Since economic growth in Australia has generally outpaced growth in energy consumption over the past few decades, the country's economy has shown lower energy intensity and higher energy productivity over time. This is a result of both a gradual increase in energy efficiency and a change in the Australian economy from highly energy-intensive sectors like manufacturing to less energy-intensive sectors like services. Energy productivity has also benefited from the increased use of renewable energy sources rather than fossil fuels to generate electricity.
In 2021–2022, energy productivity increased by 3.7%, and in the previous ten years, it increased by 28%. For every petajoule of energy used, Australia's GDP now generates $374 million, an increase of $83 million from ten years ago. Stated differently, compared to a decade ago, Australia consumes 22% less energy for every dollar of economic output. Additionally, compared to ten years ago, Australia uses 14% less energy per person.
Energy usage broken down by fuel type in 2021–2022, fossil fuels, which include coal, oil, and natural gas, made up 91% of Australia's primary energy mix. With a share of 37% in 2021–2022, oil—including crude oil, liquefied petroleum gas (LPG), and refined products—accounted for the largest portion of energy consumption, followed by natural gas (27%), coal (28%), and coal (27%).
In 2021–2022, coal continued to be the second-most consumed fuel. In 2021–2022, natural gas made up 27% of the energy used. Australia used 520 petajoules, or about 33%, of its gas consumption in 2021–2022 to generate electricity. With gas accounting for 42% of manufacturing final energy use in 2021–2022, gas continues to be by far the most popular energy source for end users in the manufacturing sector. The remaining 9% of Australia's energy consumption in 2021–2022 came from renewable sources. The consumption of renewable energy primarily consists of solar, wind, hydro, and biomass energy. The use of renewable energy increased by 10% in 2021–2022, mostly as a result of rapid growth in solar and wind power. ( Reference: Australian Energy Statistics).
Let’s look at the five best ASX companies in the utilities sector that are listed on the Australian Stock Exchange (ASX). These are as follows:
Note: The market cap and the share price of the selected ASX companies below are mentioned as of 18 January 2024.
Origin Energy Limited (ASX: ORG)
Market cap: $14.02 billion
CMP: $8.14
The ORG has three strategic pillars that strongly support its strategic role, which are primarily: unrivalled customer solutions, accelerating renewable and cleaner energy, and delivering reliable energy through the transition. The company has been highly focused on integrating its product offerings across electricity, rooftop solar, gas, LPG, batteries, and e-mobility solutions. Revenue from businesses has been growing systematically over the past five years. It has a cash balance of approximately $0.46 billion and total assets of $18.95 billion as of June 2023. The balance sheet has been well maintained with a well-established mix of debt and equity.
Contact Energy Limited (ASX: CEN)
Market cap: $5.85 billion
CMP: $7.43
Contact Energy Limited expects the contract to reach significant milestones in the coming year in the delivery of its strategy to lead the de-carbonization of New Zealand. The company has been preparing for Tauhara to come online by the end of the year, which will be very crucial. The company has been well on track to bring Te Huka 3 online by the end of 2024 and expects to take final investment decisions on Geo Future and a 100 MW battery all within this financial year. Contact Energy Limited’s dedication to laying the groundwork to realize its strategy has been intact.
Meridian Energy Limited (ASX: MEZ)
Market cap: $13.50 billion
CMP: $5.22
Meridian is expecting that after it becomes operational, Harapaki’s 41 turbines will generate 176 MW of renewable energy, which is enough to power over 70,000 average households. The project also features several sustainability innovations. Initially, at the site in 2021, reviews of the wind farm’s civil design curtailed the amount of concrete and steel to be used by 30%. Meridian estimates a further 10,000 tonnes of CO2e have since been saved through ongoing actions to drive down carbon emissions during the construction of the wind farm. This was achieved by minimizing the amount of rock aggregate that was imported to the site from Napier and Taupo, adjusting the wind farm’s road network to minimize earthworks, and using piles instead of concrete foundations for turbines.
AGL Energy Limited (ASX: AGL)
Market cap: $5.93 billion
CMP: $8.82
AGL Energy has made significant strides in its renewable energy targets since the closure of the Liddell Power Station. The company is well on track to deliver 12 GW of new renewable generation and firming capacity by 2035, with its development pipeline increasing by 60% in the past six months, now totaling 5.3 GW. This, combined with recent agreements and projects, forms a strong foundation for AGL's energy future. The Structured Transition Agreement (STA) with the Victorian Government benefits AGL by providing a clear plan for the orderly closure of the Loy Yang A Power Station, reducing uncertainties, and demonstrating AGL's commitment to responsible and sustainable energy practices.
Genesis Energy Limited (ASX: GNE)
Market cap: $2.56 billion
CMP: $2.38
Genesis has made some significant advancement in expanding its capacity for renewable generation, which will receive a major boost under the company’s latest growth strategy. This increased capacity will allow the company to deliver on New Zealand’s increasing energy needs and decarbonisation goals. Genesis could receive substantial support from the government and other private institutions in its effort to do so while also bringing in substantial monetary value for its stakeholders. The existing leading position of the company in energy generation through a diverse generation portfolio already provides substantial assurance of operational health and scale.
Reference: - *All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters
Frequently Asked Questions (F.A.Q)
What are major ASX companies in the utilities sector?
• Origin Energy Limited (ASX: ORG)
• Contact Energy Limited (ASX: CEN)
• Meridian Energy Limited (ASX: MEZ)
• AGL Energy Limited (ASX: AGL)
• Genesis Energy Limited (ASX: GNE)
What is the fundamental of Contact Energy Limited?
Over the past five years, Contact Energy Limited (CEN) has delivered good performance, with overall revenue increasing steadily during that time. Although the company experienced some weakness in its financial results for FY2020, it recovered the following year and showed significant improvements in revenue. Despite facing multiple economic setbacks, CEN was able to maintain stable EBITDA margins. Net profit margins also improved over pre-pandemic levels in FY22. The company had reasonable borrowings, and its rising cash position indicated a sound balance sheet.
What is the update of Australian energy productivity?
Productivity in energy is increasing. Gross domestic product (GDP) divided by energy consumption is a measure of energy productivity, which increased by 3.7% in 2021–2022 and by 28% over the previous ten years. Currently, Australia generates $374 million in GDP for each petajoule of energy used, which is 22% more than it did ten years ago.
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