A new report has highlighted the extraordinary expense Australia’s electricity networks have passed on to consumers to meet demand forecasts that never eventuated. It says the energy market is “not fit” for its stated purpose of providing a benefit to consumers. The report, Zero Carbon Australia, Renewable Energy Superpower, by Beyond Zero Emissions, shows that networks on Australia’s main grid, the National Electricity Market – which excludes WA, the Northern Territory and off-grid areas like Mt Isa in Queensland – have spent $75 billion on network improvements and expansion in the past 10 years and passed these costs on to consumers. The spending was justified on demand forecasts that have proven to be outrageously wrong. Indeed demand, far from growing, has barely changed over the past decade. But electricity bills have more than doubled, driven almost exclusively by these soaring network costs, compounded by exaggerated rates of return that benefited the networks and hit the consumer. The spending is highlighted in this graph to the right. The report says the over-investment has been encouraged by the NEM structure, first by the move to “corporatise” utilities and then by distorting their business conditions. It notes that the networks’ costs to consumers have been further exaggerated by “Weighted Average Cost of Capital” (WACC) — the interest yield on the assets they held – which is far above the market rate for low-risk assets. “In order to fully exploit the inflated yields, and hence maximise profits, network businesses have sought to expand their ‘poles and wires’ asset base. To do this, network businesses over-hyped future demand from the grid, in order to be granted expansion approval by the Australian Energy Regulator (AER).” This next graph shows those demand forecasts, and what actually eventuated. As the report notes, some $75 billion was invested in transmission and distribution network upgrades, causing the regulated asset base to double to $77 billion by 2014. The demand forecasts have proved ludicrously wrong. This graph to the right shows how the 2010 forecasts have been wound back. Even the 2014 forecast may be optimistic. And total demand is virtually the same as in 2005. But networks had a strong incentive to produce such optimistic forecasts, because the more they could build, the more revenue they could receive. “Because network revenue is guaranteed by the regulator, consumers must pay for this new capacity whether they use it or not,” the report notes. “Clearly the demand did not rise in line with projections, but declined.” The network response to this has been to reject outright any proposals that they should take a write-down on the inflated value of the assets. For the next five-year period, they have attempted to continue their spending spree, and have taken the extraordinary step of taking the Australian Energy Regulator to court after it rejected their spending proposals. Now, the NSW networks have also flagged a potential “solar tax”, to hit households that export solar back into the grid with extra charges. They flag similar fees for households using battery storage and electric vehicles. Network spending on electricity have not been the only way that utilities have bled customers. The report says history is being repeated with Australia’s gas system, also governed by the Australian Energy Market Commission according to the National Gas Rules. “The supply network is being expanded and new unconventional gas supplies are being developed, at great cost, to satisfy projected demand,” it notes. “Warnings are being sounded that consumers will withdraw from the gas system even more dramatically than the electricity system as a result of rising gas prices and substitution of efficient electric appliances.” This is known as the “death spiral” and it is likely to happen in the electricity network too, as the plunging cost of solar and battery storage offer alternatives. Which is one reason why networks, not just resisting calls to write down the value of those inflated assets, are talking about compulsory fees even for those who leave the grid, as well as a special tax on the use of solar, battery storage and electric vehicles. The report says that in the retail market, consumers are also being squeezed. It found that deregulated markets have not resulted in the benefits being promoted by the utilities. This figure above illustrates how. It shows Victoria has the highest retail “margins” of any state.
“The ultimate judgement of market success lies in the value to consumers,” the report notes. “The retail component of Victorian power bills is the most costly in the country and therefore the least successful, no matter what proxy metrics are used to say otherwise. “Essentially the national energy market structure is not fit for its stated purpose of delivering energy services in the interests of consumers. “The sector ring fencing and growth focus does not match contemporary technical solutions or customer desires. Unless it is reformed Australia’s domestic energy supply will grow increasingly uncompetitive.” This article has been sourced from Renew Economy
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Welcome to PV Industry Alert - Issue 24 Maximum voltage trip point settings The new AS 4777.2–2015, was released on 9 October 2015, replacing the existing AS 4777.2–2005 and AS 4777.3–2005, with a 12-month transitionary period applying, during which either version of the Standard can be used. One change introduced is new overvoltage (Vmax) settings. Accordingly, we’ve modified the Embedded Generating Unit Installer’s Confirmations on page two of our Form A to reflect both options, so please ensure you complete this section. The options available are: Single-Stage Vmax (AS 4777.2–2005) Vmax set to 255V (2 seconds) Two-Stage Vmax (AS 4777.2–2015) Vnom-max set to trip at 255V (10-minute averaging) Overvoltage 1 set to trip at 260V (2 seconds) Overvoltage 2 set to trip at 265V (0.2 seconds) We attempt to check maximum voltage trip point settings on new installations, as well as those we investigate for supply quality issues. In order for us to confirm the installation operates correctly, we need to know which voltage setting methodology is in use. If we don’t have this information on the Form A, we will issue a Form B to obtain the relevant trip point settings information. This requirement is also reflected in the current version of the joint Ergon Energy/Energex Connection Standard for Small Scale Parallel Inverter Energy Systems (Connection Standard). A prompt response to options and offers is essential
If you have received an “options letter” from Ergon Energy after having submitted your connection application, we request that you respond in a timely manner with advice on the option that best suits your customer’s needs. This will ensure that we can make a subsequent connection offer within the required timeframe, which you will have 20 business days to accept. If you have any questions upon receipt of the options letter please call the Solar Support Team to discuss any concerns you or your customer may have. Want to know more about what we do? Hear from some of our members on why the Clean Energy Council plays such an important role in the clean energy sector. For anyone whose had Solar Installed and has noticed the recent charges going up on their electricity bill. Below is an excerpt from an email, of a customer who made the enquiry as to why her Solar was not as effective as when it was installed. In most cases, the answers can be found in your electricity bills.
Due to the recent changes to Energex and the Energy Retailers pricing structure, supply charges have increased and there are new charges for Solar owners that have been introduced. This was effective from 01/07/2015 for Energex and was effective from 01/08/2015 for Energy Retailers. Driftwind Electrical requested 3 recent power bills for evaluation and below is the end result. Hi Lisa, I have attached your 3 bills that you sent and will explain the numbers that I have marked on them. On the bill for April 14 2014. There are 1,2,3 and an = sign. 1. is the amount of kW hours that you are consuming from Origin/Energex. On this bill it is 543. 2. is your Service fee in April 2014 it was $44.69c 3. is your solar feed in. on this bill you fed back 849kW @ 50c per kW. Return $424.50 Of the 3 bills this was your best result, maybe you were on holidays or were extra careful with power as your usage was way down and your feed in was up. The bill for July 2014 you have 1. is 2 x 1 figures as now you have an increase in per kW charge imported. From 02 April 2014 to 2 July 2014 you paid 26.73c per kW and from 1 July 2014 to 02 July 2014 it increased to 28.1c per kW. The total of this is up from 543kW to 961 kW a dramatic increase. 2. is again your service fee slightly increased because of an increase in service fee now. $45.20c 3. is again your feed in to the grid down from 849 to 627 so that return has decreased from $424.50 to $323.50 Your bill for March 2015. 1. was broken into 2 parts again. For what reason I am not sure but you have been charged from 06 Jan 2015 to 28 Feb 2015 for 568kW and then from 01 March to 31 March 2015 at the same rate of 25.378c per kW this is again another increase in usage from 961kW to 995kW. Not as dramatic as previous but still an increase. 2. Is again your service fee charge that has risen dramatically from $42.50 to $70.90 and that is where Origin and Energex are attacking Solar owners. They are not able to defeat us on kW usage so they are clawing back on service fees. 3. is again your solar export up slightly on last bill but down considerably on April. Again from 849 to 628. That represents over $100.00 and the addition of $25.00 on your service fee = a loss of $125.00 since April 14 as well as an additional import up from April 14 from Import of 543 to 961 = 418kW @ 25c per kW or $105.00. Total lost is $230.00 The sad news is that the bill that you have not sent has seen a further increase of Service fee to some customers of an additional $45.00 and is probably the reason why you are starting to become concerned. I hope you understand what I am trying to explain here. I am probably starting to think that you may be becoming a bit complacent with the comfort of never having a power bill and maybe not being as cautious as before and possibly using power more during the daytime and a bit less during the evening. If that is the case remember we discussed using heavy power items at night and feeding as much as possible back into the grid during the day, this is where you win buy it at 25c and sell it for 50c. With the antics of Origin/ Energex you will not get back to the glory days but you will slow down their progress. The Solar health check and clean will lift your output by possibly up to 10%. Kylie tells me that you are looking at a putting in a pool. I would suggest a 1kW upgrade if that is so and that will help keep that cost down. Unfortunately due to new regulations Inverters installed before July this year will not attract the CEC REC’s that were available when your system was installed so there will be no Govt. rebate as such. The cost to install another 1 kW will be $2,150.00 Inc. GST. Give me a call if you need any further help. Cheers John Lisa in reply wrote. Wow! I have always thought the customer service at Driftwind was very good, but that email is exceptional!! Thanks so much for taking the time to go through everything and give such detailed feedback. I have never taken much time to notice the increasing service fees and this is certainly highly annoying from a solar outputters point of view. You could also be right about an element of complacency creeping in, probably more so from my parents point of view who live downstairs and clearly enjoy their free power!! Also a handy reminder about the night time power usage, particularly when the pool is on its way. I think we will probably go for an extra 1kw, but we will discuss this tomorrow. We also have solar heating on the roof to consider, in terms of space. Does your quote include "racking up"? Thanks again John, will be in touch. Lisa Driftwind reply Sure Lisa we will rack it for that price if required. If you wish to proceed just let us know and we will book it in for a time that suits you. We all love our parents and it seems that you are sharing the love. (Free power in this day and age, that is a real luxury) well done. Cheers John. Rules that could have reduced network bills have been delayed another five years, following fierce resistance from coal generators. The decision could mean higher bills, and more grid defections, as networks and retailers engage in a turf war over battery storage. New rules that could have encouraged electricity networks and to help consumers adopt technologies such as battery storage, solar PV and demand management controls have been delayed for another five years, potentially adding billions of dollars in unnecessary network costs and to the bills of electricity consumers.
In a decision labeled by consumer advocates as a “travesty”, the Australian Energy Market Commission has decided not to ask the Australian Energy Regulator to enforce the introduction of its long awaited Demand Management Incentive Scheme (DMIS) until late 2016. This means it will not be implemented until the next five-year spending plans for networks are up for review in 2019 through to 2021. This is despite the AER having previously stated that it intended to “…introduce a revised DMIS a soon as practicable following the AEMC’s rule change process” The AEMC’s 2012 Power of Choice Report estimated in that demand management in the Australian electricity system could deliver savings of $4–$12 billion by 2023. (These savings, if passed on to electricity consumers, could result in bill reductions of between $120 and $500.) These savings are now very unlikely to be delivered given this delay in the DMIS. Analysts say it could add billions of dollars to network upgrades and also to consumer bills. The delay in implementing these new rules for the running of Australia’s electricity markets is also a set-back for network-wide adoption of technologies such as rooftop solar, battery storage, and energy efficiency – and a victory for coal-fired generators fighting moves that would lower consumption from the grid. “This is bad for demand management, distributed generation, solar PV, energy efficiency and customer-based battery storage,” said Chris Dunstan, from the Institute of Sustainable Futures. Dunstan says that between $4 billion and $12 billion could be saved if networks looked to adopt solar, battery storage, and energy efficiency programs, rather than rely on the traditional method of making network upgrades, and building more poles and wires. “Savings delayed are savings denied.” Queensland looks set to break its large-scale renewable energy drought, with confirmationthat government-owned utility, Ergon Energy, is launching a tender for 150MW of new solar, wind or hydro energy capacity to be added to its regional grid. Ergon said on Monday it was looking for detailed submissions from companies with “solid reputations” in the renewables industry, who it could partner with to help meet its renewable energy requirements. Queensland has so far commissioned very little in the way of large-scale renewables, despite being the prospective state for large-scale solar, because of its excellent solar resources, and because it is one of the few growth areas for demand in Australia.
But it seeking proposals for projects from Townsville and Cairns to the north, down the Whitsunday coast and inland to the south west region. It is looking for projects of at least 20MW, and wants them to have council development approvals, or be well down the track of getting those. Bloomberg New Energy Finance has predicted Queensland could be the epicentre of large scale solar in Australia, because of the excellent resources and demand growth mentioned above. This has been echoed by Origin Energy, which is thought to be canvassing similar proposals. There are a few big solar projects in the pipeline – including the Solar Choice-SunEdison 2GW Bulli Creek project in the state’s south west, which stands to be the largest in the world if it is ever fully developed – and, with a renewable energy friendly state government now in place, Ergon should be spoiled for choice. Canberra-based renewable energy development company Windlab is proposing a 1,200MW wind and solar (600MW wind, 600MW solar PV) project for north Queensland, called the Kennedy Energy Park. And the Australian arm of Spanish renewable energy developer FRV in May revealed plans to build a 150MW grid-connected solar PV farm south of Townsville, which would deliver up to 80 per cent of local electricity demand at rates cheaper than a new coal plant. Canadian Solar also has a 90MW project ready. Queensland energy minister Mark Bailey said the Ergon reverse auction signalled the beginning of the large-scale renewable energy agenda of the Labor Palaszczuk government, which in May confirmed its commitment to 50 per cent renewables for the state by 2030. “This simply would not be happening if Ergon Energy was being privatised as planned by the previous LNP government,” Bailey said in a statement on Monday. “Our focus on public ownership and strong commitments on renewable energy gives confidence to Ergon to take this forward.” Ergon Energy chief executive Ian McLeod said the move to invest in renewables was a common sense approach. “Renewable energy sources including rooftop solar are already contributing over 10 per cent of the electricity for our main grid and we expect that growth to continue,” McLeod said. “Queensland’s sugar industry’s generation of renewable energy is already contributing $45.7 million in economic value to the industry. “We have a government owner of a retailer committed to renewable energy projects,” he said. Ergon said companies would be able to download documentation from the company’s website next week, when the Expression of Interest was released. You know the cliché about work that can be 59 minutes of boredom and one minute of white knuckle excitement and danger? In the electric power industry, this happens when a major power plant loses its connection to the grid, instantly and dramatically unbalancing the supply and demand of electricity. Blackouts follow if there isn’t an instant response. Last week I had a similar exciting moment at a conference of utility commissioners, where I learned that a key grid reliability requirement during these emergencies has not been provided by new natural gas plants. Assumptions are not always true Throughout the electricity engineering community, there is an assumption that, when that kind of supply-demand imbalance incident happens, there will be an automatic response within 5-6 seconds from conventional (gas, coal, hydro) generators that stabilizes the power supply. How valid this assumption is matters, because it is used by practically every utility study and commentary aimed at highlighting limits to using renewable energy to replace fossil-fuel power plants. (See here, for example.) The assumed difference between conventional power plants has figured prominently in current debates about the adoption of renewable energy versus an over-reliance on natural gas and coal. Surprised looks all around But what if that assumption turned out to be wrong? In a thinly attended session on a Sunday at the summer meeting of NARUC, (the National Association of Regulatory Utility Commissioners) I attended, a representative from NERC (the North American Electricity Reliability Corporation) committee process made an astounding revelation, that this assumption has indeed been mistaken. The reality is that a thousand gas-fired power plants built in the U.S. do not operate properly in white knuckle emergencies. In the discussion with regulatory staff, Troy Blalock, reliability expert at South Carolina Electric & Gas, explained how jaws hit the floor as NERC’s investigation into reliability questions found that all three of the gas generator manufacturers (GE, ABB, Siemens) predominant in the U.S. had for years been delivering equipment that fail to provide this “essential reliability service”. As word spread around the 3-day NARUC conference, this news caused the same speechless, open-mouth expression. The need for energy industry incumbents to get on board the energy revolution that is rapidly transforming electricity markets around the globe is a well-worn theme. But what about consumers? The inevitable and unstoppable shift to solar and storage is likely to see a big change in the way that tariffs are structured – hopefully for the better, rather than the worse – but it may just mean another level of complexity for consumers in what is already a thoroughly opaque market. As a new report by the CSIRO has pointed out, “meaningful demand-side participation” – which is code for using solar and storage to help manage the grid, such as surges in peak demand – by consumers will be critical to optimising Australia’s future decentralised, distributed electricity systems and stabilising costs.
But as this same report also notes, inspiring millions of electricity consumers to “make a substantial and enduring mass shift in electricity usage that flattens peak demand” will be no easy task, particularly when you factor in “the pervasive human preference for simplicity, familiarity and certainty.” And when the key to effecting this mass shift – according to most industry stakeholders – is to get customers to actively uptake cost-reflective or time-of-use energy pricing, and to make the most of it using solar and storage – the task starts to look nigh on impossible. In its survey-based study, Australian Consumers’ Likely Response to Cost-Reflective Electricity Pricing, published on Wednesday, the CSIRO found that “consistent with well-known biases against complexity, novelty and risk …Australian consumers generally prefer flat rate tariffs to all forms of cost-reflective pricing.” The most recent head of the National Australia Bank, one of the country’s most powerful financial institutions, has made extraordinary revelations about the back-lash from government to business that dared speak out in support of sensible climate change and renewable energy policies. In an opinion piece for Fairfax Media, and later in interviews with Fairfax and ABC Radio, the now retired Cameron Clyne lamented the economically reckless policies of the current government and the “will-ful ignorance and blindness of political leaders and some business people in Australia.” And he also spoke of retribution to those who did speak out.
“You put your head out there and it’s going to get smashed off,” he told Fairfax Media. Later, he told ABC National; National program that he had suffered months of “emails and abuse” after supported a carbon price in 2011, and the political environment had worsened under the Abbott government. Clyne’s comments confirm what has been obvious to most, but also reveals the extraordinary behind-the-scenes pressure imposed by a government installed to essentially to frustrate climate change action and to block the development of renewable energy. The Abbott government has scrapped the carbon price and slashed the renewable energy target. Its policies have resulted in a surge in energy industry emissions and an investment drought in renewable energy. It has also dismantled the Climate Commission, and cut funding for climate change research. It has tried, and failed, to scrap the Climate Change Authority, the Clean Energy Finance Corporation and the Australian Renewable Energy Agency. Behind the scenes, government bureaucrats are told that the words clean energy, clean-tech and climate change are not to be used, and there are myriad reports of the intense pressure that government ministers have put incredible pressure on business people who speak in favour of a carbon price or renewable energy, or who are seen to criticize government policy. |
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