The Electricity Industry’s Death Spiral revisited

10 07 2014

I know I only wrote about The Electricity Industry’s Death Spiral just a couple of days ago, but the speed at which things are now moving is almost bewildering.  The subject of disconnecting from the grid and moving to battery storage actually made it to the evening news last night……  I wish I could post a link to this video clip, but it looks like the ABC isn’t playing ball.  In truth, the owner of the system did such a bad job explaining how it works I doubt installers will be rushed off their feet just yet.

This from The Examiner, a Tasmanian online news outlet….

Energy specialist Lucy Carter of the Grattan Institute outlined the horror scenario for suppliers while launching a new report to be released on Monday about why we are paying too much for power.

She says network charges account for most of the increase in electricity prices. The carbon tax is small by comparison.  [the Carbon tax repeal act has just been knocked back in the Senate as I type this…  The motion was defeated 37 votes to 35.]

”The risk for the companies is that when people get the option of putting solar panels on their roofs and installing batteries and cutting the cord, demand will fall sharply. The people who end up left on the network will be the only ones left paying.” They will be stuck with extremely high network charges, forcing even more people off the network, pushing network charges higher still. It is what Ms Carter calls ”your death spiral scenario”.

She says it is not upon us yet, but if battery storage improves and network costs keep rising, it will be.

Part of Ms Carter’s proposed solution is for power companies to charge for network costs differently. At the moment customers who put very little strain on the network [like us…] pay the same fixed charge and the same amount per kilowatt as those whose peak usage necessitates extra spending on high-grade wires and substations.

Those peak users account for about one-third of the extra spending on infrastructure over the past five years, Ms Carter says.

She wants to charge users for the pressure they put on the network rather than for being part of it. Someone who comes home to a McMansion and whacks on all the airconditioners or heaters puts far more pressure on the network than someone who is at home all day using the same amount of power more steadily.

It can properly happen only with smart meters that report usage to retailers. Victoria has them and could adopt the proposal immediately. In other states such as NSW, Ms Carter says, the ability to levy variable charges could build a business case for suppliers paying to install smart meters.

Her other solution is even bolder: a peak usage warning to be delivered by SMS or broadcast on TV the day before extreme peak demand due to events such as heatwaves. In France it is done using a red, white and blue colour code. ‘’Red’’ means the next day is facing an extreme peak and that for that day only electricity will be more expensive. Throughout the rest of the year users will be given rebates to make sure they are not charged more overall.

The system would apply only in locations where the network was under pressure and the alternative was new infrastructure.

If it was in operation over the past five years, the Grattan Institute believes it would have saved $7.8 billion of the $17.6 billion spent on new infrastructure.

Data on household electricity use provided by the Victorian government suggests the change would be unlikely to affect disadvantaged families.

And now this from REneweconomy…

Wholesale electricity prices this week in Queensland have fallen below $30/MWh – see graph below – far below the levels of other states as mild weather and sunny condition reduced demand and generated a large amount of solar electricity.  [that’s 3c/kWh….. or 10% of the new retail price..]

aemo qld prices

The Energex network, which operates in the south-east corner and Brisbane, added another 13.7MW of rooftop solar in June, to take their total installed in the Energex network to 843MW on 261,500 homes and businesses.

Another 3,563 homes added solar in the south east corner in June, despite the fact that they would only get paid 8c/kWh for electricity they export back into the grid.

From Tuesday, that payment by the network ceases and falls to retailers. But the payment is voluntary, and has to be negotiated between the customer and the retailer. More than 59,000 houses – with some 200MW of rooftop solar – now find themselves in this situation.

Whats more, new rules have been introduced which allow the network operator to require that no exports can be made back to the grid for new rooftop solar systems. Ergon Energy explained its reasoning here, saying it wanted to prevent “reverse flows” and encourage more solar and energy storage on its network.

So if people in Qld lose what paltry feed in tariff they were getting, what incentive is there to stay connected?  Watch this space….

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4 05 2015
Solar death spiral? | Damn the Matrix

[…] Every day, I’m bombarded with information about some place somewhere going 100% renewables by (insert your favourite date here), and lately Tesla’s new battery wall being a ‘game changer’.  Let me tell you, from where I sit, I predict a renewables death spiral to match the grid’s. […]

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