Reading the Energy White Papers chapter on smart meters and the need for variable electricity prices was like being transported back in time. What I was reading could have been transcribed from the 2003 Parer Energy Market Review or the 2004 Energy White Paper or the Rudd-Gillard Labor Government Energy White Paper.
Yet other than in Victoria, nothing much has changed in customers metering and electricity prices at least. Yet while the power industry and associated regulation has been incredibly static, energy technology and information technology have advanced incredibly.
We all know the story of solar PV, but an interesting little aside in the Energy White Paper was the chart below on heater-air conditioner energy efficiency. Before regulated minimum energy efficiency standards were introduced in Australia, air conditioners managed to put out about 2.6 units of heat or cooling energy for every 1 unit of electrical energy consumed, on average. Now the ratio is about 4.2 to 1 thats a 60% improvement within a decade and a half.
In combination with my six-star insulated home, my air conditioner, far from being an evil energy guzzler, will heat my home to 21 degrees over winter most likely drawing less than a 1 kilowatt of power.
This is the fundamental issue for the power industry incumbents and government they are moving too slowly to be able to keep up with technological advancement.
Yet there is a fundamental rule of probability which remains in spite of all this technological advancement the rule of large numbers. We know that as we assemble a larger group of power consumers together we begin to balance out their widely varying demand for power such that it becomes less volatile and the need for power capacity of the collective group is far lower than each individual households demand peak.
This means the electricity grid is likely to remain valuable to us because it allows us share power capacity.
Also it will allow us to take advantage of geographic diversity in weather such that when it's cloudy in one place it might be sunny in another, so output from solar PV becomes less volatile too.
Another example of the benefits of the grid is that I may have plenty of roofspace for solar PV and the spare cash to purchase a system while my neighbour may not. The grid allows me to install a larger system to take advantage of economies of scale with the excess available to my neighbour rather than being wasted.
Now while the Energy White Paper seemed to be worded in such a way that you might think solar and heater-air-conditioners should be taxed out of existence, they are on the right track about the need for pricing of electricity to change. Present pricing structures where consumers pay 30 cents for power but then only get paid 8 cents for exporting power will likely push households towards a focus on self-sufficiency, when it fact we could get a better outcome by pooling demand and sharing our power supply infrastructure.
The problem at present however seems to be that power companies and some sections of government believe consumers owe these companies a living. That if power companies have spent billions purchasing fixed assets, we should be forced to pay for them whether we need them or not. While we do need to roll-out new meters that allow for prices to vary to ensure we better utilise and share our power infrastructure, some see this as a mechanism to force people to pay for the assets they dont need.
Its as if we are being told, sure solar, and advancements in energy efficiency and possibly batteries mean you dont need as much grid or power generating capacity as Mr Power Company thought you would, but were going to make you pay anyway.
Source: Business Spectator
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