Australia needs electricity overhaul

CANBERRA, Australia, March 22 (UPI) -- Australia warned that $100 billion is needed to avoid brown-outs and power shortages in the country.

"We simply cannot maintain supply reliability for households and businesses if we don't invest in electricity supply infrastructure," said Resources and Energy Minister Martin Ferguson during the weekend, The Australian reports.

Ferguson said Australia needed to invest at least $100 billion in electricity infrastructure over the next 10 years to meet growing demand and replace the aging infrastructure.

"In 2010 we now stand at a point where demand and supply are finely balanced," Ferguson said to a group of business leaders.

But, he said, the country's energy consumption could increase by more than 40 percent by 2030.

Ferguson said Australians also expect the country to invest in climate change energy efficiency measures, renewables and other clean energy technologies.

"That investment can only be paid for with higher electricity prices," he said. According to Ferguson's department, Australia's electricity prices have increased about 35 percent in three years.

Admitting that the Australian government is concerned about the impact of the hikes on families and businesses, Ferguson said that in many cases price increases are unavoidable "to guarantee supply reliability."

In related news, a report released Monday by technology giant Siemens calls for a $60 billion investment by the government and private sector into renewable and low-carbon technologies such as wind, solar and gas-fired facilities to meet Australian Prime Minister Kevin Rudd's 2020 greenhouse target of a 5 percent reduction.

The Siemens report, "Picture the Future: Australia -- Energy and Water," says that although electricity costs would increase by 30 percent as a result of these measures, the efficiency savings would result in households using 30 percent less power. That would mean no net increase on the average electricity bill.

According to the U.S. Energy Information Administration, approximately 75 percent of electricity produced in Australia is from coal with around 55 percent coming from black coal.

Siemens Chief Executive Officer Albert Goller said coal and oil companies were prepared to adapt.

"You would not believe how intensive they are and involved in sustainability and they want to look for alternatives," Goller said, The Australian reports.

Australia is the world's largest shipper of coal and minerals such as iron ore, lead, zinc and alumina.

"Higher energy prices would primarily affect energy-intensive processing operations," Matthew Ward, an investment manager at Perth's Katana Asset Management Ltd. told Bloomberg News. "Any increases in primary energy costs would adversely affect the potential for future downstream processing of mineral resources."