The challenges of energy pricing and security articulated in the Newcastle Herald this week by Tomago Aluminium CEO Matt Howell have again highlighted a significant issue of concern to business and industry throughout the Hunter.
Our country's energy mix is changing, and statistics show Australians have been among the most enthusiastic adopters of renewable energy technologies - solar and wind in particular - in the world.
But while households and some types of commercial users can operate quite efficiently on renewables, current technologies are not capable of servicing the needs of energy-intensive industries such as manufacturing.
Disturbingly, it is unclear how these needs will be met as our older coal-fired energy assets come to the end of their operating lives, which in the case of Liddell Power Station will be in as little as three years.
The problem is that the volume and reliability of energy produced from the thermal plants that are due to be retired over the next decade is not matched by new supply proposals, which include gas, wind, solar and hydro solutions.
Put simply, we are looking at an imminent gap in supply and no one at the moment has the answer on how we are going to fill it.
The federal government has identified 12 projects nationally in the Underwriting New Generation Investments (UNGI) program to support targeted investment designed to lower prices, increase competition and improve reliability in the energy system.
However, the projects in this scheme promise a capacity of 3818MW - far less than the approximately 6200MW that will be withdrawn from the grid by the retirements of Liddell, Eraring and Vales Point power stations.
And there is no guarantee that renewable or non-renewable proposals that are in the pipeline will materialise quickly.
Some have stalled at concept stage waiting for capital investment, while others are facing delays through state-based approval processes, which is extending estimated commissioning periods.
For energy-intensive industries such as manufacturing, these issues are of significant concern. These industries need a reliable supply of energy, often around the clock, that is not subject to the vagaries of weather conditions.
They also need energy supply that is affordable. Australian businesses pay some of the highest energy prices in world and half of respondents to the NSW Business Chamber's most recent quarterly Business Conditions Surveys highlight energy prices as their top cost-control priority.
Researchers are working hard on finding solutions that will make renewable energy more efficient and reliable, and there is leading work in that field being done here in the Hunter, but the science is not there yet; not at a scale that will satisfy the needs of all industry. Until it is, we need to ensure that our manufacturers have the security of energy supply and pricing that they need to continue operating viably.
The Hunter region has relatively high exposure to the gyrations of the energy market, as has been seen over the past 10 years.
Big energy users such as Tomago Aluminium and Orica have seen the cost-efficiency of their local plants slide in comparison to similar offshore sites within their organisations and industry sectors, due to increasing energy prices.
If industries like these ultimately opt to close, or move elsewhere, it could spell the end of our proud reputation as a region that is highly skilled at making things.
The Hunter Business Chamber supports a shift to a lower-carbon future but the transition process needs to be a reasonable and pragmatic one that does not drive our manufacturing industries offshore.
To make that happen, we need strong leadership from government. There are encouraging initiatives, including the NSW Government's recently released Energy Strategy and a Federal Government target of reducing the average National Energy Market wholesale price by up to 30 per cent by the end of 2021, but the problem demands a national approach that can hold fast in the face of electoral cycles and opinion polls.
We have struggled in Australia to find consensus on a national energy policy that addresses affordability, security of supply, transmission requirements of the emerging network and Australia's international commitment to emissions reduction targets.
NSW should also address the issue of gas supply and pricing, as we are importing 98 per cent of our natural gas requirements while sitting on untapped reserves. Gas is an essential commodity for business and industry and can be a bridge to a cleaner-energy future.
The Hunter and NSW business chambers continue to work with a range of stakeholders to impress upon government the importance of energy security, cost and reliability.
Bob Hawes is the CEO of the Hunter Business Chamber
While you're with us, did you know the Newcastle Herald offers breaking news alerts, daily email newsletters and more? Keep up to date with all the local news - sign up here.