The Renewable Energy Market in Australia - Essay Example

Marketing Strategy Executive Summary The use of renewable energy devices for households has emerged as one of the key mechanisms for sustainable energy use by consumers at a global level. Australia is no exception to this trend, although the country’s status as one of the Global leaders in renewable energy use such as solar energy use has been overtaken by Germany, Japan, and Spain who have invested heavily and/or regulated in favor of renewable energy. However, there has been an increased effort by the federal government to encourage consumers to use renewable energy devices for various household activities. The government’s vision is to see Australia increase its use of renewable energy by 2020 (Australian Conservation Foundation 2007, p.12-25). It now expects at least 20 per cent of all electricity to be sourced from renewable sources by 2020, and a reduction in carbon pollution. Through the established Renewable Energy Target (RET) Scheme, the Australian Government pledged that by year 2020, 20 per cent of the electricity supply within Australia would come mainly from renewable sources (Dennis 2006, p.791). In ten years to come, the amount of electricity in the country coming from sources for instance geothermal, solar, and wind will be around the same, similar to Australia's current household use of electricity. The RET expands on the ideal Mandatory Renewable Energy Target (MRET) that ideally started in 2001. Table of Contents Introduction ………………………………………………………………………………… 3 Market Dynamics ………………………………………………………………………….. 4 Market drivers ………………………………………………….………………………….. 6 Market inhibitors ………………………………………………..…………………………. 7 Growth momentum ………………………………………………………..………………. 8 Segmentation, targeting, and positioning …………………………………………..……… 9 Conclusions ……………………………………………………………………………….. 12 References ………………………………………………………………..……………….. 13 Introduction The renewable energy market in Australia consists of the electricity consumption generated via geothermal, hydroelectric, solar, and wind means, as well as through waste combustion or wood. Renewable energy in the country is a critical part of Australia's low emissions mix of energy sources and is critical to Australia's security of energy production. It plays a significant role in the reduction of Australia's greenhouse gas emissions, greatly being of help to Australia staying on track and helping it meet its Kyoto target and even extending beyond (Australian Conservation Foundation 2007, p.12-25). The Government support for renewable energy strategizes and facilitates considerable assistance to the industry development, reducing barriers to the electricity market nationally, and providing easy community access to forms of renewable energy. In Australia, wind and solar energy sources are the most harnessed on a small scale comparatively, and the two are at the stage of commercialization. However, there are other sources being investigated as well as given some consideration for instance wave and geothermal power but these are not mainly under scrutiny like the wind and solar power. It is importantly noted that Australia has an extraordinary potential for the broad renewable energy capabilities. Nevertheless, this has not yet been realized fully, and Australia’s abundant resources are being utilized currently (Keith 2006, p.793). The noteworthy deployment of the respective technologies would mitigate the country’s greenhouse gas emissions substantially, as the extensive electricity generation accounts for the highest percentage of the country's emissions of carbon (Dennis 2006, p.791). There is a movement known considerably as The Transition Decade to transition of the country’s entire energy system directly to become renewable by 2020. In year 2006, Australia’s electricity production in a year was 255 TWh, with an approximated 9,500 GWh of the same from renewable sources. This in representation was less than 4% of the consumption of electricity annually (Australian Conservation Foundation 2007, p.12-25). The Australian Government in the current times has a Renewable Energy Target purely Mandatory to introduce 9,500 GWh of renewable generation in a year, based on 1997 levels by year 2010 and would continue to 2020. There are different types of devices in the Australian market all meant for the reproduction of the renewable energy. It is estimated that, over the last few years, Australia has been on the frontline in the installation of a large capacity of renewable energy. Additionally, the country installed a minuscule level of renewable energy capacity. In year 2008, Federal and State Governments in the country were on the frontline of partially funding a few more energy projects, which also received funding from the private companies. The government started solar thermal energy plants and some few Wind farms that run operational and heavily contributed to the grid supply. Market Dynamics The Australian market is boomed with renewable energy devices that aid in the facilitation of energy for use both in the domestic as well as in the commercial. The solar energy line is one of the lines of devices common within the market. Solar photovoltaic are some of the principal devices booming in the Australian market and featuring as excellent devices in the production of the energy (Dennis 2006, p.797). Solar photovoltaic (PV) technology in Australia has been of use in generating electricity from sunlight. The devices are of use also in off-grid and grid-connected applications (Renewable Energy Focus 2009). The issue for the photovoltaics industry in Australia today is that there are many market potential, built up via a natural competitiveness in the country’s research and development, government policy support and industry investment (Renewable Energy Focus 2010). Nevertheless, despite this, industry for the devise is not yet self-sustaining with many of the advantages gained to date from the same being lost in many avenues (International Energy Agency 2007, p.2-34). A 2004 market report regarding the situation suggested that a partnership agreement between the industry and the government is critical for the success of the industry (Australian Conservation Foundation 2007, p.12-25). The PV industry in Australia cannot continue to invest actively in strategic industry development except the Australian government is also dedicated to the journey. The industry demands program and policy support to help it in bridging the existing gap to mainstream the commercial competitiveness (Renewable Energy Focus 2009). Two recent projects that exemplify cooperation between government and industry are the solar power station planned within the country and the new developments of solar cells (Renewable Energy Focus 2010). Many projects in the country have shown the viability of solar power in the country, and new solar power stations are starting to operate in the diverse region. The module for use particularly in concentrated sunlight is what holds the device. The device have cooling systems that are excellent in keeping solar cells operating ideally at 60°C to optimize their operation that of the PV modules in a solar beam, which can melt steel (Keith 2006, p.793). The devices also have low cost, but high performance mirror systems excellent for its operation in the generation of energy. This has been the device in the market overly and the most accepted in the market (Australian Conservation Foundation 2007, p.12-25). The device also holds a control system especially for managing the power station to deliver maximum output and reliability. The commercialization of the solar technology in the country has already seen at least four smaller solar power stations that have been started in central Australia, and deriving enthusiastic support from the Greenhouse Office in Australia (Dennis 2006, p.797). In Australia, solar photovoltaic (PV) trends in the overall market indicate burgeoning demand because of the strong governmental commitment aimed at promoting of solar energy as well as with the goal of creating sustainable cities (Renewable Energy Focus 2010). Volatile oil prices with the adverse occurrences of heightening concerns relating to global warming have seen their way through to the successful establishment and introduction of the solar PV systems both in fare reached remote areas as well as in the extensive urban areas, in the Australian region (Renewable Energy Focus 2009). Solar PV systems are the main providers of environment-friendly generation of power solution for providing the electricity in the remote, rural areas at least where it is neither economically nor technically feasible to extend grid coverage over other vast territories. Market trends show a burgeoning demand for the PV because of the strong commitment from the side of the government to promote the same. On the same note, even with the increased local government commitment, solar PV systems used in electrifying the rural area projects are also likely receive active participation and support from the nongovernmental organizations because of the substantial funds they are availing from international financial agencies. Market drivers In Australia, in the year 2009, solar PV systems market was summed up as having earned revenues of approximately US$198.2 million and the estimations were extended as to reach close to US$827.8m by the year 2016 (Renewable Energy Focus 2009). There is a growing environmental consciousness as well as a developed urgent need to act totally against the increased carbon emission forcing governments to formulate policies and establish programmes that would be addressing this mounting challenge (International Energy Agency 2007, p.2-34). The solar PV systems are therefore, extending across the use over the domestic and the commercial market gaining roots and becoming the sole provider of the energy required for use and in the production (Renewable Energy Focus 2010). Because of the earlier introduction of the solar cities, solar flagships programmes, solar credits programmes, and numerous other programmes for renewable energy encompassing solar PV systems technologies, this has encouraged the current adoption of systems across all uses in the commercial field as well as developed a greater attraction of new entrants into the industry market (Dennis 2006, p.791). The region also has a topographical advantage that has boosted the market trends in the number of people going the renewable energy sector (Dennis 2006, p.791). With Australia having extraordinarily high solar radiation and topography encouraging direct sunlight, this has led to the eventual development and growth of new opportunities particularly in the advanced solar thermal market. On the same note, with the introduction of feed-in tariff and its expectation to be a tremendous stimulant ideally for on-grid solar PV installations for both centralized and distributed solar power plants, there is no doubt that the industry is looming and picking up with a great force in the Australian market for energy devices (Renewable Energy Focus 2010). State wise solar systems targets also have been a leading cause of the increased demand for PV systems in the country. In many locations that are remote within Australia, solar PVs are being promoted largely along with the high demand of diesel fired generator sets, which are meant to satisfy on-site power requirements especially for small communities. Market inhibitors However, the market for the solar devices does not go, unscratched, and there are market inhibitors for this extensive industry. Market penetration of PV systems in the Australian market has been, faced with a monumental challenge especially because of the dominance of coal ideally in the electricity mix within the industry of energy (Renewable Energy Focus 2009). The region especially rural Australia is the fourth largest coal producer, and it holds an estimated 76 billion Tonnes of reserves for the same meaning that it has considerable potential for producing coal that poses as a challenge for the reduced demand of the solar devices. Additionally, the stable and well-developed power infrastructure within the country poses as a strong restriction for the usage of PV systems especially within the urban areas (Australian Conservation Foundation 2007, p.12-25). In many cases, the expensive PV systems adoption becomes only an option (secondary) as there are numerous other low-cost power generation technologies well distributed in the country and that gratify the on-site power demands of the end users (International Energy Agency 2007, p.2-34). The device market experiences a direct threat, which arises from the low-cost, easily available and proven diesel fired generator sets with more pressure from the wind power systems (Dennis 2006, p.791). The PV systems growth within the vast Australian market will continue relying heavily on government support up until the device price hits the grid parity. This includes the introduction of a standardized gross feed-in tariff scheme substantially at a national level. Growth momentum Looking at the Solar system devices market, information dissemination coming from the government agencies concerned about the project proposals, favourable installation locations, technical guidelines and existing approval processes, needs to be availed readily to potential project developers as well as to the chief end users in helping with the future development of the industry (Bernard 2006). In some Australian states, aggressive measures demand fast adoption in helping with the increment of the overall levels of awareness regarding the long-term benefits of PV power systems (Mark 2007, p.109). Even with the persistent global financial crisis, the solar power industry in Australia has grown a phenomenal 366% within period 2009 to 2010. Driven by a rebate, which allowed ‘free’ solar power systems sale, the extensive installations of grid connected PV systems grew eclipsing even past the years with a 200% growth (Renewable Energy Focus 2009). Will Australia having the ability to repeat the same figures in 2010 because the Federal Government’s return has been substituted for a less generous point-of- discount in sales, this is showing a significant potential in the growth of the industry (Australian Conservation Foundation 2007, p.12-25). Segmentation, targeting, and positioning For the segmentation of the market for solar devices in the country, it will start with the determination of the kinds of customers that exist within the market. In this case, the market will be segmented using several variables including demographics, level of income, region and the market trends. It is essential to note that different customers in the region have varying tastes for the PV systems meaning that the segmentation will have to input this factor. Some customers for PV systems in the Australian market demand speed and performance therefore, different types of PV will be, segmented to the regions of marketing (Australian Conservation Foundation 2007, p.12-25). There is also a group of customers who their greater concern is the roominess and safety of the devices. The segmentation is geared towards understanding and satisfying the respective needs of customers for PV systems in the country’s market. The Australian market cannot work well with the undifferentiated strategy because all consumers for the solar devices cannot be treated the same (Dennis 2006, p.791). The firms producing these devices will need to make specific efforts of gratifying and delivering satisfaction of specific groups. This strategy cannot work within the market because the solar devices are not standard and there are many competitors in the same field. The demographic variable will essentially be of use in segmenting the Australian market for the solar devices. This will incorporate and consider personal statistics derived from research for instance education, location, income, gender, family size and ethnicity. The urban area for instance will be more concentrated in the supply of the solar devices bearing in mind that there are heavy consumers of energy and with the idea of saving in consumption. They will be at a higher propensity of buying the idea. The other segmentation will be based on the consumer behavior. Previous trends of purchasing the solar devices within the Australian market will determine what type of device, as well as the amount; will trickle down to respective areas. It will consider the heavy as well as light users in segmenting the supply of the devices in respective regions. The next step will be involving the targeting of the segmented region. This will involve the selection of which of the segmented regions gets first priority in service and supply of the solar devices. The targeting will however, look into the existing segments that have been served by other manufacturers of the same devices. The idea here is that appealing to a segment already well served would be much difficult that getting a new area to supply the solar devices. Therefore, going for new regions and segments and targeting them for the supply would be a terrific option for the success of the market penetration. With the same issue of targeting, there is a need to input the size of the segment, and how it is expected to grow. With the prospective targeting, it will be easier for the market penetration in the solar device market. However, it is expedient to note that for any solar device within Australia that is prospective of growing fast, the probability is higher that more competitors will join in to have a share of the same (Australian Government 2007, p.2). The targeting is also delightful when it considers the reputation advantage of a given company and how well it has been doing within the market. This will involve the interested firm in to conduct a research and establish and to its reputation in the solar device market. The last step will involve positioning that will engage the implementation of the target. For example, a firm might choose to position it as a primary maker of user-friendly solar devices and therefore, gain competitive advantage within the market. The positioning will also require that a firm maintain the competitive advantage through the maintenance of exceptional efficiency, therefore, enabling the firm to essentially, provide reliable solar devices to the customer at an appreciably lower cost than the ones of less well-organized competitors. It is worth noting that Australia has featured many providers of the solar devices and therefore, the emphasis in the positioning here is on low cost, reliability in performance, and greater value (Australian Government 2007, p.2). To attempt better positioning and one that will be highly effective, it is critical to have an understanding of how one’s brand of the solar devices and those of competitors are held in perception within the market. Multidimensional scaling is an excellent way of positioning in the solar device market within Australia (Dennis 2006, p.791). This will involve identification of how products are perceived on various “dimensions,” which will allow easy plotting of brands of solar devices against each other. Conclusions The renewable energy market in Australia consists of the electricity consumption generated via geothermal, hydroelectric, solar, and wind means, as well as through waste combustion or wood. Renewable energy in the country is a critical part of Australia's low emissions mix of energy sources and is critical to Australia's security of energy production. Solar systems have been the main target for the government assisting and supporting many programmes relating to the same. With the high level of acceptance and awareness on the usefulness of the solar panels, it is evident that the industry is growing at a drastic rate and will be featuring massive developments in the near future. Simply, this is the way forward for the renewable source of energy for the country and a greater solution for the conservation of energy resources. References Australian Conservation Foundation 2007, A Bright Future: 25% Renewable Energy for Australia by 2020 PDF, from, http://www.industry.gov.au/assets/documents/itrinternet/RE_Fact_Sheet25_9_0720071015171309.pdf Australian Government 2007, Australian Government Renewable Energy Policies and Programs PDF, from, http://www.acfonline.org.au/uploads/res/res_a_bright_future.pdf Bernard, L 2006, “Australia advances with solar power,” Times, October 6, retrieved on 18 August 2010, from, http://technology.timesonline.co.uk/tol/news/tech_and_web/article613720.ece Dennis, M 2006, Solar thermal energy systems in Australia, International Journal of Environmental Studies, Vol. 63, No. 6, December 2006, p.791 Dennis, M 2006, Solar thermal energy systems in Australia, International Journal of Environmental Studies, Vol. 63, No. 6, December 2006, p.797 International Energy Agency 2007, Renewables in global energy supply: An IEA facts sheet, OECD, p.2-34 Keith, L 2006, Solar thermal energy systems in Australia, International Journal of Environmental Studies, Vol. 63, No. 6, December 2006, p.793 Mark, D 2007, Greenhouse Solutions with Sustainable Energy, UNSW Press, p.109 Renewable Energy Focus 2009, Comment: Australian solar shines in 2009 – updated, retrieved on 18 August 2010, from, http://www.renewableenergyfocus.com/view/9224/comment-australian-solar-shines-in-2009-updated/ Renewable Energy Focus 2010, Australia & New Zealand solar PV market report, retrieved on 18 August 2010, from, http://www.renewableenergyfocus.com/view/10304/australia-new-zealand-solar-pv-market-report/ Read More