Our predictions for 2020 in property and energy
Updated: Jan 28, 2020
The holidays are behind us and we’ve returned with fresh ideas and new energy for the year (no pun intended!).
We’ve taken stock to think about what at going to be the big themes of the year. The big megatrends continue to be climate change, electrification, and decentralisation of energy.
Below we partake in some punditry and make our predictions for property and energy in Australia in 2020.
Image courtesy of Unsplash
1. Electric hot water and cooktops make a comeback
Finally, gas is starting to look sooo last decade.
Firstly, gas simply isn’t that cheap anymore. Efficient split-system are cheaper and safer to run nowadays than a gas heater. Fixed charges for gas cost at least $1/day, regardless of how much gas is used.
Technology advances are also playing their part. Induction cooktops, for example, are improving out of sight. They can boil water faster, they have more control (makes cooking pancakes a breeze!), they are easier to clean and increase the usable space of a kitchen by doing away with the metal racks. Smart internet-enabled solar products (such as these ones from SMA and Powerdiverter) mean linking appliance use to solar production is getting easier to do, thereby maximising your usage of free solar energy. Likewise, some exciting new heat-pump hot water systems hit the market including this system by Reclaim and this system by Stiebel Eltron that feature better control to take advantage of solar.
Then there are the emissions. As the grid becomes greener - gas is no longer seen as a lower emissions fuel. In fact, the UK recently moved to ban gas in new homes starting from 2025. Closer to home, the ACT is amending their planning regulations to remove the mandating of reticulated gas in new suburbs.
For these reasons – we’re predicting more and more developers will ditch gas and go smart all-electric.
2. EVs accelerate
Far from being “the end to weekend”, electric vehicles are highly likely to be seen by a vast cross-section of the community as the most attractive solution to all their mobility needs. This is not just cars, but buses, bikes, scooters, boats, planes and more. As an e-bike owner, our family has done away with the need for a second car entirely and we can’t wait to buy an electric car.
Projections on the growth of electric cars in Australia show we are not alone with the numbers of EV on the road expected to at least quadruple over the next 3 years (see chart below). While more expensive to buy, electric cars are mechanically simpler and cheaper to run. Businesses like the Good Car Co are finding ways to make EVs much more affordable.
If you’re a property developer without an EV strategy, now might be the time to start thinking about one.
Figure: Actual and forecast EVs on the road, Australia Sources: VFACTS EV Sales Data; CarSales.com.au, 2019; AEMO Energeia - Electric Vehicle Insights, 2017; New Energy Ventures analysis
3. “100% solar” becomes a new norm in property developments
We have several large developers already on this path for significant projects in Victoria, including Intrapac (read more here). We expect the trickle to turn to a flood. Australia has some of the cheapest rooftop solar in the world and on track to have the most distributed grid in the world (see figure below). The barriers to solar adoption are evolving, shifting from upfront cost being the number one barrier just a few years ago, to the grid and its ability to handle so much solar.
Even if developers continue to make solar voluntary, thinking about how large penetrations of solar affect the design of the grid within the development will become increasingly important. We also expect there to be increased tension between distributors and developers on how to treat solar in new networks “fairly”. So much tension that it might contribute to the next trend discussed below.
Figure: Ratio of energy from decentralised sources. Source: Bloomberg New Energy Finance.
4. Broadacre embedded networks become a thing
There appears to be no stopping the rise of embedded networks. The AEMC releasing a final rule change to improve the regulatory framework about embedded networks appears to be both solidifying their role in the energy landscape and making them fairer for customers. Read more about that here.
Furthermore, embedded networks are being increasingly sophisticated with the inclusion of solar, batteries and other new energy technology that’s leading to cheaper and cleaner power for consumers. Together we see this as a precursor to bigger, bolder, community-scale embedded networks built over broadacre residential developments.
5. Everyday Australians start including climate-change in their home purchasing decisions
The Great Australian Burning and record-breaking heatwaves this summer has awakened the nation from its slumber on climate change. The effects of climate change and now evident and visceral. One-in-five Australians are now concerned or very-concerned about climate change.
In the absence of substantive government policy customers, we expect customers to take matters into their own hands. No doubt, customers will increasingly seek out new homes that are:
safe from bushfire (it's highly likely places that are not won't be insurable within a decade)
reducing their carbon footprint (while maintaining creature comforts)
“climate-changed” ready including having back-up power options, and
capable of handling rising temperatures.
We have discussed in this article what developers can do.
Let us know your thoughts!