About Social Media Today
The Queensland Competition Authority (QCA) has released its Final Price Determination for 2012-13 regulated retail electricity prices for all regulated retail electricity tariffs in Queensland. Unsurprisingly for energy consumers prices are set to increase by over 20%, with fixed costs set to increase substantially and punish those who are energy efficient. According to the QCA, there were a number of factors involved including massive capital expenditure and Government subsidised 'Clean Schemes'.
George Maltabarow, Managing Director of Ausgrid, one of the largest electricity networks in Australia, recently told ABC’s Insight, that one of the main reasons prices are rising is because consumers are pursuing energy intensive lifestyles, which means electricity networks have to spend large amounts on infrastructure to meet rising demand. Energy hungry devices such as air-conditioning units are now being seen as a necessity rather than a luxury.
Energy companies are quick to point their finger at consumers and renewable energy. With many calling for reductions or an end to the Government’s Renewable Energy Target (RET) of 20% renewable energy by 2020. The position of the energy companies is clear: It's the consumer and green energy to blame. But how true is this statement?
Much of Queensland's energy network was built 50 or more years ago and is now becoming obsolete. As an example, ENERGEX (Owner of a large portion of the electricity network) has had to increase their capital expenditure by over 400% from 2005 to just over $1 billion in the last financial year.
In fact Queensland no longer produces enough baseload electricity to power the state on a warm summer day and is forced to generate extra power at premium prices. At one point this past summer, energy retailers were paying $12,000 per megawatt hour (MWh) to the market as expensive smaller generators were fired up.
Electrical Trades Union organiser Trevor Gauld said: "Every time we go over 33C, demand will exceed (baseload) capacity. At the same time, rooftop solar actually helped to drive down demand by delivering energy just when the grid needs it. As the graph below shows, peak demand during the middle of the day has been reduced significantly as 200,000 solar power systems across the state kick in.
Furthermore energy demand across Australia has actually decreased. Over the last four years, despite industry forecasts calling for growth, electricity demand has actually fallen – as a result of lower consumption due to rising prices, introduction of energy efficiency measures and the growing impact of rooftop solar. In 2012, the average consumption for Victorian households fells 10 per cent.
Energy Utilities has started using this data to argue that the rollout of large scale renewables and even rooftop solar should be slowed or even stopped due to their effect on wholesale energy prices. Supported by a network of coal fired generators and network operators who are in the midst of declining profits they have formed an energy cartel with the direct intention of halting renewable energy.
In fact over the past year we have seen massive reductions in renewable energy incentives across every state of Australia as well as other proposals such as forcing rooftop solar to be priced on a ‘gross’ Feed-in Tariff (FiT) basis - a scheme which would virtually eliminate the industry in a post FiT world.
And so for those wondering what has been the cause of these electricity price rises – the proof is in the pudding. As the graph below demonstrates, network costs now account for two thirds of the increase of electricity in NSW, with similar trends being repeated across Australia.
So now that Australian consumers have worn some hefty electricity prices over the past few years many are asking how large will their electricity bills be by 2020? It is this same question that is driving many to consider the use of rooftop solar and now battery storage systems, despite decreases in Government incentives – Australian consumers are beginning to look to the future.
My advice to energy retailers who want to keep their profits would simply be to drop their prices for the next few years, making rooftop PV and large scale renewable energy unviable again or to keep up with the times, embrace the change and look to the future - become clean energy retailers. One thing is for certain, the energy game is changing and those who choose to keep their traditional business models will soon find themselves out of a customer base willing to pay for their products.
