sustainable and reliable supply of hydrogen.’. The Strategy includes the $15 million Hydrogen Industry Development Fund, providing funding for investors developing hydrogen projects in Queensland. In 2019, Queensland signed a Memorandum of Understanding with the Japan Oil, Gas and Metals National Corporation to cooperate on hydrogen and a Statement of Intent with the University of Tokyo’s Research Center for Advanced Science and Technology. The Queensland Government’s Redlands Research Facility will establish the Hydrogen Process Research and Development Project.

While Western Australia remains the only state without a renewable energy target, in July 2019 the State released the Western Australian Renewable Hydrogen Strategy detailing vision, goals and implementation pathways required for WA to be a significant producer, exporter and user of renewable hydrogen. The $10 million Renewable Hydrogen Fund aims to facilitate private sector investment, providing financial support for feasibility studies and capital works projects. Examples:  The $3.53 million ATCO’s industry leading Clean Energy Innovation Hub is a test bed for solar PV, battery storage, hydrogen production and hydrogen blending with natural gas, as it incorporates production, storage and use of hydrogen produced by solar powered water electrolysis.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 65 of 88 Then the hydrogen is injected into a demonstration gas network and is also being tested in a fuel cell generating electricity as well as a direct and blended combustion fuel for domestic appliances.  Stage One of the Infinite Blue Energy Liquid Hydrogen Project will be the Arrowsmith Project, located in Western Australia: this installation will commence production in 2022 resulting in 25 tons (25,000 kg) of green Hydrogen per day from the zero carbon energy sources of water, solar and wind.

The Government of South Australia was the first jurisdiction to publish a hydrogen strategy, in 2017, and to date has committed more than $40 million in grants and loans to the development of hydrogen projects. Building on this investment, the government released South Australia’s Hydrogen Action Plan in 2019, setting out the next steps for the development of the State’s hydrogen industry. A key commitment of the Action Plan is the development of a SA Hydrogen Export Modelling Tool to inform the establishment of renewable hydrogen export supply chains. The Hydrogen Regulatory Working Group is currently supporting 3 MW-scale projects the SA Government has co- invested in with over $40 million in grants and loans:  Hydrogen Park South Australia from Australian Gas Networks;  Renewable hydrogen and green ammonia supply chain demonstrator from The Hydrogen Utility;  Hydrogen Superhub from Neoen Australia.

Following the Tasmanian Renewable Hydrogen Action Plan, the Government is actively working with a range of proponents to facilitate investment in renewable hydrogen production for both domestic use and export, with a focus on developing the Bell Bay Advanced Manufacturing Zone as a hydrogen hub.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 66 of 88 Energy Transition in Australia

CARBON CAPTURE AND STORAGE / UTILIZATION

Following many years without being clearly indicated as a valid option in lowering Australian emission, Carbon Capture and Storage has (unexpectedly) been included in the recently released discussion papers of the "Energy Technology Investment Roadmap" (see Chapter 7.1). The Federal Government is considering legislative changes to allow its clean energy agencies to fund carbon capture and storage from fossil fuel projects in a bid to unlock $2 billion of potential private investment to reduce greenhouse gases.

Despite multiple CCS demonstration projects at Australian coal-fired power stations, none of Australia's coal plants are currently capturing CO2 or have a timeframe for doing so. However, the Carbon Capture and Storage Flagships program supports a small number of demonstration projects that will capture carbon dioxide emissions from industrial processes, provide transport infrastructure (generally pipelines) and safely store carbon dioxide underground in stable geological formations.

Victoria is actively pursuing opportunities to use its brown coal resource in new ways, consistent with the Statement on Future Uses of Brown Coal: the production of hydrogen from brown coal, when coupled with CCS presents a significant opportunity and comparative advantage for Victoria. The conveniently located CarbonNet Project could enable production of clean hydrogen for domestic and export markets. The CarbonNet project investigates the potential for a large scale CCS network in the Gippsland region of Victoria: the network could cover multiple sources of carbon dioxide captured from industrial plants or power stations, that would then be transported via a shared pipeline and injected offshore in a deep sub- sea storage formation. CarbonNet is managed and co-funded by the Victorian Government and the Australian Government, that has committed $95.2 million to the current phases of project.

WASTE-TO-ENERGY AND CIRCULAR ECONOMY

8.5.1 Waste export ban

In 2019 Federal, State and Territory governments agreed that plastic, paper, glass and tyres waste that had not been processed into value-added materials should be progressively banned from export from Australia by no later than 30 June 2022, starting in 2020.

Changes in waste import standards in countries around the world have highlighted the need for Australia to manage its own waste better. In 2018, China introduced new restrictions on the recyclable materials it imports through China’s National Sword Policy. Australia is one of over 100 countries affected by China’s restrictions: China was Australia’s largest export market for waste, receiving approximately 4% (1.3 million tonnes) of Australia’s recyclable waste and around one-third of Australia’s recyclable plastics, paper and cardboard. Following China’s decision, other countries (including India, Indonesia and Malaysia) raised concerns about the standards of recyclable materials they were importing.

Prior to the restrictions, Australian recycling facilities received $225 - $250 per tonne for paper and plastics sold to China. The current price now sits at around $50 per tonne and this significant reduction in export price has left many recycling facilities unprofitable.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 67 of 88 Australians create around 67 million tonnes of waste each year. In 2018-19, 4.4 million tonnes of this waste was exported: this included 1.4 million tonnes of plastic, paper, glass and tyres waste, representing 32% of total waste export tonnage, as per picture below:

Here below a picture indicating Australian waste exports and in-cope waste volumes per State and Territories in 2018-2019.

In 2019 Australia was recycling 58% of generated waste. Although there was a need to improve recycling rates, some recyclable materials in Australia were already in oversupply (i.e. stockpiles of tyres and glass): these stockpiles were posing a significant risk to the environment and human health, as it was important to avoid this waste going to landfill.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 68 of 88 Energy Transition in Australia

Other market challenges in Australia’s waste management, recycling and manufacturing sectors included unreliable supply of recyclable materials that were ready for re-manufacturing and costs of virgin materials often being lower than costs of recycled material. There were also big differences in the infrastructure available to manage waste, recycle materials and manufacture products containing recyclable material across Australia’s States and Territories and between metropolitan, rural, regional and remote areas. Further modernisation of Australia’s recycling infrastructure was considered necessary to improve recovery rates and create more opportunities for re- processing and re-manufacturing recyclable materials.

8.5.2 National Waste Policy and beyond

The National Waste Policy (November 2019) presents targets and actions that will guide investment and national efforts to 2030 and beyond, addressing also the impediments to a circular economy. The national targets can be summed up as per the following list: 1. Ban the export of plastic, paper, glass and tyres waste, commencing in the second half of 2020 2. Reduce total waste generated in Australia by 10% per person by 2030 3. 80% average resource recovery rate from all waste streams following the waste hierarchy by 2030 4. Significantly increase the use of recycled content by governments and industry 5. Halve the amount of organic waste sent to landfill by 2030

In March 2020 the Council of Australian Governments released a response strategy presenting a coordinated and ambitious package to implement the 2019 waste export ban, including action in the following key areas: driving demand for recycled content, public education to reduce contamination at its source, investment in recycling and waste infrastructures.

In early July 2020, the Federal Government announced $190 million funding towards new recycling infrastructure, as it looked to divert more than 10 million tonnes of plastic, paper and glass waste away from landfill. The funding, contingent on State and Territory Governments and industry groups matching the federal contribution, is part of a newly launched Recycling Modernisation Fund that the Government hopes to generate $600 million in investment. In addition to the $190 million, the federal government confirmed the allocation of $24.6 million on improving waste data to better track recycling targets, as well as $35 million towards implementing its commitments under the National Waste Policy Action Plan. The objective was that this “targeted investment will grow Australia’s circular economy, create more jobs and build a stronger onshore recycling industry”. However as a result of a Covid-19 induced legislative backlog, the first deadline as part of the proposed waste export ban has been pushed back, beginning with a ban on exporting glass waste from 1 January 2021, which had originally been planned to take effect from the second half of 2020.

8.5.3 Waste-to-Energy technology

Australia generates nearly 70 million tonnes of waste per year, around half of which is recycled (and approx. 40% is sent to landfill). There’s a multitude of different coloured bins outside residential and commercial buildings and traditionally this rubbish would be all destined for landfill and recycling stations, but now some companies are taking cues from innovations in Europe and investing in ways to extract energy from Australian waste.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 69 of 88 Australia’s landfills are reaching capacity and forcing leaders to find new solutions, including one that involves turning waste into electricity, with the view that the results will help to reduce waste-levels while also creating bio-energy and a sustainable fuel. “Where you can possibly reuse, recycle you should do it,” says Mac Irvine, acting head of Waste and Bioenergy for Australia-based Clean Energy Financing Corporation. “But if it gets to the point where it would go to a landfill, then this technology is a better alternative. It is not a silver bullet to curing the world’s waste issue, but it does prevent tons of municipal solid waste that would otherwise go into landfill.”

Australia’s waste sector is undergoing an important transition, requiring significant investment in infrastructure and equipment, including upgrades to existing assets, as well as the installation of new assets. Through the $100 million Australian Recycling Investment Fund, the focus is on large-scale projects which use clean energy technologies to support the recycling of plastics, paper, glass and tyres waste. However, Waste-to-Energy, whilst a well-established technology for municipal waste disposal and energy generation in comparable jurisdictions, is relatively immature on a large scale in Australia, one of the main reasons being the fact that local communities consider waste incineration not good for the environment and their health.

In Victoria, there are various small to medium organic waste conversion facilities including Yarra Valley Water’s Aurora facility, which is a medium scale anaerobic digestion facility converting 30,000 tonnes of commercial food waste into energy annually, and the Waranga Green Energy’s project to convert biomass (piggery effluent) into renewable energy. However, while there are a number of project proposals, and a large-scale thermal WtE plant that is currently under construction in Kwinana, there is not yet a single operating plant that can recover energy from municipal solid waste.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 70 of 88 Energy Transition in Australia

The first waste-to-energy plant in Australia - The Kwinana Waste to Energy project will develop a waste processing facility to process approximately 400,000 tonnes of municipal solid waste, commercial and industrial waste and/or pre-sorted construction and demolition waste per annum to produce approximately 36 MW of baseload power for export to the grid. The project will use Keppel Seghers’s moving grate technology, which thermally treats waste and converts the recovered energy into steam to produce electricity. Metallic materials will be recovered and recycled, while other by-products will be reused as construction materials. It will be the first thermal utility-scale Waste to Energy facility constructed in the nation, diverting approximately 25% of Perth’s post-recycling rubbish from landfill sites.

The second waste-to-energy plant got green light: Spanish renewable energy leader Acciona will work with Hitachi Zosen Inova (HZI) on a $515 million project to build the 29 MW waste-to-energy plant in the Rockingham Industrial Zone, 45 Km South of Perth, that will have capacity to power 40,000 homes from an annual feedstock of 300,000 tonnes of municipal, industrial and commercial rubbish. Long term contracts have been put in place to source household refuse from nearby local council collections, and Suez has committed to supply 65,000 tonnes of non-hazardous industrial and commercial waste. Together with HZI, Suez has also signed a 20 year agreement to operate and maintain the facility, which will be jointly owned by a consortium of investors that includes John Laing, HZI and ACCIONA.

According to a report from Infrastructure Partnerships Australia, considering recent international waste market disruptions, Australia’s waste management system needs a clear, nationally coordinated and forward-looking response. The decisions made by the COAG provide some clarity around national objectives on waste management, but more work is required by governments of all levels. Appetite among community and industry stakeholders to reform the waste sector is growing also in response to decreasing tolerance for landfill and increasing social awareness of related issues. This is occurring in conjunction with large infrastructure operators and investors providing significant capital and expertise to meet Australia’s waste challenges.

Waste management and circular economy strategies have been released – either in draft or final form – over the past 12 months by the State Governments in New South Wales, Victoria, Queensland, Western Australia and Tasmania. However, there is still a lack of clarity and consistency about waste management technologies in these Government plans: only some strategies (most notably the final advice by Infrastructure Victoria) openly address WtE and steps required to support its implementation. In March 2020 the Metropolitan Waste and Resource Recovery Group (supporting Melbourne’s 31 metropolitan councils to to minimise waste and maximise resource recovery)called for expressions of interest for solutions to provide an alternative to landfill for 16 councils in Melbourne’s South-East: the shortlisted companies (Veolia Environmental Services Australia, Sacyr Environment Australia and Pacific Partnerships and REMONDIS) will develop an advanced waste processing solution as an alternative to landfill. It is expected that the process will take close to two years to reach a final tender stage and a 20 to 25-year contract will be awarded by 2022, with construction of new facilities starting in 2023.

Emissions standards are another key component of the regulatory framework for WtE facilities. In the European Union, there are currently over 450 WtE facilities in operation and emissions are tightly regulated through the EU Industrial Emissions Directive. Noting that Victoria and Western Australia have already implemented the EU standards, adoption across all States and Territories should be applied through nationally consistent regulation.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 71 of 88 Therefore, in absence of a national policy, State and Territories Governments are tackling the WtE agenda in different ways. For example, in early June 2020, the Australian Capital Territory has ruled out any incineration of waste under a new ACT Waste-to-Energy Policy 2020-25, developed to move towards its 90% resource recovery by 2025, stating “The policy establishes underlying principles and outcomes to guide the transition to a circular economy and provides clear direction about the types of activities that are permitted.”. According to the policy, new facilities, proposing thermal treatment of waste (by means of incineration, gasification, pyrolysis) will not be permitted in the ACT, while the waste hierarchy will be respected and recycling won’t be undermined.

Moreover the lack of a nationally coordinated approach means that, even if investors and operators can proceed with an WtE facility in one jurisdiction, developing similar projects in other jurisdictions will require a whole new approach.

8.5.4 Circular economy

The transition to a circular economy represents an ambitious movement towards a low-waste, high- resource-efficiency future. Elements of the circular economy have been in play for many years in Australia: cleaner production programmes, waste to landfill levies (see Chapter 6.5.1), collection and recycling of household packaging and paper, metals recycling, regional waste strategies, infrastructure planning and investment, waste and recycling legislation and other regulatory interventions under State-based environment protection acts.

Below are two examples of State policies supporting a shift away from the current linear economic model based on the ‘take-make-dispose’ approach to managing products and resources:  Queensland’s new Waste Management and Resource Recovery Strategy, underpinned by a waste disposal levy, provides the strategic framework for Queensland to become a zero-waste society, where waste is avoided, reused and recycled to the greatest possible extent. The strategy focuses on transitioning to the principles of a circular economy to help retain the value of material in the economy for as long as possible. It provides the framework to help deliver coordinated, long-term and sustained growth for the recycling and resource recovery sector while reducing the amount of waste produced and ultimately disposed of, by promoting more sustainable waste management practices for business, industry and households. The necessity of the Strategy was triggered by an absence of policy certainty and strategic direction, that inhibited investment in the recycling and resource industry: in particular, insufficient investment in recycling and resource recovery infrastructure has restricted Queensland’s ability to improve waste recovery performance. As a result, it has become clear that improved on-shore reprocessing capacity is necessary to contend with a growing stock of recyclable materials.

 The state of Victoria is still suffering from a recycling crisis, partly due to the insolvency of SKM Recycling in 2019, contracted to manage the waste of 31 local councils in Victoria, that led to the transfer of more than 4,600 tonnes of recyclable material to landfill in a single week. Recycling Victoria: A new economy is the Victorian Government’s 10-year circular economy policy and action plan to fundamentally transform the state’s recycling sector, by investing more than $300 million in a suite of landmark reforms dedicated to shifting Victoria to a circular economy. Greater separation of recyclable materials and investment in the right infrastructure will produce higher-quality recycled materials with stronger market demand. ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 72 of 88 Energy Transition in Australia

A clearer understanding of where the recycling ends up will support a recycling system that communities and businesses can rely on. The policy released in March 2020 is based on strategic reforms (examples):  Kerbside reform - Changing how Victorians recycle so that materials collected from households are high quality and can be used again to make new products.  Stronger recycling oversight - New Act and new waste authority to make the recycling system reliable and transparent.  Waste-to-energy – The Government will encourage investment in appropriate waste-to-energy facilities that reduce the need for landfills.  Reducing business waste - A new Circular Economy Business Innovation Centre will help businesses reduce waste and generate more value with fewer resources.  Invest in priority infrastructure - Victoria will have the right infrastructure to support increased recycling, respond to new bans on waste export and safely manage hazardous waste.

The Victorian Government will support early entrants into Victoria’s waste to energy market, including facilities that use organic waste to make bioenergy or provide precinct-scale energy. Investment support will include grant or loan funding and investment facilitation to help proponents navigate regulatory and financial processes. The government will also fund research to develop safe end uses for the residual products (like ash and digestate) of waste to energy facilities.

A change in landfill levies will be introduce as well, as Victoria has currently one of the lowest landfill levies for municipal and industrial waste in the country, risking to make Victoria a dumping ground for waste coming from other States: landfill levy for metropolitan household and business waste will increase up to $125.90 per tonne over the next three years, with proportional increases reflected at regional landfills. This progressive increase of the landfill levy rate will support the social, economic and environmental value of recycling, and so a shift to a circular economy.

Exponential technologies like AI, IoT, and robotics will be the key enablers in helping Australia transition to a circular economy. AI will be integral in optimising supply chains and assessing the condition of products returned to manufacturers for repair, refurbishment, or dismantling. IoT sensors will provide ongoing usage analytics and signal the best time to repair or replace componentry with minimal downtime for customers. Finally, advanced robotics will enable the analysis of materials required for speedy repairs, refurbishment, or breakdown of products into valuable componentry and resources.

KPMG prepared a report investigating the potential economy-wide pay-off of transitioning to a more circular economy in Australia (with focus on key sectors such as Food, Transport and the Built Environment), taking into consideration Australian-specific circular opportunities to estimate economy- wide impacts for Australia. The document estimates that a future circular economy in the indicated sectors would represent a potential economic benefit of $23 billion in present value GDP by 2025. By 2048, KPMG estimates that the benefit of a circular economy will likely rise to a present value of $210 billion in GDP and an additional 17,000 full-time equivalent jobs for Australia. Opportunities such as energy efficiency in dwellings and food waste reductions represent the greatest impacts in dollar terms: the former, for example, is estimated to increase the output of the dwellings sector by 3.2% by 2048.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 73 of 88 OFF-SHORE WIND

The bushfires that ravaged Australia in late 2019 and early 2020 crystallised the growing concerns of most Australians over climate change. The country was already facing major challenges over the need to reshape its energy sector given the impending closure of all existing coal-powered generators by 2048, which provide the majority of electricity in Australia, and the demands of a population that’s predicted to double to 50 million by 2050.

In that light, it was timely that on 3 January 2020 the Australian Government released a Discussion Paper for a proposed Offshore Clean Energy Infrastructure regime (specifically including offshore wind), signaling the intent to provide a framework for development of this relatively new (at least to Australia) technology, with only the 2.2 GW Star of the South advancing off the Victoria coastline currently putting the nation on the global offshore wind map. The regulatory framework will be developed to enable the exploration, construction, operation and decommissioning of offshore wind and other clean energy technologies and associated infrastructure in Australian waters (beyond three nautical miles from the coast). The Federal Minister with responsibility for energy matters will make all major decisions under the framework, that will recognise all offshore users and balance competing interests through consultation and negotiation. The first step in this process is the requirement for the Minister to consult over an area that may be potentially suitable for offshore clean energy infrastructure development. The consultation and any subsequent declaration would take place before any licence for progressing development can be awarded. The declaration stage is designed to identify and prevent potential conflicts in competing interests, and set conditions before a project could progress, such as key stakeholders and consultation requirements, constraints on types of activities. After consideration of the results of the consultation process the Minister may declare an area as suitable for offshore clean energy projects. Following a declaration, the Minister may open applications to seek competitive interest in a declared area for commercial and / or non-commercial activities. It is proposed to leverage the experience of the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) to operate as the regulator for any new industry.

The Government Discussion Paper is a very positive signal that Australia is ready to investigate and legislate to promote and regulate this industry, but the question remains whether Australia can move quickly enough to exploit an incredible opportunity that is being recognised in other nations competing for infrastructure investment capital.

With 85% of Australia’s population living within 50km of the coastline, the potential for offshore wind should be more obvious than other forms of energy where the resource is located much further away from its intended market, and often with little chance of actually transmitting resultant electricity via a clogged grid to the final customer. Offshore wind provides many benefits to a transitioning energy system that go beyond the mere supply of electricity. These include:  Amenable connection to transmit electricity to the market given that the central grid is located close to coal mines and generators which are in proximity to Australia’s coastline;  Greater energy supply and network reliability, given the less intermittent generation of offshore wind and a profile that often meets Australian peak demand periods;  Possible transition of workers from traditional fossil-fuel based industries that may suffer from impending closures over the coming decades.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 74 of 88 Energy Transition in Australia

8.6.1 Star of the South offshore wind project

The Star of the South offshore wind farm will further boost the wind sector’s credentials, with feasibility studies underway to assess the viability of the wind farm off Port Albert near the Gippsland region of Victoria (a 496km2 area in Bass Strait). The Star of the South operates under an exclusive exploration licence, which was approved by the Australian Government in March 2019: the licence is for exploration activities only and is valid for five years, with a possible extension of two years.

With the expectation that the project will feed 2,200 MW of clean energy into the grid, the offshore wind farm will require the installation of an undersea cable to link to existing transmission infrastructure in the nearby Latrobe Valley, Victoria’s coal power generation hub. The 200 wind turbines planned would generate up to one-and-a-half times the energy of the now-closed Hazelwood coalfired power station.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 75 of 88 9. FUNDING

A range of Government grant programs are available to assist companies with funding energy efficiency projects, with eligibility requirements that can differ significantly across programs and jurisdictions. Funding sources also include co-financing packages, loans, tax incentives and other innovative financing solutions, with many designed to support transition to a low carbon economy or to help overcome barriers to energy efficiency uptake.

On top of dedicated Federal, State and Local Governments’ funding and grants, an important source of capital can be traced to agencies like Clean Energy Finance Corporation and the Australian Renewable Energy Agency. In order to unlock more funding, industry experts recently recommended an "expanded, technology-neutral remit" for these two agencies, so they could attract more private investment in a wider range of technologies outside renewables, such as coal or gas-fired power incorporating carbon capture and storage. This would be a significant change to the remit of these agencies, which were set up to promote the development of renewable wind and solar supplied to the electricity grid, as changing the legislation would enable the $1 billion Grid Reliability Fund to be invested in new gas, hydrogen and coal projects relying on carbon capture.

The Climate Solutions Fund was set up in 2015 with $2.5 billion funding to pay polluters to employ cleaner technologies and to fund carbon capture through tree planting, soil carbon sequestration on farms and energy efficient systems in commercial properties, as well as methane capture from landfill and waste management. In 2019, the Federal Government topped up the fund with another $2 billion. To date, it has issued 450 contracts to abate a cumulative 190 million tonnes of carbon at a total cost of $2.3 billion.

According to Energy and Emissions Reduction Federal Minister, "The government will target Dollar-for- Dollar co-investment from the private sector and other levels of government to drive at least $4 billion of investment that will reduce emissions across Australia".

9.1.1 Clean Energy Finance Corporation

CEFC invests in projects related to Renewable Energy, Built Environment and Sustainable Economy. With regard to Renewable Energy, CEFC considers innovations and solutions for:  Solar – Working alongside a diverse range of global and Australian financiers and investors, the objective is to deliver large-scale projects that support reliability and stability of electricity supply. CEFC’s commitments (with $1.1 billion already invested) since inception are on track to deliver 1.6 GW of new large-scale solar in Australia.  Energy Storage – CEFC collaborates with project proponents to deliver energy storage projects in order to integrate clean energy into the electricity grid. The agency is providing significant investment to improve transmission system flexibility, balancing technologies, such as pumped hydro, battery storage and providers of system strength such as synchronous condensers.  Bioenergy – CEFC has invested in several market-leading bioenergy projects and is working with industry to help increase market understanding about the potential uses and benefits of bioenergy, supporting the ‘reduce, reuse, recycle’ recommendations of the international waste hierarchy.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 76 of 88 Energy Transition in Australia

 Hydrogen – The $300 million Advancing Hydrogen Fund supports the growth of a clean, innovative, safe and competitive Australian hydrogen industry. CEFC finance has the potential to drive large-scale deployment of electrolyser technologies (leading to technology cost reductions, improved supply chain expertise), catalyse the hydrogen industry (to accelerate the deployment of large-scale renewable energy hydrogen technologies, including demand-side projects to achieve price discovery), access to tailored finance (providing investing support to project proponents as they seek to accelerate hydrogen developments) and support the implementation of the National Hydrogen Strategy (Chapter 8.3). Projects seeking CEFC finance through this Fund are required to be based on renewable energy, energy efficiency and/or low emissions technologies, including those that advance hydrogen production and develop export and domestic hydrogen supply chains (i.e. hydrogen export industry infrastructure and establishment of hydrogen hubs).  Wind – CEFC investments in large-scale wind projects have tracked a remarkable level of innovation and change in the sector, with hybrid projects that bring together wind, solar and energy storage. Wind energy opportunities are demonstrating increasing market maturity, but there are still factors that limit investor appetite: CEFC can work alongside global and Australian investors to address these challenges with tailored finance solutions designed to help accelerate Australia’s transition to a low carbon economy.

9.1.2 Australian Renewable Energy Agency

From research to large-scale deployment, ARENA funding spans the entire innovation chain, accelerating the affordability of new technologies and building investor confidence in renewable energy projects in Australia. As at 31 March 2020, ARENA had $92 million available to commit to new projects: despite ARENA’s projects pipeline exceeding this amount and whilst not all of the projects will be successful in seeking funding, it is expected that ARENA’s funds will be fully committed by the end of 2020.  ARENA’s Advancing Renewables Program supports a broad range of development, demonstration and pre-commercial deployment projects that can deliver affordable and reliable renewable energy.  An opportunity is offered by the Renewable Hydrogen Deployment Funding Round, providing up to $70 million in funding to support the acceleration of hydrogen. The Round can receive expressions of interest for projects which: demonstrate electrolysis and associated renewable hydrogen technologies at scale, facilitate a pathway to technical and commercial viability of renewable hydrogen in Australia, provide price discovery and transparency in relation to the current and projected economics for renewable hydrogen technologies.  ARENA and CEFC are collaborating on the Clean Energy Innovation Fund, the largest dedicated cleantech investor in Australia, created to invest $200 million in early-stage clean technology companies. The Innovation Fund targets technologies and businesses that have passed beyond the research and development stage and which can benefit from early stage seed or growth capital to help them progress to the next stage of their development.

As the agency’s funding is expected to be exhausted by the end of 2020, before its scheduled wind-up in 2022, the Clean Energy Council is “calling on the Government to extend the life of ARENA for at least another decade, and to equip the agency with at least $2 billion over that time to ensure it can continue its work in accelerating the clean energy transition.”.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 77 of 88 10. PROJECTS IN CONSTRUCTION AND COMMITTED

The market indicated a stall in new project commitments in 2019, with clear differences in a State by State analysis.

Source: Green Energy Markets (All-Energy Australia, October 2019)

Nevertheless, according to the Clean energy Council, the renewable energy sector is experiencing unprecedented activity across Australia in 2020: based on projects that have reached financial close and are not yet commissioned, there are currently 95 large-scale renewable energy projects in construction (or due to start construction soon), that will deliver over $19 billion in capital costs, 11,007 MW of new renewable energy capacity and create 13,567 direct jobs.

Projects in construction or due to start soon by technology:  Wind 5,844 MW  Solar 5,975 MW

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 78 of 88 Energy Transition in Australia

Number of projects in construction or due to start soon by State:  NSW 29  NT 4  QLD 13  SA 14  TAS 2  VIC 21  WA 12

Projects completed (commissioned) by year:  2017 11 projects 1,013 MW  2018 27 projects 1,565 MW  2019 42 projects 2,621 MW  2020 9 projects 623 MW (7 large-scale solar farms and 2 wind farms)

If this rate of installation growth continues, it is estimated that Australia’s energy mix could reach 50% renewables by 2025. An analysis by the ANU Energy Change Institute suggests that the Australia energy industry has now demonstrated the capacity to deliver 100% renewable electricity by the early 2030s.

10.1.1 10 major projects in construction or due to start (by MW)

Stockyard Hill Wind Farm Technology: Wind MW: 530 Owner: Goldwind Australia About: is a wind farm project under construction in Victoria. As of June 2020, 1 of 149 planned turbines was operational and connected to the grid. Website: www.stockyardhillwindfarm.com.au

Western Downs Green Power Hub Technology: Solar MW: 480 Owner: Neoen About: The Western Downs Green Power Hub in Queensland is a large solar farm project in advanced development. At a size of 480 MW once built, it will be Australia’s largest operating solar farm. The site also holds up to 150 MW battery energy storage potential. Website: www.westerndownsgreenpowerhub.com.au

Coopers Gap Wind Farm Technology: Wind MW: 453 Owner: AGL and PARF

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 79 of 88 About: in Queensland will be one of the largest Australian wind farms by end 2020. Funded by the Powering Australian Renewables Fund, the project will have a capacity of 453 MW and produce around 1,510,000 MWh of renewable energy, powering approximately 264,000 average Australian homes. Website: www.agl.com.au/about-agl/how-we-source-energy/coopers-gap-wind-farm

Dundonnell Wind Farm Technology: Wind MW: 336 Owner: Tilt Renewables About: The inspiration for the $560 million came from a group of Victorian land holders who were keen to host a wind farm on their properties. The wind farm will include 80 wind turbines and will be connected to the network via a 38 km 220 kV transmission line to the Mortlake Gas Fired Power Station. Website: www.tiltrenewables.com/assets-and-projects/Dundonnell-Wind-Farm

Darlington Point Solar Farm Technology: Solar MW: 333 Owner: Edify Energy and Octopus Investment About: The Darlington Point Solar Farm is a 333 MW DC single-axis tracking project with an approximate capital cost of $450 million in NSW. A power purchase agreement has been signed with for the supply of 150 MW of renewable energy. Website: www.edifyenergy.com/project/darlington-point

Riverland Solar Farm and Storage Technology: Solar MW: 330 Owner: Lyon Group About: Lyon’s tranche 1 battery power plant projects are Cape York (Queensland), Nowingi (Victoria) and Riverland (South Australia). Each will have a 4 hour duration battery energy storage system and dispatch firm clean energy through a single connection point, using a single power plant controller. Website: www.lyonasia.com.au/projects/riverland-battery-power-plant

Port Augusta Renewable Energy Park Technology: Hybrid MW: 320 Owner: DP Energy and Iberdrola About: The Port Augusta Renewable Energy Park is a unique hybrid renewable integrating wind and solar PV technology. With a capex of $500 million, the project will provide around 320 MW of power on land situated on the coastal plain south-east of Port Augusta, in South Australia. Website: www.dpenergy.com/projects/port-augusta-renewable-energy-park

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 80 of 88 Energy Transition in Australia

Moorabool Wind Farm Technology: Wind MW: 312 Owner: Goldwind Australia About: The project in Victoria is divided into two sections: 50 wind turbines are currently under construction in the Northern Section and 54 turbines are currently under construction in the Southern Section. All 104 turbines proposed are 171 mt to the tip of the blade. Construction began in July 2018 and the wind farm is expected to commence operation in late 2020. Website: www.mooraboolwindfarm.com

Coppabella Wind Farm Technology: Wind MW: 295 Owner: Goldwind Australia About: The NSW Government has approved construction and operation of up to 75 wind turbines that, once operational, will power around 173,000 NSW homes. Construction of the wind farm commenced in mid-2019. Website: www.coppabellawindfarm.com

Lake Bonney Battery Energy Storage System (stage 1 and 2) Technology: Hybrid MW: 279 Owner: Infigen Energy About: The 278.5 MW wind farm comprises 112 wind turbines which include 46 Vestas V66 wind turbines and 66 Vestas V90 wind turbines. The wind farm generates enough renewable energy to power approximately 131,700 homes. The 25 MW / 52 MWh Lake Bonney Battery is co-located with the Lake Bonney Wind Farms in South Australia and was energised in 2019. Website: www.infigenenergy.com/our-assets/owned-renewable-energy-assets/lake-bonney

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 81 of 88 11. MAJOR INDUSTRY STAKEHOLDERS

Australian Energy Council Address: 50 Market Street, Melbourne 3000 Tel: +61 3 9205 3100 Email: Online form Website: www.energycouncil.com.au About: The Australian Energy Council represents 24 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.

Australian Energy Market Commission Address: 60 Castlereagh Street, Sydney NSW 2000 Tel: +61 2 8296 7800 Email: Online form Website: www.aemc.gov.au About: The Australian Energy Market Commission is an independent statutory body with two key roles: a] making and amending rules for the National Electricity Market, elements of the natural gas market and related retail markets; b] providing strategic and operational advice to the COAG Energy Council.

Australian Energy Market Operator Address: 530 Collins Street, Melbourne VIC 3000 Tel: +61 3 9609 8000 Email: [email protected] Website: www.aemo.com.au About: Australian Energy Market Operator was established by the Council of Australian Governments (COAG) on 1 July 2009 to manage the National Electricity Market (NEM) in the eastern and south-eastern states and Australian gas markets, later adding various gas market functions, and becoming the market and independent power system operator for Western Australia from 2015. Its ownership is shared between government and industry, with members representing federal and state governments, as well as generation and production, distribution, retail and resources businesses across Australia. AEMO actively drives and plans for Australia’s energy future.

Australian Energy Regulator Address: 2 Lonsdale Street, Melbourne VIC 3000 Tel: +61 3 9290 1444 Email: [email protected] Website: www.aer.gov.au About: The Australian Energy Regulator regulates electricity networks and covered gas pipelines, in all jurisdictions except Western Australia. It sets the amount of revenue that network businesses can recover from customers for using these networks and enforces the laws for the National Electricity Market and spot gas markets in southern and eastern Australia. ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 82 of 88 Energy Transition in Australia

Its retail energy market functions cover New South Wales, South Australia, Tasmania, the ACT and Queensland. The AER sets standing offer prices small business and residential customers pay in areas where there is no other retail price regulation – South Australia, New South Wales and south-east Queensland (Energex).

Australian Institute of Petroleum Address: 42 Macquarie Street, Barton (Canberra) ACT 2600 Tel: +61 2 6247 3044 Email: [email protected] Website: www.aip.com.au About: Formed in 1976, the Australian Institute of Petroleum promotes industry self-regulation and an effective dialogue between the oil industry, government and the community.

Australian Renewable Energy Agency Address: Canberra ACT 2601 Tel: +61 1300 005 135 Email: Online form Website: www.arena.gov.au About: ARENA was established by the Australian Government to improve the competitiveness of renewable energy technologies and increase the supply of renewable energy through innovation. Since its creations in 2012, the agency has supported 538 projects with $1.58 billion in grant funding, unlocking a total investment of almost $5.96 billion.

Australian Ocean Energy Group Address: 377 Kent Street, Sydney NSW 2000 Email: [email protected] Website: www.oceanenergygroup.org.au About: The Australian Ocean Energy Group is an industry-led cluster formed to facilitate industry collaboration of the ocean energy industry to create significant value for Australia. Founding partners include leading energy organisations, Australian research institutions, plus innovators and SMEs drawn from across Australia and the world. AOEG’s mission is to accelerate commercialisation of Australia’s ocean energy as the next frontier in low carbon generating capacity and add ocean energy to Australia’s energy resource mix. NERA’s project funding and industry support have provided an important catalyst to attract engagement and collaboration with Australia’s energy sector.

Australian Petroleum Production & Exploration Association Address: 60 Marcus Clarke Street, Canberra ACT 2601 Tel: +61 2 6247 0960 Email: [email protected] Website: www.appea.com.au About: The Australian Petroleum Production & Exploration Association is the peak national body representing Australia’s oil and gas exploration and production industry. It has about 60 member companies, accounting for an estimated 98% of Australian petroleum production.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 83 of 88 APPEA also represents about 140 associate member companies that provide a wide range of goods and services to the upstream oil and gas industry.

Australian PV Institute Email: Online form Website: www.apvi.org.au About: The Australian PV Institute comprises companies, agencies, individuals and academics with an interest in solar energy research, technology, manufacturing, systems, policies, programs and projects.

Bioenergy Australia Address: Civic Square (Canberra) ACT 2608 Tel: +61 439 555 764 Email: [email protected] Website: www.bioenergyaustralia.org.au About: Bioenergy Australia is committed to accelerating Australia’s bioeconomy, by fostering the bioenergy sector to generate jobs, secure investment, maximise the value of local resources, minimise waste and environmental impact, and develop and promote national bioenergy expertise into international markets.

Biomass Producer Website: www.biomassproducer.com.au About: Biomass Producer is a virtual hub where one can search for information about bioenergy as it relates to primary industries in Australia, and it is designed for primary producers and their advisors, regional economic developers and policymakers. This website has been developed and managed by AgriFutures Australia, as one of the partners in the National Primary Industries Research, Development and Extension Framework (Framework partners include the bioenergy industry, Federal and State Governments, relevant rural R&D corporations, CSIRO and universities).

Circular Economy Alliance Australia Tel: +61 411 100 551 Email: [email protected] Website: www.ceaa360.com About: Circular Economy Alliance Australia focusses on bringing together experts and leaders from government, industry, university, consulting and training organizations.

Clean Energy Council Address: 222 Exhibition Street, Melbourne VIC 3000 Tel: +61 3 9929 4100 Email: Online form Website: www.cleanenergycouncil.org.au About: The Clean Energy Council is a not-for-profit, membership-based organisation representing and working with Australia's leading renewable energy and energy storage businesses, as well as rooftop solar installers, to further the development of clean energy in Australia. CEC’s mission is to accelerate Australia’s transition to a clean energy future.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 84 of 88 Energy Transition in Australia

Clean Energy Finance Corporation Address: 1702/1 Bligh Street, Sydney NSW 2000 Tel: +61 1300 002 332 Email: Online form Website: www.cefc.com.au About: The Clean Energy Finance Corporation has a unique role to increase investment in Australia’s transition to lower emissions. They invest to lead the market and to address some of Australia’s toughest emissions challenges (such as in agriculture, energy generation and storage, infrastructure, property, transport and waste). Moreover CEFC supports Australia’s cleantech entrepreneurs through the Clean Energy Innovation Fund. At the end of 2019, CEFC committed AU$ 26 billion to finance 11,700 smaller-scale projects.

Clean Energy Regulator Address: Canberra ACT 2601 Tel: +61 2 6159 3100 Email: [email protected] Website: www.cleanenergyregulator.gov.au About: The Clean Energy Regulator, a non-corporate Commonwealth entity, administers schemes legislated by the Australian Government for measuring, managing, reducing or offsetting Australia's carbon emissions, with responsibilities for the National Greenhouse and Energy Reporting Scheme, Emissions Reduction Fund and Renewable Energy Target.

Climate-KIC Australia Address: 4-12 Buckland Street, Chippendale (Sydney), NSW 2008 Email: [email protected] Website: www.climate-kic.org.au About: Established in 2017, Climate-KIC Australia (part of EIT Climate-KIC, the EU’s climate innovation initiative) is a knowledge and innovation community aiming to link research, business, entrepreneurs, investors and government to drive climate action.

Council of Australian Governments (COAG) Energy Council Address: Department of Industry, Science, Energy and Resources, Canberra ACT 2601 Tel: +61 2 6243 7844 Email: [email protected] Website: www.coagenergycouncil.gov.au About: Established in 2013, the Council of Australian Governments Energy Council is a Ministerial forum for the Commonwealth, States and Territories and New Zealand, to work together in the pursuit of national energy reforms.

Energy Efficiency Council Address: 222 Exhibition Street, Melbourne VIC 3000 Tel: +61 3 9069 6588 Email: [email protected] Website: www.eec.org.au

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 85 of 88 About: Founded in 2009, the Energy Efficiency Council is a not-for-profit membership association for businesses, universities, governments and NGOs, with the mission to build a sophisticated market for energy management products and services.

Energy Networks Australia Address: 385 Bourke Street, Melbourne VIC 3000 Tel: +61 3 9103 0400 Email: [email protected] Website: www.energynetworks.com.au About: Energy Networks Australia is the national industry body representing Australia’s electricity transmission and distribution and gas distribution networks. It works with networks, regulators and industry partners to develop research and advice on issues including national and state government policy and regulation relevant to energy networks.

Engineers Australia Address: 11 National Circuit, Barton (Canberra) ACT 2600 Tel: +61 2 6270 6555 Email: Online form (or [email protected]) Website: www.engineersaustralia.org.au About: Engineers Australia is the principal engineering association representing around 100,000 professionals.

National Energy Resources Australia Address: 26 Dick Perry Avenue, Kensington (Perth) WA 6151 Tel: +61 1300 589 310 (available within Australia) Email: [email protected] Website: www.nera.org.au About: As an industry-led research and knowledge organisation for Australia's energy resources industries, National Energy Resources Australia is the go-to centre for energy resources solutions, technologies and services, and is uniquely positioned to support sector-wide transformation and unlock +$10 billion of new value for the Australian economy. NERA is creating connections between researchers, industry, government, SMEs, supply chains, and entrepreneurs to grow collaboration and entrepreneurship in the sector. NERA is delivering a range of initiatives to drive these connections and has committed $12.3 million to 34 collaborative projects valued at $31.2 million, with over 200 partners through the NERA Project Fund.

National Offshore Petroleum Safety and Environmental Management Authority Address: 58 Mounts Bay Road, Perth WA 6000 Tel: +61 8 6188 8700 Email: [email protected] Website: www.nopsema.gov.au About: The National Offshore Petroleum Safety and Environmental Management Authority is Australia's independent expert regulator for health and safety, environmental management, structural and well integrity for offshore petroleum facilities and activities in Commonwealth waters. ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 86 of 88 Energy Transition in Australia

12. BIBLIOGRAPHY

 Electricity Distribution in Australia (IBISWorld, March 2019)  Electricity Retailing in Australia (IBISWorld, March 2019)  Electricity Transmission in Australia (IBISWorld, May 2019)  Hydro-Electricity Generation in Australia (IBISWorld, January 2020)  Gas Supply in Australia (IBISWorld, May 2020)  Liquefied Natural Gas Production in Australia (IBISWorld, October 2019)  Petroleum Refining and Petroleum Fuel Manufacturing in Australia (IBISWorld, April 2020)  Solar Electricity Generation in Australia (IBISWorld, May 2020)  Solar Panel Installation in Australia (IBISWorld, June 2019)  Wind and Other Electricity Generation in Australia (IBISWorld, May 2020)  Wind Farm Construction in Australia (IBISWorld, December 2019)

 APA opens new solar farm in its Western Australian renewables precinct (PV Magazine, 4 December 2019)  Australia hits record-breaking energy storage capacity (SunWiz, 10 March 2020)  Australia’s National Hydrogen Strategy (COAG Energy Council, 22 November 2019)  Battery of the Nation report (Hydro Tasmania, 2019)  Bioenergy state of the nation report (KPMG, November 2018)  Clean Energy Council Report 2020  Clean energy found to be a pathway to prosperity for Northern Territory (The Guardian, 20 June 2019)  Discussion paper on implementing and Response strategy to implement the August 2019 decision of the Council of Australian Governments (COAG, November 2019 and March 2020)  DOE Hydrogen and Fuel Cells Program Record (United States Department of Energy, 2017)  Hydrogen: The Economics of Storage (Bloomberg New Energy Finance, 2019)  Hydrogen opportunity for Australia (McKinsey, 2019)  Insights from the Australian-German Energy Transition Hub (September 2019)  Forget coal, the new roadmap is a gas guzzler (AFR, 23 May 2020)  Future of Energy: Australian energy outlook report (PwC, 2019)  Government looks to carbon capture for climate action (SMH, 19 May 2020)  Green Building (Green Building Council of Australia, October 2019)  Making the Australian circular economy a reality (Deloitte, 20 January 2020)  National Waste Policy – Action Plan 2019  New plan to transition NSW to green hydrogen by 2027 (Energy Magazine, May 2020)  NSW Electricity Strategy (NSW Government, November 2019)  “Offshore wind is a golden opportunity Australia can't afford to miss” (Recharge, February 2020)  Potential economic pay-off of a Circular Economy (KPMG, April 2020)  Putting Waste to Work report (Infrastructure Partnerships Australia, 2020)  Recycling Victoria: A new economy (Victoria Government, March 2020)  Renewable energy is growing but NSW and Queensland are still undershooting their targets, (ABC News, 10 July 2019)  South Australia’s stunning renewable energy transition, and what comes next (Renew Economy, 5 November 2019)

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Energy Transition in Australia Page 87 of 88  South Australia unveils plan for 100% renewable hydrogen economy (Renew Economy, 24 September 2019)  Coalition announces $190m plan to divert 10m tonnes of waste from landfill (The Guardian, 6 July 2020)  Victorian solar industry in crisis as August solar homes rebates run out within hours (Clean Energy Council, 1 August 2019)  Virtual Power Plant demonstration in Australia (Energy Storage News, 3 April 2020)  WA opens $10m hydrogen fund to boost renewable gas production and exports (Renew Economy, 18 September 2019)  Waste Management and Resource Recovery Strategy (Queensland Government, 2020)

The information in this publication is provided for background information that should enable you to get a picture of the subject treated in this document. It is collected with the greatest care based on all data and documentation available at the moment of publication. Thus this publication was never intended to be the perfect and correct answer to your specific situation. Consequently it can never be considered a legal, financial or other specialized advice. Flanders Investment & Trade (FIT) accepts no liability for any errors, omissions or incompleteness, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organization mentioned.

Date of publication: 07/2020

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Page 88 of 88 Energy Transition in Australia