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61 responses to “Electricity price conundrum: the effect of renewables”

  1. BilB

    More diversionary tactics.

    Lets not forget that electricity prices have skyrocketed due to profiteering by the electricity “industry” players. Far more than just a few hundred dollars. This appears to be a tactic to disguise future ripoffs as being the cost of Climate action.

    The is a huge difference between what was supposed to happen under the CPRS and what did happen.

    If you go back to the original announcements of the electricity price rise schedule intended to accommodate the CPRS, it was stated that if the CPRS did not eventuate then that portion of the increase attributed to it would be returned. Well the CPRS did not eventuate but electricity prices did not reduce. They have in fact continued to increase unabated.

    I think that there is scope here for a legal class action against the electricity industry main players for a refund of the CPRS contribution to electricity prices to consumers dating back to the original price increases.

    There is also scope here for independent electricity brokers of solar energy, independent of the main energy distributors.

  2. Chris

    So the Newman Government acted forthrightly to limit the FIT for new installations to a mere 8¢/kWh.

    They’re not alone in reducing the FiT though, and its not just Liberal controlled states. With the significant decrease in solar PV panels I think its worth looking at whether the FiT and/or the federal capital subsidy is required anymore. In SA for example electricity prices are high enough that for many it pretty much makes economic sense to install PV even without the FiT.

  3. BilB

    I agree with you, Chris.

    The FiT is near its use by date.

    But what we need is an independent brokerage medium through which to buy and sell renewable energy. Energy be it electricity, heat, cold, biomass, biofuels.

    Smart meters must be required to accommodate multiple billers rather than be locked to one energy supplier.

    This will enable true energy competitiveness at the front gate.

  4. Chris

    BilB – multiple billers and let households sell power on the spot market 🙂

    I’m assuming that meter reading is outsourced so there’s no reason that multiple billers couldn’t be done.

  5. Salient Green

    ” Every time an air-condition unit is installed, it costs our network up to $5,000 ” Anna Bligh, 2009
    Has someone done the sums for how this translates into higher bills? The fact that solar installations have actually reduced power bills against the tide of air-con is even more remarkable.

  6. BilB

    Chris,

    The Super Smart Meter would need to be able to log electricity consumption against time and billing account within the one meter device. This way the consumer would be able to set a multiple supplier schedule of best opportunity with a mix of utility and local supply.

    The broker would source power generators and contract to supply his customer base, again for best commercial performance. So he would seek out as many adjoining rooftop generator time slots with consumer needs as possible, the shorter the transmission distance the lower the transmission fee and brokerage.

    This logic is very likely what is behind the utility offer to John Davidson. Where there is a cluster of rooftop generators in the near vicinity to a shopping mall (big consistent air conditioner electricity consumption) a utility can afford to more for rooftop solar.

  7. Golly Gosh

    Interesting to see the success achieved by Germany and goals they have set:

    “Germany has doubled the renewable share of its total electricity consumption in the past six years to 23% in 2012. It forecasts nearly a redoubling by 2025, well ahead of the 50% target for 2030, and closing in on official goals of 65% in 2040 and 80% in 2050.”

    Great to see.

  8. John D

    Bilb: What we need at this stage is a steady growth of the rooftop solar industry to provide stable jobs and reduce power related emissions. In addition, we need long term rooftop solar contracts that generate enough income to give a reasonable return on capital. Contracts that specify the FIT for the life of the contract are one of the type of contracts that could be used.
    In addition we need a mechanism that adjusts new contract FIT’s to take account of changes in the cost of installing rooftop solar. A logical way of acheiving this is some version of the ACT’s successful reverse auction system. suited to small scale installations. The ACT system uses competitive tendering to set up long term, fixed price contracts for the supply of utility size solar PV power generation. (The result of the first auction was a very competitive fixed price of 18.6 c/kWh for the 20 yr contract.)
    The use of complex metering to feed into some complex spot marketing system doesn’t make sense to me. Competition should be applied at the contract setting stage, not day to day.

  9. BilB

    Thanks John D,

    We see this from different perspectives. Your view is for the current situation and ensuring its steady growth. And I endorse your view to that end.

    I am, however, thinking a little further in to the future. The GenIIPV system that I have spoken of regularly is a concentrating system based on the Spectrolab technology which delivers up to 40%conversion efficiency for the electrical side, but also because it takes in all of the solar radiation has a useful amount of heat in a form that is used in an absorptive chiller process for air conditioning and refrigeration, as well as space and water heating. It is the integrated nature of the system that makes it extremely cost effective. So a system rated with an electrical output of 10 Kw can be actually delivering well over 20 Kw for up to 7 hours per day, and the integration also allows continuous reconfiguration of the energy throughput for best effect in a manner that also gives the system a high degree of seasonal compensation.

    Spectrolab are now able to produce flat panel non concentrating systems with an efficiency up to 38%, they have just recently announced. Yes, of coarse these panels are going to be expensive for another 10 years, but they will eventually become the standard. Based on this technology even the smallest of rooves will be able to generate 10Kw for 4 hours per day, and the cost of the systems will be within the means of most family incomes.

    At this point the energy industry looks very different. Within that 10 years the number of EV’s may well have risen to be 15% of the vehicle stock and demand for daytime charging will be increasing steadily, so local electricity supply, local to where vehicles are parked at the away end of their commute, will have a valuable demand base for surplus rooftop solar.

    This is an entirely new market and how it develops is unpredictable, but I am predicting that private brokering of solar energy will be growth industry of the future. If you work the numbers based on these eventualities you will appreciate that, as I have been saying for some years, that by 2050 up to 75% of all of Australia’s electricity needs will come from distributed sources, and much of the personal transport energy will be from this source.

    Naturally storage is a huge issue, but the recent article and demonstration of the laser printed carbon super capacitor makes me believe that very real static high capacity storage is not far away at all. Any system where the main performing element is carbon or silicon based has solid scope for production at a disruptive technology rate.

  10. John D

    Bilb: One of the advantages of competitive tendering is that the government can specify both the technological and geographical mix. The potential is there to include a % of a developing technology with the aim of giving it the chance to go down the cost reduction curve in the manner that solar PV has.

    While I have an open mind about how power should be sold I tend to favour approaches that minimize risk to the investor on the grounds that, on average, investors expect higher average rates of return when risk is high. I am skeptical of market tragics trying to sell some complicated marketing system that depends on the installation of special meters, highly paid marketeers etc.

    I also hope that EV’s move from the current crop of energy guzzlers to something closer to the current energy consumption of pedal electric hybrids. If this happens the EV driven power boom that power companies are starting to enthuse about may be a lot less important than they think it will be.

  11. BilB

    John,

    I am confident that there will be multiple consecutive solutions. Your scenario is certain to eventuate in the near future, the other will arrive if the market demands it. The Super Smart Meter is simply a Smart Meter with a software change that allows consumption to be logged into multiple registers and displayed or transmitted to more than one biller.

    If you really want to see more pedal electric vehicles then you must with urgency make a submission to the NSW govt. review on unregistered vehicles and power levels. Victoria has just locked this away at 250 watts, which is a ridiculously low level. We should be matching the US at 750 watts minimum. Without this increase pedal EV’s will remain in the toy department and no-one will invest in this area.

    My favoured near option commute vehicle option is the 2 seat VWXL1 which is nearing production. This so far has a top speed of 100 kph but a fuel consumption of 100 kpl. It also has 6 Kwh battery capacity to power a 24 kw (?) motor which is backed up by a 40 hp petrol or diesel motor. The nice thing about that battery size is that it is sufficient for most local low speed running around, and when the battery becomes iffy it is not such a huge replacement cost, and the retired pack will then add, perhaps 5Kwh, to the domestic storage bank.

    Problem is that this vehicle has a road profile only a little higher than a Mazda MX5, which is dwarfed by the by the van sized family vehicles of today. I think, though, that I can and will live with that. The XL1 is going to be a lot more comfortable year round than my 400cc motor scooter, and more efficient as well.

    Reports are that VW have changed the XL1 from a diesel motor to a petrol motor. I am hoping that by the time this vehicle class hits Australia it will have its diesel power supply back. My vision is to receive my annual delivery 200 litre drum delivery of palm oil bio diesel from Arnheim Land, and that is my full years commute fuel extended by regular battery charging from the home and factory roof solar panels (future plan).

  12. nottrampis

    Brian, you have made it in two catagories.

    It is the BEST reading for the week-end!

  13. desipis

    So the Newman Government acted forthrightly to limit the FIT for new installations to a mere 8¢/kWh.

    I would guess that the 8c/kWh represents the average price of wholesale electricity weighted by generation time based on actual price data. I did a quick check by taking the numbers for Queensland, December 2012 and averaging the timespan from 1pm to 4pm (which is quite a favourable short cut towards solar generators). It comes out about $77/MWh or just less than 8c/kWh.

    This 8c/kWh fits reasonably well with the “1/3 generation : 1/3 transmission : 1/3 other” rule of thumb used in the industry relative to the current 23c/kWh tarrif in Queensland. Remember that as a generator providing power to the grid someone with solar power isn’t providing the network from their house to the end demand and they aren’t providing all the other elements that go into providing a functioning electricity market. This means they should only get compensated for the generation component of the total electricity service the tariff represents.

    I did a quick read through John Davidson’s and I can’t make out the archaic voodoo incantations he performs to suggest that 44c/kWh is actually directly beneficial to the power companies, or that the cut-off tariff would be 96c/kWh. The primary reason I imagine power companies are still keen to offer higher amounts for solar power is to meet some non-economic regulatory or marketing target for renewable power.

  14. John D

    Desipis: I don’t know where the Qld government got its 8 c/kWh from but I do know where the Queensland Competition Authority got its figures from.
    Basically, the QCA defined fair and reasonable FIT as being

    fair and reasonable to the retailer

    and worked this out as being 7.55 c/kWh in their report table 4.6 in their report

    “Estimating a Fair and Reasonable Solar Feed-in Tariff for Queensland”

    The 7.55 c/kWh ignored any benefit the retailer gained from the 30% drop in wholesale power prices that occurred between 2008 and 2011/12 and charged solar PV the same network cost (12.59 c/kWh) as would be charged for power brought from Gladstone. (Vs exported rooftop solar being used within a short distance of the panels.)
    Many of the the figures reflect what are reasonable simplifications for converting wholesale prices for remote generation. However, these simplifications are not reasonable for the very different conditions of rooftop solar.
    I adjusted table 4.6 to take account of rooftop solar impacts on wholesale power price etc. and came up with a “fair to the retailer” FIT price of 102 c/kWh.
    The results highlight the problems of using “fair to the retailer” to set price and, to be fair, the difficulties that would be faced by any authority asked to set any form of fair and reasonable. It makes a lot more sense to make the price “fair to the rooftop solar owner”
    It is these complexities that make me favour a market based process for setting FIT. Processes such as variations of the ACT reverse auction process will give a contract FIT that reflects current conditions at the time the contract is written.

  15. John D

    Bilb: It will be good to see the VWXL3 come out next year. Good because converting to EV will cost a lot less if you start by producing a low energy per km car first instead of of simply replacing gas guzzlers with electricity guzzlers.
    If pedal electric vehicles are to become the logical form of transport for <15 km commutes they may end up looking like this all weather tilting narrow track Apart from protection from weather it will provide some protection from collisions, should not fall over when it skids and would be narrow enough to use on bike tracks and lanes.

  16. desipis

    John:

    I adjusted table 4.6 to take account of rooftop solar impacts on wholesale power price

    The wholesale power prices are the outcome of a complex market involving many generators and varying demand. For example between 2008 and 2012 there was over 1 GW of new gas turbine capacity added to the Queensland network (Braemer-2 and Darling Downs). These are the types of plants that meet the peak demand economically. This is likely to have a much greater impact on generation prices than rooftop solar (which has significantly less than 1 GW capacity). There’s also the impact from demand management approaches that include the government funding for roof insulation. The notion that the actions of rooftop solar generators are the sole, or even most significant, driver in these prices is fanciful speculation.

    Fair is to pay them at the same rate as other generators; which is what the 8c/kWh seems to be approximating. The idea that it’s “fair” that rooftop solar generators reap all the benefits from the actions of the entire market is utter garbage. If we are intent on subsidising solar power we’d be much better off subsidising large scale PV or solar thermal plants rather than small and expensive rooftop solar.

  17. John D

    By your argument “fair” is the cost of replacing the power source that is being replaced, not the average wholesale price. What you need to understand is that, at any time power will be coming from a variety of sources that will be charging a variety of prices. During the day the sources can range from very low price base-load to very very expensive peaking power. A new source of power may not only replace theh most expensive but will also create market pressures that will also reduce prices.

  18. BilB

    Desipis,

    To say

    “This is likely to have a much greater impact on generation prices than rooftop solar ”

    is to ignore the reality of why electricity prices have skyrocketed in recent times, specifically our continued consumption of fossil fuels for the production of, primarily, electricity and the effect that this has on our environment and global warming.

    Gas turbines are a very important part of the energy system but their performance agility means that they will be used at the fringe of demand to fill shortfalls in generation capacity, still a high earning period, but not necessarily the highest. Furthermore the operation of gas turbines involves considerable cost to the utility operator in the form of investment cost, maintenance cost, fuel cost and location cost. None of these costs fall on the grid operators as a result of Rooftop Solar energy input into the grid system.

    And to say:

    “The notion that the actions of rooftop solar generators are the sole, or even most significant, driver in these prices is fanciful speculation”

    is completely false. No speculation at all. Lets remind ourselves of the special features of Rooftop Solar energy production:

    1 Rooftop Solar generates power at the time when people most want it. When they are awake and active.

    2 Rooftop Solar carries no investment cost or maintenance responsibility for the utility generator.

    3 Rooftop Solar requires no terrestrial fuel.

    4 Rooftop Solar is generated nearer to the point of consumption and has few transmission losses.

    5 Rooftop Solar has no local environmental impact from emissions such as CO2, CO, NO2, or SO2.

    6 Rooftop Solar requires no land consumption.

    Other advantages are:

    1 Rooftop Solar has the greatest scope for expansion and efficiency increase, total reduction in global resource consumption.

    2 Rooftop Solar directly improves the standard of living for those people who participate, and this is available to everyone.

    3 Rooftop Solar along with Wind Energy contributes more to the reduction in global resource depletion than any other energy production activity.

    Why do we have to keep going over this material time and time again. It is like dealing with Dory.

  19. John D

    Well said Bilb.

  20. desipis

    John,

    During the day the sources can range from very low price base-load to very very expensive peaking power.

    Yes. Due to the reverse auction process the market price will be the most expensive price in use at the time. This is the price the 8c/kWh is based on.

    A new source of power may not only replace the most expensive but will also create market pressures that will also reduce prices.

    You’ll only remove the need for expensive peaking power if you remove the peaks. As the graphs indicate this has not occurred. The graph shows the peak as being at 6pm just when solar power will be petering out.

  21. Moz has no blog

    @BilB: because people don’t like those answers. If they keep asking, maybe the answer will change.

    As well, for people who start with “what’s fair to the retailer” they’re implicitly saying “fairness to the shareholders is more important than fairness to the electricity users”. Otherwise the question would be desipis’ one.

    @JohnD: I’m sorry but I’m going to keep saying this every time you point to someone’s first attempt at an enclosed power assisted bike, that design sucks. It would not work anywhere that there is significant wind or sunshine.

    Anything that has a side area that big but is only 700mm wide is going to fall over when a gust of wind hits it. And the goldfish bowl on the top is going to be unpleasant in an Australian summer unless there’s air conditioning – just having a powered fan will not cut it. And I assume it has decent suspension, otherwise it would be unpleasant to ride and likely suffer mechanical failures.

    I’ve been riding a velomobile for a while now, in both Melbourne and Sydney, and it is unpleasantly hot inside it in the summer, especially when going uphill or at walking speed (ie, on a shared path). That’s despite it being red rather than clear, and having no lid on the cockpit. Plus it is affected by gusty crosswinds more than I would like, despite being only about 0.9m high (that pictured design is more like 1.5m high).

  22. desipis

    Bilb,

    is to ignore the reality of why electricity prices have skyrocketed in recent times, specifically our continued consumption of fossil fuels for the production of, primarily, electricity and the effect that this has on our environment and global warming.

    Rising electricity prices have been driven by higher input costs (commodities, labour), prior underinvestment in the grid and a history of underpriced power. Continued use of fossil fuels has occurred precisely because it’s the cheapest way of generating electricity.

    Furthermore the operation of gas turbines involves considerable cost to the utility operator in the form of investment cost, maintenance cost, fuel cost and location cost. None of these costs fall on the grid operators as a result of Rooftop Solar energy input into the grid system.

    This is all incorporated into the price the peaking generators charge the market. If rooftop solar reduces the utilisation of gas generators the capital costs will be amortised over less energy and the prices they charge per MWh will need to increase. Solar rooftop won’t remove the need for peaking gas turbines. If the operators can’t recover their costs there will be a lack of peaking capacity in the future as no one else chooses to invest.

    1 Rooftop Solar generates power at the time when people most want it. When they are awake and active.

    Bollocks. Look at the graph. The peak is at 6pm in the evening. The best thing that can be said is it reduces demand during the hottest days when air conditioner usage peaks. But this represents only a small time period of the total power consumption and will have a minimal impact on average energy prices.

    2 Rooftop Solar carries no investment cost or maintenance responsibility for the utility generator.

    3 Rooftop Solar requires no terrestrial fuel.

    6 Rooftop Solar requires no land consumption.

    The retailer doesn’t have direct responsibility for investment or maintenance of any generation. These costs are reflected in market price. If rooftop solar generators can’t get a decent return on their investment from the market price then its a demonstration that rooftop solar is an uneconomic investment.

    4 Rooftop Solar is generated nearer to the point of consumption and has few transmission losses.

    Which would justify a whole 7% increase in price to 8.6 c/kWh if it weren’t already included.

    5 Rooftop Solar has no local environmental impact from emissions such as CO2, CO, NO2, or SO2.

    Which is why generators should pay a carbon tax/price to ensure market price incorporates all costs.

    Other advantages are:

    Your other advantages are more applicable to mass solar generation. Rooftop solar is an incredibly inefficient means of installing solar capacity.

    Why do we have to keep going over this material time and time again.

    Possibly because you keep getting your facts wrong in order to support your political position. The long run marginal costs of open cycle gas turbines (OCGT) is less than 15c/kWh. How on earth does make economic sense to pay rooftop generators 44c/kWh (or more) to replace OCGT generators (even if it could)?

  23. BilB

    Moz,

    On Solar energy. Yes they keep asking the questions and the answers do change. But the answers change steadily in the positive direction, not surprisingly, because the news on solar energy is always better than the last.

    Velo. In fairness to JohnD’s suggestion the link is to a power assist device. Which projects power levels in steps 500 watts, 1000 watts and 2000 watts, all of which would be illegal in Australia as we here are fixated with 180 watts, Victoria being the exception at 250 watts in power assist mode only.

    Your comments about the windage and heat are totally correct.

    As an industrial designer I have worried over this design area for a lifetime. It is a difficult design zone and I applaud the efforts of the pioneers who are building working prototypes to test the design parameters and effectiveness.

    The BMW C1 semi enclosed scooter was a design breakthrough for the west even though Japan produced covered 3 wheelers for years. BMW came back with a proposed BMW C1E in 2009 which I cannot see as being in production yet.

    When I bought my Yamaha 400cc scooter I made a lap cover to seal off the lower body including the feet in winter. When you pull this over your lap on a cold day it is like sliding into a warm bath on a cold day, the difference is so pronounced. But it is no long before the smallest of drafts under the cover begin to cause discomfort. In principle though this approach works well particularly in sub zero temperatures.

    My current design thrust in this area is for a bike that folds into the size of a brief case, yet still has the riding feel of a standard bike. It is getting much closer to prototype. This bike offers a wheel dia of 300mm, rigid low frame, fully damped suspension front and back with 60mm travel, 13 speed gearing, rear wheel braking, the ability to have electric drive added in minutes, and with a targeted weight under 9 Kg. This folds to 470 by 400 by 120 (roughly I can’t remember exactly off the cuff) which means that 4 of these will fit into the boot space of event the smallest cars with room to spare.

    The important feature here though is the front to rear low frame bridge at 400mm above the ground means that the rider can comfortably wear a full raincoat while riding this bike and stay totally dry except for the feet and ankles. This positive feature only occurred to me recently and is a design accident.

    The feet and ankles. When I moved to NZ in 1980 I had a 175 honda bike which I rode every where. I solved the feet and ankles problem with a pair of French made wind surfing boots which were made with full thickness wet suit rubber. I had a shoe maker fit good quality running shoe soles to these boots and they became my standard shoe for the next few years until they finally wore out. I wore these shoes in the ice slush in the fields of full winter Scotland, with completely warm and dry feet. They were the best shoes ever. I tried to interest Adidas with the design as they had a factory in ChCh at the time. No imagination.

    So that for me at the present is the best economy solution. Low bridge (girls bike) eCycle with good quality full length raincoat and high (up to the calf muscle) wind surfing boots.

  24. Moz has no blog

    Also, the flip side of keeping the residential sell price low while the buy price keeps climbing and connection charge rises even faster, is that the cost of being off grid drops and may be negative for some people already. We’re hoping to buy a house in Sydney (cue hollow laugh) in the next year or two and it’s looking as though grid connection will be optional by then for people using gas for heating. For us wanting renewables it’ll take a little longer, but it’s definitely heading in that direction.

  25. BilB

    Gas for cooking also, solar water heating, log fire, 6Kw 20%efficient, 3 to 10 Kwhrs storage ( http://www.samsungsdi.com/storage/energy-storage-system.jsp ), and you are just about there, Moz.

  26. Moz has no blog

    Bilb, I haven’t been following it, but AFAIK a methane digester is the only renewable source of gas we’re likely to be able to put on a residential property, and they’re not very efficient (space, money or energy). But yes, the home electricity storage market seems to be starting a major shakeup.

    I think driven mostly by people who don’t accept desipis’ maths above – the cost of delivering electricity to a home is more than 7% of the total. I’ve heard numbers over 50% for established neighbourhoods that are suffering a combination of homes using more power and increased numbers (urban densification plus “ducted aircon from $1999 installed”). It irritates me that retrofit insulation isn’t being pushed harder, but hopefully soon the Liberal “no carbon tax, just massive state intervention everywhere” policy will see a mandatory standard and subsidised refit. (don’t even *hint* that that is one of those “not in writing” promises).

  27. desipis

    Moz:

    I think driven mostly by people who don’t accept desipis’ maths above – the cost of delivering electricity to a home is more than 7% of the total.

    That’s not what I said. The 7% figure is based on energy losses over the network. As I said @13 the network costs are about 1/3 of the total, although that is only a rough estimate. Certainly more significant peaks resulting from high airconditioning could influence that.

    However, as I’ve already noted the peak demand is at the end of the day when solar power input will be quite low. This means solar power will have minimal impact on reducing peak demand or supplying energy to meet it. It will therefore have minimal impact on the required network capacity, resulting in minimal impact on the network costs that need to be passed onto consumers.

  28. Moz has no blog

    desipis, if that’s the case you should revise your response to the point “4 Rooftop Solar” above, where you said .. “Which would justify a whole 7% increase in price to 8.6 c/kWh if it weren’t already included.”

    If we don’t need to build out the grid to cope with increased demand, then the 1/3rd-ish of the power bill that covers that should shrink correspondingly. And when it doesn’t the people who are the best customers will start leaving. Best in this case meaning the ones who are most profitable, because they pay the connection fee but generate surplus power during the annual peaks which more than makes up for the total cost of supply. I’d rather dump electricity during the summer peaks than pay $1/day or more for the privilege of feeding the grid.

    To be clear, the grid is not built for the daily peak load, it’s built for the 2-10 times a year when total demand spikes. Those times are almost always the heatwave days when everyone, commercial and residential alike, adds a giant wodge of air conditioning to their normal activities. Those are the days when every installed aircon is running full blast, people who don’t normally use air conditioning dig out the evaporative cooler or spare fan from under the house and power it up.

    That is what is driving the grid expansion, and the new power plants to feed the expanded grid. And it’s a ridiculously expensive way to do it. Or to put it another way, ridiculously profitable.

  29. Moz has no blog

    Desipis, a few links to peak demand FYI:

    http://energyaction.com.au/peak-demand-what-is-it NSW peaks about 3pm. Solar is still in peak output then.

    http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/Appendices/Australia-s-Electricity/ Victoria’s summer peak demand days typically peak at or before 6pm. Winter peaks are ~75% of summer but later – about 8pm – so they don’t increase the grid size requirement.

    http://www.sa.gov.au/subject/Water,+energy+and+environment/Energy/Energy+supply,+providers+and+bills/Electricity+and+gas+supply/Managing+peak+electricity+demand+in+South+Australia South Australia, most notably this comment: On some days South Australia’s demand for electricity can be more than double the average demand on a typical day. This is described as peak demand. Peak demand only occurs a few times each year on extremely hot summer days when air conditioners are being run in households in addition to other appliances and while the commercial and industrial sector is consuming power.

    Even LifeHacker has had a rant, with a lot of useful links in there: http://www.lifehacker.com.au/2012/11/how-does-peak-power-affect-electricity-prices/

  30. BilB

    Desipis @ 23,

    “Rising electricity prices have been driven by higher……”

    You’ve bought into the hype to believe this. There was under investment to a degree, but any industry that was working efficiently that then get a 50% increase in their revenue in just a few years is doing very well for itself. The profiteering surplus revenue is being used to buy up competition narrowing the competitive base while at the same time delivering exactly the opposite of what more efficient industries are supposed to deliver,…lower prices and better service.

    “This is all incorporated into the price…..”

    I think that you are arguing about the contents of a fog. The operating costs of individual parts of a generation system are agglomerated into a final charge. Only the utility knows the cost of each system element, and they are not releasing that information.

    * As I have said above I would prefer that Rooftop Solar was brokered independently. You suggest a long distance transmission cost of 33% which for local distribution would be half, and less efficiency increase percentage of 7% would mean a distribution cost under 4% and with a brokerage fee of 20% would give a return to the Rooftop Solar supplier of 17 cents per Kwhr. So for me to charge my car 20 klms away at work with the power from my own roof this would cost 5 cents per unit, or $1.50 for a 30 Kwhr charge and 200 klm range.

    That would be the market working properly.

    This example also demonstrates the difference between a real market reality and the false market as at present.

    “Bollocks. Look at the graph….”

    The graph represents a demand structure created over many years with preferential pricing to best serve the power generation facilities of the time. In another 10 years that demand graph will look very different.

    “….a demonstration that rooftop solar is an uneconomic investment”

    Refer to * point above.

    “Which is why generators should pay a carbon tax/price….”

    Agreed.

    “Your other advantages are more applicable to mass solar generation…”
    Wrong. These advantages are completely applicable to the individual. Any household that installs and uses their solar capacity for their own consumption is benefiting at the full retail electricity rate with a household cost reduction. ie improved standard of living. Furthermore they are directly contributing with government requirement or intervention to the reduction in global resource consumption. You are confusing installation costs for the domestic consumer budget with that of a grid supplier. ie 3 to 1 return ratio domestic to utility. Think about it.

    “Possibly because you keep getting your facts wrong…….”

    One of us is very wrong about all of this. Others and time will prove which.

  31. Chris

    Moz @ 30 – it would be possible to move the peak demand though if we exposed residential users more to the actual peak cost. It would more strongly encourage people to shift demand. In a well insulated house for example you could run an a/c system earlier in the day and then turn it off during the peak periods and rely on sufficient thermal mass to keep the house cool. You can do similar things with fridges/freezers as well. But currently there’s not really sufficient economic incentive to bother.

  32. desipis

    Moz:

    To be clear, the grid is not built for the daily peak load, it’s built for the 2-10 times a year when total demand spikes.

    I checked the NEM data and for 2008 the QLD peak occurred at 5pm and the 2012 peak was at 4pm. These fall outside the peak generation times (middle of the day) and would mean at best only a few percent difference in the peak demand resulting from rooftop solar. This represents about a year of demand growth and so is unlikely to have long term impact on network costs.

    BilB:

    You’ve bought into the hype to believe this.

    No, I’ve done research and modelling to that effect.

    That would be the market working properly.

    The problem with applying such price adjustments to network costs is that we don’t have a ‘network market’. It’s an entirely regulated price that is based on total network cost spread across total energy usage. Unless we’re going to start calculating network cost of individual connections (as a result charging customers at the end of the line a lot more, and customers near generators or substations a lot less) it doesn’t make much sense to single out rooftop solar for such adjustments purely because they might benefit from such an arrangement.

    As I mentioned above I don’t think rooftop solar significantly reduces peak demand so I don’t think it meaningfully reduces network costs enough to justify a special pricing system. The current arrangement of distributing network costs across all energy consumption might become quite unfair if a large enough class of people contribute to peak demand out of proportion to their total energy usage. A fairer system would require smart meters and determining individual peak demand during the system peak demand times to calculate network usage charges.

    Even with we did allow such adjustments I don’t think you’d get to 17c/kWh. The 7% losses will form part of the network cost. So if we assume network costs are 33% of the tariff, and assume half of that is transmission, we still only get ~12c/kWh to cover the no-transmission-cost bonus. There will still be distribution costs and distribution energy losses. Either way it’s still a long way from 44c/kWh.

    Any household that installs and uses their solar capacity for their own consumption is benefiting at the full retail electricity rate with a household cost reduction. ie improved standard of living.

    Of course, but that’s a separate issue to valuing the energy they pump back onto the grid. I’ve just done some rough calculations and assuming people use 50% of the power and pump back 50%, the 8c/kWh seems to be a bit past the break even point. (i.e effectively 15.5c/kWh, 3.5kW @ $7600, ~5000 kWh/~$800 per year, financing at homeloan rate, 20 year life, etc) So it’s already in individuals long term interests to invest in it without the higher tariff.

    However in the current system, that’s 5000kWh less to spread network costs over and it will drive up the network component of the energy price for everyone. Effectively it’s driving down costs for those who can afford to install it and driving costs up for those who can’t (this would also include renters). That’s not something I think needs subsidising.

  33. John D

    [email protected]: I don’t think the particular covered pedal electric would be practical here for some of the reasons you talked about. However, the material of construction is interesting and things with more than two wheels, a tilting body and and a design that minimizes side wind thrust have some hope of being more practical than the current crop of velos. In addition, the electric power makes it a lot easier to avoiding the overheating problem. Firstly, the electric power allows the driver to control the amount of power put into pedalling without having to compromise on speed and, secondly, there is power to drive fans.
    Despis: spot power prices go up as high as 1200 c/kWh. A bit more than 8 c/kWh.

  34. BilB

    Those are all solve-able design problems, JohnD, the aesthetics included. I don’t think that the design’s rendering does the styling justice. Some things really need to be seen in dynamic reality to be properly appreciated. The carver suspension really is a cool feature. Frankly I think that this design is a little amateurish. There are others, though.

    http://www.youtube.com/watch?v=V_vk1TwGJ4k

    for instance.

  35. BilB

    ….and possibly more believable in the pedal power assist department…..

    http://www.youtube.com/watch?v=KtHyF8DQ9ls&NR=1&feature=endscreen

    though at this stage not acceptably weather proofed.

  36. FMark

    …it’s already in individuals long term interests to invest in it without the higher tariff.

    However in the current system, that’s 5000kWh less to spread network costs over and it will drive up the network component of the energy price for everyone. Effectively it’s driving down costs for those who can afford to install it and driving costs up for those who can’t (this would also include renters). That’s not something I think needs subsidising.

    If you extrapolate out this scenario (and it accords with my limited understanding of the data), a real problem for the generators becomes apparent. The individual incentive to install solar drives up network costs, which increases the incentive to install solar (because the bulk of network costs are incorporated into the price of power rather than the connection fee). Without restructuring, I can’t see what would stop this cycle from becoming self perpetuating in the coming two decades (especially if the cost of batteries decrease at the same time making off-grid viable).

    Could we be seeing the death of the grid as we know it?

  37. BilB

    Exactly, Fmark. And it is also why Nuclear for Australia is permanently dead. There is insufficient certainty of stable consumption demand in any one locality for Nuclear to be a safe commercial option.

  38. Fran Barlow

    I have to say Bilb that the French trike in the youtube clip was very cute. At 0.9gCO2/km it’s very impressive in CO2 intensity.

    A maximum speed of 80km/h is plenty in an urban or even a suburban setting.

  39. desipis

    spot power prices go up as high as 1200 c/kWh. A bit more than 8 c/kWh.

    Well they can have the $12/kWh for the couple of hours in the year when the price if that high if they’re happy to accept the 4-5c/kWh they’ll get for much of winter.

  40. desipis

    FMark, without batteries it’ll mean greater reliance on peaking generation for the evenings when solar drops out and effective demand peaks even sharper than it currently does. There are also potential technical issues. Imagine the impact on generators if on a hot summer’s afternoon a storm front rolls over quickly and takes out the solar generation, there’d be a massive need for peaking generation capacity and the event could even cause network instability and outages.

    If the trend continues I’d say we’ll see a significant push for smart metering where rooftop solar generators get significantly less for what they generate during the day than what they pay for in the evenings. It’ll get to the point where base load generators would be pushing that energy out onto the market cheap/free anyway, since they would strongly prefer not to shutdown everyday. That would help keep the installations to a level where the rest of the network can efficiently handle the resulting demand.

    With batteries all bets are probably off. However, with current batteries you’d be spending thousands a year for a house to be off grid, and that’s assuming no persistent bad weather. Battery technology is currently one of the things holding back wider adoption of electric vehicles, so I’m not holding my breath.

  41. Lefty E

    Great post Brian. The renew economy link shows how much peak demand reduction is costing generators.

    In that sense, Solar PV is the cure to ‘gold-plating’, not because of its overall generating capacity (which is still limited), but because its best at expensive peak demand periods for air-con etc.

    Nice to see some figures being worked on by researchers.

    I cant see this going any way but up once people work out its cheaper in the long run, not just better for the environment.

  42. Chris

    Well they can have the $12/kWh for the couple of hours in the year when the price if that high if they’re happy to accept the 4-5c/kWh they’ll get for much of winter.

    I think that’s the way we should head (and should have in the past). Net, not gross FiT and just pay solar PV generators the spot market price. Like wind generators they will always just underbid gas/coal plants while they are generating. And thats where they really hurt the profitiability of base load power generators.

    I think that you’re right – in the future we may see cheaper power during the day not the night. But that’s not necessarily a bad thing, and just like people now can move power usage to night for cheaper tarrifs they can also do the reverse if given the financial incentive to do so.

  43. desipis

    just pay solar PV generators the spot market price.

    There’s also the question of the impact of that uncertainty on investments in rooftop solar. Large generators are much better placed to plan for and deal with such uncertainty. It’s not going to be so easy to convince individuals to invest in solar if you can’t tell them what their return will be with some certainty. “You might get $12/kWh or you might get 4c/kWh” might not cut it with retail level investors.

    Having averaged daily/seasonal price curves for retail customers/suppliers would provide better certainty while maintaining incentives for changing investment or consumption patterns.

  44. Chris

    desipis – that’s true, though certainty of return also led to gross feed in tarrifs which I think are bad because they don’t encourage change in household behavior. But I’d be happy if you gave people the choice between the two, with the average payment just some low-side statistical estimate that you could update every year based on how the market has behaved in the previous year.

  45. BilB

    Desipis,

    You seem to have lost the plot that people put solar panels on their roof to generate power for their own consumption primarily, by which method they are avoiding buying electricity at the full retail rate.

    Power exported to the grid amounts to grid storage. The higher the storage loss factor (sell price less buy back price) the greater the incentive to add in house battery storage.

    Here is how they do it in San Antonio

    http://www.cpsenergy.com/Residential/Rebates/Solar_Rebates/Solar_Photovoltaic/SolarPV_billing.asp

  46. Jumpy

    There are also suggestions that rooftop PV should be oriented to the NW or NWW rather than N out of preference.

    NWW?
    WNW perhaps.

  47. Moz has no blog

    BilB, exactly. We want PV almost entirely for our own use, and will likely face it noticeably west of north so we get that late afternoon peak. It does suck to be renting, and it will suck more as people pull out of the grid. But it sucks for a lot of other reasons too, which is why we’re starting to be more imaginative about affordable home-ownership. Cohousing is too hard, so we’re looking at other options.

  48. desipis

    BilB, my estimates make it somewhere between 30-40c/kWh for battery storage (depending on size & life assumptions). This is more expensive than it is currently to buy absolutely direct from grid. This means even if you had a ‘free’ source of power it wouldn’t make economic sense to store it in batteries for later use (if you have access to the grid).

    The generation cost spread in a day averages at about 10c/kWh. So we’re a long way off battery storage being an economically viable way for smoothing demand.

  49. Moz has no blog

    Brian, the main issue is with landlords not allowing it on the roof, and many flats not having enough outdoor space to make it worthwhile. I’ve looked quite seriously at plug-in panels, but we would have had to sacrifice our entire balcony to get any value out of them. The obstacles to ground-mounted panels are many, and again losing that much outdoor space is not an option for most inner-city types.

    Roof mounting in a detached house requires modifying the roof so it’s out. Tying flexible panels to the roof might work, but it would probably attract complaints (we had neighbours go nuts at shadecloth on the north side of the house, visible from the street).

    If you’re further out I can see popping a tracker next to the hills hoist in the capacious back yard and getting quite good value from something portable. Hammer a star picket a couple of metres into the ground at each corner and it might even stay put. I think a tracker because for renters max power from a small, portable unit is more important than cost per watt, at least to some point.

    You’d also need to play fast and loose with the regulations, at least until bidi smart meters are ubiquitous. Again, landlord permission required to change the meter, and why would they bother? And with an at-will lease, why would I stump the cash to swap the meter? The alternative is what I’ve done at times in the past (when I’ve been babysitting gear), and run an off-grid system powering as much of the mobile electrical gear as I can get away with.

    If you run a modem/router 24/7 like most lazy people do it’s easy enough to hook a 20W+ panel and wee SLA up to feed it… I’m tempted to make a kit because while it’s a simple enough thing to make it’s way too technical for most people. Given the cost it’s almost going to be better to add an arduino and a small display ($40 retail) to entertain the punters while it works.

  50. Lefty E

    Brian, the main issue is with landlords not allowing it on the roof,

    Yeah, this is quite an issue, and Im wondering how long it will be before there’s a portable model of panels. I assume the inputs / output to grid business is the tricky end there, rather than the panels.

  51. Lefty E

    Having fully read your post Moz I now see its both.

    This one needs to be tackled. Though the “non-PV customer subsidises your PV” argument is demonstrable crap, there is a clear equity issue between renters and owners on the PV front.

  52. FDB

    Lose the feed-in tariff and introduce a subsidy for PV in rental properties. And obviously mandate PV as a central design feature in all new public housing.

  53. FDB

    “…for PV *installation*…”

  54. Chris

    Yeah, this is quite an issue, and Im wondering how long it will be before there’s a portable model of panels. I assume the inputs / output to grid business is the tricky end there, rather than the panels.

    With the drop in panel costs I believe that a significant proportion of the total cost is the frame that the panels sit on (which is not so easily moved and if moved so repairs would need to be done) and labor. Remember there’s a significant amount of cabling and other hardware installed like an inverter, breakers etc.

    Lose the feed-in tariff and introduce a subsidy for PV in rental properties. And obviously mandate PV as a central design feature in all new public housing.

    The capital subsidies always should have been targeted at installing PV in public housing rather than private installations. Install the PV and remove the electricity subsidies for those who live in public housing with PV. Win-win, but Not nearly as many votes in it for the government that way though.

    Brian, the main issue is with landlords not allowing it on the roof, and many flats not having enough outdoor space to make it worthwhile.

    With apartments it probably makes more sense for the body corporate to install one big system and then sell the power direct to the people living there rather than people installing tiny systems with lots of small expensive inverters.

    If you run a modem/router 24/7 like most lazy people do it’s easy enough to hook a 20W+ panel and wee SLA up to feed it… I’m tempted to make a kit because while it’s a simple enough thing to make it’s way too technical for most people.

    Could you make it cheap enough to make it financially worthwhile? I have a 4kW system and every now and then I look into battery systems. Not intending to go off grid, but I work from home so being immune to grid failures and being able to store power to use cheaply at night would be great (on average I generate about as much as I consume). But the numbers have never added up for me for a battery system – it would never pay for itself.

  55. Moz has no blog

    Chris, for you buying a cheap UPS and a big battery to sit under it is probably a better bet. I have a 650VA UPS (APC CS-500), it came with a 7AH battery that it fried the first time I used it (too much power drain, wrecked the battery). Those sell for ~$99. To make it work I bought a $300 120 AH AGM battery and ran a couple of wires to it (all 12V). That will run my ~300W PC for a couple of hours without problems. You could reasonably easily add a separate panel and charger to that setup, but I’d be adding a switch rather than hacking the UPS to change the battery voltage detection. Your local solar dealer should be able to explain it and sort you out.

    There are panels that have built-in inverters so they literally plug into the wall to feed power back into the “grid” (ie, your house). I believe those are legal, but if they generate more power that you’re using at any instant you’re in breach of your supply agreement. Smart meters will detect that, old disk ones will not (some will even run backwards).

    The issue for apartments is that they typically have one electricity connection per apartment, so if they put panels on the roof they need to pay for another meter and connection charge just for the panels. Most strata committees struggle to agree what colour to paint communal walls, let alone anything expensive and risky like PV. When there’s a financial risk things typically get even more difficult (I’m guessing $2/day to be connected, $1000 for a smart meter, fluctuating feed-in prices making payback period uncertain, plus limited panel power allowed – 5kW?).