Scholar lays blame for energy crisis on politics

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  • Balance needs to be found between market innovation and protection of customers
  • Batteries gas and renewables – The Energy Holy Trinity
  • Shifting the blame will damage the nation’s future – Garry Bowdich

A leading scholar has contributed to the ongoing energy crisis debate, by laying the blame for the energy crisis on politics, absolving the market of wrongdoing that has led to today’s outrageously high energy costs.

Writing in the Australian Financial Review, Executive Director of the Better Infrastructure Initiative – University of Sydney – Garry Bowditch says that quick fixes pose the risk of carnage further down the line.

Open season for “political meddling”

Bowditch argues that political meddling in the energy markets has led to the situation spiralling out of control, and now politicians have declared open season for a spot of “political adventurism”. He is correct in his assessment, but at the same time, could Australia have continued on the path of seeing energy costs double every two years? No. State, as well as Federal Governments, are at least doing something to secure a supply that can meet demand in the long term, although there are still big question marks on the short to medium term.

“Battery storage technology will allow individuals and corporates to aggregate and make their surplus energy substitutable and tradeable in both time and geography” – Garry Bowditch

Executive Director of the Better Infrastructure Initiative – University of Sydney – Garry Bowditch

Bowditch says that markets demand consistency with rules and protocols that govern them. This is 100% true, and he also makes a convincing case for governments having a vital role to play in their setting and ongoing integrity towards achieving reliable, responsible and efficient energy.

Setting good market design with clear objectives and then prescribing the consequences to market actors if they are not met is where the government can do best; this is the language of performance, success and partnership with the private sector, says Bowditch.

The Holy Trinity for energy security

He has also come up with what could be the next buzz phrase in energy generation: “The new holy trinity for energy security appears to be a combination of gas, batteries and renewables.”

However, he argues against government micromanagement of the transformation of energy, saying that this will almost deny Australia its innovation, productivity and wealth generation potential for at least a generation. But he fails to ask another question: What good is it to innovate if the next generation cannot even afford power? The answer must surely lie somewhere in between. Governments have an obligation to provide for the safety of citizens, and energy is a necessity that people cannot do without. Is the public expected to fund the cost of innovation at the expense of their safety, security and shelter in their own homes? Are we to innovate in a time of crisis, only to have no economic activity because everyone has shut up shop?

 Transformation of energy

Batteries, gas and renewables – the Holy Trinity of energy

Bowditch is correct when he says the transformation of energy is going to be breathtaking. As he rightly points out, the consequences of storage through batteries at multiple levels of the value chain will be profound. Individuals and corporates alike will be able to aggregate and make their surplus energy substitutable and tradeable in both time and geography, he says.

He concludes that politicians who shift the blame for Australia’s energy woes onto markets and previous microeconomic reform is a new normal we must reject because left unchallenged will diminish the nation’s future.

What does this mean for my business?

  • The jury is out on how far politicians should go in intervening in the energy crisis. At least, they are doing something to secure supply in the long-term, which should eventually lead to price drops. But in the short-term, the only way to shield your business is to eliminate waste and self generate power. Leading Edge can help you.
  • Be aware of emerging technology and future developments. Make sure you keep up to date and invest in new technology, but also be aware that some of it will lead to a dead-end – think of the Sony Discman as a classic example. Leading Edge’s expert consultants can help guide you.

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