Small business switched off from electrification boom
Thousands of Australian small businesses are falling behind on electrification, weighing on national climate targets and exposing producers to gas market volatility.
Many small and medium-sized businesses that rely on gas-fired heat for the production of food, beverages, paper, cardboard and textiles have financially attractive electric technologies.
But despite projected domestic gas shortages and conflicts in the Middle East bringing instability to global fossil fuel markets, few businesses are taking this step.
This group has been described as the “missing middle” in decarbonisation policymaking, with policy largely focused on households and large industrial users, according to a report by climate and economics research institute Common Capital.
Without policy reforms, these transition projects are often too small for support from the Australian Renewable Energy Agency but too complex for state-based energy efficiency subsidies as currently designed.
The costs and headaches of connecting to the electrical grid are another major handbrake.
Network providers charge all electricity users the cost of transporting power through poles and cables, with the system built to withstand peak demand periods to prevent blackouts.
The prospect of energy-intensive industrial users electrifying their equipment could prompt network providers to explore upgrades, leading to expensive, long-term runs and infrastructure investments that increase costs for small businesses.
Reforms in the way networks manage costs and encourage energy users to shift their loads elsewhere have been announced as a response by Common Capital executive Henry Adams.
A handful of forward-thinking network operators are already exploring “dynamic pricing,” which means charging less for electricity used outside of the most constrained times on the network, and “dynamic connections,” which allow network operators to control loads remotely during an unforeseen event.
Mr Adams said businesses that only needed low or medium heat to process products had the ideal technology available to them to take advantage of dynamic loads and connections.
Electric thermal energy storage systems, which are similar to solid batteries that store heat, can be charged for later use during peak hours on days when solar power produces cheap energy.
“You can take advantage of shifting demand to those periods of the day where we have excess capacity,” Mr Adams told AAP.
“But you can still protect networks from the worry of a real blackout, because unlike a traffic jam on an inconvenient road, a complete traffic jam on the electricity network means a grid collapse.”
He added that smart, flexible industrial electrification has the potential to reduce electricity bills for households and all users by avoiding unnecessary network upgrades and using existing infrastructure more efficiently.
Between $691 million and $899 million will be needed over the next two decades to power Australia’s small gas-using utilities.
The transition will deliver the equivalent of 41 million metric tons of carbon dioxide in emissions reductions and more than $6 billion in public benefits.
Australia aims to reduce its emissions by 62-70 percent by 2035 as part of its international climate commitments.
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