Chapter 2Opportunities
2.1Throughout the inquiry, the committee received considerable evidence on the range of opportunities associated with residential electrification in Australia. In particular, this chapter outlines evidence from inquiry participants on:
the role of electrification in improving household energy efficiency; and
the economic opportunities of electrification.
Overview
2.2In general, inquiry participants expressed strong support for increased residential electrification in Australia. The committee heard that electrification improves household energy efficiency and, in doing so, creates consumer benefits and national benefits. For instance, the City of Sydney submitted that the benefits of electrification include:
… better energy performance, lower greenhouse gas emissions, improved air quality and human health, lower running costs, and enabling the renewable energy transition. It also improves domestic fuel security and reliance on imported fossil fuels.
2.3Inquiry participants often emphasised that residential electrification benefits both the environment and the economy. By replacing gas appliances with energy efficient electric appliances, and installing consumer energy resources, household energy use can be made significantly more efficient, reducing both carbon emissions and household energy costs. Further, the committee heard that electrification is anticipated to create thousands of jobs in appliance installation and manufacturing and will strengthen domestic energy security.
Electrification and household energy efficiency
2.4This section outlines evidence on household energy use and the role of electrification in improving energy efficiency. In particular, the section outlines:
the significant amount of energy used by households;
the energy efficiency of electric household appliances; and
the role of electrification in reducing carbon emissions.
Energy use in Australian households
2.5Households use a significant proportion of Australia’s energy. Indeed, the residential sector is Australia’s fourth largest consumer of energy, after the transport, manufacturing and mining sectors, as shown in Figure 2.1.
Figure 2.1Australian total energy consumption, by industry in 2022–23
Source:Department of Climate Change, Energy, the Environment and Water, Australian Energy Update 2024, August 2024, p. 21.
2.6In 2022–23, the residential sector used 484.2 petajoules of energy (PJ). Of that:
electricity accounted for 52 per cent (249.8 PJ);
gas accounted for 30 per cent (147.1 PJ);
renewables accounted for 15 per cent (71.5 PJ); and
oil accounted for 3 per cent (15.8 PJ).
2.7In addition to the large amount of total energy used in the residential sector, households also accounted for a large proportion of national gas use. In 2022–23, the residential sector accounted for 26 per cent of national gas use, significantly more than any other sector. Yet, compared to the prior year, factors including warmer weather, cost pressures and electrification contributed to an 11per cent decline in residential gas use in 2022–23.[8]
2.8Nonetheless, gas appliances remain a common feature in Australian households. More than five million households are connected to the gas network,[9] and collectively own an estimated 13 million gas appliances. Moreover, households spend an estimated $1.8 billion on new gas appliances each year.
2.9However, energy efficient electric appliances are starting to replace household gas appliances. For instance, while around half of Australia’s hot water systems are powered by gas, Rheem Australia submitted that sales of electric heat pumps are ‘growing at a rapid rate’ and will become ‘water heating system of choice for the majority of new builds, particularly when combined with a rooftop solar’.
2.10While the increased use of residential electric appliances and electric vehicles (EVs) is anticipated to drive up underlying electricity consumption, modelling by the Australian Energy Market Operator (AEMO) suggests that this increased demand for electricity will be offset by investments in rooftop solar and energy efficiency, as seen in Figure 2.3.
Figure 2.3Residential electricity consumption, National Electricity Market (TWh, 2024–25 to 2049–50)
Source: Australian Energy Market Operator, 2024 Integrated system plan, June 2024, p. 26.
2.11Further, AEMO noted that while households would continue to ‘draw electricity either direct from their rooftop solar, from the grid, from their household or community batteries, or even from EVs that are able to discharge their batteries … there will be big swings in demand across the day…’. The challenges associated with managing demand variability in Australia’s electricity grids are considered in further detail in Chapter 5.
Energy efficiency of electric household appliances
2.12Many inquiry participants provided evidence on the role of electrification in improving household energy efficiency. The Institute for Energy Economics and Financial Analysis (IEEFA) submitted that the efficiency of electric appliances compared to gas appliances increases when considering the ‘lifetime energy consumption of both appliances, and associated emissions given likely changes to the emissions intensity of electricity production’. Based on key assumptions regarding yearly gas use and the emissions intensity of gas, IEEFA found that the ‘lifetime emissions for gas cooktops, heating systems and hot water systems are up to 4.9times that of their efficient electric counterparts’.
2.13Several other inquiry participants highlighted the efficiency benefits of heat pump technologies. For example, Beyond Zero Emissions submitted that a home using reverse cycle air conditioners might use just 2.55 MJ of electricity to create the same amount of heat as a home with a gas-fired central heating system using 34 MJ of gas, as shown in Figure 2.4.
Figure 2.4Space heating relative efficacy—gas ducted heating vs split system heat pump
Source: Beyond Zero Emissions, Submission 19, p. 3.
2.14At the same time, some inquiry participants cautioned that variations in the efficiency of electric appliances can have a significant impact on overall residential electrification outcomes. The Ai Group, for example, submitted that there is a ‘wide gulf in systemic impacts between low-quality and high-quality electrification’. The Ai Group considered an example of the electrification of households and light commercial gas users in NSW:
Current annual gas usage from these customers is around 35 petajoules (PJ). If customers electrify with appliances that are no more efficient than typical gas heaters, replacing that annual energy with electricity would require around 10 terawatt hours (TWh) of generation – about 14% of currently projected statewide electricity demand in 2030.
2.15Additionally, the Ai Group submitted that the efficiency of appliances has an even greater impact in periods of peak electricity demand. The Ai Group concluded that ‘the more efficient electric appliances are, and the better their operation is coordinated with the state of the wider energy system, the higher their systemic benefits and the lower their systemic costs’. Issues relating to appliance standards are considered further in Chapter 4.
2.16While much of the evidence regarding appliance efficiency focused on heat pumps, several submitters pointed to the importance of utilising a range of residential electrification technologies. For example, Infrastructure Victoria submitted that ‘[r]ising energy demand, coupled with meeting greenhouse gas emissions targets, means no single solution can deliver net zero emissions in Victoria’. Similarly, Rheem Australia submitted that:
… no single technology is a silver bullet in the electrification of residential water heating. Rather, the future should include a range of products, including heat pump water heaters, grid-connected electric water heaters and solar water heaters.
2.17Many inquiry participants made recommendations in support of the uptake of residential electrification technologies. These recommendations, which are considered further in later chapters, were broadly aimed at:
encouraging consumers to consider replacing gas appliances with electric appliances;
financial assistance for households to upgrade their appliances, particularly low-income households;
incentives for landlords to electrify rental properties; and
tailored assistance to support the electrification of apartments.
Electrification and emissions reduction
2.18Given the efficiency of electric household appliances, inquiry participants considered electrification to be an important avenue to reducing emissions from household energy use. For instance, the DCCEEW submitted:
Electrification is a key component to improve energy performance for consumers, as the efficiency of electric technologies is generally higher than fossil fuel-based alternatives, and switching to renewable-generated electricity delivers emissions abatement.
2.19IEEFA similarly suggested that the efficiency of electric appliances over gas appliances meant that ‘electrifying a household today will lead to immediate avoided emissions’. IEEFA added:
… a home with a gas ducted heating system, gas instantaneous hot water system and [a] gas cooktop emits approximately 3.6 tonnes of carbon dioxide equivalent (CO2-e) a year from burning fossil gas. If the same amount of useful energy were delivered by reverse-cycle air conditioners, a heat pump hot water system and induction cooktop, this would convert to 2.2 tonnes CO2-e/pa based on Australia’s current average electricity emissions intensity.
2.20The Australian Academy of Technological Sciences and Engineering (AATSE) told the committee that ‘[e]lectrification coupled with the uptake of clean energy is vital to drive down carbon emissions’ and ‘is an essential cornerstone of Australia's strategy to achieve net zero emissions by 2050, if not sooner’. Further, energy software company Evergen considered that electrification ‘will be critical’ to meeting Australia’s climate commitments and ‘transitioning to a 1.5 degree economy’.
2.21Further, inquiry participants noted that energy efficient electric technologies that reduce household emissions are widely available today. For example, Evergen told the committee that a number of electrification technologies are available ‘off the shelf’ and, as such, contended that with the right supports the electrification of households ‘can be implemented relatively easily and quickly’. Mr Luke Menzel, CEO of the Energy Efficiency Council, expressed a similar view:
There are many challenges on our journey to net zero emissions, and there are a number of sectors for which the technology is nascent, unproven or yet to be developed. The good news for this committee is that households are not one of those sectors. We have safe, reliable and efficient technology—induction cooktops and heat pumps for space heating and cooling and for hot water—that is ready to go and commercially available and that, indeed, many Australians are already using and benefiting from.
Electrification alongside renewable energy
2.22While residential electrification technologies have the potential to significantly reduce emissions, the committee also received evidence on the need to progress electrification alongside the development of renewable energy. For example, AATSE explained that:
It is important for Australia to prioritise investments in residences that rely heavily on renewable energy sources for their electricity supply. If a residence primarily relies on non-renewable energy, it won't effectively reduce carbon emissions or lead to noticeable decreases in household power bills, especially if those residences have poor energy performance.
…
Combining rooftop solar generation and battery storage with electric appliances allows for more significant integration of renewable energy into the residential sector. It reduces reliance on fossil fuels and contributes to greenhouse gas emissions reduction. By generating electricity through rooftop solar panels, households can become more self-sufficient and reduce reliance on the grid. This can lead to energy cost savings and greater energy independence. Since electric appliances can be more energy-efficient than their gas counterparts, their use can lead to reduced energy consumption and lower utility bills for consumers.
2.23Further, Mr Peter Derbyshire, Director of Policy and International Affairs at AATSE, told the committee that there is a strong pipeline of renewable energy infrastructure developments in Australia:
Renewable energy sources have been on a significant upward trajectory in Australia, with solar electricity generation growing by 25 per cent in the 2021-22 year and being 14 times higher than a decade ago. As of January this year, there were 81 renewable energy projects under construction or due to start construction soon in Australia, encompassing wind, solar, hydro and bioenergy. Looking into the future it has been forecasted that Australia's renewable energy capacity is set to expand by 85 per cent to reach 40 gigawatts by 2027.
2.24The Australian Energy Market Operator (AEMO) also recently reported Australia’s energy transition as being ‘well underway’. In doing so, AEMO observed that coal power stations continued to be retired and that renewables delivered almost 40 per cent of the NEM’s total energy in 2023. Further, AEMO noted the growing capacity of renewables:
The level of renewable energy injected into the grid regularly sets new records. On 24 October 2023, 72.1% of total NEM generation came from renewable sources, a new record for a 30-minute period. At maximum available output from wind and solar generation, plus the actual dispatched output from other renewable sources, renewable potential represented 89.9% of the total NEM supply at that time (nearing the current record of 99.7% renewable potential observed on 1 October 2023).
2.25Moreover, AEMO reported that it will soon ‘regularly face times when the power system is able to be supplied entirely by renewable energy, which will have implications for system security and strength’. According to AEMO, the NEM is ‘among the first systems in the world facing the challenge of securely handling a high-renewables system’. Inquiry participants’ evidence on the challenges of integrating household electrification with an increasingly renewable energy system are considered further in Chapter 5.
What is the role of residential gas?
2.26Several industry bodies recognised that reductions in carbon emissions from electrification were contingent on the broader removal of fossil fuels from Australia’s electricity supply. Energy Networks Australia (ENA) observed that ‘[e]lectrification to decarbonise only makes sense if our electricity supply is largely renewables and if coal is removed from the system’.
2.27However, some industry bodies also emphasised the complex challenge of removing coal and gas power from Australia’s energy system. For instance, electricity, solar and gas provider AusNet Services told the committee:
I think we're highlighting in our submission that a mass decommissioning of the gas network will be very difficult from a resourcing perspective and also the capital cost-recovery considerations that need to be managed over the remaining life of the gas network. So, essentially, if the gas network is decommissioned over a managed and longer period of time, that gives more opportunity to manage those cost impacts of the last customers that remain on the gas network which could include a large proportion of the more vulnerable customers.
2.28Further, some industry bodies argued in favour of using ‘renewable gas’ to meet the energy requirements of households. For example, the Australian Gas Infrastructure Group argued that without a ‘well-planned renewable dual fuel system, we are removing well-established system reliability and security of supply benefits that we potentially take for granted today…’. The Australian Pipelines and Gas Association also considered that incorporating ‘renewable gas’ in the energy system would lower the costs of decarbonisation for Australia households:
Residential gas use is responsible for around 2% of emissions in Australia and represents one of the most costly and challenging sectors to decarbonise. The gas infrastructure sector can play a major role in supporting least cost decarbonisation of household energy use.
In many circumstances, individual households will face lower decarbonisation costs by using renewable gas to replace their natural gas use rather than electrifying their gas demand. Beyond individual household costs, it is apparent that a future integrated energy system delivering renewable electricity and renewable gas to meet Australia’s energy needs is highly likely to be lower cost than a single energy system delivering only electricity.
2.29The APA group also suggested that as renewable energy generation is increased and ‘fossil fuels are displaced from the economy’:
… gas infrastructure becomes key to providing back-up generation as periods of low wind and solar availability require significant volumes of dispatchable resources to be available to support the reliability and security of the system.
2.30Mr Rainer Korte, Chief Operating Officer of energy transmission and infrastructure services provider ElectraNet, told the committee that while getting consumers off gas could play a role in Australia’s energy transition, this should be a less of priority than increasing uptake of electric technologies. MrKorte explained:
There's no doubt that residential electrification over time and getting residential customers off gas can also play a part, but in the current scheme of things that's only going to give you a small benefit compared to focusing on those areas that will really deliver the greatest benefit and progress towards the transition to zero emissions. That's just something I would offer in response to your question. When it comes to residential customers, I think the greatest near-term benefits are available through rooftop solar and batteries, energy-efficient practices and purchasing an electric vehicle. Those things are going to have a greater impact than getting them off gas immediately, although obviously in the long term the push to electrification may also lead to that outcome. I think customers should be encouraged to take those steps so that they feel comfortable to move to electrification.
Residential electrification as a cost-effective option for decarbonisation
2.31The committee heard from several submitters that residential electrification is one of the most cost-effective opportunities to reduce carbon emissions. For example, the Public Interest Advocacy Centre submitted that:
Efficient household electrification is a key part of the lowest cost pathway for decarbonising the energy system and improving long term energy affordability and equity. Early-adopting households with the means to do so are already demonstrating the significant cost, health and sustainability benefits efficient electrification can enable.
2.32The IEEFA also argued that, given households use 11 per cent of fossil fuel gas and that electric household appliances are mature and cost-effective technologies, ‘decarbonising residential fossil gas as early as possible makes economic sense’. The IEEFA noted that ‘conventional marginal abatement cost curves typically show residential electrification as one of the lowest-cost (often negative-cost) decarbonisation option’. Further, IEEFA added that more recent and sophisticated models, which consider interactions between different decarbonisation options, also found that ‘residential electrification is one of the lowest-cost decarbonisation options’, particularly when:
the marginal cost of abatement for electrification decreases as the emissions intensity of the electricity supply decreases; and
increased household energy efficiency measures are also likely to reduce the required investment in electrification.
2.33In contrast, Dr Robert Barr, Director of Electric Power Consulting, told the committee that he did not consider that the case for electrification driving down emissions had been made. Rather, Dr Barr prioritised getting emissions down in the grid first and considered it ‘premature to go ahead with the electrification at the present time, particularly in New South Wales and Victoria’. Additionally, Dr Barr commented that:
It's a very difficult task, getting emissions levels down. I think in the 2030s it would be moving towards nuclear. We've got to patch the system up and we've got to keep the system going until we reach that time when we can bring online some nuclear power stations, which could actually drive emissions down to the levels that would make electrification worthwhile.
2.34Additionally, Dr David Sweetin, Director of Sweeting Consulting, argued that it would be difficult to reduce energy prices when transmission costs had increased. Further, Dr Sweeting commented on the costs associated with firming systems, particularly replacing batteries after an estimated lifespan of ‘at best, 10 years’. Dr Sweeting concluded that ‘[y]ou can't think of these renewables as just a capital cost. They're almost a running cost, because they fail so much’.
2.35Other submitters argued for a holistic approach to emissions reduction. For instance, energy infrastructure business APA Group argued that ‘… greater emissions reductions will be achieved through a whole of system approach to decarbonisation, rather than focusing on the electrification of a particular group of consumers.’ APA Group cited commissioned research on the role of gas infrastructure in Australia’s energy transition which found that:
… adopting a whole-of-system approach will support the decarbonisation of the economy at least cost. Adopting this whole-of-system approach, there are three actions that will contribute most to emissions reduction in Australia: i) retiring coal-fired generation; ii) electrification of light vehicles; and iii) decarbonising industrial gas loads.
Economic opportunities of residential electrification
2.36Many inquiry participants pointed to what they considered were the economic benefits of residential electrification. As outlined in the following section, the committee heard that:
by making household energy use more efficient, electrification can help reduce the rising costs of energy faced by consumers;
the scale of the residential electrification transition has the potential to create thousands of jobs in the electrical sector; and
residential electrification has the potential to distribute electricity generation at the household level and scale up domestic energy capacity.
Reducing rising costs of energy for Australian households
2.37The committee received a range of evidence on the costs and benefits associated with residential electrification. In particular, the committee heard that energy efficient electric appliances can directly reduce households’ costs and, more broadly, reduce households’ exposure to energy price inflation.
2.38By international standards, Australian households face high energy costs. Dux Hot Water noted that, in August 2020, the International Energy Agency reported that household electricity prices in Australia were the ninth most expensive of 36 selected Organisation for Economic Co-operation and Development members and 78 per cent more expensive than in the United States. Dux Hot Water further pointed to evidence that ‘energy poverty’ was a growing problem in Australia.
2.39Alongside rising energy costs, households are also experiencing historically high rates of inflation across a range of essential goods and services. The Climate Council of Australia (Climate Council) argued that the reliance on costly fossil fuels in Australia, alongside poor energy efficiency in Australian homes, was ‘driving up energy costs’ and contributing to cost of living challenges.
2.40According to the IEEFA ‘households that consume gas are more exposed to energy price inflation than if those loads were switched to electricity’. Indeed, analysis submitted by IEEFA found that the consumer price index for electricity as a household fuel increased by 11 per cent between September 2017 and July 2023, compared with a 35 per cent increase for ‘Gas and other fuels’, as shown below in Figure 2.4.
Figure 2.5Consumer price index of electricity compared with gas and other household fuels, 2017–23
Source: Institute of Energy Economics and Financial Analysis, Submission 23, p. 3.
2.41The committee heard from several submitters that replacing gas appliances in households with electric equivalents can result in cost savings for consumers and ease cost of living pressures.
2.42The Energy Efficiency Council (EEC) described electric household technologies as a ‘powerful antidote to cost-of-living pressures’. Further, MrLuke Menzel, Chief Executive Officer of the EEC told the committee that:
New homes cost the same to build and are cheaper to run when they are all electric as compared to dual-fuel homes, and existing households that go all electric will be better off over 10 years, even when you account for the capital costs—and, of course, there are a number of incentive schemes and programs around the country that can help households defray those costs.[61]
2.43Based on several price assumptions, Beyond Zero Emissions’ modelling shows projected household energy savings from all-electric homes, particularly when combined with solar PV, as shown below in Figure 2.5.
Figure 2.6Beyond Zero Emissions modelling of energy cost savings for electrified households
Source: Beyond Zero Emissions, Submission 19, p. 2.
2.44Several other submitters also considered that household electrification would have positive price impacts for consumers. For example, using energy prices current at the time of its submission, IEFFA found that using electricity to run efficient appliances is 43 to 77 per cent cheaper than gas in Australia. Similarly, Strata Partners submitted that:
Savings achieved by upgrading hot water systems to a heat pump which typically achieve an average annual saving of $420 per dwelling per couple. The payback period of a heat pump system being between 3–5 years (faster for larger families or higher use cases) while the lifespan of this system can be up to 15 years.
Reducing energy price inflation
2.45Additionally, several submitters considered that residential electrification would reduce energy price inflation in Australia.
2.46For instance, the Australian Renewables Academy submitted that electrification ‘will provide a buffer against energy price inflation by enabling homeowners to generate and manage their own power supply’. Further, Tesla’s submission noted that the use of home battery technology will compound the benefits of household electrification, including by reducing costs associated with upgrading Australia’s energy system.
2.47However, Housing Institute Australia cautioned that the increasing proportion of energy costs in household budgets is ‘unlikely to be alleviated’ in circumstances where there are:
reduced competition from disincentives for hydrogen and biofuels;
pecuniary externalities which ‘negatively affect customers remaining on traditional fuels, e.g. gas’; and
‘increased capital costs and increased fixed costs for distribution networks offset or outpace savings in the energy component’.
2.48The committee also heard from several submitters of the disproportionate impacts high-energy costs have on low-income households. As discussed further in Chapter 3, submitters strongly argued that policy measures are needed to ensure households are not priced out of the electrification transition.
Job creation
2.49Several inquiry participants considered that the transition to residential electrification will create many new jobs. Evidence to the committee contained a range of estimates of the numbers of jobs that would be created, however it is clear that residential electrification and, more broadly, the transition to renewable energy, are anticipated to have considerable labour market benefits.
2.50Globally, the International Energy Agency (IEA) has estimated that ‘[a]round 9-30 jobs would be created for every million dollars invested in energy efficiency measures in the buildings sector’. The IEA reported that jobs created in construction would be ‘mostly local’, while jobs in manufacturing and the industrial sector would be ‘created by increased demand for building materials and equipment such as insulation, efficient glazing and heat pumps …’
2.51In Australia, employment opportunities are also anticipated to be created across a range of sectors. As Bank Australia submitted:
Residential electrification also involves opportunities for job creation across a range of sectors, including construction, engineering and project management. The Federal Government should also consider how the stimulation of this employment market could provide equitable social outcomes, such as creating employment in communities affected by the decarbonisation of the energy sector.
2.52Similarly, the Australian Renewables Academy also submitted that the transition to residential electrification would generate jobs, including in regional Australia:
Transitioning to a clean energy economy will generate thousands of new jobs nationwide. This will be particularly prevalent in the installation, maintenance, and ancillary industries related to renewable energy infrastructure. Furthermore, the design, installation and maintenance of energy-efficient and smart homes can be a significant source of employment, especially in regional areas.
2.53The committee heard a range of estimates regarding the number of jobs associated with residential electrification. For instance, the AATSE told the committee that the ‘transition to residential electrification is poised to create approximately 20,000 full-time jobs, highlighting the economic benefits that this shift can provide’.
2.54Beyond Zero Emissions told the committee that, based on modelling of the electrification of 5 million residential homes and the replacement of 12million fixed gas appliances, an estimated 87 500 jobs will be required to replace gas fired heating systems, gas fired hot water systems, gas cooktops and ovens, insulation, and solar panels and batteries.
2.55Further, the Electrical Trades Union of Australia (ETUA) submitted that, based on 2019 analysis by Green Energy Markets, ‘residential efficiency upgrades had the potential to generate over 34,000 job-years for Australian workers’. Equivalent upgrades in commercial buildings were ‘anticipated to provide opportunities for a further 47,545 job-years’. The ETUA added that the analysis did not factor in the:
… the employment opportunities of electrification initiatives such as rooftop solar and battery installations, EV charging installations, and the rollout of smart meters, which should provide thousands of further opportunities for skilled Australian tradespeople in the coming decade.
2.56Master Electricians Australia (MEA) noted that electricians trained and employed by small to medium enterprises would undertake the majority of the work associated with residential electrification in Australia. The MEA noted that the benefits of this include ‘local employment and training for skilled occupations, leading to well-paid careers and employment’.
2.57Similarly, AEMO also considered that:
NEM regions are forecast to need over 60,000 people in jobs to build and maintain energy infrastructure over the next 20 years. As both global trade and Australian policies press for low emission products, new opportunities may emerge in hydrogen, data services, agriculture, aluminium and steel production and minerals processing.
Jobs in manufacturing
2.58The committee also received evidence that the transition to electrification presents a significant opportunity to create jobs in local manufacturing.
2.59For instance, the Climate Council submitted that ‘Australia is rich in many raw materials for manufacturing the components of an all-electric home’ and that ‘[r]ather than sending our minerals offshore as lower-value raw materials, there is a huge opportunity to boost processing and advanced manufacturing at home’. Research by Beyond Zero Emissions suggests that supporting manufacturing supply chains for a range technologies that underpin residential electrification will have significant economic benefits. For instance, Beyond Zero Emissions research has variously suggested that:
Australia could build a ‘5GW solar supply chain, creating 5,820 jobs and adding $21 billion to GDP by 2035’;
‘driving demand and local supply of heat pumps could reduce emissions by 11% and benefit the Australian economy by generating $28.9 billion in revenue and creating at least 18,000 jobs by 2030’; and
‘an Australian lithium battery industry could deliver over $57 billion in GDP and 44,000 jobs in 2035 alone’.
2.60SunDrive Solar, a solar technology company in Sydney, submitted that manufacturing advanced solar photovoltaic cells will have a range of benefits, including ‘creating thousands of jobs (particularly in transitioning regional areas)’. SunDrive Solar estimated that installing 60GW of solar each year for the next 30 years, to help reach our Net Zero by 2050 target, would create up to 60 000 jobs in Australia. Further, SunDrive Solar emphasised the view that a ‘domestic solar manufacturing industry would reduce costs for consumers and ensure sovereign capability’.
Workforce shortfalls could impede electrification efforts
2.61While electrification is expected to create new jobs, the increased demand from households to electrify is also anticipated to exacerbate Australia’s workforce shortages, particularly for qualified electricians.
2.62For instance, the National Electrical and Communications Association (NECA) told the committee that some 35 000 additional electricians are required by 2030 to satisfy the current workload plus the renewable energy sector. MrNeil Johns, Director, Policy, Technical and Safety at NECA explained that:
We need 35,000 electricians to be trained and in place by 2030. That sounds a long way away, but it's only five years. We're already halfway through our first intake of apprentices. Based on the number of apprentices entering into the system and those qualifying—I could argue that while NECA has a 92 per cent completion rate, the average completion rate for an electrician is around 52 per cent. You have to put something like 70,000 young men and women through the training system to get 35,000 electricians. That is a huge task that we require.
2.63To address the abovementioned issues, inquiry participants made several proposals to improve workforce capacity. For example, Mr Marc England, Chief Executive Officer, Ausgrid, told the committee that policies to ‘encourage and enable private enterprise to develop those trained skills and develop people leaving school at 16, leaving school at 18 to even university graduates’ will help to develop skills needed to the energy transition.
2.64The Electrical Trades Union (ETU) advocated for measures to increase the participation and retention of women in trade jobs. DrKatieHepworth, National Policy Director of the ETU, outlined that while there are examples or programs to help women enter trade workforce, efforts are also needed to ‘make sure women stay in the trades once they get there’. Dr Hepworth elaborated:
There are really significant issues with completion rates for all genders but also women staying in the trades once they get there. What we've seen is that you really need those supports and multiple women starting on a site to really keep them attached to the industry once they get through. We've made different proposals around exemplar projects where the government can incentivise higher targets on major construction projects or major infrastructure targets for women to allow a larger cohort of women to move through their apprenticeship and stay onsite as they go through, noting that really leads to the cultural change that you need to keep women attached to the industry.
2.65To help support the electrification workforce, Rewiring Australia recommended:
providing funding for energy transition registered training organisations;
requiring government-funded projects and companies in receipt of government funding to ‘deliver on training mandates’;
funding supports for apprentices to improve completion rates; and
improving the attraction and retention of apprentices and trainees.
Scaling up domestic capacity and improved energy security
2.66Evidence from several inquiry participants outlined that the transition to residential electrification could enhance Australia’s domestic energy capacity and improve energy security.
2.67For example, Zero Emissions Noosa submitted that:
… scaling up domestic capacity for renewable energy production is another significant economic opportunity presented by household electrification. By increasing our domestic capacity, Australia can not only meet its own energy needs but also potentially export renewable energy, creating a new source of national income.
2.68Other inquiry participants considered that domestic capacity would be enhanced by increasing the manufacturing capabilities needed to support electrification technologies. For instance, the Australian Renewables Academy submitted that the development of local battery storage, energy management systems, and electric vehicle technology could reduce dependence on imports and expand Australia’s industrial capacity.
2.69Additionally, the ACT Government submitted residential electrification has the potential to stimulate domestic manufacturing for locally supplied products such as LED lighting:
Programs that incentivise households to switch from gas to electricity or be more energy efficient can provide confidence to and stimulate the market and helps to scale up domestic capacity to locally supply products to households. An increase in demand for products can help to embed these products into the market. Examples of this in the ACT have been LED lighting in small to medium businesses via the Energy Efficiency Improvement Scheme and solar panel installation via the Sustainable Household Scheme.
2.70Inquiry participants also emphasised the potential for residential electrification technologies to improve energy security. For instance, Beyond Zero Emissions submitted that residential electrification including solar panels and batteries could act as a buffer against energy price volatility as well as supporting energy security in the case of extreme weather events. Beyond Zero Emissions cited storms in South Australia in 2016 which caused widespread blackouts, and noted that extreme weather events will be an increasing part of life in Australia. According to Beyond Zero Emissions, increasing Australia’s energy independence would be a climate change adaption that could improve community resilience.
2.71Master Electricians Australia was of the view the best way to improve domestic energy security would be to distribute generation assets throughout the electricity grid and avoid ‘concentrating generation and transmission bottle necks in a smaller number of large renewable energy zones.’ They further stated that consumer energy sources could build resilience in the network, working in a similarly distributed manner as the modern internet operates.
2.72The Conservation Council ACT Region submitted that ‘[w]ith an abundance of solar energy, electrification is an easy pathway to domestic energy security as well as energy resilience for individual households’.
2.73In its submission, APGA also addressed the question of energy security, but argued that this would be improved ‘through the deployment of parallel and complimentary renewable gas and renewable electricity supply chains’.