By Danny Kennedy
Australia stands at a crossroads after the Paris agreement and a week of talk about being an innovation nation. This has been coming for some time and, as a successful energy entrepreneur, I think the choices facing the country could not be starker.
A mate and I left Australia in 2007 to build a solar business in the United States called Sungevity, which is now selling solar systems to homes and businesses across America and Europe and holds a market value greater than that of Peabody Coal. As our business has continually strengthened, we’ve watched Australia’s solar industry lurch up and down, struggling under the curse of intermittent policy and a lack of commitment. It has affected investment (the policy seesaw was behind our decision to sell our interests in Australia to Roofjuice) and cost Australia its place as a world leader in renewable ingenuity.
By comparison California, with its ambition to lead the solar game and its robust innovation culture, has thrived. We started up a business incubator, which now houses dozens of renewable energy companies. I also have the good fortune to run the California clean energy fund, which has invested in startups and entrepreneurs driving climate solutions, creating wealth and jobs and changing the world.
In the US they may not like to say the dirty words “industry policy” in public, but in California they’ve still got one and it’s delivering major benefits in the new energy economy. Coming from an epicentre of the enormous changes that are disrupting energy industries globally, I have a few observations of the Australian industry following a recent trip home:
Firstly, hats off to the Australian solar industry which, despite it all, pioneers the best technology in the world. At a residential level, it’s achieved some of the highest rates of solar penetration and lowest costs in the world. Thanks to those working in the sector, families are saving money on their power bills and we have great learnings for the rest of the world on how to integrate solar at scale into the electricity supply.
Secondly, Australia must build on this success. The last government seemed determined to quash it but there are positive signals from the new prime minister that he understands the world is moving this way and we need to invest to keep up. While I have reservations as to whether the recently announced $1.1bn innovation plan can turn around Australia’s risk-averse business culture, at least it’s a start. Political signals are important – now we need some meat on the bone.
Finally, now is the time to move quickly if Australia wants to benefit from the world’s energy shift. Australia has to wake up from the illusion that fossil fuels will be its saviour. The UK has just announced that it will be done with coal by 2025, after hundreds of years of being powered by the stuff. California, the eighth largest economy in the world, is weaning itself off coal by 2020 and has laws in place demanding that 50% of its power comes from renewables by 2030. China, in its latest plan, is going to peak its coal use in 2017. The list goes on. Australia confused delegates in Paris by talking up the opportunities of the transition to renewable energy while seeking to protect the dying coal industry.
That is not an innovation nation – it’s an inertia nation. Why not spend the $4bn Australia wastes each year on fossil fuel subsidies on bolstering the renewable energy sector? There’s no market sense in skewing the playing field when the world’s committed to get off coal.
There is so much talent in this country. Australia keeps punching above its weight in the world, but its brightest and most innovative minds are struggling for support.
We need to lean in on our genius. Australians are legends overseas in the photovoltaic industry, for example, which will dominate energy this century. They should also be household names at home, rather than the mining moguls who are risking everything we hold dear in order to keep profiteering. South Australian business Infratech, for example, is selling floating solar systems to California, which should have been much bigger news.
Renewable energy is an enormous export opportunity for Australia. More people live on earth today without electricity than were here when Thomas Edison started spreading the stuff. Most of those people live in nations to the north of Australia. Why can’t we sell some of our solutions and systems for spreading solar and smart energy in these markets? There will be decades of work and trillions of dollars to be made in these emerging markets.
If you want an ideas boom, you need to create the infrastructure to mine the minds. Why not build a string of incubators up and down the country, tapping into the power of our people and ideas? We could provide spaces in every city and get the legal, mentoring and capital support to entrepreneurs capable of building the companies and solutions needed. We are willing to help build an energy lab in Sydney - who’s with us?
At the end of the day, the transition will not be that hard. We have the technology and the momentum is already there. It’s going to be a bit like the transition we went through from using phones and fax machines to being online. There’s a lot of good work to do, but for most of us it simply means that our electricity service and mobility will be better and cheaper.
This is a historic opportunity for ideas and entrepreneurs to arise. The world needs to come up with new combinations of existing things: more than innovation, this energy transition requires great ingenuity. So the challenge is about backing people and their creative genius. Australia has been great at that and could be again, but if you aim to go long on ingenuity, you can’t also be long on a commodity.
Danny Kennedy is the founder of US residential solar energy company Sungevity, and he wrote Rooftop Revolution: How Solar Power Can Save Our Economy–and Our Planet–from Dirty Energy (2012). He is currently the managing director of California Clean Energy Fund,