No. 166

RENEWABLE ENERGY REWARDS THE BETTER OFF

To be potent power must be pure

STONE the crows! The Greens have won – electricity consumption is down, meaning less damage to the environment by global-warming, fossil fuel-burning power stations!

And yet the Crows see no green-garbed dancing in the streets – which seems strange. Unless of course it’s less the amount of electricity that matters than the way it is produced, because to make the ideological grade power must be pure.

There are many debates about electricity – providing it more cheaply and cleaner are quite different. Yesterday’s announcement by the Queensland Government that it will end uniform pricing in the hope prices will fall (that is after they go up by 22 per cent next month) was greeted by opposition warnings that this was a privatisation ploy.[i] But there is a foundation for all of them – market solutions.

Electricity consumption has dropped every year since 2008-09, according to the Australian Energy Market Commission.[ii] Even seasonal peaks are down; despite last summer’s shocker, for example, electricity consumption dropped one per cent.[iii]

There are all sorts of reasons for this – lower industrial demand as the high dollar reduces exports, and ever-more-energy efficient appliances.[iv] The Crows also suspect the state owned systems jacking up their prices over the last couple of years might have had something to do with it.

Tony Wood emphasises that the way the national regulator accounts for investment encourages electricity distributors to over-spend on infrastructure – the result is consumers are paying $2bn over the odds for power.[v] According to Ausgrid, average daily household electricity consumption dropped by 6.2 per cent across greater Sydney between 2010-11 and 2011-12.[vi]

What a surprise, the price went up, so consumers cut consumption – making the federal government’s carbon compensation cash a straight-out gift, which people saved or spent on other things as they chose.

So (Finance Department officials, who feel these things, aside) why is not the green establishment pleased? The Crows suspect because the market worked without need for nudging by the state or pious exhortations as to why it is wrong for Australians to enjoy coal-fueled air conditioners while people in Africa (insert moralising mantra of choice here).

Never mind, at least greens can still be pleased with an increase in renewable energy. As the ABC quoted, a Clean Energy Council media release asserted that “renewable sources now power almost four million Australian homes,” or some 13 per cent of the total [vii]. However, what neither explained, as far as the Crows can find, is whether renewables were the sole source of power these people used. The CEC states, “There was enough electricity generated by renewable sources during this period to power the equivalent of more than 4 million homes”, which is not quite the same thing as having 24/7/365 renewable energy around the house. [viii]

Whatever the case, renewables reward those with the income to invest in their own generating capacity and go off the grid, and stay off it for longer, as battery technology improves. Which will leave everybody else, such as renters or people who live in flats without solar panels, to pay for the infrastructure component of the power network, which everybody uses. [ix]  Importing power from people’s solar panels also imposes a cost on the network, which all consumers on the grid pay. [x]

Still, it’s all in a good cause init? Shutting down those terrible coal-fired power stations, and all. Except the economics and engineering of base load generators mean they have to tick over 24/7 to provide power for people too poor to build their own boutique supplies.[xi] 

Of course, there is a case that renewables can already provide all the mains power we need.[xii] But then, again, the cost of the shift away from conventional power would be a bit, ranging from constructing vast amounts of renewable capacity to the cost of closing down the existing generators.

Strange that experts advocate this while the market is responding to price signals with people using less conventional power. Are the Crows missing something, or does reducing green house gas emissions matter less than how the cut came about?

 

ENDNOTES


[i] Andree Withey, “Proposed changes to Queensland’s electricity sector unveiled,” ABC News June 16 @ http://www.abc.net.au/news/2013-06-16/changes-to-queensland27s-electricity-sector-unveiled/4756938 recovered on June 16

[ii] AEMC, “Consideration of Differences in Actual Compared to Forecast Demand in Network Regulation,” April 26 @ http://www.aemc.gov.au/Media/docs/Advice-to-SCER—Differences-between-actual-and-forecast-demand-in-netwo-6e2714f4-2581-45f6-9b5c-bac361468dc6-0.pdf  recovered on June 15

[iii] Jessica Irvine, “Australians used less power during summer despite record heatwave, figures show,” News Limited April 2 @ http://www.news.com.au recovered on June 15

[iv] See Daniel Palmer’s comprehensive analysis, “Australia’s electricity demand collapse,” Climate Spectator, April 23 and 24 @ www.businessspectator.com.au/article/2013/4/23/climate/special-report-australia’s-electricity-demand-collapse recovered on June 15

[v] Tony Wood, “Putting the customer back in front: how to make electricity cheaper,” Grattan Institute, December 2012 @ http://grattan.edu.au/static/files/assets/7d0a806e/178_energy_putting_the_customer_back_in_front.pdf recovered on June 15

[vii] Sarah Clarke, “Almost four million Australian homes now powered by renewable energy,” ABC News, June 4 @ http://www.abc.net.au/news/2013-06-05/4-million-australian-homes-powered-by-renewable-energy/4733548 recovered on June 15

[viii] Clean Energy Council, Clean Energy Australia Report, 2012 @ http://www.cleanenergycouncil.org.au/cec/resourcecentre/reports/cleanenergyaustralia recovered on June 15

[ix] Graham Lloyd, “Rooftop solar panels help to generate panels as well as power,” The Australian May 25

[x] Electricity Supply Association of Australia, “Who pays for solar energy,” @ http://www.esaa.com.au/policy/who_pays_for_solar_energy recovered on June 15

[xi] Stewart Needham, “The potential for renewable energy to provide baseload power in Australia,” Commonwealth Parliament Library, August 4 2011 @ www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp0809/09rp09#_Toc318812457 recovered on June 16

[xii] David Mills, “Baseload power is not a fundamental requirement of modern energy production,” ABC Science, December 2 2010 @ http://www.abc.net.au/science/articles/2010/12/02/3081889.htm#.Ub06UkbUms0 recovered on June 16

'2012