Origin CEO says virus has hastened clean energy shift

The head of power giant Origin Energy says the dramatic transformation of the energy market is accelerating faster than anyone in the industry would have predicted even six months ago and requires co-ordination between state and federal governments to manage the changes smoothly.

Origin chief executive Frank Calabria on Tuesday outlined how the forces driving the transition – including decarbonisation in favour of clean energy, and decentralisation as solar panels and batteries continue to grow in popularity – have been picking up pace even amid the enormous challenges of this year’s coronavirus crisis.

Origin Energy CEO Frank Calabria.
Origin Energy CEO Frank Calabria.Credit:Dominic Lorrimer

“COVID has resulted in the acceleration of technology in every aspect of our lives and there will be no turning back,” Mr Calabria said at The Australian Financial Review‘s climate and energy conference.

“The same forces are driving change in energy and lasting changes in consumer behaviour.”


Prior to the pandemic, Australia already had among the world’s highest penetration of rooftop solar, comprising around 20 per cent of households compared with 0.2 per cent in 2007, Mr Calabria said.

“And despite the economic uncertainty posed by COVID solar installations continue to grow, with 2020 tracking ahead of 2019, which was itself a record year with 2.2 gigawatts installed,” he said.

The comments come amid renewed debate about the best path for Australia to manage the power grid’s transition from fossil fuels such as coal and gas toward a greater share of renewable energy.

Leaders from rival energy producers this week voiced concerns about state governments opting for go-it-alone energy policies that risked fragmenting the national energy market, causing uncertainty and deterring investment decisions. Senior executives from AGL and EnergyAustralia argued the newly announced NSW policy to underwrite renewable projects had forced them to reassess their upcoming plans for gas power plants in the state. Their comments drew condemnation from NSW Energy Minister Matt Kean, who said energy companies should “get out of the way”.

“If the vested interests want to stand in the way, I say to them get out of the way,” Mr Kean said. “Let us get on with delivering cheaper, reliable energy.”

Mr Calabria, however, struck a different tone on Tuesday, making the case for cohesion while also saying the NSW plan, with the right details, could send a “strong investment signal” for renewable energy and long-duration storage such as big batteries.

While state and federal governments were developing their own policies, coordination would be key to delivering a “smooth, orderly transition at the least cost to customers”, he said.

Mr Calabria said energy companies, too, had big changes to make in order for the industry to smoothly transition to a net-zero economy by 2050.

Origin Energy, a heavy emitter, has followed a string of energy giants in Australia and overseas including heavyweights BP and Royal Dutch Shell in committing to achieve net-zero emissions by 2050, amid growing pressure to avert the worst impacts of global warming.

“Even five years ago, BP announcing it will be net zero by 2050 would have been unthinkable,” Mr Calabria said. “As one of the largest producers of emissions globally – and with the ability to accelerate emissions reduction in many other sectors – the energy sector must and will be front and centre of efforts to lead the charge on decarbonisation.”

Origin, whose portfolio spans coal, gas, renewable energy and liquefied natural gas (LNG), needed to be the “missing link”, bridging the centralised energy network of thermal power plants and decentralised energy, he said, “maximising all the capacity in the system to deliver benefits to customers and the grid”.

“We will also need to progressively invest less in legacy technologies and more into renewable energy and storage and the development of future fuels like hydrogen,” he said.

This year, Australia’s top power companies have faced falling wholesale energy prices following an influx of cheap renewable energy coupled with a demand slump caused by offices and factories temporarily closing due to COVID-19. Coal-fired power lost share to renewable energy, as coal was unable to compete with renewables’ very low operating costs. The International Energy Agency predicts that power generated by wind, solar and hydro sources globally will grow nearly 7 per cent in 2020, despite overall energy demand falling 5 per cent.

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