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A People Powered Transition

The role of the consumer in Australia’s renewable energy journey

Co-authors: Craig Hutchinson, Alina Dini, Remy Fonseca, Tim Kreuziger, Tobias Fanger, Matthias Van Kerkhove

In the face of Australia’s — and the world’s — climate change challenges, we are accelerating the transition pathway to reduce emissions to create a clean energy future.

With Australia committed to the pursuit of net zero by 2050, our emissions targets are ambitious. And the potential downside of failure, as well as the upside of success, is stark. Deloitte Access Economics estimates that inaction will have the effect of curtailing Australia’s economic growth and result in 880,000 fewer jobs in just 50 years. On the flipside, Australia can make choices that can create a new climate for growth, leading to a bigger economy with 250,000 more jobs1.

While Australia’s energy transition aims to create a clean energy future for all Australians, consumers — the households that so heavily rely on accessible and affordable electricity — are at risk of being left behind.

If we are to achieve an equitable and fair transition to Australia’s net zero ambitions we must put the consumer at the heart of the journey. We must work harder to make the transition easier, more affordable and one that delivers maximum energy efficiency. And we must have the conversations that help to build consumer confidence in the fast pace of the transition.

The good news is that consumers have already signalled their willingness to make small changes in their energy purchase and consumption behaviour. Now, we must support them to implement the bigger actions to drive the energy transition.

Australia faces enormous and costly infrastructure challenges in replacing fossil fuel generation with its cleaner and greener renewable alternatives. While reaching 82% renewable energy by 2030 is the agreed ambition, there is still significant work to do to alleviate the risks of making the NEM (National Energy Market) based on new energy technologies and sources a fit-for-purpose energy system.

Government policy responses have been centred on rebuilding and modernising Australia’s energy network, improving the affordability of electric vehicles, and bolstering the nation’s industrial base with investments in the renewable energy supply chain.

And headline policies in this year’s federal budget included the establishment of a National Net Zero Authority that will work with communities to take advantage of new green industries as well as an injection of more than $2 billion to fund new renewable hydrogen production projects2.

Many consumers are intellectually and emotionally invested in their contribution to a net-zero future, but current cost of living challenges, including rising energy costs, are contributing to household hardship and can’t be ignored.

The Australian Energy Regulator’s 2023–24 Default Market Offer, for example, offers an electricity price safety net designed to protect consumers from unjustifiably high prices. But from 1 July 2023, residential consumers on standard retail plans are seeing increases of 20.8 to 23.9% with controlled load, and between 19.6 to 24.9% without controlled load3.

The federal government recognises the pain being felt by households, and the 2023–24 budget included policies to ensure Australians have equitable access to fair energy prices and technology to deliver cost of living savings. These included:

  • The Household Energy Upgrade Fund which pledges $1.3 billion to create low-interest loans for more than 110,000 households to unlock energy-saving home upgrades, and fund energy performance upgrades to 60,000 social housing properties nationally2
  • A new partnership with state and territory governments to deliver up to $3 billion in energy bill relief for eligible houses and small businesses2

But with rising energy costs on top of shrinking household budgets, the energy transition has become a lower priority for many households, and Australia’s energy transition has the potential to stall as a result.

Progress has been made but given our energy transition ambitions there’s a lot more to be done.

Inflation and high energy prices have accentuated the energy transition challenge for consumers. While early adopters have the money to adopt existing and emerging green tech, it’s clear that vulnerable, lower income consumers are being left behind.

The consumer and the two-speed clean tech adoption story

Australian clean energy technology and renewables uptake is a two-speed story. The household energy divide between the ‘haves’ and ‘have-nots’ is widening. Many consumers are accelerating ahead with electrifying their homes, installing solar and batteries and buying electric vehicles (EVs). But at-risk consumers, such as vulnerable, lower income consumers, residential renters, and consumers with older, lower energy rated dwellings, are being left behind.

While some consumers have a good understanding of the energy transition and what it means for them, and for Australia, others are unsure about their place in a clean energy future.

Today’s barriers for energy consumers to participate in the energy transition

As an example, with 30% of the Australian population living in rental accommodation, our research shows that only 3-4% of these consumers have access to solar generated electricity4. They are simply not able to benefit from lower prices and managing their energy costs and are limited in their ability to participate in, and benefit from, the energy transformation.

The transitional costs of unlocking energy-savings at a household level are also significant. For example, a 2018 study conducted by Sustainability Victoria estimated that to retrofit existing dwellings to a modern energy efficiency standard would cost approximately $13,037 per household5.

For the 8 million Australian households in need of energy efficiency upgrades6, this would cost around $104 billion, 80 times more than the $1.3 billion in low interest loans provided for in the recent federal budget.

We know that our energy transition won’t be easy,  but by combining the individual actions of well-informed, incentivised, and suitably supported consumers with collective intent, we can get there.

Deloitte sees five key levers to achieve this:

  1. Education and Marketing – Education programs around the energy transition to provide consumers and business with a clear and objective understanding of the products and services available to them.
  2. Financial Management – Financial products and services to support investment in the energy transition provided by banks and financial institutions and underpinned by government subsidies.
  3. Grants, Incentives and Policy – Policies, grants and incentives to stimulate adoption and investment in innovation and technology and support consumers in hardship.
  4. Products and Technologies – Products and services to manage and optimise energy usage for end users and businesses, such as nudge technologies, gamification of energy, in-home monitors and smart appliances.
  5. Industry Readiness – Assessment of the industry and organisations to evaluate their preparedness and ability to transition to net zero across their supply chain, as well as those of their suppliers and consumer.

The question is, are governments and businesses doing enough to consider and articulate the impacts on consumers – the individuals, families and businesses that rely on reliable and affordable (net zero electricity) energy?

It is time to fully engage consumers in the transition to net zero. The energy transition will affect consumers in different ways, but explaining how their choices impact not only their own carbon footprint but Australia’s net zero ambitions will help to build confidence in an equitable future.

In this series, we will explore the tangible actions, including investment, education, incentives, programs and propositions, that governments and businesses can launch. 

1. Five steps to accelerate to zero, Deloitte (2022)

2. Australian Federal Budget 2023-2024, Australian Federal Government (2023)

3. Australian Energy Market Regulator (AER) Default Market Offer 2023-2024, AER (2023)–24-default-market-offer

4. Solar for renters: Investigating investor perspectives of barriers and policies Hammerle, White & Sturmberg (2023) 2018%2C%20a,Bureau%20of%20Statistics%2C%202019).

5. Comprehensive Energy Efficiency Retrofits to Existing Victorian Houses, Australian Sustainable Built Environment Council (2019) – pg 46

6. 2022 PowerHousing Australia CoreLogic Standard House Report, PowerHousing Australia (2022)

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