The scientific way to avoid electricity price spikes, saving Australians thousands
How a process called "aggregated demand response" could work in Australia, writes Dan Cass, strategist at The Australia Institute.
Australia
Jul 14, 2017
Federal Energy Minister Josh Frydenberg at today's COAG Energy Council meeting.
Imagine if petrol prices went up from $1.29/litre to $180/litre for brief parts of the day on a few days of the year. Worse still, imagine drivers had no way of knowing what price they were paying until after they’d filled up.
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The system is a rehash of an old solution to the opposite problem, when an oversupply in electricity causes the price to go low or negative. That should be the opportunity for everyone with a battery to store it up and sell later when the prices high. These are the “intermittent consumers” needed for an intermittent energy supply. However the biggest batteries are not big enough and despite recent hype, show little likelihood of reaching the grid-scale capacity needed.
Industrial society has developed in, and continues to be designed for, a steady price for a reliable supply. Why should this broader consumer base offer from wild fluctuations of electricity caused by intermittent supply? It would make sense for these (purportedly willing and able) intermittent consumers to do their own private deal with the intermittent suppliers for a mutual profit. It would relieve the pressure on the grid operator, allowing it to provide the remaining dispatchable power to on-demand consumers.
Surely Dan this is the result of privatisation. A Mw/h of electricity has little variation in the cost of production and that is entirely source related. The present system actually encourages power suppliers to hold off producing power to maximise the price as we saw last summer, with the power stations in SA offline at critical times for “technical reasons”-read greed or malfeasance.
Agree totally with you Greybearded One. Greed or malfeasance definitely. The situation is disgusting.
Thanks OGO. You are correct that privatisation has failed to acheive efficiency and of course has embedded the old, polluting model.
But I note that detailed research by Dr Bruce Mountain indicates that you can have good or bad outcomes from both privatised or state-owned electricity industries.
In Australia for example, state governments (and the feds via the Snoty) still own hefty investments in generators and poles and wires. The problem here is that they milk these investments for returns or try to make them richer pickings for future privatisation rounds, rather than use them wisely to keep prices down and transition to a low emissions, democratic energy system.
Gaming of markets is a key driver of higher prices, which is why we advocate the Five Minute Rule: https://www.crikey.com.au/2017/04/05/the-five-minute-solution-to-australias-energy-crisis/
What an over-response to gaming by generators – and to excessive depreciation allowances. Just fix the real problems.
Josh can go and GF. I spent a lot of my own money putting panels up, to reduce my bills and it hasn’t happened because his lot c=keep fusing prices up. I feel really sorry for those that cant afford to add solar, it should be something that our feds are pushing, but they would rather pump billions of subsidises into fossil fuel crap…3.3 billion to renewable , 11 billion to fossil fuel…kill subsidies to everything now.
Am I going made or is the first paragraph categorically false?
Electricity retailers are exposed to price fluctuations, but consumers are not. Sure the price has trended up as a result of the spot market price spikes, but customers are not exposed to that volatility in any way equivalent to the analogy in the first paragraph.
Good question Jimmy, thanks.
Indeed, its an analogy, not a description, but a useful one.
The point is that the price you and all of us customers do pay for the total cost of electricity supplied to us through our bill, including the peaky times.
For example, the Productivity Commission reported that 40 hours of price peaks in NSW made up 25% of annual cost of electricity.
Your retailer might be really lovely, but I can assure you, if their input costs go up, they pass it on! Its not reflected in an hourly or daily change to your bill, but the bill will go up, without fail.