tag:theconversation.com,2011:/ca/topics/electricity-networks-4371/articlesElectricity networks – The Conversation2023-06-28T20:03:53Ztag:theconversation.com,2011:article/2068642023-06-28T20:03:53Z2023-06-28T20:03:53ZWe could need 6 times more of the minerals used for renewables and batteries. How can we avoid a huge increase in mining impacts?<p>We are seeing the biggest changes in our energy and transport systems since industrialisation. By 2026, global renewable energy generation is <a href="https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions/executive-summary">expected to match</a> total fossil fuel and nuclear output. Building the wind and solar farms, batteries and electricity networks we need to run our system on renewables will use a huge array of mined minerals, known as “transition minerals”.</p>
<p>The numbers are staggering. The International Energy Agency <a href="https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions/executive-summary">estimates</a> a sixfold increase in demand for these minerals by 2040 to meet climate targets of well below 2°C of warming. We could need 21.5 million tonnes for electric vehicles and battery storage alone. </p>
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<p>Transitional minerals include metals such as lithium, cobalt, copper, graphite, magnesium and nickel. They also include rare earths like neodymium, praseodymium, dysprosium and terbium. </p>
<p>Currently, mining provides almost our entire supply. The scale of demand for these minerals could result in almost <a href="https://source.benchmarkminerals.com/article/more-than-300-new-mines-required-to-meet-battery-demand-by-2035">400 new mines</a> by 2035.</p>
<p>To put this in perspective, Australia has around <a href="https://www.ga.gov.au/education/classroom-resources/minerals-energy/australian-mineral-facts">350 operating mines</a>. <a href="https://www.minister.industry.gov.au/ministers/king/media-releases/australias-lithium-powering-global-energy-transition">More than 50%</a> of the world’s lithium and much of its copper, cobalt, nickel and rare earths come from our mines. </p>
<p>Australia is hosting the <a href="https://wmc2023.org/">World Mining Congress</a> this week. A key issue for the industry is how we can ensure the minerals needed for the energy transition are sourced responsibly.</p>
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Read more:
<a href="https://theconversation.com/more-clean-energy-means-more-mines-we-shouldnt-sacrifice-communities-in-the-name-of-climate-action-170938">More clean energy means more mines – we shouldn't sacrifice communities in the name of climate action</a>
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<h2>How can we manage demand?</h2>
<p>We can design energy and transport systems to minimise mineral demand. Strategies include:</p>
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<li>reducing our dependence on cars and using smaller vehicles</li>
<li>improving energy efficiency</li>
<li>moving to a circular economy that makes reuse and recycling a priority. </li>
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<p>All these changes can reduce the need for new mines. </p>
<p>Recycling, for example, could reduce demand for mined materials. For lithium-ion batteries for electric vehicles, <a href="https://earthworks.org/resources/recycle-dont-mine/">estimated reductions</a> are 25% for lithium, 35% for cobalt and nickel, and 55% for copper by 2040. </p>
<p>This recycled content will mainly come from waste batteries. However, large volumes of lithium-ion batteries won’t start reaching the end of their lives for at least a decade. Recycling will only have a <a href="https://www-sciencedirect-com.ezproxy.lib.uts.edu.au/science/article/pii/S0921344923000885">significant impact from 2035</a>.</p>
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Read more:
<a href="https://theconversation.com/batteries-are-the-environmental-achilles-heel-of-electric-vehicles-unless-we-repair-reuse-and-recycle-them-205404">Batteries are the environmental Achilles heel of electric vehicles – unless we repair, reuse and recycle them</a>
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<h2>Mining is unavoidable, so we must limit its impacts</h2>
<p>If we are destined to continue mining for the minerals needed for the energy transition, how can this be done responsibly? And what exactly do we mean by responsible sourcing?</p>
<p>Responsible sourcing minimises the environmental, social and governance impacts and risks of mining. Key concerns include the use of child labour and forced labour, damage to the environment, impacts on Indigenous rights and cultural heritage, and corruption.</p>
<p>In 2011, the Australian government released <a href="https://www.industry.gov.au/publications/leading-practice-handbooks-sustainable-mining">guidance on sustainable mining</a>. Historical and recent harmful impacts highlight the need for a fresh look at mining practices. In 2020, for example, Rio Tinto <a href="https://www.theguardian.com/australia-news/2021/may/24/a-year-on-from-the-juukan-gorge-destruction-aboriginal-sacred-sites-remain-unprotected">destroyed</a> a 46,000-year-old Aboriginal heritage site in Juukan Gorge. </p>
<p>First Nations people worldwide are calling for free, prior and informed consent when mining and renewable energy developments are proposed for their land. This approach recognises the right to be consulted early in the process, informed of the impacts, and supported to take part in negotiation and making agreements. Most importantly, it includes the right to say no. </p>
<p>In many parts of Australia, Indigenous communities have been <a href="https://theconversation.com/native-title-and-australias-resource-boom-a-lost-opportunity-2725">locked out of economic opportunities</a>, despite mining generating enormous wealth on their Country. </p>
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Read more:
<a href="https://theconversation.com/54-of-projects-extracting-clean-energy-minerals-overlap-with-indigenous-lands-research-reveals-195438">54% of projects extracting clean energy minerals overlap with Indigenous lands, research reveals</a>
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<h2>What does responsible sourcing involve?</h2>
<p>How do we do things more responsibly? We need to ensure activities comply with a range of sustainability criteria. An agreed standard will mean we have information that enables us to compare the good and bad apples.</p>
<p>The problem is there isn’t a common approach to measuring, managing and reporting environmental, social and governance performance. Our <a href="https://fbicrc.com.au/wp-content/uploads/2022/11/FBICRC-Certification-Commonalities-Report-Spreads-VFINAL30November.pdf">recent research</a> analysed the plethora of voluntary standards and certifications available to battery materials producers. No common global or Australian standard has been adopted. </p>
<p>Smaller mining companies also struggle with the administrative complexities of sustainability reporting and management criteria. An agreed common language for reporting and management is needed. Only then can traceability solutions, such as the Global Battery Alliance’s blockchain-enabled “<a href="https://www.globalbattery.org/battery-passport/">battery passport</a>”, produce trustworthy and comparable results. </p>
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Read more:
<a href="https://theconversation.com/australia-has-rich-deposits-of-critical-minerals-for-green-technology-but-we-are-not-making-the-most-of-them-yet-182331">Australia has rich deposits of critical minerals for green technology. But we are not making the most of them ... yet</a>
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<h2>Let’s set the bar high</h2>
<p><a href="https://fbicrc.com.au/wp-content/uploads/2022/11/FBICRC-Certification-Commonalities-Report-Spreads-VFINAL30November.pdf">Our research</a> identified the Initiative for Responsible Mining Assurance (IRMA) as one of the more rigorous standards. Its credibility is built on how it is governed. This involves six stakeholder groups: mining companies, purchasers, NGOs, affected communities, labour organisations and the finance sector. </p>
<p>There are still questions to be answered. How do practices in Australia measure up to the standard? And how can regulatory reform help to steer mining operations in the right direction? </p>
<p>A focus on environmental, social and governance practices in the <a href="https://www.industry.gov.au/publications/critical-minerals-strategy-2023-2030/our-focus-areas/4-promoting-australia-world-leader-esg-performance">Australian Critical Minerals Strategy</a>, released last week, is a welcome first step.</p>
<p>Issues that must be front and centre include:</p>
<ul>
<li>mining impacts on water supply</li>
<li>free, prior and informed consent from First Nations communities</li>
<li>integrated planning for climate change impacts such as extreme weather that may affect management of mine tailings</li>
<li>biodiversity protection</li>
<li>mine closure planning that integrates progressive rehabilitation of ecosystems</li>
<li>circular business practices to make the most of what we have. </li>
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Read more:
<a href="https://theconversation.com/tapping-mineral-wealth-in-mining-waste-could-offset-damage-from-new-green-economy-mines-183232">Tapping mineral wealth in mining waste could offset damage from new green economy mines</a>
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<p>As a leading mining nation, Australia is in a position to leverage its historical environmental leadership, show renewed responsibility and integrity, and lead by example. We can then help leave the planet in a shape that future generations will be proud to inherit.</p><img src="https://counter.theconversation.com/content/206864/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rusty Langdon receives funding from a range of government and non-government organisations. In 2022-23 this included the BSC and the FBI CRC. </span></em></p><p class="fine-print"><em><span>Elsa Dominish receives funding from various government and non-government organisations. In 2022-23 this includes DFAT, Earthworks, WWF-Australia and UNESCAP. </span></em></p>Nearly 400 new mines could open by 2035 to meet demand for the minerals used in global electrification. Better recycling can help with supply, but mining’s impacts will have to be better managed.Rusty Langdon, Senior Research Consultant, Institute for Sustainable Futures, University of Technology SydneyElsa Dominish, Research Principal, Institute for Sustainable Futures, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1854182022-06-21T19:55:06Z2022-06-21T19:55:06ZThe national electricity market is a failed 1990s experiment. It’s time the grid returned to public hands<figure><img src="https://images.theconversation.com/files/469944/original/file-20220621-24-2eunm2.jpg?ixlib=rb-1.1.0&rect=0%2C28%2C6287%2C4151&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Dean Lewins/AAP</span></span></figcaption></figure><p>A crisis, as the saying has it, combines danger and opportunity. The dangers of the <a href="https://theconversation.com/australias-national-electricity-market-was-just-suspended-heres-why-and-what-happens-next-185136">current electricity crisis</a> are obvious. The opportunity it presents is to end to the failed experiment of the national electricity market.</p>
<p>Having suspended the market last week, the Australian Energy Market Operator (AEMO) is now directing generators when to supply electricity. It’s also paying them lavish compensation for the financial shortfalls they suffer as a result. </p>
<p>These emergency measures are unsustainable. But they provide the starting point for a restructured electricity supply industry – one that’s better balanced between markets and planning.</p>
<p>Now’s the time to create a national grid that serves the Australian public and meets the challenges of a warming world. A new government-owned and operated body should take control of Australia’s electricity system. And decarbonising the grid, while ensuring reliable and affordable energy, should be its core business. </p>
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<img alt="string of light bulbs in dark" src="https://images.theconversation.com/files/469945/original/file-20220621-19-mubsbk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/469945/original/file-20220621-19-mubsbk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=405&fit=crop&dpr=1 600w, https://images.theconversation.com/files/469945/original/file-20220621-19-mubsbk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=405&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/469945/original/file-20220621-19-mubsbk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=405&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/469945/original/file-20220621-19-mubsbk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=509&fit=crop&dpr=1 754w, https://images.theconversation.com/files/469945/original/file-20220621-19-mubsbk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=509&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/469945/original/file-20220621-19-mubsbk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=509&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Decarbonising the grid should be a key goal of electricity reforms.</span>
<span class="attribution"><span class="source">Dave Hunt/AAP</span></span>
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<h2>Privatisation and poor design</h2>
<p>The national electricity market is where energy generators and retailers trade electricity. It was established about 25 years ago after technological advances allowed electricity grids to be connected across all states except Western Australia and the Northern Territory. </p>
<p>Before the market began, each state operated its own electricity industry with only limited interconnection. Back then, electricity companies were publicly owned. Most were also fully integrated, with one company responsible for the entire electricity supply chain, from generation to distribution and billing. </p>
<p>The national grid’s arrival coincided with the peak of enthusiasm for micro-economic reform. So, instead of a unified national enterprise, state utilities were broken up into separate parts – generation, transmission, distribution and retail – with the intention they would be privatised then engage in market competition. </p>
<p>Driving the trend towards privatisation was a widespread view that state-owned electricity enterprises had <a href="https://researchnow.flinders.edu.au/en/publications/nation-building-nationalisation-and-etsa">not performed well</a> – particularly in investing to expand access to electricity. </p>
<p>Reflecting this view, the industry became fully or mostly privatised in Victoria, South Australia and New South Wales. Other states opened electricity generation and retail to competition. </p>
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Read more:
<a href="https://theconversation.com/whats-a-grid-anyway-making-sense-of-the-complex-beast-that-is-australias-electricity-network-185127">What's a grid, anyway? Making sense of the complex beast that is Australia's electricity network</a>
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<p>The market was created just as the global need to reduce carbon emissions was being recognised. Despite this, the climate problem was not considered in the design of the market, which was based on a mix of coal and gas plants.</p>
<p>Until AEMO suspended the market last week, bids from generators determined the wholesale price of electricity at five-minute intervals. Retailers supplied electricity to consumers at prices that shielded them from the fluctuations in wholesale prices. </p>
<p>Prices typically sat around A$50 per megawatt hour. But in periods of very high electricity demand, the price can reach the market “price cap”, <a href="https://wattclarity.com.au/other-resources/explanations/glossary/market-price-cap/">currently set</a> at $15,100 per megawatt hour.</p>
<p>Meanwhile, electricity distribution – getting the power to homes and businesses using poles, wires and other infrastructure – was handed to a set of regulated monopolies, which were awarded high rates of return on low-risk assets.</p>
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<span class="caption">The climate problem was not considered in the design of the market.</span>
<span class="attribution"><span class="source">Dan Himbrechts/AAP</span></span>
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<h2>What went wrong</h2>
<p>The designers of the national electricity market hoped it would lead to better efficiency and more rational investment decisions. The market also aimed to lower consumer power bills and promote competitive retail offers tailored to individual needs. But none of this happened. </p>
<p>In fact, consumer electricity prices – after falling for the better part of a century in real terms under public ownership – <a href="https://www.aph.gov.au/about_parliament/parliamentary_departments/parliamentary_library/pubs/briefingbook44p/energyprices">rose dramatically</a>. </p>
<p>This was partly due to high returns to private electricity distribution companies, and the need for infrastructure investment to improve reliability. A proliferation of highly paid marketers, managers and financiers were also required to run the market. </p>
<p>Over time, the failures of the original design led to an alphabet soup of agencies needed to run the industry. They include AEMO, AEMC, AER, ARENA and a bunch of state-level regulators. Finally, the Turnbull government created the misnamed Energy Security Board (ESB), which sat on top of the whole process. </p>
<p>All this delayed the transition from an old and unreliable coal-based system to its necessary replacement by a combination of solar, wind and storage.</p>
<p>Now, this rickety system has failed to deal with a major supply crisis. The temptation is to slap on another patch and restore “normal” market conditions. The <a href="https://theconversation.com/why-including-coal-in-a-new-capacity-mechanism-will-make-australias-energy-crisis-worse-185404">ESB’s proposal</a> to pay coal and gas generators to be on standby if needed is one such quick fix. But much more comprehensive reform is needed.</p>
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Read more:
<a href="https://theconversation.com/why-including-coal-in-a-new-capacity-mechanism-will-make-australias-energy-crisis-worse-185404">Why including coal in a new ‘capacity mechanism’ will make Australia's energy crisis worse</a>
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<img alt="composite image of electricity infrastructure and numbers" src="https://images.theconversation.com/files/469947/original/file-20220621-11-jhumxd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/469947/original/file-20220621-11-jhumxd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=228&fit=crop&dpr=1 600w, https://images.theconversation.com/files/469947/original/file-20220621-11-jhumxd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=228&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/469947/original/file-20220621-11-jhumxd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=228&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/469947/original/file-20220621-11-jhumxd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=286&fit=crop&dpr=1 754w, https://images.theconversation.com/files/469947/original/file-20220621-11-jhumxd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=286&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/469947/original/file-20220621-11-jhumxd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=286&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The national electricity market has failed to achieve its key aims.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<h2>Where to from here?</h2>
<p>A combination of public and private investment is now needed to secure affordable electricity and transition to renewable energy generation.</p>
<p>The plethora of bodies regulating the market should be replaced by a single government agency that buys wholesale electricity from generators. This organisation could then sell electricity directly to customers or supply it to electricity retailers.</p>
<p>The emergency purchasing arrangements AEMO currently has in place should be replaced by “power purchase agreements”. These are long-term contracts between a buyer and a generator to purchase energy, in which prices, availability and reliability are set. </p>
<p>Within those terms, generators that consistently produce electricity at very low prices are the first to be called on. This dispatch method, known as merit order, has been <a href="https://reneweconomy.com.au/the-merit-order-effect-actually-its-a-good-thing-84129/">shown in Germany</a> to lead to lower prices for consumers.</p>
<p>At the same time, the Australian electricity grid should be returned to government ownership and operation. And its guiding principle should be moving to a decarbonised energy system, rather than the “<a href="https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--2.pdf?la=en">net market benefit</a>” test AEMO currently uses when deciding where to approve investment.</p>
<p>Labor’s Rewiring the Nation policy provides a starting point for reform. It should invest directly in the expanded transmission network needed to support the transition to renewable energy.</p>
<p>Australian energy policy took a wrong turn in the 1990s. It’s time to get back on course.</p>
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Read more:
<a href="https://theconversation.com/in-an-energy-crisis-every-watt-counts-so-yes-turning-off-your-dishwasher-can-make-a-difference-185247">In an energy crisis, every watt counts. So yes, turning off your dishwasher can make a difference</a>
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<img src="https://counter.theconversation.com/content/185418/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Quiggin is a former Member of the Climate Change Authority</span></em></p>It’s time for a national grid that serves the public and meets the challenges of a warming world. A new government-owned and operated body should take control of Australia’s electricity system.John Quiggin, Professor, School of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1562252021-08-05T10:44:39Z2021-08-05T10:44:39ZWhy the UK’s unfair energy market is unlikely to spearhead a green transition<figure><img src="https://images.theconversation.com/files/414769/original/file-20210805-25-hzjc05.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4912%2C3264&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/double-exposure-electric-pole-sky-stock-1157896027">Art Stock Creative/Shutterstock</a></span></figcaption></figure><p>Millions of people will pay more for gas and electricity in the UK by the autumn of 2021 as the energy regulator, Ofgem, has removed a cap on prices. For some households, this could mean bills rising by as much as <a href="https://www.theguardian.com/business/2021/aug/06/millions-of-great-britain-homes-face-highest-energy-bills-in-a-decade">£153 (US$212) a year</a>, potentially pushing <a href="https://amp.theguardian.com/society/2021/jul/31/calls-for-social-tariff-on-uk-energy-bills-as-rises-push-extra-half-million-homes-into-fuel-poverty">an extra 500,000 homes</a> into fuel poverty.</p>
<p>Those heftier energy bills also fund much of the UK government’s flagship policies for the low-carbon transition. On top of their energy use, every home in the country is paying extra on their bill to cover the cost of retrofitting programmes to increase the energy efficiency of homes, help for those in fuel poverty and subsidies for renewable generation. All of these costs are added to energy bills at a flat rate.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/396077/original/file-20210420-15-lxuwos.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A bar chart showing cost of green policy as share of income from each income group." src="https://images.theconversation.com/files/396077/original/file-20210420-15-lxuwos.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/396077/original/file-20210420-15-lxuwos.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=385&fit=crop&dpr=1 600w, https://images.theconversation.com/files/396077/original/file-20210420-15-lxuwos.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=385&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/396077/original/file-20210420-15-lxuwos.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=385&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/396077/original/file-20210420-15-lxuwos.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=484&fit=crop&dpr=1 754w, https://images.theconversation.com/files/396077/original/file-20210420-15-lxuwos.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=484&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/396077/original/file-20210420-15-lxuwos.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=484&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Who foots the bill for decarbonisation?</span>
<span class="attribution"><a class="source" href="https://www.tandfonline.com/doi/full/10.1080/14693062.2020.1773754">Owen & Barret/Climate Policy</a></span>
</figcaption>
</figure>
<p>According to <a href="https://www.ippr.org/publications/when-the-levy-breaks-energy-bills-green-levies-and-a-fairer-low-carbon-transition">a 2015 report</a>, this means, in practice, that those on the lowest incomes pay a six times higher share of their income for the transition than the highest income group, who also happen to have the <a href="http://www.ledevoir.com/documents/pdf/chancelpiketty2015.pdf">highest CO₂ emissions</a> on average.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/396078/original/file-20210420-21-1wkxryc.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A bar chart comparing energy use between different income groups." src="https://images.theconversation.com/files/396078/original/file-20210420-21-1wkxryc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/396078/original/file-20210420-21-1wkxryc.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=334&fit=crop&dpr=1 600w, https://images.theconversation.com/files/396078/original/file-20210420-21-1wkxryc.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=334&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/396078/original/file-20210420-21-1wkxryc.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=334&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/396078/original/file-20210420-21-1wkxryc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=420&fit=crop&dpr=1 754w, https://images.theconversation.com/files/396078/original/file-20210420-21-1wkxryc.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=420&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/396078/original/file-20210420-21-1wkxryc.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=420&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Higher income groups use significantly more energy than those on lower incomes.</span>
<span class="attribution"><a class="source" href="https://www.ippr.org/publications/when-the-levy-breaks-energy-bills-green-levies-and-a-fairer-low-carbon-transition">Garman & Aldridge/IPPR</a>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Through energy bills, people in the lowest income groups effectively self-fund their own fuel poverty support, including measures like <a href="https://www.gov.uk/the-warm-home-discount-scheme">the warm home discount</a> – a one-off winter payment of £140 towards energy bills – while also paying towards measures that mainly benefit <a href="https://www.tandfonline.com/doi/full/10.1080/14693062.2020.1773754">higher income groups</a>, like subsidies for rooftop solar panels.</p>
<p><a href="https://www.eci.ox.ac.uk/people/bboardman.html">Academic Brenda Boardman</a> warned about this problem in <a href="https://www.sciencedirect.com/science/article/abs/pii/030626199390061S">the 1990s</a>. Not only is this not a fair way to fund the national effort to decarbonise the UK’s energy system, but that same unfairness is slowing the speed and reducing the motivation for a transition in the first place.</p>
<h2>The big fix</h2>
<p>The UK’s energy market is dominated by six multinational corporations. On the website of Ofgem, the energy regulator, <a href="https://www.ofgem.gov.uk/investigations">a page</a> documents the multiple infractions of these companies, known as <a href="https://theconversation.com/uk/topics/big-six-energy-companies-16080">the Big Six</a>, from their <a href="https://journals.sagepub.com/doi/full/10.1177/1024529420964933">treatment of vulnerable customers</a> to their failure to fulfil obligations to reduce the carbon intensity of their gas and electricity.</p>
<p>Ofgem’s answer is a voluntary <a href="https://energyredress.org.uk/about-us">redress scheme</a> which companies under investigation pay into. This often funds programmes which advise vulnerable customers, such as the chronically ill, on how to navigate an (often intentionally) bewildering energy market. Npower paid <a href="https://www.ofgem.gov.uk/publications/npower-pay-ps26m-failing-treat-customers-fairly">a record fine</a> in 2015 of £26 million. The total number of fines and redress payments made in 2020 <a href="https://www.ofgem.gov.uk/energy-policy-and-regulation/compliance-and-enforcement">reached £71.3 million</a>.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/people-who-cant-heat-their-homes-need-energy-justice-not-fuel-bank-charity-40778">People who can't heat their homes need energy justice – not 'fuel bank' charity</a>
</strong>
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<p>Had this money been spent directly on low-cost renewable generation, <a href="https://www.renewableuk.com/page/UKWEDExplained">57 megawatts of wind energy</a> could have been installed, enough to power around 40,000 homes annually. </p>
<p>These six companies made profits of nearly <a href="https://assets.publishing.service.gov.uk/media/5773de34e5274a0da3000113/final-report-energy-market-investigation.pdf">£2 billion</a> in 2015 from their standard tariffs. People are often placed on these automatically and tend to remain on them, with only the most nimble customers (<a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/699937/modernising-consumer-markets-green-paper.pdf">around 30% in 2016</a>) switching. The government <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/699937/modernising-consumer-markets-green-paper.pdf">noted</a> that those least likely to switch to cheaper tariffs earn less than £18,000 a year, are aged 65 and over, with a disability, or live in social housing or the private rented sector. As a result, a significant proportion of these profits are extracted from those <a href="https://www.ofgem.gov.uk/sites/default/files/docs/2008/10/energy-supply-probe---initial-findings-report.pdf">least able to pay</a>.</p>
<p>In fact, many people living in private rentals and social housing (20% and 17% of the population <a href="https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukprivaterentedsector/2018#main-points">respectively</a>) are effectively <a href="https://www.sciencedirect.com/science/article/pii/S0301421519300102">excluded</a> from the choice of installing the solar panels and electric vehicle charging points their energy bills finance, because such freedoms tend to depend on home ownership.</p>
<p>UK consumers also pay some of the <a href="https://www.gov.uk/cma-cases/energy-market-investigation">highest pre-tax rates</a> for electricity in Europe, and energy costs in general are <a href="https://www.gov.uk/government/publications/cost-of-energy-independent-review">higher than they should be</a> considering falling gas prices since 2014 and more efficient boilers and smart meters. Meanwhile, the <a href="https://www.ofgem.gov.uk/information-consumers/energy-advice-households/costs-your-energy-bill">third of the bill</a> which pays for the maintenance and environmental upgrade of energy infrastructure is taken at the same rate from billionaires as it is from those on Universal Credit. People without solar panels will continue paying for the essential network changes that incorporate the growing amount of renewable energy, and those who cannot afford to swap their fossil fuel burning car for an electric vehicle could end up having to travel further and emit more to get fuel, as retailers cease supplying or <a href="https://www.sciencedirect.com/science/article/pii/S0301421519300102">close their facilities</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/396079/original/file-20210420-17-60vm8k.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A bar chart comparing pre-and post-tax electricity prices in EU countries." src="https://images.theconversation.com/files/396079/original/file-20210420-17-60vm8k.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/396079/original/file-20210420-17-60vm8k.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=346&fit=crop&dpr=1 600w, https://images.theconversation.com/files/396079/original/file-20210420-17-60vm8k.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=346&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/396079/original/file-20210420-17-60vm8k.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=346&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/396079/original/file-20210420-17-60vm8k.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=435&fit=crop&dpr=1 754w, https://images.theconversation.com/files/396079/original/file-20210420-17-60vm8k.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=435&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/396079/original/file-20210420-17-60vm8k.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=435&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Electricity prices from July to December 2015, including and excluding tax (p/kWh).</span>
<span class="attribution"><a class="source" href="https://www.gov.uk/cma-cases/energy-market-investigation">UK Government</a>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>While consumers fund measures which cut emissions from the UK’s energy system through bills, government policies effectively subsidise fossil fuels, mostly through <a href="https://journals.sagepub.com/doi/full/10.1177/1461452920960349">forgone tax revenue</a>. These UK subsidies result in effective investment in fossil fuel production of €11.6 billion a year, compared to the €7.76 billion <a href="https://journals.sagepub.com/doi/full/10.1177/1461452920960349">invested in renewables</a>. In this situation, the renewables consumers fund are more likely to add to the energy generated by fossil fuels, rather than replace it.</p>
<p>At the same time, renewable subsidies like <a href="https://www.gov.uk/feed-in-tariffs">the feed-in-tariff</a>, which paid people for the excess energy they generated with solar panels, have been axed. This makes it harder for people to pay to install solar power at home. Clearly, the transition to low-carbon energy could be quicker if government policy didn’t work against the best intentions of the public. </p>
<p>And the public are aware. <a href="https://www.sciencedirect.com/science/article/abs/pii/S2214629618311988">One study</a> in 2019 found widespread misgivings about excessive profits, a lack of transparency and close ties between the government and big energy companies. If people don’t trust the institutions tasked with overseeing the end of the fossil fuel era, how will they be persuaded to make the necessary <a href="https://www.theccc.org.uk/publication/behaviour-change-public-engagement-and-net-zero-imperial-college-london/">changes</a> to their own lives?</p><img src="https://counter.theconversation.com/content/156225/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lee Towers does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The cost of decarbonising the UK’s energy system is falling disproportionately on the poorest.Lee Towers, PhD Candidate in Energy and Politics, University of BrightonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1497612020-11-19T15:03:33Z2020-11-19T15:03:33ZTo save wild chimpanzees, imagine their habitat is an electrical circuit<figure><img src="https://images.theconversation.com/files/370131/original/file-20201118-15-10iw40c.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C7951%2C5304&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/on-back-common-chimpanzee-there-baby-1165386886">Marcel Derweduwen/Shutterstock</a></span></figcaption></figure><p>The chimpanzee is our closest living relative, and it could be <a href="https://www.iucnredlist.org/species/15933/129038584">facing extinction</a>. There were one million chimpanzees in 1900, but today, <a href="https://www.janegoodall.org.uk/chimpanzees/chimpanzee-central/15-chimpanzees/chimpanzee-central/22-state-of-the-wild-chimpanzee">300,000</a> at most are thought to remain in the wild.</p>
<p>Prime African rainforest habitat is being <a href="https://rainforests.mongabay.com/congo/deforestation.html">broken up</a> by loggers and poachers, and <a href="https://www.carbonbrief.org/scientists-examine-how-africas-rainforests-will-fare-as-the-climate-changes">dried out by climate change</a>. Habitat loss robs species of food sources and nesting sites, but it also prevents individuals moving between the remaining habitat, leaving populations isolated and in danger of inbreeding. To reverse the fragmenting of habitats, scientists often try to restore and expand <a href="https://www.nationalgeographic.com/animals/2019/04/wildlife-overpasses-underpasses-make-animals-people-safer/">green corridors</a> of <a href="https://www.greencorridor.info/">fast-growing trees</a> between the remaining patches, to encourage animals to <a href="http://assets.cambridge.org/97805218/57062/excerpt/9780521857062_excerpt.pdf">keep moving and stay connected</a>.</p>
<p>Understanding how chimpanzee habitats linked up in the past can help scientists identify the priority areas for chimpanzee conservation today. But chimpanzees have the widest range of any great ape species. How can we spread our efforts efficiently to find these areas across the broad swathe of <a href="https://www.nationalgeographic.com/animals/mammals/c/chimpanzee/">rainforest, woodland and savanna</a> they occupy? In western Tanzania alone, chimpanzees range across 20,000 square kilometres. We could try to track their movements by fitting several apes with radio-tracking devices, but this would mean trapping and sedating lots of different animals.</p>
<p>Instead, we tried something a bit more innovative. In <a href="https://www.sciencedirect.com/science/article/pii/S0006320720308740">a new study</a>, we used a concept from electrical engineering to spot connections between clumps of chimpanzee habitat that could be reinforced to help the species recover.</p>
<h2>Circuit theory for chimpanzees</h2>
<p>Let’s pretend you’re hovering above western Tanzania. But instead of seeing a vast landscape, imagine you’re looking at a circuit board. Imagine an electrical current is flowing between the different components before you. The chimpanzees are the electrons in that current, and they can pass more easily within bits of intact forest. Engineers describe parts of an electrical circuit where electrons can pass more easily as having a low resistance value. Meanwhile, there are parts of the circuit with a high resistance value which act to slow down the flow of electrons. In our landscape analogy, these are the areas where chimpanzee movement is slowed by barriers, such as roads and large rivers.</p>
<p>This is called a landscape connectivity model. It grades particular habitats visible in satellite images according to how well chimpanzees are likely to be able to traverse them, allowing us to map and predict connectivity between chimpanzee habitats over time. That’s important, as deforestation can <a href="https://advances.sciencemag.org/content/4/11/eaat2993">rapidly degrade suitable habitat</a>. Satellite images from 1973 to 2019 reveal how some forested areas with low resistance to animal movement have become more resistant as logging has continued.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/368276/original/file-20201109-16-3bg0qx.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="An example grid square map depicting areas of high and low resistance to movement." src="https://images.theconversation.com/files/368276/original/file-20201109-16-3bg0qx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/368276/original/file-20201109-16-3bg0qx.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=182&fit=crop&dpr=1 600w, https://images.theconversation.com/files/368276/original/file-20201109-16-3bg0qx.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=182&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/368276/original/file-20201109-16-3bg0qx.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=182&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/368276/original/file-20201109-16-3bg0qx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=228&fit=crop&dpr=1 754w, https://images.theconversation.com/files/368276/original/file-20201109-16-3bg0qx.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=228&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/368276/original/file-20201109-16-3bg0qx.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=228&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">How species move through their environment is analogous to how electricity passes through a circuit.</span>
<span class="attribution"><a class="source" href="https://esajournals.onlinelibrary.wiley.com/doi/abs/10.1890/07-1861.1">McRae et al. 2008</a>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Our model revealed a series of corridors connecting an 18,000 square kilometre ecosystem. These corridors appear to have become more resistant to chimpanzee journeys over time due to the destruction of 1,677 square kilometres of forest between 1973 and 2018. </p>
<p>The model also helped correct an old misconception. When 50,000 refugees from Burundi arrived in the region in 1973, a vast area of woodland was cut down so they could grow food. We assumed this had punched a hole in habitat that connected the northern and southern populations. But actually, by comparing maps from before and after the refugee settlement was established, we realised that the cleared forest was never likely to have been suitable chimpanzee habitat.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/368277/original/file-20201109-13-f9l971.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A coloured map depicting areas of high connectivity between chimpanzee habitats in western Tanzania." src="https://images.theconversation.com/files/368277/original/file-20201109-13-f9l971.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/368277/original/file-20201109-13-f9l971.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=844&fit=crop&dpr=1 600w, https://images.theconversation.com/files/368277/original/file-20201109-13-f9l971.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=844&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/368277/original/file-20201109-13-f9l971.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=844&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/368277/original/file-20201109-13-f9l971.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1061&fit=crop&dpr=1 754w, https://images.theconversation.com/files/368277/original/file-20201109-13-f9l971.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1061&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/368277/original/file-20201109-13-f9l971.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1061&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The model showed suitable habitat corridors between northern and southern chimpanzee populations.</span>
<span class="attribution"><a class="source" href="https://www.sciencedirect.com/science/article/pii/S0006320720308740">Bonnin et al. (2020)</a>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Most importantly, our results identified priority areas for chimpanzee conservation. This is where conservationists and government institutions should channel investment and focus protection efforts, whether it’s restricting settlement expansion, increasing patrols and surveillance, or boosting community outreach and education.</p>
<p>Wildlife species are becoming increasingly isolated in landscapes that are dominated by humans, and it’s up to conservationists to discover how to reconnect their lonely patches of habitat. Our results show it can be done with just a fraction of the time and resources using landscape connectivity modelling. </p>
<p>The method has already been used to support the conservation of <a href="https://link.springer.com/article/10.1007/s10980-016-0456-9">reptiles</a>, <a href="https://link.springer.com/article/10.1007/s10980-017-0548-1">birds</a> and some <a href="https://link.springer.com/article/10.1007/s10344-018-1241-7">small</a> and <a href="https://onlinelibrary.wiley.com/doi/10.1111/ddi.12164">large</a> mammals. Now, we’ve confirmed it can work for one of nature’s most behaviourally complex and wide-ranging species, the chimpanzee. As the accessibility and resolution of satellite imagery <a href="https://www.bbc.co.uk/news/science-environment-54651453">improves</a>, we can use this method to help us make the right decisions at the critical moments, safeguarding the extraordinary biodiversity of our planet.</p><img src="https://counter.theconversation.com/content/149761/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>To understand the barriers endangered species face when trying to traverse their habitat, it helps to think of their environment like an electrical circuit board.Noemie Bonnin, PhD Candidate in Conservation Biology, Liverpool John Moores UniversityAlexander Piel, Lecturer in Anthropology, University College London, UCLFiona Stewart, Lecturer in Wildlife Conservation, Liverpool John Moores UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1259142019-10-27T19:48:27Z2019-10-27T19:48:27ZNuclear power in France: imagining the industry’s future<p>Nuclear energy plays an important role in France, generating 75% of its electricity, and ongoing troubles at the country’s new Flamanville “third generation” reactor have raised crucial questions about its role in the future electricity mix and methods for managing the associated radioactive materials and waste. Construction started in 2007, with the final cost estimated at 3.3 billion euros. On October 9 the plant’s operator, EDF, <a href="https://www.ft.com/content/fc6a8610-ea5e-11e9-a240-3b065ef5fc55">annonced new delays</a>, with costs now estimated at 12.4 billion euros and the opening pushed back to 2022 – a decade later than initially scheduled.</p>
<p>France currently operates 58 pressurized water reactors (PWR), referred to as “second generation”. Nineteen of these reactors were put into operation before 1981 and will reach their design service life of 40 years over the next three years. The future of the nuclear industry represents a crucial question, which will likely have a lasting effect on all industry stakeholders – electricity producers, distribution system operators, energy providers and consumers. This means that all French citizens will be affected.</p>
<h2>Imagining the future of the nuclear industry</h2>
<p>Investment decisions regarding the electricity sector can establish commitments for the country that will last tens or even hundreds of years, and this future clearly remains uncertain. Against this backdrop, forward-looking approaches can help plan for the future and identify, even partially, the possible consequences of the choices we make today.</p>
<p>Such an approach involves first identifying then analyzing the different possible paths for the future in order to asses them and possibly rank them.</p>
<p>The future of the nuclear industry includes a relatively wide range of possibilities: it varies according to the evolution of installed capacity and the pace with which new technologies (the EPR technology that will be used in Flamanville, referred to as “third generation”, or RNR technology, referred to as “fourth generation”) are deployed.</p>
<p>Given the great degree of uncertainty surrounding the future of the nuclear industry, research relies on simulation tools; the “electronuclear scenario” represents one of the main methods. Little known by the general public, it differs from the energy scenarios used to inform discussions for the <a href="https://www.ecologique-solidaire.gouv.fr/programmations-pluriannuelles-lenergie-ppe">Multiannual Energy Plan</a> (PPE). The nuclear scenario represents a basic building block of the energy scenario and is based on a detailed description of the nuclear facilities and the physics that controls them. In practice, energy and nuclear scenarios can complement one another, with the outcomes of the former representing hypotheses for the latter, and the results of the latter making it possible to analyze in greater detail the different paths set out by the former.</p>
<p>The aim of studying the nuclear scenario is to analyze one or several development paths for nuclear facilities from a materials-balance perspective, meaning tracking the evolution of radioactive materials (uranium, plutonium, fission products etc.) in nuclear power plants. In general, it relies on a complex modeling tool that manages a range of scales, both spatial (from elementary particle to nuclear power plants) and temporal (from less than a microsecond for certain nuclear reactions to millions of years for certain types of nuclear waste).</p>
<p>Based on a precise definition of a power plant and its evolution over time, the simulation code calculates the evolution of the mass of each element of interest, radioactive or otherwise, across all nuclear facilities. This data can then serve as the basis for producing more useful data concerning the management of resources and recycled materials, radiation protection, etc.</p>
<h2>Emergence of new players</h2>
<p>Long reserved to nuclear institutions and operators, the scenario-building process has gradually opened up to academic researchers, driven largely by the <a href="https://inis.iaea.org/search/search.aspx?orig_q=RN:37007297">Bataille Law of 1991</a> and the <a href="https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000000240700">Birraux Law of 2006</a> concerning radioactive waste management. These laws resulted in a greater diversity of players involved in producing, assessing and using scenarios.</p>
<p>In addition to the traditional players (EDF and CEA in particular), the CNRS and academic researchers (primarily physicists and more recently economists) and representatives of civil society have taken on these issues by producing their own scenarios.</p>
<p>There have been significant developments on the user side as well. Whereas prior to the Bataille and Birraux Laws, nuclear issues were debated almost exclusively between nuclear operators and the executive branch of the French government, giving rise to the image of issues confined to “ministerial secrecy,” these laws have allowed for these issues to be addressed in more public and open forums, in particular in the academic and legislative spheres.</p>
<p>They also created National Assessment Committees, composed of twelve members selected based on proposals by the Académie des Sciences, the Académie des Sciences Morales et Politiques, and the French Parliamentary Office for the Evaluation of Scientific and Technological Choices. The studies of scenarios produced by institutional, industrial and academic players are assessed by these committees and outlined in annual public reports sent to the members of the French parliament.</p>
<p>Opening up this process to a wider range of players has had an impact on the scenario-building practices, as it has led to a greater diversity of scenarios and hypotheses on which they are based.</p>
<h2>A variety of scenarios</h2>
<p>The majority of the scenarios developed by nuclear institutions and industry players are “realistic” proposals according to these same parties: scenarios based on feedback from the nuclear industry. They rely on technology already developed or in use and draw primarily on hypotheses supporting the continued use of nuclear energy, with an unchanged installed capacity.</p>
<p>The scenarios proposed by the research world tend to give less consideration to the obligation of “industrial realism,” and explore futures that disrupt the current system. Examples include research carried out on transmutation in ADS (accelerator-driven reactors), design studies for MSR (molten salt reactors), which are sometimes described as “exotic” reactors, and studies on the thorium cycle. A <a href="https://tel.archives-ouvertes.fr/tel-01668610">2017 study</a> also analyzed the impact of recycling the plutonium in reactors of the current technology, and as part of a plan to significantly reduce, or even eliminate, the portion of nuclear energy by 2050.</p>
<p>These examples show that academic scenarios are often developed with the aim of deconstructing the dominant discourse in order to foster debate.</p>
<p>Electronuclear scenarios clearly act as “boundary objects”. They provide an opportunity to bring together different communities of stakeholders, with various knowledge and different, and sometimes opposing, interests in order to compare their visions for the future, organize their strategies and even cooperate. As such, they help widen the “scope of possibilities” and foster innovation through the greater diversity of scenarios produced.</p>
<p>Given the inherent uncertainties of the nuclear world, this diversity also appears to be a key to ensuring more robust and reliable scenarios, since discussing these scenarios forces stakeholders to justify the hypotheses, tools and criteria used to produce them, which are often still implicit.</p>
<h2>Debating scenarios</h2>
<p>However, determining how these various scenarios can be used to support “informed” decisions remains controversial.</p>
<p>The complexity of the system to be modeled requires simplifications, thus giving rise to biases which are difficult to quantify in the output data. These biases affect both technical and economic data and are often rightly used to dispute the results of scenarios and the recommendations they may support.</p>
<p>How, then, can we ensure that the scenarios produced are robust? There are two opposing strategies: Should we try to build simple or simplified scenarios in an attempt to make them understandable to the general public (especially politicians), at the risk of neglecting important variables and leading to “biased” decisions? Or, should we produce scenarios that are complex, but more loyal to the processes and uncertainties involved, at the risk of making them largely “opaque” to decision-makers, and more broadly, to the citizens invited to take part in the public debate?</p>
<p>As of today, these scenarios are too-little debated outside of expert circles. But let us hope that the public debate on radioactive waste management will provide an excellent opportunity to bring these issues to a greater extent into the “scope of democracy,” in the words of Christian Bataille.</p>
<hr>
<p><em>This article was translated from the original French by the <a href="https://blogrecherche.wp.imt.fr/en/2019/10/01/nuclear-scenarios-imagine-future-industry/">Institut Mines-Télécom</a> and updated to reflect current events.</em></p><img src="https://counter.theconversation.com/content/125914/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stéphanie Tillement received funding from the ANR under the RSNR Future Investments program, as well as the NEEDS program.</span></em></p><p class="fine-print"><em><span>Nicolas Thiollière a reçu des financements du CNRS/IN2P3, de la mission interdisciplinaire du CNRS et du programme NEEDS.</span></em></p>Nuclear energy generates 75% of France’s electricity, and ongoing troubles at the new Flamanville EPR reactor have raised crucial questions about its future in the country’s electricity mix.Stéphanie Tillement, Sociologue, IMT Atlantique – Institut Mines-TélécomNicolas Thiolliere, Enseignant-Chercheur en physique des réacteurs et scénarios associés, IMT Atlantique – Institut Mines-TélécomLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1062692018-11-28T14:54:08Z2018-11-28T14:54:08ZElectricity bills could rise if Brexit threatens Northern Ireland’s unique energy agreement with Ireland<figure><img src="https://images.theconversation.com/files/247743/original/file-20181128-32230-eq1uqn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The two countries have been collaborating in a single electricity market for more than a decade. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/beautiful-retro-luxury-light-bulb-decor-520040410">Shutterstock</a></span></figcaption></figure><p>Given the deluge of coverage, comment and analysis of the UK’s chaotic exit from the EU, it’s tempting to conclude that the exhausting subject of Brexit has been talked into the ground and analysed to death. </p>
<p>But that is far from true. Take the issue of the Irish border. Many keenly understand that creating a hard border between Northern Ireland and the Republic of Ireland would threaten the fragile peace that has held for two decades since 1998’s <a href="http://www.bbc.co.uk/history/events/good_friday_agreement">Good Friday Agreement</a>. </p>
<p>Theresa May’s proposed withdrawal agreement – which goes to a parliamentary vote on <a href="https://www.aljazeera.com/news/2018/11/uk-parliament-vote-brexit-deal-december-11-181126184658937.html">December 11</a> – endeavours to avoid a hard border if the UK and EU cannot reach an alternative agreement, by temporarily aligning Northern Ireland with some EU single market rules, and the UK as a whole with EU customs rules.</p>
<p>Before the Good Friday Agreement, the border was heavily fortified and crossings were tightly controlled. Its post-1998 incarnation is more than just an improvement in practical terms; it has come to symbolise progressive peace and openness in a place marked by violence and militarised division.</p>
<p>The border’s <a href="https://www.theguardian.com/uk-news/2018/sep/19/brexit-and-the-irish-border-question-explained">uncertain future</a> in light of Brexit has attracted a tremendous amount of attention – and rightly so, given its enormous importance. But Brexit’s cyclops eye struggles to look meaningfully at more than one dimension of an issue at a time, and other areas that are crucial to people’s everyday lives are being neglected. One key issue concerns the potentially damaging impact of Irish border divisions on Ireland’s all-island energy market.</p>
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<h2>A unique energy market</h2>
<p>Northern Ireland and the Republic of Ireland operate an <a href="https://www.uregni.gov.uk/sem">Integrated Single Electricity Market</a> (ISEM), which covers most energy generation on the island. This bespoke market is regulated by a special committee composed of northern and southern regulators, and overseen by a <a href="https://www.sem-o.com/">Single Electricity Market Operator</a> (SEMO).</p>
<p>This groundbreaking set up was created in 2007 by the then Northern Ireland secretary, <a href="https://peterhain.uk/about-peter/">Peter Hain</a>, during a period of direct Westminster rule, after <a href="https://www.gov.uk/guidance/devolution-settlement-northern-ireland">devolution</a> had collapsed. Working in tandem with the Irish government, Hain’s team drew the northern and southern electricity markets together into a single all-island market, with most of the island’s electricity bought and sold through one overall market. A two-party legislative framework locked the ISEM in place on either side of the border, supported by a “<a href="https://people.howstuffworks.com/memorandum-of-understanding.htm">memorandum of understanding</a>” between the two governments. </p>
<p>Energy is a devolved matter under the UK’s constitutional arrangements, and when devolution was restored in 2007 the reins were passed to the Stormont administration, which continued to operate the electricity market jointly with the Irish government. The <a href="http://www.mydup.com/about-us">Democratic Unionist Party’s</a> alleged <a href="https://www.bbc.co.uk/news/uk-northern-ireland-38301428">mismanagement of a renewable heat incentive scheme</a> has since collapsed the devolved institutions <a href="https://www.independent.co.uk/news/uk/politics/northern-ireland-talks-latest-updates-stormont-power-sharing-deal-what-deal-look-sinn-fein-dup-deal-a8207916.html">once more</a>, and so the Northern Irish elements of the ISEM are currently being overseen by Belfast civil servants until the situation can be resolved. </p>
<p>The ISEM improved on the conditions that preceded it, increasing competition and dampening <a href="https://www.uregni.gov.uk/news-centre/single-electricity-market-continues-deliver-benefits-energy-consumers">consumer prices</a>. It has also bolstered north-south energy security, and has had <a href="https://www.goodreads.com/book/show/7505503-energy-ireland-yearbook">positive effects</a> on energy efficiency and integrating renewable energies.</p>
<h2>The Brexit effect</h2>
<p>But Brexit is currently pulling this UK-Ireland innovation in opposite directions. A <a href="https://ec.europa.eu/energy/en/topics/infrastructure/projects-common-interest/electricity-interconnection-targets">target model</a> has been issued by the EU that requires member states such as the Republic of Ireland to strive for greater energy integration, whereas the Northern Irish/UK momentum is disengaging from the EU initiative as a consequence of Brexit.</p>
<p>Meabh Cormacain, manager of the <a href="https://www.ni-rig.org/about/">Northern Ireland Renewables Industry Group</a> (NIRIG), offered <a href="http://blogs.lse.ac.uk/europpblog/2018/08/09/an-electric-fence-assessing-the-impact-of-brexit-on-the-single-electricity-market-in-ireland/">insightful comment</a> on this crucial issue, suggesting that the Irish border might function as an “electric fence”, cutting the ISEM market in two if Brexit is not carefully managed. Consumers on both sides will bear the brunt of any diplomatic failure because it will likely increase their energy costs over time.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/247740/original/file-20181128-32226-1akhpni.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/247740/original/file-20181128-32226-1akhpni.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=390&fit=crop&dpr=1 600w, https://images.theconversation.com/files/247740/original/file-20181128-32226-1akhpni.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=390&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/247740/original/file-20181128-32226-1akhpni.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=390&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/247740/original/file-20181128-32226-1akhpni.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=491&fit=crop&dpr=1 754w, https://images.theconversation.com/files/247740/original/file-20181128-32226-1akhpni.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=491&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/247740/original/file-20181128-32226-1akhpni.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=491&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Renewable energies are an important part of the unique single market operation.</span>
<span class="attribution"><span class="source">SSE Ireland</span></span>
</figcaption>
</figure>
<p>It has been pointed out that these difficulties might be solved if Northern Ireland continues to operate as a distinct zone within the UK that remains largely subject to EU law in this area post-Brexit, meaning Northern Ireland would continue to be in regulatory alignment with the republic. May’s withdrawal agreement by and large adopts this <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/759019/25_November_Agreement_on_the_withdrawal_of_the_United_Kingdom_of_Great_Britain_and_Northern_Ireland_from_the_European_Union_and_the_European_Atomic_Energy_Community.pdf">approach</a>.</p>
<p>While sticking with this type of collaborative approach clearly solves problems, I suggested in a <a href="https://www.agendani.com/brexit-and-irelands-all-island-energy-market/">recent lecture</a> to the Irish energy industry that it seems undemocratic to subject Northern Irish citizens to significant EU energy laws while depriving them of the democratic mechanisms to influence those laws – bearing in mind Northern Ireland will have left the EU along with the rest of the UK.</p>
<p>At any rate, the overall principle is clear: the ISEM is a novel, bespoke energy market specific to the island of Ireland, and so its preservation and maintenance will require a similarly novel, bespoke set of agreed UK-EU arrangements for the post-Brexit period. May’s proposals may achieve this in practice, but it seems unlikely that the UK parliament will vote in favour of her deal as a whole.</p>
<p>The Irish and UK governments support the protection and continuation of the ISEM, as does the European Commission. With the Brexit clock ticking down to the make-or-break parliamentary vote in December, the sooner the parties responsible can agree on the specific policies that will underpin arrangements for the future, the better. Markets need certainty – and so do the people of Northern Ireland.</p><img src="https://counter.theconversation.com/content/106269/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thomas Muinzer does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The two countries have successfully collaborated on electricity supply for 11 years, but could Brexit pull this unique UK-Ireland innovation apart?Thomas Muinzer, Lecturer in Environmental Law and Public Law, University of StirlingLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1019812018-08-22T06:30:46Z2018-08-22T06:30:46ZCapping electricity prices: a quick fix with hidden risks<p>Governments have got the message: Australians are angry about electricity prices. On Monday, Prime Minister Malcolm Turnbull announced a decisive shift away from <a href="https://theconversation.com/malcolm-turnbull-shelves-emissions-reduction-target-as-leadership-speculation-mounts-101811">reducing emissions</a> to <a href="http://sjm.ministers.treasury.gov.au/media-release/089-2018/">reducing prices</a>. </p>
<p>This move means that both the federal government and the <a href="http://www.billshorten.com.au/labor_s_plan_to_cut_power_bills_sunday_19_august_2018">opposition</a> have adopted an <a href="https://www.accc.gov.au/system/files/Retail%20Electricity%20Pricing%20Inquiry%E2%80%94Final%20Report%20June%202018_0.pdf">Australian Competition and Consumer Commission</a> (ACCC) recommendation to cap electricity prices through a regulated “default offer”, although whether the states and territories will support this approach is unclear. </p>
<p>The good news is that price caps will probably work as advertised. That is, they will reduce prices for a relatively small number of customers who are currently on bad deals. </p>
<p>The bad news is that capping prices could also have unintended consequences.</p>
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Read more:
<a href="https://theconversation.com/a-high-price-for-policy-failure-the-ten-year-story-of-spiralling-electricity-bills-89450">A high price for policy failure: the ten-year story of spiralling electricity bills</a>
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<p>Electricity prices have risen much faster than inflation for more than a decade. From around 2005 to 2014 the cost of the electricity network (the “poles and wires”) <a href="https://grattan.edu.au/report/down-to-the-wire/">increased substantially</a>, mainly through over-investment by various state government owners, and highly prescriptive (and expensive) reliability standards. </p>
<p>Since 2016, wholesale electricity prices have <a href="https://grattan.edu.au/report/mostly-working/">increased rapidly</a> as gas prices have risen and as old coal-fired power stations were retired at the end of their life, reducing supply. During the same period governments required prices to rise to pay for renewable energy subsidies, particularly for rooftop solar systems.</p>
<p>Together, these three factors account for about 80% of the increase in household electricity prices <a href="https://www.accc.gov.au/system/files/Retail%20Electricity%20Pricing%20Inquiry%E2%80%94Final%20Report%20June%202018_Exec%20summary.pdf">over the past decade</a>. Bashing big companies is the flavour of the month, but there was not a lot that energy companies such as AGL, Origin and EnergyAustralia could realistically have done to mitigate any of this.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/233073/original/file-20180822-149472-1lc3cab.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/233073/original/file-20180822-149472-1lc3cab.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/233073/original/file-20180822-149472-1lc3cab.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=256&fit=crop&dpr=1 600w, https://images.theconversation.com/files/233073/original/file-20180822-149472-1lc3cab.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=256&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/233073/original/file-20180822-149472-1lc3cab.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=256&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/233073/original/file-20180822-149472-1lc3cab.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=322&fit=crop&dpr=1 754w, https://images.theconversation.com/files/233073/original/file-20180822-149472-1lc3cab.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=322&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/233073/original/file-20180822-149472-1lc3cab.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=322&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Change in average residential customer effective prices (c/kWh) from 2007–08 to 2017–18 across the National Electricity Market (prices in real 2016–17 dollars, excluding GST).</span>
<span class="attribution"><span class="source">ACCC</span></span>
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<p>But several other factors have driven prices still higher, including the substantial profit margins charged by the big energy retailers. This prompted the ACCC’s recommendation of a “default offer”, to ensure that a customer who does not sign up to a market contract pays no more than a regulated price. </p>
<h2>Household savings?</h2>
<p>Both sides of politics say that this policy will save some households more than A$100 a year. But this is only true of the relatively small number of households who have not signed a contract with a retailer and so are on a “standing offer”. </p>
<p>In Victoria, the state with the most developed retail market, this is only 7% of households. That figure is higher where price controls have been removed more recently (around 19% in Southeast Queensland), but it is declining rapidly (see page 244 <a href="https://www.accc.gov.au/system/files/Retail%20Electricity%20Pricing%20Inquiry%E2%80%94Final%20Report%20June%202018_0.pdf">here</a>). </p>
<p>So there will be large savings, but only for a small proportion of households. What’s more, the ACCC’s analysis suggests that the measure will not particularly benefit lower-income households, because those on hardship payment programs are less likely to be on a standing offer (see page 245 <a href="https://www.accc.gov.au/system/files/Retail%20Electricity%20Pricing%20Inquiry%E2%80%94Final%20Report%20June%202018_0.pdf">here</a>). Think beach houses, not working families. </p>
<h2>A quick fix</h2>
<p>The danger is that politicians may be tempted to use price caps as a quick fix to reduce prices across the board. Given the many factors that have pushed up electricity prices in recent years, this approach is likely to be counterproductive. </p>
<p>It is likely to damage competition and inadvertently benefit the biggest power companies. An aggressively low price cap would make it impossible for many retailers to recover their genuine costs of supplying electricity. Fewer retailers would mean increased market concentration. And because most power companies are both retailers and generators, a small saving for consumers from lower retail margins could be more than offset by price increases resulting from a less competitive wholesale market. </p>
<p>Now is not the time to abandon market-based competition, given the rapid change in Australian and global energy markets. International companies such as <a href="https://www.zenenergy.com.au/blog/french-and-australian-leaders-witness-landmark-green-power-agreements-for-industry/">Neoen</a>, <a href="http://www.gfgalliance.com/media/sacome-joint-electricity-purchasing-group-awards-long-term-supply-contract-sanjeev-guptas-simec-zen-energy/">SIMEC ZEN</a>, <a href="https://onestepoffthegrid.com.au/mars-goes-100-solar-six-australian-factories/">Total Eren</a> and <a href="http://www.baywa-re.com.au/en/baywa-re/news/235/">BayWa r.e.</a> are investing in renewable generation and battery storage, and increasingly selling power directly to commercial and industrial customers. It is only a matter of time before these players begin to compete in the wider retail market. </p>
<p>What’s more, while product innovation in retailing has been limited to date (indeed, one of the critiques of a competitive electricity retail market is that they are all supplying the same electrons through the same wires), the prospects for future innovation are good. Rooftop solar panels and batteries provide a new way to supply power, and companies can increasingly use data from smart meters to inform and empower consumers.</p>
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Read more:
<a href="https://theconversation.com/the-solar-panel-and-battery-revolution-how-will-your-state-measure-up-76866">The solar panel and battery revolution: how will your state measure up?</a>
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<p>It is understandable that governments want to protect consumers from high electricity prices. A modest price cap through a default offer, implemented cautiously, might be analogous to existing measures under Australian consumer law that limit excessive credit card payment surcharges. But the ACCC does not directly regulate credit card fees, and nor should governments directly regulate electricity prices, the drivers of which are complex and constantly changing. Rather, the focus should be on helping consumers to navigate a competitive electricity market.</p>
<p>The ACCC’s default offer recommendation is not just about capping prices for a small number of disengaged customers. It is also intended to provide a clear benchmark against which all customers can compare offers and get a fair deal. Both major federal parties have indicated their support for a range of ACCC proposals to help consumers understand electricity prices. The government should implement the full package, with price caps playing a limited role, if any. Price caps are a seductive short-term solution with dangerous longer-term consequences.</p><img src="https://counter.theconversation.com/content/101981/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Guy Dundas does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australians are angry about electricity prices and both the federal government and opposition are proposing to cap them. Will this approach work, and what are the risks?Guy Dundas, Energy Fellow, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/918472018-02-16T03:22:07Z2018-02-16T03:22:07ZIt’s 20 years since privatisation lit the spark under South Australia’s livewire energy politics<figure><img src="https://images.theconversation.com/files/206718/original/file-20180216-131021-o4m3p6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Keeping the lights on has always been a stormy issue in South Australia.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File%3ALightning_in_Adelaide%2C_South_Australia%2C_2014.jpg">Jon Westra/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>February 17, 2018, marks the 20th anniversary of a momentous day in South Australian energy politics. The then premier, John Olsen, announced that, despite repeated promises during the previous year’s state election campaign, his Liberal government would be putting the Electricity Trust of South Australia (ETSA) up for sale. </p>
<p>ETSA had been <a href="http://www.adelaidenow.com.au/news/south-australia/bob-byrne-the-playford-years-when-adelaide-was-a-powerhouse/news-story/528ee40bf2a65374eb3ca34267263b62">created in 1946</a> when a previous Liberal premier, Sir Thomas Playford, <a href="https://indaily.com.au/opinion/2017/01/18/playfords-lessons-in-power-for-the-current-sa-govt/">nationalised the Adelaide Electric Supply Company</a> (yes, you read that right).</p>
<p>Even when Olsen made his announcement, privatisation was on the nose with voters, literally as well as metaphorically. The “<a href="https://www.icij.org/investigations/waterbarons/big-pong-down-under/">big pong</a>” – a smell of rotten gas that pervaded Adelaide for several months during 1997 – had been traced back to a lack of maintenance after the privatisation of water treatment works.</p>
<p>Despite the big pong having put privatisation in bad odour, Olsen ploughed on. Faced with the impending launch of the National Electricity Market, and with the 1993 <a href="https://www.australiancompetitionlaw.org/reports/1993hilmer.html">Hilmer Report</a> having recommended competition as a way to drive down prices (although we all know <a href="https://theconversation.com/why-the-free-market-hasnt-slashed-power-prices-and-what-to-do-about-it-74441">how that worked out</a>), SA was set to follow in neighbouring Victoria’s footsteps and embrace deregulation. </p>
<h2>From state bank to bankrupt state</h2>
<p>The story had begun, as so many stories seem to, with hubris on the part of the financial sector. The <a href="https://en.wikipedia.org/wiki/State_Bank_of_South_Australia">State Bank of South Australia</a> had, through reckless lending, got itself into a huge hole that ultimately led to the resignation of the Labor premier, John Bannon, in 1992 and a <a href="https://en.wikipedia.org/wiki/South_Australian_state_election,_1993">heavy election defeat for the government</a> the following year.</p>
<p>Despite the Liberals’ thumping win in 1993, voters swung back again and the 1997 contest was far tighter than it had any right to be. ETSA had already been broken up into separate retail, transmission and energy subsidiaries in preparation for its participation in the NEM, and Labor seized on rumours of ETSA’s privatisation, despite adamant denials by the Liberals. On Nine News, Olsen flatly stated: “We are not pursuing a privatisation course with ETSA.” </p>
<p>Olsen’s Liberals were returned to government only thanks to the support of two conservative independents and one extremely independent National.</p>
<p>After Olsen’s February 1998 announcement, there were power plays back and forth. The Liberals were now claiming that privatising electricity assets would wipe out the state’s enormous debt, creating “an additional A$2 million a day to spend on things like schools, hospitals and other infrastructure”. </p>
<p>Labor and other opponents were, to put it mildly, sceptical. A normally pro-privatisation economist, <a href="https://indaily.com.au/contributors/richard-blandy/">Richard Blandy</a>, pointed out: “Mr Lucas keeps on talking about saving on interest but he ignores the aspect of lost revenue… Interest payments are now so low it is much less interesting to pay off debt.”</p>
<p>Nick Xenophon – at the time a newly elected independent state MP – indicated that he would support a long-term lease, but only if there were a referendum. Eventually, in June 1999, two Labor MPs switched sides and the privatisation went ahead. The journalist Chris Kenny put it best when he wrote in the Sunday Mail at the time:</p>
<blockquote>
<p>Rumoured, denied, ruled-out, revealed, reviled, rejected, revamped, revived and ratified, John Olsen’s power privatisation deal has somehow, finally, sparked into life. Politics and economics in South Australia will not be the same. It is our millennial change – our circuit-breaker.</p>
</blockquote>
<p>There was collateral damage. A proposed interconnector with New South Wales – to supplement the existing cable to Victoria completed in 1990 – was canned because it would have added more competition to the SA market, hitting the value of assets the Liberals wanted to sell. Xenophon was scathing, <a href="http://www.abc.net.au/radionational/programs/backgroundbriefing/power-games---the-politics-of-electricity/3464756">accusing the government</a> of having a “blinkered view of just maximising the value of the assets rather than maximising the benefits to consumers”.</p>
<p>Over the past decade, South Australia has gone from zero (renewable energy) to hero (at least to environmentalists) for its staggering growth in wind generation, as well as its more recent trendsetting in solar and batteries. This is partly thanks to a Howard government decision: the Mandatory Renewable Energy Target (such are the ironies of history).</p>
<h2>Power still in play</h2>
<p>If – as the old adage goes – a week is a long time in politics, then two decades is several eternities. But remarkably, three players from this chapter of South Australia’s political life are still on the scene. </p>
<p>Rob Lucas was in 1997 the Liberal government’s treasurer, a post he might regain in next month’s state election. Nick Xenophon, who cautiously supported discussion of privatisation but then came out against it, is back in the running for state office after a decade in Canberra. And Tom Koutsantonis, currently SA treasurer, was by Kevin Foley’s side when they tried to stop those two Labor MPs from switching.</p>
<p>Since then, of course, there was also the notorious statewide blackout of September 2016 – an event that has had monumental political and economic consequences. Jay Weatherill’s Labor government, already a staunch backer of renewables, responded with a <a href="https://theconversation.com/south-australia-makes-a-fresh-power-play-in-its-bid-to-end-the-blackouts-74522">radical new plan for energy security</a> (including, famously, the <a href="https://theconversation.com/yes-sas-battery-is-a-massive-battery-but-it-can-do-much-more-besides-88480">world’s biggest battery</a>), while the Liberal opposition has presented voters with its own <a href="https://www.saliberal.org.au/liberal_energy_solution">energy policy</a>. </p>
<p>In the past few weeks we have seen yet more headline-grabbing announcements from Weatherill’s government, including a “virtual power plant” made up of people’s rooftop panels and energy storage, and more money for <a href="http://reneweconomy.com.au/future-is-storage-sa-govt-pumps-for-four-more-hydro-projects-41345/">pumped hydro</a>.</p>
<p>South Australian energy and climate campaigners are trying to hold all the politicians’ feet to the fire, <a href="http://reneweconomy.com.au/south-australia-should-aim-for-100-renewables-by-2025-not-50-34320/">calling on them to bring forward a 100% renewable target to 2025</a>.</p>
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Read more:
<a href="https://theconversation.com/a-year-since-the-sa-blackout-whos-winning-the-high-wattage-power-play-84416">A year since the SA blackout, who's winning the high-wattage power play?</a>
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<p>In September 2016, just before the blackout, the Adelaide Advertiser <a href="http://www.adelaidenow.com.au/news/south-australia/poll-finds-we-blame-etsa-sale-for-high-sa-power-prices/news-story/ddec625e5a8f091eec874c6ca8b1b88f">commissioned an opinion poll on electricity privatisation</a>. The front-page story relayed the “extraordinary finding”, to the palpable shock and disbelief of reporter Paul Starick, that 51% of those polled blamed Olsen’s sell-off for rising electricity prices. </p>
<p>The story added that “only 15% blamed Labor’s investment in renewable energy to replace coal, a significant factor in Port Augusta power station’s closure in May at the cost of more than 180 jobs”.</p>
<p>John Quiggin, an economist who fought in vain to keep ETSA in public hands, has <a href="https://theconversation.com/the-case-for-renationalising-australias-electricity-grid-73951">put the case for renationalising Australia’s electricity</a>. In the UK, Opposition Leader Jeremy Corbyn
has <a href="https://labourlist.org/2018/02/a-catapult-into-21st-century-public-ownership-corbyn-speech-on-new-economics/">proposed a similar move</a> as part of his policy platform.</p>
<p>But whatever happens, we can definitely say three things:</p>
<ul>
<li><p>This is not the issue on which the SA Liberals would have chosen to fight the coming election, for both state-based historical and federal-present reasons.</p></li>
<li><p>If Weatherill loses, opponents of renewables will label it a referendum on wind, solar and storage, regardless of voters’ actual opinions.</p></li>
<li><p>And two decades on, power policy is still just as much a red-hot political battleground as it was during South Australia’s millennial circuit-breaking moment.</p></li>
</ul><img src="https://counter.theconversation.com/content/91847/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc Hudson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Two decades ago, the then SA premier, John Olsen, defied a campaign promise and announced plans to privatise the state’s electricity industry. It’s been a high-voltage issue ever since.Marc Hudson, PhD Candidate, Sustainable Consumption Institute, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/768662017-05-01T20:04:31Z2017-05-01T20:04:31ZThe solar panel and battery revolution: how will your state measure up?<p>A <a href="http://www.energynetworks.com.au/sites/default/files/entr_final_report_summary_april_2017.pdf">new roadmap</a> for Australia’s electricity networks outlines a national plan to keep the lights on, make sure bills are affordable, and decarbonise our electricity industry by mid-century.</p>
<p>The plan, by CSIRO and <a href="http://www.energynetworks.com.au/">Energy Networks Australia</a>, sets out measures that could save households A$414 a year on average, by generating their own electricity through “distributed” technologies such as solar panels and batteries. It envisages that Australia could save a total of A$101 billion by 2050, while also bringing net greenhouse emissions to zero.</p>
<p>As described in an <a href="https://theconversation.com/australians-can-have-zero-emission-electricity-without-blowing-the-bill-69869">earlier draft report last December</a>, Australia’s electricity networks can be transformed to give millions of customers more choice and control over their energy, while also meeting Australia’s international climate change commitments.</p>
<p>The roadmap calls for a coordinated approach, but how will that play out in practice?</p>
<h2>Regional analysis</h2>
<p>While it is a national plan, each state and territory will play its own distinct role. </p>
<p>Each faces different circumstances in terms of electricity demand growth, renewable resources, state renewable energy policies, and the age and fuel mix of their existing electricity infrastructure. </p>
<p>The <a href="http://www.energynetworks.com.au/sites/default/files/entr_final_report_april_2017.pdf">full report</a> outlines what each state and territory can expect.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/167337/original/file-20170501-29380-8mht56.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/167337/original/file-20170501-29380-8mht56.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/167337/original/file-20170501-29380-8mht56.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=251&fit=crop&dpr=1 600w, https://images.theconversation.com/files/167337/original/file-20170501-29380-8mht56.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=251&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/167337/original/file-20170501-29380-8mht56.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=251&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/167337/original/file-20170501-29380-8mht56.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=316&fit=crop&dpr=1 754w, https://images.theconversation.com/files/167337/original/file-20170501-29380-8mht56.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=316&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/167337/original/file-20170501-29380-8mht56.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=316&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Regional analysis snapshot.</span>
<span class="attribution"><span class="source">CSIRO/ENA</span></span>
</figcaption>
</figure>
<p><strong>New South Wales</strong></p>
<p>The renewable electricity generation share in NSW is expected increase steadily to 28% by 2030. Thereafter, new generation capacity building is expected to accelerate to fill the gap left by more rapid coal capacity retirement.</p>
<p>NSW’s rooftop solar panel capacity will increase by more than 400% by 2030, with more than 6,000 megawatt hours in small-scale battery storage. These changes will be driven largely by falling costs, which will encourage wider customer adoption and the use of larger system sizes.</p>
<p>NSW customers will become a significant player in Australia’s overall energy system, with the capacity of the state’s rooftop solar panels projected to exceed 11,000MW by 2030 - more than the state’s coal-fired capacity today.</p>
<p><strong>Queensland</strong></p>
<p>Similarly to NSW, were the lack of coal plant retirement to be the main driver, Queensland’s renewable electricity share would lag other states at only 12% by 2030, with more rapid transformation occurring in the period between 2030 and 2050. However, state government renewable energy schemes could modify this outcome.</p>
<p>Queensland will see a huge increase in rooftop solar panels, of more than 500% by 2030. By then, it is also forecast to have more than 10,000MWh of small-scale battery storage capacity – the equivalent of 760,000 residential battery storage systems. That will rise to the equivalent of more than 2 million household battery systems by 2050.</p>
<p>High levels of rooftop solar and other distributed generation will create challenges for Queensland’s electricity network. There is the potential for “reverse flow” (where local generation exceeds consumption) in many parts of the Queensland power system within 15 years.</p>
<p><strong>Victoria</strong></p>
<p>Victoria is assumed to meet its target of 40% renewable share of generation by 2025 and maintain that share for next 15 years before investment accelerates again in the 2040s.</p>
<p>Victoria is also set for a 500% increase in rooftop solar panels by 2030, and more than 6,000MWh in small-scale battery storage. These batteries would represent the equivalent of 440,000 residential battery storage systems installed by 2030, and more than 1 million by 2050.</p>
<p><strong>South Australia</strong></p>
<p>South Australia has the second highest share of renewables of all states at around 40% and is expected to steadily improve that position until other states accelerate their own building programs in the 2030s.</p>
<p>South Australia’s rooftop solar panels will increase by more than 300% by 2030, with 4,000MWh of small-scale battery storage.</p>
<p>While South Australia already leads the nation in the installation of new large-scale renewable generation and is set to become a <a href="http://www.abc.net.au/news/2017-03-30/new-solar-project-announced-for-sa-riverland/8400952">leading installer of large-scale battery capacity</a>, small-scale renewables and batteries will also play an important part in its future energy mix, as in other states.</p>
<p><strong>Western Australia</strong></p>
<p>WA’s rooftop solar power capacity will triple by 2030, combined with a forecast 2,000MWh of small-scale battery storage.</p>
<p>More than 40% of the states’s electricity is projected to come from renewable sources by 2030, as is the case in South Australia today.</p>
<p><strong>Tasmania</strong></p>
<p>Tasmania is the leading renewable generation state and its hydro generation and storage capacity could support grid stability in the broader National Energy Market into the future.</p>
<p>Residential battery storage would play a small but significant role in supporting the energy transformation in Tasmania. More than 1,000MWh in onsite battery capacity could be installed in Tasmania by 2030, and more than 2,000MWh by 2050.</p><img src="https://counter.theconversation.com/content/76866/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul Graham has received funding throughout his career from electricity generators, electricity networks, federal and state government departments, non-government non-profit organisations and energy consulting and engineering companies.</span></em></p>A new report predicts a boom in household solar and batteries as Australia’s electricity networks move to a more sustainable footing, with some states poised for a 500% boost in rooftop solar.Paul Graham, Chief economist, CSIRO energy, CSIROLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/729652017-02-14T04:44:42Z2017-02-14T04:44:42ZWant electricity reform? Start by giving power back to the states<p>In 1999, Australians were paying some of the <a href="https://archive.treasury.gov.au/documents/195/PDF/round4.pdf">lowest electricity prices in the world</a>. Now they are <a href="http://cmeaustralia.com.au/wp-content/uploads/2013/09/160708-FINAL-REPORT-OBS-INTERNATIONAL-PRICE-COMPARISON.pdf">among the highest</a>. What went wrong?</p>
<p>Back then, the electricity network in the southern and eastern states of Australia had just been reformed to create a regional wholesale market, called the <a href="https://www.aemo.com.au/Electricity/National-Electricity-Market-NEM">National Electricity Market</a>. Some states – Victoria and then South Australia – privatised their industry. All states then progressively deregulated their retail electricity markets, and transferred the regulation of their remaining network monopolies to two quasi-federal regulatory agencies, the <a href="https://www.aer.gov.au/">Australian Energy Regulator</a> and the <a href="http://www.aemc.gov.au/">Australian Energy Markets Commission</a>.</p>
<p>These reforms replaced the state governments’ electricity commissions – derided by some as Soviet-style relics – with what was purported to be a dynamic new arrangement of competition and private risk-taking. </p>
<p>The reforms were bolstered by reports by the Industry Commission (now the Productivity Commission) predicting that even though electricity prices were already low, they would fall further as the pressure of competition drove the industry to become more efficient and customer-focused.</p>
<p>The exact opposite happened. The sector’s productivity has declined sharply after tens of billions of dollars were spent on network infrastructure - particularly substations – that are not used at anything like their full capacity, even at the peak of an Australian summer.</p>
<p>But the failures are not just in the regulation of networks. Our retail markets compare very unfavourably with those in other countries, and our wholesale electricity markets seem to be cornered regularly – most recently in South Australia on February 8, where a lack of available generation led regulators to <a href="https://theconversation.com/why-did-energy-regulators-deliberately-turn-out-the-lights-in-south-australia-72729">cut the power to some 90,000 customers</a>. </p>
<p>Besides not being cheaper, the system is also no greener or more reliable. The amount of <a href="http://ageis.climatechange.gov.au/">greenhouse emissions per unit of electricity produced</a> has shown little change, and as South Australia has shown, the system can’t always keep the lights on.</p>
<p>Australia is blessed with a surplus of every conceivable energy resource and no shortage of technical and managerial skill. How did it come to this?</p>
<h2>Passing the buck</h2>
<p>The common factor underlying these failures is accountability. Officials use the phrase “all care and no responsibility” to describe the situation in which politicians become as skilled in finger-pointing as they are in showing empathy for those suffering through power blackouts.</p>
<p>The latest manifestation of this is the mis-characterisation of Australia’s electricity problem as one of <a href="https://theconversation.com/south-australias-electricity-price-woes-are-more-due-to-gas-than-wind-62824">renewables versus fossil fuels</a>. In this view, the solution is to turn back the clock to last century’s high-emission technologies (such as coal), despite the clear risk to the private sector of doing so.</p>
<p>What can sensibly be done to get us out of this mess? The real problem is not renewables – it’s poor governance.</p>
<p>Fixing governance problems is hard, but it’s clear which direction we should take. It needs to be made obvious who should be strung up when things go wrong, or covered in glory when they go right. This clarity will in turn deliver the accountability needed to anticipate and solve problems, rather than the buck-passing and blame-dodging we’re seeing now.</p>
<h2>The state model</h2>
<p>There are lessons to be learned from other comparable federal countries, including Germany, the United States and Canada. They too have regional power markets and retail competition, but they have avoided the bickering between federal and state governments seen in Australia.</p>
<p>Their electricity networks (except interconnectors) and their retail markets are overseen by the states and provinces – as used to be the case in Australia.</p>
<p>When accountability is clearly established, we will know where the buck stops when the lights go out or prices become unaffordable. But under Australia’s current quasi-federal system, there is an irresistible temptation to point fingers and obfuscate if things go wrong.</p>
<p>Politicians past and present created this problem, and they must now rise above it. The immediate task is not to tinker with existing institutions, but instead to make some fundamental changes.</p>
<p>The starting point should be to recognise that electricity supply is the province (under our Constitution) of the states and territories, not the Commonwealth. It would be better to get on with fixing our own back yards than idly waiting and wishing, often without good reason, for “national coordination”.</p>
<p>We should reassign oversight of networks and retail markets back to the states and territories, as used to be the case. Regional transmission interconnection and market operation should continue to be federally coordinated, but the primary responsibility for pricing and reliability must rest with the states. The states might choose to delegate the oversight of various issues to central entities, but these entities must be clearly answerable to those states under the terms of their delegation. </p>
<p>In some respects these will be major changes, and in others, mainly a change of mindset and orientation. But for too long now we have been pushing a model of governance that does not reflect our constitutional responsibilities, and is at odds with the approach adopted in other federal countries. </p>
<p>It has failed and it is time to change. Other nations’ experience can give us confidence that if we make changes we can look forward to vibrant electricity markets that actually work in customers’ best interests.</p><img src="https://counter.theconversation.com/content/72965/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bruce Mountain does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Privatisation and competition were supposed to make electricity cheaper. Instead, Australia’s quasi-federal energy system has made it easier to pass the buck when things go wrong.Bruce Mountain, Director, Carbon and Energy Markets., Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/727292017-02-10T03:05:01Z2017-02-10T03:05:01ZWhy did energy regulators deliberately turn out the lights in South Australia?<figure><img src="https://images.theconversation.com/files/156303/original/image-20170210-8651-41z6zb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">High gas prices have left Adelaide's Pelican Point power station running at less than half its capacity.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File%3APelican_Point_power_station.jpg">Peripitus/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Last Wednesday evening, shortly after 6pm local time, around 90,000 homes and businesses in South Australia were <a href="http://www.abc.net.au/news/2017-02-09/sa-heatwave-further-potential-power-cuts/8254278">deliberately disconnected from the electricity grid</a> for up to an hour. In what is becoming a familiar pattern, this event provoked politicians and political actors to release a stream of claims and counter-claims about what happened and what should be done about it. </p>
<p>So why did it actually happen? At the start of the day, electricity was being supplied by a combination of wind power, the two interconnectors from Victoria, and a modest amount of local gas generation. As the day heated up (the temperature in Adelaide <a href="http://www.abc.net.au/news/2017-02-08/sa-heatwave-forces-rolling-blackouts-angering-government/8252512">hit a maximum of 42°C</a>), demand grew, wind generation fell away, and the volume of electricity supplied by gas generators increased rapidly. </p>
<p>Half-hourly total state electricity consumption reached its maximum for the day between 5.00pm and 5.30pm, by which time rooftop solar was supplying about 9% of the total. This is a very common pattern on hot days in the state. </p>
<p>As the sun went down, total consumption went down but solar generation went down faster. This is also very common and in theory there is more than enough capacity to meet this level of demand from gas-fired generators plus the interconnectors. </p>
<p>In practice, however, not all of South Australia’s gas generation was available on the day, meaning that it was not sufficient to meet demand. This happened shortly after 6.30pm local time, not helped by the fact that the maximum temperature arrived very late in the day, boosting the demand for after-work air conditioning.</p>
<h2>Switched off</h2>
<p>To prevent potentially widespread damage to the entire system, which might have triggered even more widespread blackouts, the <a href="https://www.aemo.com.au/">Australian Energy Market Operator</a> exercised its authority to instruct SA Power Networks (the local “poles-and-wires” distributor) to start a series of rolling disconnections of blocks of consumers – a tactic known as “load-shedding”. </p>
<p>Unfortunately, although the demand was only lowered by 3%, it affected a large number of consumers. It was about 40 minutes before the underlying demand had fallen to the point where available sources of generation could supply all the electricity that was required, at which time all customers were reconnected.</p>
<p>There are two reasons why this was deemed necessary. First, the peak demand for grid electricity was the highest for three years. Second, the amount of gas generation available on Wednesday was about 20% less than the nominally available capacity. Had the full capacity been available, the blackouts would have easily been avoided. It is this fact that has <a href="http://www.afr.com/business/energy/electricity/sa-energy-minister-fumes-in-phone-call-to-aemo-on-power-cuts-20170208-gu8qvd">particularly angered the South Australian government</a>, which is once again facing political derision for failing to keep the lights on. </p>
<p>The largest single part of the unavailable capacity is 240 megawatts – roughly 8% of the state’s total gas generation – at Pelican Point power station. Pelican Point is the highest-efficiency, lowest-emission thermal power station in South Australia. But nearly two years ago its owner, the French multinational Engie (which also owns the Hazelwood coal station in Victoria), announced that the rising cost of gas had made it too expensive to run at full capacity. Since then Pelican Point has operated only intermittently, and never at more than half of its nameplate capacity. </p>
<h2>What a gas</h2>
<p>High gas prices are the direct result of the huge demand for gas by the three export LNG plants at Gladstone, in Queensland. Gas that might notionally have been used to supply electricity for South Australians is instead being shipped to customers in Asia. </p>
<p>Meanwhile, smaller amounts of nominally available gas-fired electricity were also offline in South Australia on Wednesday. We are unlikely to know why until the official reports on the incident are published.</p>
<p>More importantly, however, making more gas generation capacity available is only a short-term fix and does not seriously address the changes needed to maintain, in the words of the <a href="http://www.aemc.gov.au/Energy-Rules/National-electricity-rules">National Electricity Objective</a>, a secure, reliable and affordable supply of electricity. </p>
<p>What kinds of changes will be required? A good starting point would be to acknowledge the role that rooftop solar is already playing in reducing peak demand for electricity from the grid. On Wednesday, the peak demand for grid-supplied electricity was about two hours later and 4% lower than it would have been if no one had solar panels.</p>
<p>The need for load-shedding could have been completely avoided with the help of technologies that are already available for power consumers to reduce their own demand. For more than a decade, demand-side participation (which gives consumers more influence over the timing and quantity of their own electricity use) and direct load control (which involves reducing specific customers’ demand at certain times) have both been talked about, reported on, trialled, and instituted in only a desultory way. They have never been taken seriously by either industry participants or their regulators. </p>
<p>Large-scale electricity storage has emerged only recently because of significant cost reductions. These are just some of the likely components of a <a href="https://theconversation.com/the-government-is-right-to-fund-energy-storage-a-100-renewable-grid-is-within-reach-72353">low-emission, 21st-century electricity supply system</a>.</p>
<p>Almost the only positive action which governments have taken on these matters in recent times has been to establish the <a href="http://coagenergycouncil.gov.au/news/finkel-review">review by Chief Scientist Alan Finkel</a>. The real test for the politicians will be whether they understand and act decisively on what Finkel and his colleagues have to say.</p><img src="https://counter.theconversation.com/content/72729/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hugh Saddler is a member of the Board of the Climate Institute </span></em></p>South Australia’s government was angry about the blackouts enforced by electricity regulators. But with much of the state’s gas power offline, the regulators had little choice.Hugh Saddler, Honorary Associate Professor, Centre for Climate Economics and Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/724872017-02-07T19:11:25Z2017-02-07T19:11:25ZCrisis, what crisis? How smart solar can protect our vulnerable power grids<p>Some commentators <a href="http://www.theaustralian.com.au/business/mining-energy/rooftop-solar-panels-putting-sunshine-states-power-at-risk/news-story/3d7363482f81d78216cc88e3b9c396de">seem to be worried</a> that our electricity networks are facing an impending voltage crisis, citing fears that renewables (rooftop solar panels in particular) will threaten the quality of our power supply. </p>
<p>These concerns hinge on the fact that solar panels and other domestic generators can push up voltages, potentially making it harder for network companies to maintain stability across the grid. But what is less well understood (and far less reported) is the massive potential for local generation to actually improve the quality of our power, rather than hinder it.</p>
<p>A <a href="https://www.uts.edu.au/sites/default/files/Networks%20Renewed%20-%20Public%20Report%20-%20Technical%20Analysis%20.pdf">new report</a> from our <a href="https://www.uts.edu.au/research-and-teaching/our-research/institute-sustainable-futures/our-research/energy-and-climate-8">Networks Renewed</a> project aims to show how technologies such as “smart inverters” can help to manage voltage at the household scale, rather than at substations. This would improve the quality of our power and flip the potential problem of household renewables into a solution.</p>
<h2>Why all the fuss about voltage?</h2>
<p>Electricity from our power points should be at roughly 230 volts, without deviating too far above or below. It fluctuates throughout the day, depending on how much power is being used.</p>
<p>Here’s an analogy: think of water flowing through pipes. The power lines are the pipes themselves, and the voltage is like the water pressure in the pipes – that is, the amount of force pushing the water (or electricity) along. Using large amounts of power causes the voltage to drop, rather like when the washing machine comes on while you’re having a shower; all of a sudden the pressure drops because other appliances are using the water too.</p>
<p>Pressure is also affected by how close the appliance is to the source. For instance, if your washing machine and shower were connected right at the foot of the dam, instead of at the end of several miles of pipes, you could have them both switched on and not notice a drop in pressure. </p>
<p>For an electrical distribution system, this means that the houses farthest away from the substation are the most susceptible to sagging (lower) voltage when large amounts of power are being used.</p>
<p>Voltage management has always been an issue for grid operators, particularly in rural locations where the power lines are longer. Low voltage on long power lines often means dim and flickering lights for residents at the end of the line.</p>
<p>On the flip side, overvoltages can damage sensitive electronic equipment – a bit like when the water pressure pops your garden hose off the tap. </p>
<p>These fluctuations can become a problem for power companies when the voltage goes outside the allowable range.</p>
<h2>How does solar power affect voltage?</h2>
<p>Our electricity networks were not originally built for lots of local generation sources like rooftop solar panels or small wind turbines. Until recently, power has generally flowed only in one direction, from a large (usually coal-fired) power station to consumers. </p>
<p>The <a href="https://theconversation.com/factcheck-qanda-is-australia-the-world-leader-in-household-solar-power-56670">growing number of household solar panels</a> on the network have changed this landscape and now power flows both ways. Solar panels can make managing the grid more complex, because the voltage rises where they are generating power. </p>
<p>A small voltage increase is not a problem when there is enough demand for electricity. But when nobody is home in the neighbourhood, the solar power might lift the voltage beyond the upper limit.</p>
<p>In this case, the circuit protectors in the generator will probably trip and the solar panels will be cut off, to protect the network. This also means that the household won’t have access to (or get paid for!) the solar power it is generating.</p>
<p>Any customer-owned generator can affect the voltage – including solar, batteries, or diesel generators. But we tend to hear about solar because it is by far the most popular means of local generation; Australia now has more than <a href="http://pv-map.apvi.org.au/analyses">1.5 million homes with rooftop solar</a>, and that figure is rising rapidly.</p>
<p>While some people might see this as an issue, sometimes the solution lies in the problem itself. In this case, new solar systems can offer a much more sophisticated way to manage grid voltage.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/155823/original/image-20170207-4216-143ifq5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/155823/original/image-20170207-4216-143ifq5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/155823/original/image-20170207-4216-143ifq5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/155823/original/image-20170207-4216-143ifq5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/155823/original/image-20170207-4216-143ifq5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/155823/original/image-20170207-4216-143ifq5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/155823/original/image-20170207-4216-143ifq5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/155823/original/image-20170207-4216-143ifq5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The innovation: smart inverters can control solar and batteries to help stabilise voltage on the grid.</span>
</figcaption>
</figure>
<h2>How can solar become the solution?</h2>
<p>Traditionally, voltage management solutions are fairly blunt, affecting tens or even hundreds of properties at a time, despite the fact that conditions might be quite different at each property. The equipment used – replete with technical-sounding names such as “on-load tap changers” and “line-drop compensators” – is expensive and is often located within transformers at substations. All of this electrical engineering kit adds to the cost of energy for customers. </p>
<p>However, new solar and battery systems now have the intelligence to manage voltage in a cheaper and more targeted way, through their “smart” inverters. These new technologies may provide the missing link to new renewable and reliable energy sources.</p>
<p>This is how it works: residential solar, batteries and other generators are connected to the grid through inverters that now have embedded IoT (<a href="https://theconversation.com/explainer-the-internet-of-things-16542">internet of things</a>) communications technology. These smart inverters allow the network to “talk” to the local generator and request support services, including through what’s called <a href="http://www.allaboutcircuits.com/textbook/alternating-current/chpt-11/true-reactive-and-apparent-power/">reactive power</a> (see graphic below). </p>
<p>Reactive power can help to raise and lower the voltage on the network, improving the quality of our power including the voltage stability. For more technical detail see our <a href="https://www.uts.edu.au/sites/default/files/Networks%20Renewed%20-%20Public%20Report%20-%20Technical%20Analysis%20.pdf">newly released report</a> on the potential for smart inverters to help manage the grid.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/155824/original/image-20170207-4221-164sdl2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/155824/original/image-20170207-4221-164sdl2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/155824/original/image-20170207-4221-164sdl2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/155824/original/image-20170207-4221-164sdl2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/155824/original/image-20170207-4221-164sdl2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/155824/original/image-20170207-4221-164sdl2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/155824/original/image-20170207-4221-164sdl2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Smart inverters can export or absorb both real and reactive power.</span>
</figcaption>
</figure>
<p>All this is only possible if network businesses are open to new, proactive ways of operating - as demonstrated by our Networks Renewed project partners <a href="https://www.unitedenergy.com.au/">United Energy</a> in Victoria and <a href="http://www.essentialenergy.com.au/">Essential Energy</a> in New South Wales.</p>
<p>This means a shift in thinking from the traditional passive customer model – we deliver energy to you! – to a more dynamic and collaborative one in which customers can actually help to manage the grid as well as using and generating power.</p>
<p>Sure, transitioning an entire energy system is no mean feat, but it offers an opportunity to build a better, more resilient electricity system that includes more renewable energy. </p>
<p>If we are smart, we will not need to trade off our climate impact with the dependability of our electricity system. We just need to be open to the new ways of solving old problems.</p>
<p><em>If you’re interested in finding out more, the Institute of Sustainable Futures is holding a public forum on Networks Renewed at UTS campus on Tuesday February 14 at 12:15-3:15 pm. For further information <a href="mailto:danielle.alexander@uts.edu.au">contact Dani Alexander</a>.</em></p><img src="https://counter.theconversation.com/content/72487/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The Institute for Sustainable Futures (ISF) at the University of Technology Sydney undertakes paid sustainability research for a wide range of government, NGO and corporate clients, including energy businesses. The Networks Renewed project is funded by the Australian Renewable Energy Agency (ARENA) and the NSW and Victorian state governments, in partnership with Essential Energy, United Energy, Reposit Power, SMA Australia, and the Australian PV Institute.
Lawrence McIntosh is also a partner at PV Lab Australia, a solar panel quality assurance business, and serves as the part time Principal Executive Officer of SolarShare, a community owned solar project in Canberra, ACT. </span></em></p><p class="fine-print"><em><span>Dani Alexander is a member of the Institute for Sustainable Futures (ISF), which undertakes paid sustainability research for a wide range of government, NGO and corporate clients, including energy businesses.</span></em></p>Managing voltage on the electricity network has always been an issue. But solar panels have the potential to make the situation better, not worse as some have feared.Lawrence McIntosh, Senior Research Consultant, Institute for Sustainable Futures, University of Technology SydneyDani Alexander, Research Principal, Institute for Sustainable Futures, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/690392016-12-23T23:08:14Z2016-12-23T23:08:14ZWhat role for the states on climate and energy policy? NSW enters the fray<p>We’re currently having a national conversation about climate and energy, with reviews of climate policy and the National Electricity Market underway. Up for debate is how the states and federal government will share these responsibilities. </p>
<p>Following the recent statewide blackout in South Australia, the <a href="http://reneweconomy.com.au/coalition-launches-fierce-attack-against-wind-and-solar-after-blackout-93841/">federal government</a> pointed the finger at Labor states’ “aggressive”, “unrealistic” and “ideological” renewable energy targets. </p>
<p>Victorian <a href="http://www.premier.vic.gov.au/malcolm-turnbull-plays-politics-with-south-australias-blackout/">Premier Daniel Andrews returned</a>: “Rather than peddle mistruths, Malcolm Turnbull and Barnaby Joyce should start providing some national leadership and focus on developing a renewable vision beyond 2020.”</p>
<p>It might seem to be yet another partisan, ideological stoush between a Liberal federal government and three Labor state governments. </p>
<p>However, the Liberal-led New South Wales government has now also entered the fray, with a <a href="http://www.environment.nsw.gov.au/research-and-publications/publications-search/nsw-climate-change-policy-framework">2050 emissions target</a> that will almost certainly require complete decarbonisation of the electricity sector within the next 25 years. </p>
<p>And to achieve this, renewables will have a key, many would argue overwhelming, role to play.</p>
<h2>What are the states already doing?</h2>
<p>NSW released its <a href="http://www.environment.nsw.gov.au/research-and-publications/publications-search/nsw-climate-change-policy-framework">climate policy framework</a> in November, joining Victoria, South Australia and the ACT with an aspirational target to reduce carbon emissions to net zero by 2050. </p>
<p>While NSW didn’t announce a renewable target, the <a href="https://theconversation.com/victorias-renewables-target-joins-an-impressive-shift-towards-clean-energy-61084">majority of states now have one</a>. Queensland is seeking 50% renewable generation by 2030, Victoria 40% by 2025 and South Australia 50% by 2025. </p>
<p>Tasmania’s generation is already mostly renewable (albeit mostly conventional hydro generation). The Australian Capital Territory looks set to achieve 100% renewables by 2020 and the <a href="http://reneweconomy.com.au/n-t-appoints-wind-solar-experts-to-50-renewables-panel-73451/">Northern Territory has announced a 50% target for 2030</a>. </p>
<p>At present, the federal government has a renewable energy target of around 23.5% renewable electricity by 2020 and a 2030 target of 26-28% greenhouse emission reductions from 2005 levels. These ambitions fall way below those of the states.</p>
<p>And way below the almost complete electricity sector decarbonisation by 2040 that the <a href="http://www.worldenergyoutlook.org/publications/weo-2016/">International Energy Agency says</a> is required globally to avoid dangerous global warming.</p>
<h2>What does the law say?</h2>
<p>Constitutionally, energy policy in Australia is a matter for state governments. The development and implementation of the National Electricity Market over the past two decades has been achieved through the Council of Australian Governments (COAG), with harmonised legislation in each state.</p>
<p>State governments therefore have the constitutional scope to act both independently and in consort to achieve clean energy related goals.</p>
<p>Whether they should choose to do this, however, is another question. There is an obvious national context including Australia’s participation in international climate change processes such as the UN Framework Convention on Climate Change.</p>
<p>National policy coherence also has value in avoiding uncoordinated policies that can adversely impact investment incentives, increase compliance costs, and generally <a href="https://grattan.edu.au/report/keeping-the-lights-on-lessons-from-south-australias-power-shock/">lead to less efficient outcomes</a>. </p>
<p>While suitably ambitious, nationally consistent, legislation under federal government leadership may be ideal, it hardly seems realistic at present. The apparent divisions within the federal government seem likely to prevent useful progress, even with the two reviews. </p>
<p>It might well be a choice between state leadership or very little leadership over the next few years. And these years will be key to setting Australia on a clean energy path fit for the future. </p>
<h2>New South Wales’ climate plan</h2>
<p>The NSW <a href="http://www.environment.nsw.gov.au/research-and-publications/publications-search/nsw-climate-change-policy-framework">climate change policy framework</a> proposes to meet the net zero target through a number of policy “directions” to reduce emissions. It also proposes adaptation measures to cope with the warming that is already underway. </p>
<p>The emission reduction directions include: enhancing investment certainty for renewables; boosting energy productivity (energy efficiency); capturing other benefits of reducing emissions (such as improved health from reduced air pollution) and managing the risks; and growing new industries in NSW. </p>
<p>These are to be advanced through government policy, government operations, and advocacy. Specific initiatives are to be outlined in a set of action plans, including a <a href="https://engage.environment.nsw.gov.au/Environmental-Future-Consultation-CCF-Strategic-Plan">climate change fund</a> and an <a href="https://engage.environment.nsw.gov.au/Environmental-Future-Consultation-Plan-to-Save-NSW-Energy-and-Money">energy efficiency plan</a>, which are currently under consultation. </p>
<p>A further advanced energy plan will be developed in 2017. This will include provisions for the future role of renewable energy. Clearly the government will not be able to achieve its aspirational emissions target in the absence of a transformation of the energy system, so how will renewable energy figure in the absence of a state target?</p>
<p>While we can’t preempt the plan, the policy framework defines advanced energy to not only cover renewable generation itself but also how it is integrated into industry structures and adopted by end users. </p>
<p>Given the importance of integration in transitioning the energy system, such a broad focus could usefully complement the activities of other states as well as NSW. </p>
<p>The policy also emphasises collaborating with the commonwealth and other states through COAG.</p>
<h2>NSW: a climate advocate?</h2>
<p>Combined state action has historically played a key role in federal climate policy. It was bottom up pressure from states that resulted in the <a href="http://www.abc.net.au/news/2016-12-08/10-years-of-emissions-trading-leaves-climate-policy-in-the-lurch/8100870">Howard government’s initial emissions trading scheme (ETS) proposal</a> in 2007. </p>
<p>The <a href="http://www.garnautreview.org.au/">Garnaut review</a> that formed the basis of Kevin Rudd’s ETS was originally commissioned by Labor state governments.</p>
<p>On this point <a href="http://www.abc.net.au/news/2016-12-08/sa-premier-calls-for-state-emissions-trading-scheme/8102398">SA Premier Jay Wetherill has taken the lead in calling for a national emissions trading scheme</a> to be implemented through harmonised legislation at a state level.</p>
<p>While this seems unlikely to be a feature of NSW’s advocacy in 2017, continued failure by the federal government to advance climate and energy policy might require such types of coordinated state efforts. </p>
<p>In this light, state government efforts do not appear “ideological”. That would seem to better describe the federal government’s present opposition to even exploring promising emission reduction options. </p>
<p>And while it is too soon to know if NSW’s climate policy is fit for the future, it certainly represents welcome progress, and provides a basis that can be built upon.</p><img src="https://counter.theconversation.com/content/69039/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anna Bruce receives funding from the Australian Renewable Energy Agency (ARENA), Energy Consumers Australia and the Australian Research Council Cooperative Research Centre for Low Carbon Living (CRC-LCL), and leads the Australian PV Institute's solar mapping work.</span></em></p><p class="fine-print"><em><span>Graham Mills receives funding from the CRC for Low Carbon Living</span></em></p><p class="fine-print"><em><span>Iain MacGill is a Joint Director of UNSW Australia's Centre for Energy and Environmental Markets. The Centre has received funding from a range of government sources including the Australian Research Council, Energy Consumers Australia and ARENA. He has also undertaken consultancies for a number of Australian State Governments and the Federal Government on clean energy regulation, markets and policy. He also contributes unpaid expert advice to a number of government organisations, industry associations and not-for-profit groups in the clean energy area within Australia and internationally. Iain's share portfolio includes AGL which owns a range of coal, gas and renewable generation in Australia.</span></em></p>In the absence of strong federal action on climate change, many states have developed their own climate and energy policies.Anna Bruce, Lecturer in the School of Photovoltaic and Renewable Energy Engineering, UNSW SydneyGraham Mills, UNSW SydneyIain MacGill, Co-director, Centre for Energy and Environmental Markets, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/699802016-12-16T01:37:40Z2016-12-16T01:37:40ZFactCheck: Are Australians paying twice as much for electricity as Americans?<blockquote>
<p>Business here and households here, already we’re paying twice the cost of the US for electricity. <strong>– Craig Kelly MP, chair of the backbench environment and energy committee, <a href="http://www.abc.net.au/radionational/programs/breakfast/kelly/8095266">ABC Radio National Breakfast interview</a>, December 6, 2016.</strong> (Listen from 7.38)</p>
</blockquote>
<p>Environment and energy minister Josh Frydenberg recently <a href="http://www.abc.net.au/news/2016-12-05/government-to-consider-carbon-price-for-power-generators/8091912">left open</a> <a href="https://www.theguardian.com/australia-news/2016/dec/05/direct-action-review-coalition-leaves-carbon-trading-option-open">the possibility</a> of some form of carbon trading in the <a href="http://www.environment.gov.au/climate-change/review-climate-change-policies">electricity sector</a>. He later <a href="https://theconversation.com/turnbull-government-rules-out-an-emissions-intensity-scheme-70039">ruled out that option</a>, saying he wanted to keep electricity prices down.</p>
<p>Following Frydenberg’s initial comments, Liberal MP Craig Kelly said businesses and households in Australia are already paying twice as much as Americans for their electricity.</p>
<p>Is that true?</p>
<h2>Checking the source</h2>
<p>When asked for sources to support his statement, Craig Kelly referred The Conversation to a <a href="http://theconversation.com/full-response-from-craig-kelly-70215">range of sources</a>, saying that:</p>
<blockquote>
<p>… a report titled <a href="http://www.aemc.gov.au/getattachment/02490709-1a3d-445d-89cd-4d405b246860/2015-Residential-Electricity-Price-Trends-report.aspx">2015 Residential Electricity Price Trends</a> lists [on page 212] the average Australian price at 28.72 cents per kilowatt hour for 2014/2015. </p>
<p>In comparison, the <a href="http://www.eia.gov/electricity/state/">US Energy Information Administration</a> lists the average price for residential electricity [in the US] at 10.44 cents for 2014.</p>
<p>Converting 10.44 US cents at A$1/US$0.74 – is the equivalent of 14.11 cents Australia.</p>
<p>So using these sources (in Australian cents) we have 14.11 cents in the USA and 28.72 cents in Australia. Therefore I think to say that “we’re paying twice the cost of the US for electricity” (on average) is pretty much right on the money.</p>
</blockquote>
<p>You can read Craig Kelly’s full response <a href="http://theconversation.com/full-response-from-craig-kelly-70215">here</a>. </p>
<h2>Do Australians pay more?</h2>
<p>It’s definitely true that Australians pay much more for their electricity than US citizens do (and Australian prices are <a href="http://www.aemc.gov.au/Markets-Reviews-Advice/2016-Residential-Electricity-Price-Trends/Final/AEMC-Documents/2016-Electricity-Price-Trends-Report">set to rise even further</a>, according to the Australian Energy Market Commission. </p>
<p>Using OECD data, there’s one measure that says it is twice as much – or at least it was twice as much as recently as 2014. Another measure – a better measure, in my view – shows Australians pay about 50% more than US citizens do for their electricity. </p>
<p>As Craig Kelly notes in his <a href="http://theconversation.com/full-response-from-craig-kelly-70215">full response</a>, there is significant variation in electricity prices across states and territories in Australia and in the United States, so comparing the two is not a simple matter. The Australian Energy Market Commission’s annual <a href="http://www.aemc.gov.au/Markets-Reviews-Advice/2016-Residential-Electricity-Price-Trends/Final/AEMC-Documents/2016-Electricity-Price-Trends-Report">Electricity Price Trends</a> report shows that retail prices in Australia vary from 18.44 c/kWh in the Australian Capital Territory to 29.75 c/KWh in South Australia.</p>
<p>But we can use Organisation for Economic Co-operation and Development (<a href="http://www.oecd.org/">OECD</a>) data on <a href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/wholesale-and-retail-indices-of-energy-prices_data-00445-en">wholesale and retail indices energy prices</a> to check Craig Kelly’s statement. </p>
<p>The wholesale price is the cost of generating the energy that is sent to the grid. Retail prices are what householders are more used to talking about. Retail prices factor in extra costs like transmission and distribution (“poles and wires”), retailer margins and other levies (such as Feed-in Tariff and Renewable Energy Target costs). In other words, it’s what we’re paying on our power bill. </p>
<p>Let’s examine the data. </p>
<h2>A tale of two measures</h2>
<p>The two measures I have used to compare prices in the US and Australia are called “market exchange rates” and “purchasing power parities”. Craig Kelly’s calculations rely on market exchange rates, so we will start with that one. </p>
<p>Market exchange rates simply means converting the price in one country’s currency to that of another country’s currency, as Kelly <a href="http://theconversation.com/full-response-from-craig-kelly-70215">did</a>. This measure of comparison is <a href="http://www.imf.org/external/pubs/ft/fandd/2007/03/basics.htm">more volatile</a> than purchasing power parity exchange rates.</p>
<p>Using market exchange rates, OECD <a href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/energy-prices-in-us-dollars_data-00442-en">data</a> show that Australian electricity prices have, in recent years, been approximately twice as high as electricity prices in the US. Recently, the gap has narrowed. In 2015, using market exchange rates, electricity prices in Australia were about 70.3% higher than in the US. </p>
<p>The Australian Energy Market Commission projects that Australian prices will <a href="http://www.aemc.gov.au/Mark%E2%80%8Bhttp://www.aemc.gov.au/Markets-Reviews-Advice/2016-Residential-Electricity-Price-Trends/Final/AEMC-Documents/2016-Electricity-Price-Trends-Reportets-Reviews-Advice/2016-Residential-Electricity-Price-Trends/Final/AEMC-Documents/2016-Electricity-Price-Trends-Report">rise even further</a> in coming years.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">By converting Australian electricity prices into US dollars (market exchange rates), we can see Australian electricity prices have been an average of twice as high as in the US over the past four years – though the gap narrowed in 2015, down to a 70% difference.</span>
<span class="attribution"><a class="source" href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/wholesale-and-retail-indices-of-energy-prices_data-00445-en">Chart provided by author, using data from the OECD.</a></span>
</figcaption>
</figure>
<p>That broadly supports what Kelly said. But if we use purchasing power parity exchange rates, the data show that Australia’s prices are approximately 50% higher than the US. </p>
<p><a href="https://www.oecd.org/std/prices-ppp/purchasingpowerparitiespppsdata.htm">Purchasing power parity exchange rates</a>, or PPP, factor in inflation and the cost of living in a particular country, and eliminate differences in price levels between countries. This measure allows a cleaner, less volatile comparison between the US and Australia.</p>
<p>The chart below compares the retail prices of electricity in Australia and the United States when adjusted for cost of living differences using purchasing power parity.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Using purchasing power parity exchange rates, OECD data shows household prices of electricity are approximately 50% higher in Australia than in the US.</span>
<span class="attribution"><a class="source" href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/wholesale-and-retail-indices-of-energy-prices_data-00445-en">Chart by author, using data from the OECD.</a></span>
</figcaption>
</figure>
<p>As the above chart of the OECD <a href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/energy-prices-in-us-dollars_data-00442-en">data</a> shows, household prices of electricity are about 50% higher in Australia than in the US when you use purchasing power parity data. </p>
<h2>Why are the prices so different?</h2>
<p>As this chart shows, data from OECD indicate there has been a substantial divergence between Australian and American electricity prices since about 2008.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=375&fit=crop&dpr=1 600w, https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=375&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=375&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=471&fit=crop&dpr=1 754w, https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=471&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=471&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Retail price index: average power prices for householders in the US and Australia. The year 2000 is indexed to 100 (that is, 2000 = 100)</span>
<span class="attribution"><a class="source" href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/wholesale-and-retail-indices-of-energy-prices_data-00445-en">Author provided, using data from the OECD</a></span>
</figcaption>
</figure>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=375&fit=crop&dpr=1 600w, https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=375&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=375&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=471&fit=crop&dpr=1 754w, https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=471&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=471&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Wholesale price index: the average price the generators charge to the retailers (or distributors) for the power they put into the grid. The year 2000 is indexed to 100 (that is, 2000 = 100)</span>
<span class="attribution"><a class="source" href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/wholesale-and-retail-indices-of-energy-prices_data-00445-en">Author provided, using data from the OECD.</a></span>
</figcaption>
</figure>
<p>As noted in the <a href="http://www.environment.gov.au/energy/publications/energy-market-preliminary-report">preliminary report</a> of the Australian chief scientist Alan Finkel’s <a href="http://www.environment.gov.au/energy/national-electricity-market-review">review</a> of the National Electricity Market, household energy bills in Australia increased 61% on average between 2008 and 2014. </p>
<p>The main reason for this is the cost of maintaining the electricity network – essentially, the poles and wires that deliver the power. Network costs represent between 45% and 55% of a typical electricity bill. This has been the largest contributor to Australia’s increasing prices over the past six years. </p>
<p>Some observers have said that the “<a href="https://theconversation.com/bringing-an-end-to-electricity-network-gold-plating-40830">gold-plating</a>” of the network came about because of a regulatory regime that encouraged <a href="http://www.brisbanetimes.com.au/federal-politics/editorial/power-to-the-people--at-the-lowest-price-20120808-23ugb.html">over-investment</a> in poles and wires. This was been partly driven by an effort to shore up electricity supply and an overestimation of demand.</p>
<p>The <a href="https://theconversation.com/low-oil-prices-are-here-to-stay-as-the-us-shale-oil-revolution-goes-global-48100">US shale gas revolution</a> has also helped keep energy more affordable there than in Australia. </p>
<p>The <a href="http://www.pc.gov.au/projects/inquiry/electricity/report">Productivity Commission</a> reported that, in New South Wales, network costs accounted for 80% of price rises in 2010-11 and 50% of price rises in 2011-12.</p>
<h2>Is it really that simple?</h2>
<p>Not really. Energy economics is far more complicated than can come across in Kelly’s quick quote or this short FactCheck.</p>
<p>While the Australian <em>price</em> is higher, this doesn’t necessarily mean the <em>cost</em> is higher: Australians use much less energy than Americans. This is because as prices increase, energy productivity and energy efficiency also tend to increase. In total, most countries actually spend a similar proportion of GDP on energy costs. </p>
<p>This holds surprisingly consistent across a range of countries. For example, Japan has high energy prices, but also has high energy efficiency and productivity. Consequently, it spends practically the same amount of GDP on energy cost as the US. </p>
<p>So <em>prices</em> may be higher for individuals, but that doesn’t mean the economy-wide costs are higher. All that said, Kelly was talking about the prices for individuals and business, so that’s what this FactCheck is focused on.</p>
<h2>Verdict</h2>
<p>If we compare Australian and American electricity prices using market exchange rates, Craig Kelly’s comment is correct: Australia’s electricity prices were essentially double those of the United States as recently as 2014. In 2015, using market exchange rates, Australian prices were about 70.3% higher. </p>
<p>If we compare the prices using purchasing parity power exchange rates – which I’d argue is the more accurate reflection of the costs of living in each of the countries – Australia’s prices are about 50% higher than the US. </p>
<p>Overall, Craig Kelly’s broader point is correct: Australians pay a much higher price for their electricity than Americans do. <strong>– Dylan McConnell.</strong></p>
<hr>
<h2>Review</h2>
<p>I agree with the author’s position that purchasing power parity comparisons are less volatile and more representative of the relativity based on actual living costs. It is true Australian households pay a much higher electricity price than Americans.</p>
<p>There’s one important point I’d add. There is a baseline cost of having a house or business connected to electrical supply, regardless of how much electricity is used. This is called the fixed supply cost. The more electricity a household or business uses, the more the fixed supply cost is diluted in the overall electricity bill. This brings down the cost per kilowatt-hours (kWh).</p>
<p>American households use about twice as much electricity as Australian households. <a href="http://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3">According to the US EIA</a>, average US household electricity consumption in 2015 was 10,812 kWh. <a href="http://www.energyrating.gov.au/document/report-residential-baseline-study-technical-appendix">2014 data for Australia</a> shows average Australian household electricity consumption was 5,772 kWh (down from 6,819 kWh in 2008. At 25 cents/kWh that is a saving of $307 for Australians for using less electricity over time). </p>
<p>So we would expect Australian household electricity prices to be higher, because an average Australian household uses less electricity and the large fixed supply costs must be spread across a smaller amount of consumption. This raises the cost per kWh. But because Australians use less, their annual bill may be lower. </p>
<p>Further, in recent years, Australian energy retailers have been raising their fixed supply (or baseline) charges. So small users pay much more overall per unit of electricity they use.</p>
<p>Lastly, it’s worth noting that larger businesses often negotiate much better deals on their electricity prices than householders can. <strong>– Alan Pears.</strong></p>
<hr>
<blockquote>
<p>This article was corrected on February 9 to replace the line “In 2015, using market exchange rates, the US prices were about 70.3% higher” with “In 2015, using market exchange rates, Australian prices were about 70.3% higher”. The Conversation apologises for the error, which was introduced in the editing process.</p>
</blockquote>
<hr>
<p><div class="callout"> Have you ever seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/69980/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dylan McConnell has received funding from the AEMC's Consumer Advocacy Panel and Energy Consumers Australia.
</span></em></p><p class="fine-print"><em><span>Alan Pears has worked for government, business, industry associations public interest groups and at universities on energy efficiency, climate response and sustainability issues since the late 1970s. He is now an honorary Senior Industry Fellow at RMIT University and a consultant, as well as an adviser to a range of industry associations and public interest groups. His investments in managed funds include firms that benefit from growth in clean energy.</span></em></p>Liberal MP Craig Kelly said businesses and households in Australia are paying twice as much as Americans for their electricity. Is that true?Dylan McConnell, Researcher at the Australian German Climate and Energy College, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/701372016-12-09T00:52:21Z2016-12-09T00:52:21ZEmissions trading for electricity is the sensible way forward<figure><img src="https://images.theconversation.com/files/149351/original/image-20161209-31352-l9m6f7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An emissions intensity trading scheme increases the cost of coal power compared to other electricity sources. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/indigoskies/14717766993/in/photolist-oqypnk-e82sDT-4RVR82-4RNCtc-4S12iw-nf7Edq-64ExUQ-e5aAru-e5aA8E-mbeQhF-mbfS4T-pS1PUt-dajEyP-mbf6Jn-mbfPHk-mbfz9v-oXEHut-oXE6vC-6z6a2R-pfdPfp-KuLLBw-cngqxE-cngx6L-cngqUf-cngpJu-cngorw-cngxzh-cngvDm-cngxYu-cngpiq-cngsRJ-cngtZY-cngrhy-cngtCq-cngq8W-cngoPu-cngv7U-cngujs-cngs6h-7Z3oLQ-cngsrN-cngwpS-cnguGL-cngw1m-cngtcq-cngo3w-8HHKJ5-79WYYu-79WZ5S-7Z3oqj">Indigo Skies Photography/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>The preliminary report from the Finkel Review of electricity market security will be presented to COAG today. <a href="http://www.abc.net.au/news/2016-12-09/australias-energy-policy-cant-meet-current-targets/8105386">Leaked versions</a> indicate that the report notes the urgent need for long-term policy certainty on climate change and that some policies (such as carbon pricing) reduce emissions at lower cost than others (renewable energy targets or regulation).</p>
<p>These are hardly inflammatory observations. Yet they link directly with this week’s <a href="https://theconversation.com/turnbull-government-rules-out-an-emissions-intensity-scheme-70039">furious debate within the Coalition government</a> over the inclusion of a particular form of carbon pricing, an emissions intensity scheme, and whether it, and all of its relatives, should be excluded from next year’s climate policy review. </p>
<h2>How does it work?</h2>
<p>An emissions intensity scheme sets an intensity baseline – effectively a limit on how much carbon dioxide the generators can emit for each unit of electricity they produce.</p>
<p>Power stations can produce electricity above the baseline, but they would have to buy permits for the extra CO₂. Power stations that have lower emissions intensity create permits, which they can then sell.</p>
<p>For example, the intensity baseline might be set at one tonne of CO₂ for every megawatt hour (MWh) of electricity. A brown coal generator produces electricity at 1.3 tonnes CO₂ per MWh. </p>
<p>For every MWh the generator produces, it therefore has to purchase 0.3 permits. Alternatively, a wind farm that emits no CO₂ will create 1 permit for every MWh of electricity generated. </p>
<p>An emissions intensity scheme increases the cost of producing electricity from high-emitting generation, while reducing the relative cost of low-emitting generation. It thus drives emissions down in the electricity sector, because the cost difference favours a switch from high- to low-emitting generators.</p>
<h2>Why this type of scheme?</h2>
<p><a href="https://theconversation.com/no-climate-policy-is-perfect-heres-how-to-choose-the-best-one-52431">Other forms of carbon pricing</a>, such as a cap-and-trade emissions trading scheme, also increase the costs of high-emitting generation relative to low-emitting generation. But there are differences between the two schemes. </p>
<p>The main one is the short-term impact on prices. A cap-and-trade scheme places a price on each tonne of CO₂ emitted, which is paid to the government. Under an emissions intensity scheme, a price is imposed only on the carbon emitted above the intensity baseline. </p>
<p>Under a cap-and-trade scheme, our brown coal generator would have to purchase 1.3 permits for each MWh it produced, as opposed to the 0.3 it purchases under the intensity scheme. </p>
<p>As a result, electricity prices do not increase as much under an emissions intensity scheme as under a cap-and-trade scheme, at least in the short term. But there are drawbacks. </p>
<p>An emissions intensity scheme does not raise any revenue, as permits are purchased from other generators rather than the government. No revenue means no compensation to those impacted by decarbonisation. </p>
<p>Smaller price increases also mean that consumers are less likely to cut back on their own electricity use. This means that overall emissions will not be reduced as much as under a cap-and-trade scheme. </p>
<p>On the plus side, the lower price increase also means that there is less effect on overall economic activity. This can be mitigated under a cap-and-trade scheme, however, if the government uses the revenue wisely. </p>
<h2>Bipartisan support at last?</h2>
<p>Consulting firm Frontier Economics assisted the New South Wales government with the design of its <a href="https://www.ipart.nsw.gov.au/Home/Industries/Energy/Energy-Savings-Scheme/Greenhouse-Gas-Reduction-Scheme">greenhouse gas abatement scheme</a>, an emissions intensity scheme that ran in that state from 2003 until 2012, with some success. </p>
<p>In 2009, Senator Nick Xenophon championed the emissions intensity approach as a better alternative to then prime minister Kevin Rudd’s proposed Carbon Pollution Reduction Scheme (CPRS). Malcolm Turnbull joined with Xenophon to attempt to persuade Rudd to adopt the scheme as an alternative to the CPRS; that attempt failed. </p>
<p>In the past couple of years, an emissions intensity scheme has again been advocated as a potential circuit-breaker to the climate policy impasse that has been the norm in Australia for the past decade. The electricity market rule-maker, <a href="http://www.afr.com/news/climate-backflip-ignores-expert-advice-20161207-gt5o7g">the Australian Energy Market Commission</a>, the <a href="http://climatechangeauthority.gov.au/reviews/special-review/towards-climate-policy-toolkit-special-review-australias-climate-goals-and">Climate Change Authority</a> and <a href="https://grattan.edu.au/report/climate-phoenix-a-sustainable-australian-climate-policy/">we at the Grattan Institute</a> have all advocated for an emissions intensity scheme in the electricity sector. </p>
<p>This position was also reflected in the Labor Party manifesto at the last general election. While ambivalent about what form it takes, the <a href="https://www.energycouncil.com.au/news/australian-energy-council-and-energy-networks-australia-communique/">major generation companies and business groups</a> have all been arguing for a form of carbon pricing.</p>
<p>The Coalition government could get to an emissions intensity scheme in the electricity sector from its existing policies. An absolute limit on total emissions for the sector has already been set under the safeguards mechanism. Arithmetic and legislation are required to change the absolute limit to an emissions-intensity limit. </p>
<p>The advantages and disadvantages of an emissions intensity scheme against other forms of carbon pricing have been debated by academics, economists and policy wonks ever since Australia first committed to tackling climate change. But two things are clear. </p>
<p>First, an emissions intensity scheme would provide the stable carbon policy that the electricity sector needs to have investment confidence and contribute to electricity security. </p>
<p>Second, an emissions intensity scheme would, for some time, limit the impact on electricity prices. Apparently, these are matters of importance to both sides of politics.</p><img src="https://counter.theconversation.com/content/70137/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tony Wood owns shares in Origin energy and other energy and resources companies through his superannuation fund. </span></em></p><p class="fine-print"><em><span>David Blowers does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Why is everyone talking about ‘emissions intensity’ schemes this week?Tony Wood, Program Director, Energy, Grattan InstituteDavid Blowers, Energy Fellow, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/663892016-10-04T19:11:22Z2016-10-04T19:11:22ZLessons from South Australia’s blackout: we need to make infrastructure more resilient to climate change<p>Last week’s storm and subsequent <a href="https://theconversation.com/what-caused-south-australias-state-wide-blackout-66268">state-wide blackout in South Australia</a> reminds us how important the electricity grid – and other infrastructure – is for our communities. </p>
<p>Immediate analysis suggests the blackout was caused by the collapse of transmission infrastructure in South Australia. Australian electricity networks, like most transmission networks worldwide, rely on above-ground conducting wires held aloft by large towers. Some of these towers were blown over in the South Australian event.</p>
<p>While the storm hasn’t yet been specifically linked to climate change, it also serves as a reminder of the increasing challenges of delivering essential services in a more variable climate and slowing economy.</p>
<p>Power, water, transport, health, defence and communications infrastructure can be exposed to climate variability and change simply because of their long lifetimes. Therefore, many if not most owners and operators of essential infrastructure have commissioned climate vulnerability and adaptation studies. </p>
<p>There are many good examples of adaptation. For instance, <a href="https://www.urbanutilities.com.au/%7E/media/quu/pdfs/about%20us/publications/water%20netserv%20plan%20part%20a_cma_250112_newcovernobleed.ashx">Queensland Urban Utilities</a>, the major water distributor and retailer in south-east Queensland, is implementing a large program to make the water and wastewater delivery network more resilient to flooding. </p>
<p>But there is increasing recognition among climate adaptation researchers that many of the recommendations from climate adaptation studies aren’t being adopted. This is sometimes referred to as the “plan and forget” approach to climate adaptation and it leaves critical infrastructure vulnerable to weather extremes.</p>
<h2>Speaking different languages</h2>
<p>One of the less obvious reasons for lack of uptake is the difference in language used in the climate science and adaptation community and in the infrastructure community. </p>
<p>All technical disciplines develop their own specialised language and climate science is no exception. But planning for climate change means that infrastructure professionals have to apply climate science to engineering planning and design.</p>
<p>Both disciplines use risk management as a common framework for assessing and managing risks. But the “bible” of climate science, the <a href="https://www.ipcc.ch/">Intergovernmental Panel of Climate Change</a> (IPCC) process, has invented new definitions of risk. </p>
<p>These differ from the long-standing definitions of risk enshrined by the <a href="http://www.iso.org/iso/home.html">International Organisation for Standardization</a> and widely used by the engineering and infrastructure community. </p>
<p>Many engineers find they cannot use the IPCC reports and projections because this information cannot be directly integrated into planning and design processes that are often heavily regulated and prescribed. </p>
<p>By necessity, climate projections are based on probabilities that specified environmental conditions may occur. </p>
<p>By contrast, engineering design is often based on a specified extreme number, whether it be a maximum wind strength or flood height, rather than a set of probabilities. </p>
<p>Over time it is expected that engineering design methodologies will be able to assimilate climate projections, but updating these highly prescriptive standards can be a drawn-out process.</p>
<h2>Harder, better, faster, stronger</h2>
<p>Often the most common recommendations in infrastructure climate adaption studies are to make infrastructure stronger, higher and, by implication, heavier and more expensive. A common example is a recommendation that bridges be elevated and made stronger to account for expected higher flood levels and water flows. </p>
<p>While this is understandable, it is in stark contrast with the way almost all other products are being developed – lighter, faster, cheaper, smarter. </p>
<p>Australia is also consistently either at the top, or near the top, of the <a href="http://www.theaustralian.com.au/news/road-rail-costs-more-to-build-in-australia-than-most-developed-nations/news-story/f88b996579cf2f7c2f8c550ca734f753">infrastructure cost</a> league table. It’s one of the most expensive places to design and construct infrastructure worldwide. </p>
<p>Therefore, climate adaptation recommendations to make infrastructure more resilient through brute strength can be difficult to fund – although, in some cases, this may be the only viable option.</p>
<h2>Getting creative</h2>
<p>We need to think a little more creatively. A good starting point is to take the approach advocated in the relatively new international asset management standard called the <a href="https://www.iso.org/obp/ui/#iso:std:iso:55000:ed-1:v2:en">ISO 55000 standard</a>. </p>
<p>A key part of this standard is not to think about infrastructure assets in isolation, but to consider how each asset contributes to an essential service, such as providing electricity to our homes. After all, infrastructure assets are only constructed to deliver a service. It is the service that is key, not just the individual asset. </p>
<p>Importantly, the demand for services, levels of service and the way essential services will be delivered in future decades is all largely unknown. Technology will change how essential services are defined and delivered. </p>
<p>Distributed energy – such as rooftop solar – may reduce the need for extensive transmission networks. Smarter combinations of light rail and autonomous vehicles may change demand for major road infrastructure. </p>
<p>New water-treatment technology, such as within-pipe treatment, may do away with the need for large treatment plants that are often located in low-lying regions exposed to sea-level rise. </p>
<p>Climate adaptation needs to stop recommending that existing infrastructure just be built stronger and higher, and take a broader and smarter perspective of what infrastructure may be required as climate change increasingly makes its presence felt.</p><img src="https://counter.theconversation.com/content/66389/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Gibbs does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While South Australia’s storm hasn’t yet been specifically linked to climate change, it’s a reminder of the challenge of delivering essential services in a more variable climate.Mark Gibbs, Director: Knowledge to innovation. Chair: Green Cross Australia, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/654082016-09-15T20:14:31Z2016-09-15T20:14:31ZKangaroo Island’s choice: a new cable to the mainland, or renewable power<figure><img src="https://images.theconversation.com/files/137900/original/image-20160915-30594-pastat.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Can Kangaroo Island's pioneering spirit be harnessed in the push for renewable energy?</span> <span class="attribution"><span class="source">Dider B/Wikimedia Commons</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>South Australia’s iconic Kangaroo Island, the site of Australia’s <a href="http://www.authentickangarooisland.com.au/history-and-heritagehttp://example.com/">first free settled colony</a>, could pioneer a new age of renewable energy, according to our <a href="http://www.uts.edu.au/research-and-teaching/our-research/institute-sustainable-futures/our-research/energy-and-climate-6">new research</a>. </p>
<p>The first hardy settlers in 1836 had to decide whether to go it alone with a settlement on the island or revert to the mainland. Today, the 4,400 or so people who call the island home face a similarly stark choice: energy independence, or continued reliance on the mainland. </p>
<p>On one hand, the ageing existing cable could simply be replaced, at a cost of between A$22 million and A$50 million. This is the “<a href="http://www.sapowernetworks.com.au/public/download.jsp?id=54387">preferred network option</a>” proposed by the local electricity distribution network, SA Power Networks (SAPN). </p>
<p>On the other hand, SAPN is also <a href="http://www.sapowernetworks.com.au/public/download.jsp?id=54387">currently considering an alternative mix</a> of local wind, solar and biomass generation, complemented by diesel generation, battery storage and demand management.</p>
<h2>Simple vs smart?</h2>
<p>The new cable option is straightforward and well understood, if a little uninspiring. The local renewable power supply option means energy independence, more local investment and economic activity, and a boost for the tourist mecca’s clean, green brand. But it also requires solutions to a series of tricky technical and regulatory issues, at a scale never before attempted in Australia.</p>
<p>To help inform this crucial decision by SAPN and the Kangaroo Island community, I and my colleagues at the Institute for Sustainable Futures (ISF) at the University of Technology Sydney yesterday published a <a href="http://www.uts.edu.au/research-and-teaching/our-research/institute-sustainable-futures/our-research/energy-and-climate-6">study</a> of the feasibility of renewable energy for the island. </p>
<p>We conclude that Kangaroo Island could be powered by 86-100% renewable energy for about the same cost as replacing the cable to the mainland. </p>
<p>We examined ten different electricity supply scenarios for Kangaroo Island. The direct costs of the three most interesting scenarios are shown below. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/137873/original/image-20160915-4958-17ot7is.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/137873/original/image-20160915-4958-17ot7is.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/137873/original/image-20160915-4958-17ot7is.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=479&fit=crop&dpr=1 600w, https://images.theconversation.com/files/137873/original/image-20160915-4958-17ot7is.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=479&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/137873/original/image-20160915-4958-17ot7is.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=479&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/137873/original/image-20160915-4958-17ot7is.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=602&fit=crop&dpr=1 754w, https://images.theconversation.com/files/137873/original/image-20160915-4958-17ot7is.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=602&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/137873/original/image-20160915-4958-17ot7is.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=602&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Kangaroo Island electricity supply scenarios: direct costs (net present value over 25 years).</span>
<span class="attribution"><span class="source">Institute for Sustainable Futures</span></span>
</figcaption>
</figure>
<p>The most cost-effective alternative to a new cable is local supply of wind, solar photovoltaics and diesel generation, complemented by battery storage and “demand management”. This hybrid solution could supply the island with 86% renewable energy for only A$10 million more than a new cable option. This option would also meet SAPN’s tight deadline of being able to meet the island’s entire electricity demand by December 2018.</p>
<p>For a further A$13 million, 100% renewable power could be provided by displacing the diesel with biomass generation technology fuelled by local, currently unharvested plantation wood. We estimate that this system could be established within five years.</p>
<p>Both the hybrid and 100% renewable options could actually cost Kangaroo Islanders less than the new cable over a 25-year period, if we factor in indirect impacts such as savings in local network charges. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/137875/original/image-20160915-4983-nuw1s8.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/137875/original/image-20160915-4983-nuw1s8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/137875/original/image-20160915-4983-nuw1s8.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=510&fit=crop&dpr=1 600w, https://images.theconversation.com/files/137875/original/image-20160915-4983-nuw1s8.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=510&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/137875/original/image-20160915-4983-nuw1s8.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=510&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/137875/original/image-20160915-4983-nuw1s8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=641&fit=crop&dpr=1 754w, https://images.theconversation.com/files/137875/original/image-20160915-4983-nuw1s8.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=641&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/137875/original/image-20160915-4983-nuw1s8.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=641&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Kangaroo Island electricity supply scenarios: direct and indirect costs (net present value over 25 years).</span>
<span class="attribution"><span class="source">Institute for Sustainable Futures</span></span>
</figcaption>
</figure>
<p>So with the cost of the different options roughly comparable, the choice of power supply will probably depend on other factors. These include the preferences of the local community; how the costs, benefits and risks are shared; and the level of support from key stakeholders including SAPN, government and regulators. </p>
<p>For local generation to be cost-competitive, SAPN’s funds earmarked for the new cable would need to be redirected to support local generation and demand management. However, the current regulatory system creates barriers to SAPN providing this support. </p>
<p>For example, SAPN can earn a net financial return on investment in network assets such as a new undersea cable over their 30-40-year life. But if, instead of investing in a new network asset, SAPN spends money on supporting local supply options, then at best it can only retain a few years’ savings by deferring capital investment.</p>
<p>Another challenge for local electricity supply is ensuring that local electricity suppliers do not abuse their monopoly by price-gouging customers if and when the existing cable eventually fails. Two possible ways to guard against this are by sharing community ownership of generation assets, and by periodic tendering of retail services. </p>
<p>For a local electricity supply solution to proceed it requires strong support, from both the Kangaroo Island community and SAPN. It would also require a major third party, such as the SA Government or the Australian Energy Regulator, to help reduce the barriers to SAPN adopting a more innovative non-network solution. </p>
<h2>Renewable future</h2>
<p>A balanced local electricity supply solution and a transition to 100% renewable power could deliver a range of economic development and other benefits to the local community. But it will require market testing to confirm the costs, and stakeholder and community consultation to develop a suitable regulatory and business model. </p>
<p>It is unclear who would provide the time and resources for such leadership, but the SA Government and the Kangaroo Island Council are two possible candidates.</p>
<p>Addressing such barriers in the context of Kangaroo Island would provide not just an inspiring local solution, but a powerful precedent for supporting local renewable energy initiatives throughout Australia. </p>
<p>Within months of their arrival in 1836, most of the original Kangaroo Island settlers had left to set up the new mainland colony of South Australia. But a few enterprising souls stayed on. We will soon see if that pioneering Kangaroo Island spirit prevails when it comes carving out Australia’s clean energy future.</p>
<hr>
<p><em>A community forum will be held on September 22 in Kingscote, Kangaroo Island, to share the study’s findings and canvass community views about future power supply options.</em></p><img src="https://counter.theconversation.com/content/65408/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chris Dunstan is a Research Director at the Institute for Sustainable Futures (ISF) at the University of Technology Sydney. ISF undertakes paid sustainability research for a wide range of government, corporate and NGO clients.
The Towards 100% Renewable Energy for Kangaroo Island study was funded by ARENA and RenewablesSA with assistance from the Kangaroo Island Council. </span></em></p>Kangaroo Island’s electricity link to the mainland needs replacing. But a new analysis shows that for roughly the same price, the island could move to independent, local renewable energy sources.Chris Dunstan, Research Director, Institute for Sustainable Futures, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/618022016-07-13T19:39:10Z2016-07-13T19:39:10ZAustralia’s energy sector is in critical need of reform<p><em>A federal election is an opportunity to take stock of how Australia is doing, where it’s going, and what governments can do about it. This <a href="https://theconversation.com/au/topics/advice-to-government">series</a>, written by program directors at the Grattan Institute, explores the challenges that Australia faces and advocates policy changes for budgets, economic growth, cities and transport, energy, school education, higher education and health.</em></p>
<hr>
<p>Over the next few decades Australia, like many countries, faces the prospect of an energy transformation that will challenge every aspect of stationary and transport energy: from production, transmission and distribution to consumption and exports.</p>
<p>The ultimate imperative is to move our economy to a low-carbon footing, while ensuring that consumers don’t pay unnecessarily high costs. The <a href="http://www.scer.gov.au/">COAG Energy Council</a>, the decision-making body of federal and state energy and resources ministers, formally recognised the <a href="http://www.scer.gov.au/sites/prod.energycouncil/files/publications/documents/Energy%20Council%20Communique%20-%2023%20July%202015%20-%20FINAL_1.pdf">critical connection between energy and climate policy</a> last July. Later that year the world’s governments brokered the <a href="https://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf">Paris climate agreement</a>, with Australia promising to cut emissions to <a href="http://www4.unfccc.int/submissions/INDC/Published%20Documents/Australia/1/Australias%20Intended%20Nationally%20Determined%20Contribution%20to%20a%20new%20Climate%20Change%20Agreement%20-%20August%202015.pdf">26-28% below 2005 levels by 2030</a>. </p>
<p>Yet this need for wholesale transformation has emerged at a time when Australia’s policy structures are already struggling to maintain the delivery of affordable and reliable electricity, after the reforms of the 1990s lost momentum in the 2000s.</p>
<p>It also comes at the end of a three-year period in which the Coalition government’s actions to address these challenges made modest progress at best. Tony Abbott’s administration <a href="https://theconversation.com/obituary-australias-carbon-price-29217">repealed the carbon price</a>, <a href="https://theconversation.com/renewable-energy-deal-gives-no-certainty-over-coming-decades-42329">wound back the Renewable Energy Target</a> and established the <a href="https://theconversation.com/au/topics/emissions-reduction-fund">Emissions Reduction Fund</a> (ERF), which has contracted for more than 100 million tonnes of CO₂ emission reductions at less than A$14 per tonne. But it largely sidestepped the reforms needed to address emerging energy trends such as low demand growth, the rise of distributed wind power generation, the boom in domestic solar power and the dramatic growth of coal seam gas. </p>
<p>The upshot was that 2013-16 has left the energy industry with huge uncertainty about what is in store, at a time when it craves reassurance more than ever.</p>
<p>This leaves the new government with three key priorities. As elsewhere, its capacity to deliver will be constrained by the reality of the new parliament. </p>
<p>The first priority will be to build on its current climate change policy to create a stable, long-term approach that will lead the transition to a low-emissions economy. The government will be able to do this through a combination of administrative action and bipartisan support. </p>
<p>The second priority is to revive energy market reform through the COAG Energy Council. The third is to maximise the value of Australia’s gas resources and ensure continuity of supply. </p>
<p>These are not politically partisan issues but they do require galvanising cooperation across state and territory governments.</p>
<p>In addition, the government should develop a renewed reform agenda for the COAG Energy Council – one that addresses all these issues with a focus on outcomes, rather than being mired in process as it has been so far.</p>
<h2>Climate policy</h2>
<p>For most of this century Australia has lacked a <a href="http://grattan.edu.au/wp-content/uploads/2016/04/870-Climate-Phoenix.pdf">credible, long-term climate policy</a>. Instead we have had toxic debate, <a href="https://theconversation.com/carbon-tax-axed-how-it-affects-you-australia-and-our-emissions-28895">policy bonfires</a> and a mishmash of unstable and unpredictable <a href="http://grattan.edu.au/report/sundown-sunrise-how-australia-can-finally-get-solar-power-right/">federal and state policies</a> that have threatened industry investment, not to mention the environment itself. </p>
<p>Existing government policy (the ERF and its new <a href="https://www.environment.gov.au/climate-change/emissions-reduction-fund/publications/factsheet-erf-safeguard-mechanism">safeguard mechanism</a>, plus the reduced Renewable Energy Target) is likely to be enough to meet Australia’s 2020 emissions target – a 5% reduction on 2000 levels by 2020 – but far from enough to meet the stronger 2030 target, or indeed to get us to zero net emissions thereafter.</p>
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<a href="https://images.theconversation.com/files/130337/original/image-20160713-12372-1waxoou.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/130337/original/image-20160713-12372-1waxoou.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/130337/original/image-20160713-12372-1waxoou.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=452&fit=crop&dpr=1 600w, https://images.theconversation.com/files/130337/original/image-20160713-12372-1waxoou.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=452&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/130337/original/image-20160713-12372-1waxoou.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=452&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/130337/original/image-20160713-12372-1waxoou.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=568&fit=crop&dpr=1 754w, https://images.theconversation.com/files/130337/original/image-20160713-12372-1waxoou.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=568&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/130337/original/image-20160713-12372-1waxoou.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=568&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>An economy-wide carbon market is the best way to cut emissions and <a href="http://grattan.edu.au/wp-content/uploads/2014/05/077_report_energy_learning_the_hard_way.pdf">meet Australia’s targets without excessive cost to the economy</a>. But in the absence of the political will to implement this, we must work with what we have. </p>
<p>The government should therefore <a href="https://www.environment.gov.au/climate-change/emissions-reduction-fund/publications/factsheet-erf-safeguard-mechanism">strengthen the safeguard mechanism</a>, which puts pollution limits on 140 of Australia’s biggest-emitting businesses, so that it becomes an <a href="http://grattan.edu.au/wp-content/uploads/2016/04/870-Climate-Phoenix.pdf">effective market mechanism</a>. This approach has the potential to gain the bipartisan support that energy companies seek as they consider investments in long-lived assets.</p>
<p>Technologies that might produce plentiful low-emission electricity will still be expensive and risky in the short term. To overcome these market barriers, the government will need to expand its existing clean energy research funding to <a href="http://grattan.edu.au/wp-content/uploads/2014/04/Building_the_bridge_report.pdf">reduce the costs of moving to a low-emissions economy</a>.</p>
<h2>Electricity reform</h2>
<p>Energy market reform began in the early 1990s but stalled in the 2000s. Privatisation became politicised and governments baulked at introducing electricity prices that more closely reflect the costs of producing power. Meanwhile, prices climbed by <a href="http://grattan.edu.au/wp-content/uploads/2014/03/804-shock-to-the-system.pdf">60% in real terms for all customers</a>.</p>
<p>The government should work through the COAG Energy Council to <a href="http://grattan.edu.au/wp-content/uploads/2014/04/178_energy_putting_the_customer_back_in_front.pdf">push for network privatisation</a> and <a href="http://grattan.edu.au/wp-content/uploads/2014/03/804-shock-to-the-system.pdf">tariff reform</a>, with the goal of delivering fairer and cheaper electricity bills.</p>
<p>In reforming power networks, two issues come first. </p>
<p>The process for defining the costs that networks can recover from customers takes too long and encourages networks to overspend. It must be overhauled. </p>
<p>Second, governments must decide who will pay for surplus network infrastructure that was built to meet overly cautious reliability standards and exaggerated demand forecasts. This “gold-plating” is one of the main causes of power price rises over the past decade.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/130338/original/image-20160713-12377-1kqvnle.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/130338/original/image-20160713-12377-1kqvnle.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/130338/original/image-20160713-12377-1kqvnle.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=516&fit=crop&dpr=1 600w, https://images.theconversation.com/files/130338/original/image-20160713-12377-1kqvnle.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=516&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/130338/original/image-20160713-12377-1kqvnle.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=516&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/130338/original/image-20160713-12377-1kqvnle.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=649&fit=crop&dpr=1 754w, https://images.theconversation.com/files/130338/original/image-20160713-12377-1kqvnle.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=649&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/130338/original/image-20160713-12377-1kqvnle.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=649&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>Network infrastructure has been built to meet the peak demand that occurs only once every summer in most states, yet customers are charged on their year-round use. Pricing to reflect the cost of meeting this peak would make electricity prices <a href="http://grattan.edu.au/wp-content/uploads/2014/07/813-fair-pricing-for-power.pdf">fairer and cheaper for all consumers in the long term</a>.</p>
<p>Federal and state governments have <a href="https://scer.govspace.gov.au/files/2014/05/COAG-Energy-Council-Communique-11-Dec-2014-FINAL2.pdf">agreed</a> to introduce new network tariffs from the start of 2017. But progress is slow, as the losers from policy changes have loud voices that have deterred risk-averse state ministers.</p>
<p>This lack of tariff reform is one of the factors (alongside the large subsidies on offer) that have prompted so many Australian households to install solar panels. By our analysis, the benefits have <a href="http://grattan.edu.au/wp-content/uploads/2015/05/822-sundown-sunrise5.pdf">fallen far short of the costs</a> so far. </p>
<p>Yet as solar panels and battery storage continue to get cheaper, cost-reflective network tariffs will encourage consumers to combine them fairly and effectively.</p>
<p>Since its creation in 1998, the <a href="https://theconversation.com/au/topics/national-electricity-market">National Electricity Market</a> has helped to provide affordable, reliable and secure electricity supplies. But now it faces new challenges that were not envisaged when it was established.</p>
<p>Thanks to the surge in household solar and other factors, more and more electricity is now generated at zero or even negative marginal cost. A similar situation in European markets has led to <a href="https://www.theguardian.com/business/2016/mar/09/eon-blames-losses-on-power-price-slump-and-german-renewable-push">serious financial losses for major energy companies in Germany</a>. This is forcing governments in Britain, Germany and elsewhere to introduce supplementary markets for generation capacity even if it is not used. </p>
<p>Although Australia is not yet in this situation, the government should initiate a review of the National Electricity Market to avoid such threats arising.</p>
<h2>Gas markets</h2>
<p>Opening the east coast domestic gas market to international buyers has <a href="https://theconversation.com/heading-north-how-the-export-boom-is-shaking-up-australias-gas-market-52963">pushed up prices</a>. These pressures are exacerbated by the lack of progress toward a transparent and liquid wholesale market and by patchwork regulation of <a href="http://grattan.edu.au/wp-content/uploads/2014/04/189_getting_gas_right_report.pdf">unconventional extraction such as fracking</a>.</p>
<p>The government should lead the implementation of recommendations from the recent Australian Competition and Consumer Commission’s <a href="https://www.accc.gov.au/system/files/1074_Gas">East Coast Gas Inquiry</a> to create a more effective and efficient market. Reverting to protectionism by reserving a proportion of gas for domestic use is not the answer; in the long run this would reduce the availability of domestic gas and drive up prices, while also <a href="http://grattan.edu.au/wp-content/uploads/2014/10/817-gas-at-the-crossroads.pdf">reducing export revenue</a>.</p>
<h2>Fixing the COAG Energy Council</h2>
<p>A <a href="https://scer.govspace.gov.au/workstreams/energy-market-reform/review-of-governance-arrangements/">recent review</a> of how Australia’s energy markets are governed identified problems with the COAG Energy Council and the operation of the government agencies that implement its decisions. </p>
<p>In a way this serves as a neat illustration of the problems facing the government if it is going to get energy policy right. Governance, rules, regulations and policy settings are desperately dry issues. But if Australia gets them right, the problems people really care about – like expensive energy bills and climate change – will be much easier to solve.</p>
<hr>
<p><em>Tomorrow in the <a href="https://theconversation.com/au/topics/advice-to-government">series</a>: schools and higher education.</em></p>
<p><em>Read more: <a href="https://theconversation.com/a-snapshot-of-the-challenges-facing-the-new-turnbull-government-51661">A snapshot of the challenges facing the new Turnbull government</a></em></p><img src="https://counter.theconversation.com/content/61802/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tony Wood owns shares in several energy and resources through his superannuation fund. </span></em></p>Australia’s energy policy has lost its way over the past couple of decades, which is unfortunate because the challenges – to move to a low-carbon economy without high prices – have never been tougher.Tony Wood, Program Director, Energy, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/600182016-06-09T09:44:01Z2016-06-09T09:44:01ZBrexit backfire? UK actually has more ‘energy sovereignty’ inside the EU than out<figure><img src="https://images.theconversation.com/files/125134/original/image-20160603-11585-r1mvu4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">ditttmer / shutterstock</span></span></figcaption></figure><p>The UK imports around <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/357534/Imports__exports_and_transfers_of_electricity.pdf">6% of its electricity</a> through undersea cables linking it to the European mainland. These links help Britain deal with the ebbs and flows of renewable energy generation, and give the country a “safety net” in case things go wrong. Europe’s electricity network shows just how interconnected nation states are these days, and energy offers many insights into wider issues raised by the EU referendum.</p>
<p>The first is that national sovereignty – if that means the ability of a nation state to promote its best interests – is not necessarily best achieved at a purely national level. The UK has had lots of influence on the EU’s energy policy over the years, on everything from liberalising EU energy markets to the more recent push to <a href="https://ec.europa.eu/energy/en/topics/renewable-energy/renewable-energy-directive">ditch fossil fuels for renewables</a>. On these and other issues, the UK has led and other member states have followed. British sovereignty in respect of energy and climate change policy has been expanded, not diminished, by its EU membership.</p>
<p>Sovereignty doesn’t necessarily imply democracy, of course. Yet people sometimes call the EU “undemocratic” without having the first idea of how it operates. Don’t forget that all European legislation is debated and approved, unanimously or by majority vote, by elected representatives from each member country. The European parliament, elected by proportional representation, is rather more democratically representative than the UK parliament, in which a party with <a href="http://www.mirror.co.uk/usvsth3m/victory-most-people-dont-actually-5667728">only 37% of the popular vote</a> has an absolute majority of seats.</p>
<p>This means directives on renewables or energy efficiency have been agreed by British politicians in discussion with their counterparts from all other member states. They’re not <a href="http://www.dailymail.co.uk/news/article-2895999/Now-Europe-comes-Sunday-roast-Brussels-impose-maximum-power-limit-new-gas-electric-ovens-month.html">“imposed” by “Brussels”</a>, as such legislation is so often described. At the same time, <a href="http://eur-lex.europa.eu/summary/glossary/proportionality.html">checks</a> and <a href="http://eur-lex.europa.eu/summary/glossary/subsidiarity.html">balances</a> ensure that the EC does not over-reach itself, and national governments get to decide how most European legislation is actually implemented in their countries. Therefore it’s up to the UK how it chooses to keep the lights on while reducing its carbon emissions – not the EU.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/125713/original/image-20160608-3497-1vcmi25.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/125713/original/image-20160608-3497-1vcmi25.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=396&fit=crop&dpr=1 600w, https://images.theconversation.com/files/125713/original/image-20160608-3497-1vcmi25.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=396&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/125713/original/image-20160608-3497-1vcmi25.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=396&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/125713/original/image-20160608-3497-1vcmi25.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=497&fit=crop&dpr=1 754w, https://images.theconversation.com/files/125713/original/image-20160608-3497-1vcmi25.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=497&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/125713/original/image-20160608-3497-1vcmi25.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=497&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The EU leads the world in offshore wind … by far.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/nhd-info/8033151828/">NHD</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<p>With member states moving in broadly the same direction on renewables and energy efficiency, the markets for new technologies are larger. The EU harnesses these economies of scale so that products are cheaper, which benefits both Europe’s consumers and exporters. This is the point of the <a href="http://ec.europa.eu/priorities/internal-market_en">single internal market</a>.</p>
<p>This effect is especially important in the energy sector. Energy, and especially electricity, flows through networks that need to be regulated and balanced by complex technical and institutional arrangements. If a power plant suddenly goes down, for example, or a still, overcast day prevents wind and solar generation, then electricity can still be wired in from a neighbouring nation. Most people won’t even notice any disruption. </p>
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<a href="https://images.theconversation.com/files/125598/original/image-20160607-15024-133iac0.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/125598/original/image-20160607-15024-133iac0.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/125598/original/image-20160607-15024-133iac0.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=753&fit=crop&dpr=1 600w, https://images.theconversation.com/files/125598/original/image-20160607-15024-133iac0.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=753&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/125598/original/image-20160607-15024-133iac0.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=753&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/125598/original/image-20160607-15024-133iac0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=946&fit=crop&dpr=1 754w, https://images.theconversation.com/files/125598/original/image-20160607-15024-133iac0.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=946&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/125598/original/image-20160607-15024-133iac0.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=946&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Undersea ‘interconnectors’ link the UK with France, Ireland and the Netherlands. (Proposed links with Iceland and Norway are in blue).</span>
<span class="attribution"><span class="source">J JMesserly / wiki</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
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<p>Under the EU’s <a href="http://ec.europa.eu/priorities/energy-union-and-climate_en">Energy Union</a> proposals, the UK is having its interconnection to other European countries substantially strengthened, with new cables to France, Denmark, Belgium, Norway and Iceland either agreed or <a href="http://www.scottishenergynews.com/ofgem-proposes-three-new-electricity-interconnectors-between-uk-and-eu-but-not-scotland/">mooted</a>. Such new interconnectors would be possible if the UK was outside the EU and its Energy Union, of course, but they would be a much lower priority for the EU and would almost certainly be <a href="http://www.euractiv.com/section/energy/news/uk-energy-links-to-europe-at-risk-from-brexit-analysts-warn/">substantially more expensive</a>.</p>
<p>The conclusions from the available evidence are clear. Inside the EU, the UK will have considerable influence over how the continent cuts its carbon emissions and adopts radical new renewable technology. Britain’s energy system will be well-integrated into that of the mainland, delivering benefits from economies of scale and common standards, while ensuring a secure and stable supply of electricity.</p>
<p>Outside the EU the UK will either exist in an energy isolation that is both more expensive and less secure than being part of the <a href="http://www.europarl.europa.eu/atyourservice/en/displayFtu.html?ftuId=FTU_5.7.2.html">internal energy market</a>, or it will be a second-tier member of that market, bound to accept the rules made by EU members but having no influence over how they are agreed.</p>
<p>The paradox is that inside the EU the UK will be more sovereign, in the sense of having more control over its energy future, and part of a wider democracy, with an energy system that is more secure and delivers energy at lower cost, than if the UK sought to control energy developments by itself. Such paradoxes in today’s globally interconnected world are not uncommon.</p><img src="https://counter.theconversation.com/content/60018/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul Ekins is a Fellow of the Energy Institute. He receives funding for his research from the UK Research Councils, both directly at UCL and through the UK Energy Research Centre. He has also received funding from DG Research of the European Commission. This article does not reflect the views of the research councils.</span></em></p>Energy isolation would be more expensive and less secure.Paul Ekins, Professor of Resources and Environmental Policy, UCLLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/590882016-05-12T20:05:36Z2016-05-12T20:05:36ZCarbon taxes, emissions trading and electricity prices: making sense of the scare campaigns<figure><img src="https://images.theconversation.com/files/122204/original/image-20160512-18168-4d0o79.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Labor has promised half of Australia's electricity will come from renewables in 2030. </span> <span class="attribution"><span class="source">Wind turbine image from www.shutterstock.com</span></span></figcaption></figure><p>Yet again, electricity prices are set to be a key point of contention in an Australian federal election. </p>
<p>The Coalition responded quickly to Labor’s election commitment to an <a href="http://www.smh.com.au/environment/climate-change/labor-would-introduce-carbon-market-pledge-deeper-carbon-cuts-if-elected-20160426-gofaxb.html">emissions trading scheme</a> (ETS), with Prime Minister Malcolm Turnbull warning of <a href="http://www.theaustralian.com.au/national-affairs/climate/labor-emission-targets-to-hit-electricity-costs-turnbull-warns/news-story/5b2c084a1576380d3371369e038ad25f">“much higher electricity prices” and a “very big burden” on Australians</a>. </p>
<p>Other ministers joined in. Treasurer Scott Morrison labelled the plan a “<a href="http://www.smh.com.au/federal-politics/federal-election-2016/malcolm-turnbull-reprises-elements-of-tony-abbotts-scare-campaign-to-fight-labor-plan-20160428-gogw9z.html">a big thumping electricity tax</a>” and Environment Minister Greg Hunt <a href="https://twitter.com/GregHuntMP/status/725071892198002688">branded</a> it “Julia Gillard’s carbon tax on steroids”, warning of “even higher electricity prices for Australian families”. </p>
<p>The centrepiece of the Coalition’s climate policy, meanwhile, is the A$2.5 billion <a href="https://www.environment.gov.au/climate-change/emissions-reduction-fund">Emissions Reduction Fund</a>. An important element of this scheme is the “safeguard mechanism”, which is due to kick in on July 1 this year. This has implications for the electricity sector and may also affect electricity prices. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/121812/original/image-20160510-20609-1cnkz0p.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/121812/original/image-20160510-20609-1cnkz0p.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/121812/original/image-20160510-20609-1cnkz0p.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=800&fit=crop&dpr=1 600w, https://images.theconversation.com/files/121812/original/image-20160510-20609-1cnkz0p.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=800&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/121812/original/image-20160510-20609-1cnkz0p.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=800&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/121812/original/image-20160510-20609-1cnkz0p.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1005&fit=crop&dpr=1 754w, https://images.theconversation.com/files/121812/original/image-20160510-20609-1cnkz0p.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1005&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/121812/original/image-20160510-20609-1cnkz0p.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1005&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">National summary of retail electricity cost components.</span>
<span class="attribution"><span class="source">2015 Residential Electricity Price Trends</span></span>
</figcaption>
</figure>
<p>These policies will affect the wholesale electricity market, in which electricity is bought from power generators and sold on to retailers and consumers. </p>
<p>As you can see from the figure to the right, the competitive component of the retail prices makes up about 50% of the typical household electricity bill, and the wholesale component typically makes up half of that. The other major cost is poles and wires.</p>
<p>So how exactly will the different climate policies affect electricity prices?</p>
<h2>The safeguard mechanism (Coalition)</h2>
<p>The <a href="https://www.environment.gov.au/climate-change/emissions-reduction-fund/about/safeguard-mechanism">safeguard mechanism</a> will require Australia’s largest emitters to keep emissions below a baseline. This will prevent emissions reductions under the ERF being offset by increases elsewhere. Businesses that go over the baseline will have to pay. </p>
<p>The safeguard is based on the high point in annual emissions from the whole electricity sector between 2009-10 and 2013-14. Generators’ individual baselines and associated penalties only come into play if the whole sector goes over the baseline. </p>
<p>As you can see in the figure below, emissions have fallen by almost 20 million tonnes per year since the first baseline year (2009-10), partially in response to <a href="http://www.sciencedirect.com/science/article/pii/S104061901500161X">years of declining demand</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/121815/original/image-20160510-20584-1dtq0ga.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/121815/original/image-20160510-20584-1dtq0ga.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/121815/original/image-20160510-20584-1dtq0ga.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/121815/original/image-20160510-20584-1dtq0ga.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/121815/original/image-20160510-20584-1dtq0ga.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/121815/original/image-20160510-20584-1dtq0ga.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/121815/original/image-20160510-20584-1dtq0ga.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/121815/original/image-20160510-20584-1dtq0ga.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Electricity Sector Emissions.</span>
<span class="attribution"><span class="source">Quarterly Update of Australia’s National Greenhouse Gas Inventory: December 2015</span></span>
</figcaption>
</figure>
<p>Current projections for electricity growth suggest that the baseline won’t be breached for some years. As such, individual generators are unlikely to be penalised, and wholesale prices would not be expected to change dramatically. </p>
<h2>Electricity sector emissions trading (Labor)</h2>
<p><a href="https://cdn.australianlabor.com.au/documents/Climate_change_action_plan_fact_sheet.pdf">Labor’s electricity sector ETS</a> is a “baseline and credit” scheme, based on a model proposed by the Australian Energy Market Commission (AEMC), which actually submitted the proposal to <a href="http://www.aemc.gov.au/getattachment/5f6f00b4-709e-47c7-8daa-5bcdf31cfacd/Submission-to-Emissions-Reduction-Fund-Safeguard-M.aspx">consultation on the safeguard mechanism</a>. </p>
<p>This also places a baseline on the electricity sector, but it is calculated on the basis of emissions intensity (tonnes of emissions per unit of electricity generated) rather than overall emissions. Generators with emissions intensity below the baseline (for example, gas generators) would earn credit, so “cleaner” power plants would generate more credits. </p>
<p>Power plants that go over the baseline (for example, brown coal) would have to buy credits for the amount they go over. “Dirtier” plants would thus have to buy more credits. </p>
<p>This is substantially different to a carbon tax or the previous emissions trading scheme. Under these policies, all generators are penalised, some more than others, as you can see in the figure below. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/121814/original/image-20160510-20599-10nlt06.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/121814/original/image-20160510-20599-10nlt06.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/121814/original/image-20160510-20599-10nlt06.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=262&fit=crop&dpr=1 600w, https://images.theconversation.com/files/121814/original/image-20160510-20599-10nlt06.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=262&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/121814/original/image-20160510-20599-10nlt06.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=262&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/121814/original/image-20160510-20599-10nlt06.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=329&fit=crop&dpr=1 754w, https://images.theconversation.com/files/121814/original/image-20160510-20599-10nlt06.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=329&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/121814/original/image-20160510-20599-10nlt06.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=329&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Impact of carbon price and baseline and credit scheme on different generation technology in the electricity sector. A carbon prices increases all prices, relative to emissions intensity. A baseline and credit scheme increases the price of high-emissions-intensity generation, but lowers the price of low-emissions-intensity generation.</span>
<span class="attribution"><span class="source">Author</span></span>
</figcaption>
</figure>
<p>This difference is important for electricity prices. Dirtier plants would be expected to increase their selling price to cover the financial penalty on their emissions. But cleaner plants, earning revenue from selling credits, could afford to sell their electricity more cheaply.</p>
<p>This is important, because cleaner plants (typically black coal or gas) set the price. Gas in particular would probably be significantly cheaper under this proposal. As such, the impact on wholesale prices would be small, or negative.</p>
<p>In fact, as the AEMC itself noted, the impact on the wholesale market could be an increase or decrease in prices (depending on where the baseline is set). </p>
<h2>The brown coal exit (Labor)</h2>
<p>Another component of Labor’s climate platform is a plan to finance the closure of brown coal power stations, an idea first proposed by ANU climate economists <a href="https://theconversation.com/farewell-to-brown-coal-without-tears-how-to-shut-high-emitting-power-stations-50904">Frank Jotzo and Salim Mazouz</a>.</p>
<p>In this proposal, brown coal plants would bid for the payment they would require to finance their own shutdown, with the cheapest bid being selected. The remaining plants would pay this cost, in line with their emissions. </p>
<p>Similar to the ETS, it would be expected that this cost would be reflected in increased offer prices to the market from the remaining generators. The direct costs would be temporary (a one-off payment) and small, relative to the overall wholesale price. </p>
<p>Indeed, Jotzo and Mazouz <a href="http://www.theguardian.com/environment/2016/may/02/labor-policy-could-increase-power-prices-by-8-to-25-says-coalition-linked-economist">estimated</a> it could cause a one-off rise of 1-2% in retail power bills. Analysis company Reputex found the impact could be between 0.2% and 1.3%. </p>
<p>However, Danny Price of Frontier Economics has suggested that the scheme could push up retail power prices by between 8% and 25%, as the result of a short-term price shock. But given the <a href="https://theconversation.com/factcheck-does-australia-have-too-much-electricity-31505">significant excess capacity</a> in the market, and assuming that the market is indeed competitive, it is hard to see how such a increase would happen. </p>
<p>This point aside, the price argument misses the point of the scheme, which aims to deliver an “orderly transition” away from brown coal. The longer-term effects on supply and price of a brown coal exit will be similar, regardless of how the industry closes. </p>
<p>In fact, if it were left entirely to the market, the sudden retirement of an entire power plant might create even more of shock. This proposal is chiefly about ensuring an orderly, predictable transition. </p>
<h2>50% renewable energy target (Labor)</h2>
<p>The final element of Labor’s climate platform is a 50% renewable energy target by 2030. At this stage, not much detail has been unveiled other than shadow environment minister Mark Butler’s <a href="http://markbutler.alp.org.au/news/2016/04/27/climate-change-action-policy">pledge</a> that it will be “designed in a way that does not disturb investor sentiment around the delivery of the existing Renewable Energy Target” – something that a sector beset by uncertainty would welcome. As such, it is quite difficult to speculate on how electricity prices might react. </p>
<p>The current Renewable Energy Target is a certificate scheme that requires retailers to buy a certain amount of renewable energy. The cost of these certificates is passed on through electricity bills. However, as <a href="https://theconversation.com/how-does-the-renewable-energy-target-affect-your-power-bills-29694">shown by the government’s own modelling</a>, the interaction with the wholesale market results in a net saving to consumers. </p>
<p>Interestingly, and as the AEMC points out, the electricity ETS is designed to be flexible and integrate with a renewable energy target. Indeed, such an ETS could drive investment in renewable energy, replacing current subsidies through the Renewable Energy Target. The 50% target could theoretically be achieved through the ETS alone, if the baseline was set at the right level. </p>
<h2>A bipartisan approach?</h2>
<p>As it stands, the government’s climate platform is unlikely to have any impact on electricity prices. However, it will also not have a major impact on the electricity sector’s emissions. </p>
<p>Labor’s policies will have an impact, but as the AEMC notes it may occur “without a significant effect on absolute price levels faced by consumers”. </p>
<p>The government’s current polices will require strengthening to further reduce emissions. To achieve this, the <a href="http://grattan.edu.au/wp-content/uploads/2016/04/870-Climate-Phoenix.pdf">Grattan Institute</a> and <a href="http://www.theguardian.com/environment/2016/may/02/labor-policy-could-increase-power-prices-by-8-to-25-says-coalition-linked-economist">others</a> including the <a href="http://www.theguardian.com/australia-news/2016/apr/27/business-council-praises-labors-bridge-to-emissions-trading-scheme">Business Council of Australia</a> have supported ideas that would turn the Liberal platform into something very similar to Labor’s. </p>
<p>Indeed, <a href="http://www.theguardian.com/environment/2016/may/12/coalition-climate-plan-assumes-emissions-trading-says-government-modeller">modelling</a> commissioned by the government itself assumes that Direct Action will eventually morph into a similar baseline-and-credit ETS, in order to meet long-term climate commitments. </p>
<p>Political slogans aside, perhaps a bipartisan approach is possible, without a significant effect on power bills.</p><img src="https://counter.theconversation.com/content/59088/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dylan McConnell received funding from the AEMC's consumer advocacy panel.</span></em></p>There’s a wealth of climate policies to choose from this election – but what will they do electricity prices?Dylan McConnell, Research Fellow, Melbourne Energy Institute, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/513062015-11-26T04:27:17Z2015-11-26T04:27:17ZWind, solar, coal and gas to reach similar costs by 2030: report<figure><img src="https://images.theconversation.com/files/103259/original/image-20151126-11998-1m7ejgu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">By 2030 large-scale solar cost about the same as fossils fuels. </span> <span class="attribution"><span class="source">Solar image from www.shutterstock.com</span></span></figcaption></figure><p>By 2030 renewable energy sources such as solar and wind will cost a similar amount to fossils fuels such as coal and gas, thanks to falling technology costs, according to new forecasts released in the CO2CRC’s <a href="http://www.co2crc.com.au/publications/reports">Australian Power Generation Technology (APGT) Report</a>. </p>
<p>The report also shows that technology costs will fall faster under climate policies that limit the concentration of carbon dioxide in the atmosphere to 450 parts per million. (The current CO₂ concentration is around <a href="https://theconversation.com/february-carbon-dioxide-levels-average-400ppm-for-first-time-38417">400 parts per million</a>). </p>
<p>While the practice of forecasting is often derided, with multi-billion dollar assets that can last 50 years or more, the electricity industry and the policy-makers, academics and stakeholders who study it have no choice but to get involved.</p>
<h2>Updating the data</h2>
<p>A key input to all energy crystal-ball gazing is the cost of generating electricity, and performance data. However the last comprehensive update of electricity generation costs was the then Bureau of Resource and Energy Economics’ <a href="http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Pages/Australian-energy-technology-assessments.aspx">Australian Energy Technology Assessment</a> (AETA) in 2012 (followed by a minor update to selected data in 2013). </p>
<p>The lack of consistent up–to-date data disadvantages technologies such as solar photovoltaic power systems whose costs have been improving rapidly since then. </p>
<p>To avoid misrepresenting the possible future role of fast-moving technologies, many analysts have had to slowly abandon use of the old data and create their own more up-to-date estimates.</p>
<p>While diverse opinions are sometimes useful, a proliferation of inconsistent alternative cost data sets creates confusion for the industry as it makes each published study less comparable.</p>
<p>The delivery today of a new and consistent electricity cost data set therefore is an important and long awaited addition to the electricity industry’s toolkit. The new report was conducted over the July-November period and utilised an electricity industry reference group of around 40 organisations to provide input and feedback along the way. </p>
<p>Given the often heated debates in Australia around energy sources, the CO2CRC recognised that it is crucial that studies like these are conducted in an open and unbiased manner.</p>
<p>The report includes key “building block” data such as capital and operating costs, and performance data such as emissions intensity, water usage and expected usage rates. </p>
<h2>The cost of energy</h2>
<p>Whenever a new electricity generation technology cost and performance data set is created there is an opportunity to update our view of the relative competitiveness of each technology. </p>
<p>This is calculated using a measure called the Levelised Cost of Electricity (LCOE). The LCOE captures the average cost of producing electricity from a technology over its entire life. It allows the comparison of technologies with very different cost profiles, such as solar photovoltaic systems (high upfront cost, but very low running costs) and gas-fired generators (moderate upfront cost, but significant ongoing fuel and operation costs).</p>
<p>The LCOE is the best technology comparison measure available but is not without limitations. It cannot recognise the different roles technologies might play in an electricity system (e.g. such as supplying everyday, baseload power, or power for periods of peak demand) or the relative flexibility of plant to increase or decrease power supply as needed.</p>
<p>Accepting the limitations, the updated LCOE analysis finds that in 2015 natural gas combined cycle and supercritical pulverised coal (both black and brown) plants have the lowest LCOEs of the technologies covered in the study. Wind is the lowest cost large-scale renewable energy source, while rooftop solar panels are competitive with retail electricity prices.</p>
<p>It is interesting to note that all 2015 LCOE estimates are higher than the current wholesale price of electricity of around A$40 per Megawatt-hour. The reflects <a href="https://theconversation.com/factcheck-does-australia-have-too-much-electricity-31505">reduced demand</a> in the electricity network, which is putting downward pressure on electricity prices. </p>
<p>By 2030 the LCOE ranges of both conventional coal and gas technologies as well as wind and large-scale solar converge to a common range of A$50 to A$100 per megawatt hour. This outcome is consistent with observations from many commentators noting that the continuing reductions in wind and solar photovoltaic costs must inevitably lead to an intersection with the costs of the existing mature technologies before too long. </p>
<p>Of course, equality in LCOE will not necessarily translate to an equal competitive position in electricity markets, given differences in the flexibility of renewable and conventional coal and gas plants (which LCOE does not capture as already noted).</p>
<h2>Falling technology costs</h2>
<p>The convergence of conventional and renewable energy costs depends on the capital costs of these energy sources. These were modelled for the new report by CSIRO’s Global and Local Learning Model. This model is a relatively objective way of projecting costs based on historical learning rates. Learning rates show that for each doubling of installed capacity of an energy source, costs fall by a particular amount. </p>
<p>We can model these costs across different climate policies, as you can see in the chart below. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/103252/original/image-20151125-23830-1oikiy0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/103252/original/image-20151125-23830-1oikiy0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/103252/original/image-20151125-23830-1oikiy0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=390&fit=crop&dpr=1 600w, https://images.theconversation.com/files/103252/original/image-20151125-23830-1oikiy0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=390&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/103252/original/image-20151125-23830-1oikiy0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=390&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/103252/original/image-20151125-23830-1oikiy0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=491&fit=crop&dpr=1 754w, https://images.theconversation.com/files/103252/original/image-20151125-23830-1oikiy0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=491&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/103252/original/image-20151125-23830-1oikiy0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=491&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Projected electricity generation capital costs assuming a 550ppm consistent global carbon price signal.</span>
<span class="attribution"><a class="source" href="http://www.co2crc.com.au/publications/reports">CO2CRC</a></span>
</figcaption>
</figure>
<p>CSIRO’s projections included carbon price signals consistent with either concentration of 550 parts per million or 450 parts per million of greenhouse gas emissions. However, we found the total amount of cost reduction was fairly similar, but more accelerated in time, by approximately five years, in the 450 ppm case.</p>
<p>With the future policy environment of the electricity industry potentially becoming a little clearer after the COP21 meeting in Paris next week, the new report makes the job of understanding the role of different technologies in that future a little easier.</p><img src="https://counter.theconversation.com/content/51306/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>CSIRO provided funding and in-kind support to the Australian Power Generation Technology Study. The Steering Committee of this report were its in-kind and financial contributors: They are CO2CRC, CSIRO, Australian Government – Australian Renewable Energy Agency, Australian Government – Department of Industry and Science – Office of the Chief Economist, Anlec R&D. </span></em></p>By 2030 renewable energy sources such as solar and wind will cost a similar amount to fossils fuels such as coal and gas, thanks to falling technology costsPaul Graham, Chief economist, CSIRO energy, CSIROLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/481012015-10-05T03:51:13Z2015-10-05T03:51:13ZStorage can replace gas in our electricity networks and boost renewables<figure><img src="https://images.theconversation.com/files/96015/original/image-20150924-17103-2ql547.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Renewables could benefit from more energy storage capacity in the electricity network</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/reupa/18867280344">reupa/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>Energy storage could replace peak gas in our electricity network. That’s the finding of a <a href="http://authors.elsevier.com/a/1RkGf15eiefmQq">study</a> that my colleagues and I recently published in the Journal of Applied Energy. </p>
<p>Energy storage is often considered the holy grail of the electricity sector. Tesla’s Powerwall home battery system, for instance, allows households to store energy from solar panels, to be used when the sun isn’t shining. It is seen as a vital piece of the puzzle in a future with more renewable energy. </p>
<p>Storage is great for households, but could also be as important in the wider electricity network. Here’s how it could work.</p>
<h2>Volatile prices</h2>
<p>Generators or power stations sell their electricity on a wholesale market (in eastern Australia this is the National Electricity Market or NEM). From there it is passed onto households and businesses by retailers at retail prices. The wholesale price is a significant factor in the cost of electricity (other factors include poles and wires). </p>
<p>The wholesale price varies throughout the day - sometimes quite considerably, as you can see in the chart below from Queensland. In times of peak demand, prices can skyrocket to 300-400 times the <a href="http://www.aemo.com.au/Electricity/Data/Price-and-Demand/Average-Price-Tables">average price</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/96323/original/image-20150927-17716-1kxuhoa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96323/original/image-20150927-17716-1kxuhoa.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=380&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96323/original/image-20150927-17716-1kxuhoa.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=380&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96323/original/image-20150927-17716-1kxuhoa.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=380&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96323/original/image-20150927-17716-1kxuhoa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=477&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96323/original/image-20150927-17716-1kxuhoa.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=477&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96323/original/image-20150927-17716-1kxuhoa.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=477&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Half-hourly wholesale electricity prices in Queensland, at the beginning of this year. The average price for the full 2014-2015 financial year was about $50/MWh.</span>
<span class="attribution"><span class="source">(Author provided, data from AEMO)</span></span>
</figcaption>
</figure>
<p>This volatility is largely a result of physics: generators have to match demand instantaneously, because electrical energy can’t directly be stored. </p>
<p>People don’t use electricity equally throughout the day. Usually electricity use is concentrated at the end of the day, or on the very hottest day of summer when people fire up their air conditioners. </p>
<p>Electricity networks are typically set up to meet the maximum possible peak demand. They meet this demand with flexible generators such as open cycle gas turbines (which are quick to fire up and shut down, unlike generators such as coal-fired power stations). Such “peak” gas generators are typically used less than 5% of the time.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/96337/original/image-20150927-17708-1tawse7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96337/original/image-20150927-17708-1tawse7.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96337/original/image-20150927-17708-1tawse7.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96337/original/image-20150927-17708-1tawse7.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96337/original/image-20150927-17708-1tawse7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96337/original/image-20150927-17708-1tawse7.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96337/original/image-20150927-17708-1tawse7.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Load duration curve for the National Electricity Market in the 2008-09 financial year. Curve illustrates the percentage of time that the system is at or above a particular demand level. A large amount of capacity is required for small time periods throughout the year.</span>
<span class="attribution"><span class="source">Author provided, data from AEMO</span></span>
</figcaption>
</figure>
<p>These rapid variations in energy demand, along with outages of generators or transmission lines and generator bidding behaviour on the market, can result in highly volatile prices. This is where storage can play a role. </p>
<p>Energy can be stored as chemical energy (in the case of batteries), or in other ways such as gravitational potential energy (in the case of pumped hydro), to be used later to generate electricity when convenient. </p>
<p>These electricity storage technologies can also provide peak capacity. In our paper, we found that this was the main value of energy storage. In fact, peak capacity potential may turn out to offer greater value than other options for meeting peak demand. </p>
<p>Surprisingly, we found this value wasn’t affected by energy losses involved in storage (not all energy is recovered when released from storage). </p>
<h2>Powering up with storage and renewables</h2>
<p>Due to its high flexibility, gas is often considered to be an ideal partner for renewable energy, because it can pick up the slack when the sun isn’t shining or the wind isn’t blowing.</p>
<p>But as the share of renewable energy continues to expand, large-scale electricity storage offers a promising alternative to gas. </p>
<p>In fact, a study by the <a href="https://www.environment.gov.au/climate-change/publications/aemo-modelling-outcomes">Australian Energy Market Operator</a> suggested that significant energy storage was crucial to a 100% renewable energy system, in order to minimise costs while maintaining reliability and security standards.</p>
<p>Our research found that storage actually has a competitive advantage over gas when it comes to meeting peak demand. While both can provide peak capacity, storage can also gain extra revenue by taking advantage of smaller price differences that occur on a more frequent (such as daily) basis. When taking this into account, storage may already be cheaper than gas in meeting peak demand. <a href="http://reneweconomy.com.au/2015/moodys-why-battery-storage-is-bad-news-for-coal-gas-generators-93167">New reports</a> from the US estimate batteries could replace gas in 3-5 years. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/96332/original/image-20150927-17733-1nldhym.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96332/original/image-20150927-17733-1nldhym.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96332/original/image-20150927-17733-1nldhym.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96332/original/image-20150927-17733-1nldhym.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96332/original/image-20150927-17733-1nldhym.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96332/original/image-20150927-17733-1nldhym.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96332/original/image-20150927-17733-1nldhym.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Relative costs of providing capacity from an open cycle gas turbine (OCGT) and pumped hydro electric storage (PHES). The right most bar shows the cost of capacity when the revenue from daily arbitrage is taken into account.</span>
<span class="attribution"><span class="source">(Author provided)</span></span>
</figcaption>
</figure>
<p>Australia’s electricity system is currently oversupplied with capacity to generate electricity – by around 37%. As such, there appears to be no need for new capacity for the foreseeable future.</p>
<p>However, there may be demand for new storage capacity if older generators are withdrawn from the electricity network. Alternatively, the outlook for storage may improve as renewable energy generation is increased to meet mandated targets.</p>
<p>Increasing penetration of variable renewable energy will increase revenues for storage. In times of high generation output there will be more opportunities for storage owners to shop around for lower prices. This fluctuation between prices <a href="http://www.wattclarity.com.au/2015/09/yin-and-yang-of-wind-in-the-south-australian-region-of-the-national-electricity-market/">is already happening</a> in South Australia.</p>
<p>In this way, storage and renewables may prove mutually beneficial.</p><img src="https://counter.theconversation.com/content/48101/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dylan McConnell received funding from the AEMC's consumer advocacy panel.</span></em></p>Energy storage is often considered the holy grail of the electricity sector. Great for households, it could be as important in the wider electricity network.Dylan McConnell, Research Fellow, Melbourne Energy Institute, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/483512015-09-30T16:14:52Z2015-09-30T16:14:52ZIt’s not just Facebook that goes down: the cloud isn’t as robust as we think<figure><img src="https://images.theconversation.com/files/96819/original/image-20150930-5790-cpfs7z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Josemaria Toscano/shutterstock.com</span></span></figcaption></figure><p>The computing cloud we have created supports much of our day-to-day office and leisure activity, from office email to online shopping and sharing holiday photos. Even health, social care and government functions are moving towards digital delivery over the internet. </p>
<p>However, we should be wary that as we become more dependent on it, the cracks will show. The systems are often a patchwork of interconnected services provided by various companies and industry partnerships. A failure of one can lead to a failure in others. </p>
<p>For example, Skype recently went down for <a href="http://www.independent.co.uk/news/uk/skype-down-services-affected-across-the-globe-10510815.html">almost an entire day</a>, while Facebook was down for <a href="http://www.independent.co.uk/news/uk/skype-down-services-affected-across-the-globe-10510815.html">more than an hour</a> – the second time in a week – meaning that many sites that depend on Facebook accounts as authentication <a href="https://theconversation.com/when-facebook-goes-down-it-takes-big-chunks-of-the-internet-with-it-36873">were locked out too</a>. </p>
<p>Losing Facebook is an annoyance, but interruptions to major health and social care services or energy supply management systems can lead to real damage to the economy and people’s lives.</p>
<p>A few weeks ago Google’s data centres in Belgium (<a href="https://cloud.google.com/compute/docs/zones?hl=en">europe-west1-b</a>) lost power after the local power grid was <a href="https://status.cloud.google.com/incident/compute/15056">struck by lightning four times</a>. While most servers were protected by battery backup and redundant storage, there was still an estimated 0.000001% loss of disk space – which for Google’s huge data stores meant a few gigabytes of data. </p>
<p>The lesson is not to trust cloud providers to store and provide backups for your data. Your backups need backups too. What it also shows is our dependence on power supply system which, as long runs of conductive metal, are more prone to lightning strikes than you might imagine.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/96814/original/image-20150930-5809-ja1feo.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/96814/original/image-20150930-5809-ja1feo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96814/original/image-20150930-5809-ja1feo.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=231&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96814/original/image-20150930-5809-ja1feo.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=231&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96814/original/image-20150930-5809-ja1feo.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=231&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96814/original/image-20150930-5809-ja1feo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=290&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96814/original/image-20150930-5809-ja1feo.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=290&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96814/original/image-20150930-5809-ja1feo.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=290&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Facebook response graph, showing outage.</span>
<span class="attribution"><span class="source">Bill Buchanan</span></span>
</figcaption>
</figure>
<h2>When the lights go out</h2>
<p>Former US secretary of defence, William Cohen, <a href="http://www.newsmax.com/Newsfront/William-Cohen-defense-chief-terrorist-attack-power-grid/2015/06/29/id/652742/">recently outlined</a> how the US power grid was vulnerable to a large-scale outage: “The possibility of a terrorist attack on the nation’s power grid — an assault that would cause coast-to-coast chaos,” he said, “is a very real one.”</p>
<p>As a former electrical engineer, I understand well the need for a safe and robust power supply, and that control systems can fail. It’s not uncommon to have alternative or redundant power supplies for important equipment. Single points of failure are accidents waiting to happen. Back-up your backup.</p>
<p>The electrical supply grid will try to provide alternative power whenever any part of it fails. The power supply system needs to be built with redundancy in case of problems, and monitoring and control systems that can respond to failures and keep the electricity supply balanced. </p>
<p>Cohen fears a major power outage could lead to civil unrest. Janet Napolitano, former Department of Homeland Security secretary, said a cyber-attack on the power grid was a case of “when,” not “if”. And former senior CIA analyst Peter Vincent Pry went so far as to say that an attack on the US electrical power supply network could “take the lives of every <a href="http://www.slate.com/articles/technology/future_tense/2015/07/emp_threats_could_an_electro_magnetic_pulse_weapon_wipe_out_the_power_grid.html">nine out of ten Americans</a>”. The damage that an electromagnetic pulse (EMP) could cause, such as from a nuclear weapon air-burst, is well known. But many now think the complex and interconnected nature of industrial control systems, known as <a href="http://www.engineersgarage.com/articles/scada-systems">SCADA</a>, could be the major risk.</p>
<p>An example of the potential problem is the <a href="http://www.scientificamerican.com/article/2003-blackout-five-years-later/">north-east US blackout on August 14 2003</a>, which affected 508 generating units at 265 separate power plants, cutting off power to 45m people in eight US states and 10m people in Ontario. It was caused by a software flaw in an alarm system in an Ohio control room which failed to warn operators about an overload, leading to domino effect of failures. It took two days to restore power.</p>
<p>As the world becomes increasingly internet-dependent, we have created a network that provides redundant routes to carry traffic from point to point, but electrical supply failures can still take out core routing systems.</p>
<h2>Control systems - the weakest link</h2>
<p>Often it’s the less obvious elements of infrastructure that are most open to attack. For example, air conditioning failures in data centres can cause overheating sufficient to melt equipment, especially the tape drives used to store vast amounts of data. This could affect anything from banking transactions worth billions, the routing of traffic around a busy city, or an emergency services call centre. </p>
<p>As we become more dependent on data and data-processing, so we are more vulnerable to their loss. Safety critical systems are built with failsafe control mechanisms, but those mechanisms can also attacked and compromised.</p>
<p>The cloud we have created and upon which we increasingly depend is not as hardy as we think. The internet itself, and the way we use it, is not as distributed as it was designed to be. We still rely too heavily on key physical locations where data and network interconnections are concentrated, creating unacceptable points of failure that could lead to a domino-effect collapse. The DNS infrastructure is a particular weak point, where just 13 root servers worldwide act as master lists for the entire web’s address book.</p>
<p>I don’t think governments have fully thought this through. Without power, without internet connectivity, there is no cloud. And without the cloud we have big problems.</p><img src="https://counter.theconversation.com/content/48351/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bill Buchanan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>When Facebook goes down it’s an irritation. But as the world moves its data and processing to the cloud, the potential for major loss grows ever greater.Bill Buchanan, Head, Centre for Distributed Computing, Networks and Security, Edinburgh Napier UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/470872015-09-06T20:08:51Z2015-09-06T20:08:51ZThe cheapest way to heat your home with renewable energy – just flick a switch<figure><img src="https://images.theconversation.com/files/93861/original/image-20150904-22458-mczme2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Gas bill got you feeling grey? A reverse cycle air conditioner could save you money. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/nettsu/4500641047/">Michael Verhoef/Flickr</a></span></figcaption></figure><p>A few years ago, similar to views about future electricity demand, forecasters thought gas demand in Australia would keep rising. As it turns out, gas demand peaked in 2012 and may halve by 2025 - as we showed in our recently published University of Melbourne Energy Institute (MEI) <a href="http://www.energy.unimelb.edu.au/switching-gas-report-available-here">report</a>, and <a href="https://theconversation.com/its-cold-in-my-house-and-the-price-of-gas-is-going-up-what-can-i-do-44824">earlier</a> on The Conversation. </p>
<p>Step by step, householders are making economic decisions that will eventually lead to many completely disconnecting from the gas grid, as they find gas to be an <a href="https://theconversation.com/dont-get-burnt-by-gas-price-rises-tips-for-homes-and-industry-28198">increasingly costly</a> secondary source of home energy. </p>
<p>This is particularly true when it comes to space-heating. When the cost of operating a modern reverse cycle air conditioner (known in Tasmania and elsewhere around the world as a heat pump) can be <a href="http://www.theage.com.au/victoria/heat-pump-tech-could-save-victorian-homes-up-to-658-a-year-on-gas-report-20150825-gj7gzt.html">one-third</a> the cost of heating with gas, why wouldn’t a householder have a look at the possibilities?</p>
<p>Another attraction is that heating with a reverse cycle air conditioner is largely renewable. Our research has quantified that reverse cycle air conditioners in Australia recover more renewable energy than do all of the millions of rooftop solar photovoltaic (PV) installations. Who knew?</p>
<h2>Gas demand declining</h2>
<p>The following chart illustrates how gas demand will decline in eastern Australia in all sectors: in the electricity generation <a href="http://www.pittsh.com.au/assets/files/Cedex/CEDEX%20Electricity%20Update%20August%202015.pdf">sector</a>, in <a href="http://www.aemo.com.au/Gas/Planning/Forecasting">industry</a> and also in buildings as householders and building managers switch to efficient electric heating devices.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/93837/original/image-20150904-28914-1x3dun3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/93837/original/image-20150904-28914-1x3dun3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/93837/original/image-20150904-28914-1x3dun3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=453&fit=crop&dpr=1 600w, https://images.theconversation.com/files/93837/original/image-20150904-28914-1x3dun3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=453&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/93837/original/image-20150904-28914-1x3dun3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=453&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/93837/original/image-20150904-28914-1x3dun3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=569&fit=crop&dpr=1 754w, https://images.theconversation.com/files/93837/original/image-20150904-28914-1x3dun3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=569&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/93837/original/image-20150904-28914-1x3dun3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=569&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Actual gas demand from 2010 to 2014, gas demand forecasts by the Australia Energy Market Operator, and a low-gas-demand scenario prepared by MEI.</span>
<span class="attribution"><a class="source" href="http://www.aemo.com.au/Gas/Planning/Forecasting">AEMO/MEI</a></span>
</figcaption>
</figure>
<p><a href="https://theconversation.com/a-crash-in-gas-use-is-more-likely-than-the-forecast-shortage-36764">Previously</a> we qualitatively described how in this “second electrification” of the Australian home, people will economically fuel-switch to induction cooktops, <a href="https://theconversation.com/get-more-out-of-your-solar-power-system-by-using-water-as-a-battery-37807">hot water heat pumps</a> and <a href="https://theconversation.com/its-cold-in-my-house-and-the-price-of-gas-is-going-up-what-can-i-do-44824">reverse cycle air conditioners</a>, resulting in their homes becoming <a href="http://energyfreedom.com.au">gas-free</a>. </p>
<p>As shown in the following chart, the money that householders can save when economically fuel-switching from gas to electricity can amount to hundreds and even over a thousand dollars per year.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/94074/original/image-20150908-1996-uc87s0.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/94074/original/image-20150908-1996-uc87s0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/94074/original/image-20150908-1996-uc87s0.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/94074/original/image-20150908-1996-uc87s0.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/94074/original/image-20150908-1996-uc87s0.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/94074/original/image-20150908-1996-uc87s0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/94074/original/image-20150908-1996-uc87s0.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/94074/original/image-20150908-1996-uc87s0.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>Some of this change will occur very rapidly. In up to one million homes in eastern Australia, householders have already installed reverse cycle air conditioners for summer cooling but have never attempted to use them for heating. Why not? Time and time again I have been told by friends, acquaintances and those writing on social media, “Oh, I have always thought that gas must be cheaper.”</p>
<p>As shown in the following chart, <a href="http://www.ata.org.au/news/are-we-still-cooking-with-gas">analysis</a> done by the Alternative Technology Association (ATA) indicates that using reverse cycle air conditioners to heat a large Melbourne home can amount to A$658 per year. But how is this possible?</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/94073/original/image-20150908-1992-1srig31.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/94073/original/image-20150908-1992-1srig31.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/94073/original/image-20150908-1992-1srig31.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/94073/original/image-20150908-1992-1srig31.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/94073/original/image-20150908-1992-1srig31.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/94073/original/image-20150908-1992-1srig31.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/94073/original/image-20150908-1992-1srig31.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/94073/original/image-20150908-1992-1srig31.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<h2>Heat pumps: global renewable energy giants</h2>
<p>The biggest reason behind these new home economics is that reverse cycle air conditioners produce far more energy than they consume. Operating at efficiencies of up to 600%, they use a small amount of purchased electricity to capture free renewable heat from the outside air. For ducted gas heating, which can operate at efficiencies of less than 50%, the opposite is true. </p>
<p>The <a href="https://bze.org.au/buildings">following diagram</a> shows that a ducted gas system will consume 34.02 megajoules of energy (including gas and electricity for the air blower: the sum of the two blue figures on the left) in order to produce just 10 megajoules of useful delivered heat. The rest of the gas energy purchased is immediately, in a sense, thrown away. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/93838/original/image-20150904-28894-9yjaso.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/93838/original/image-20150904-28894-9yjaso.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/93838/original/image-20150904-28894-9yjaso.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=351&fit=crop&dpr=1 600w, https://images.theconversation.com/files/93838/original/image-20150904-28894-9yjaso.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=351&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/93838/original/image-20150904-28894-9yjaso.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=351&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/93838/original/image-20150904-28894-9yjaso.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=442&fit=crop&dpr=1 754w, https://images.theconversation.com/files/93838/original/image-20150904-28894-9yjaso.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=442&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/93838/original/image-20150904-28894-9yjaso.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=442&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://bze.org.au/buildings">Beyond Zero Emissions</a></span>
</figcaption>
</figure>
<p>This compares to an efficient reverse cycle air conditioner that requires only 2.55 megajoules of purchased electricity (the sum of the blue figures on the right) to extract an additional 9.53 megajoules of free, renewable, ambient heat from the air outside your house, and then produce the same 10 megajoules of useful delivered heat.</p>
<p>In other words, in this comparison, in order to get the same amount of heat from a reverse cycle air conditioner, the householder must purchase only 1/13th of the energy needed to operate ducted gas. This efficiency advantage wipes out the traditionally lower cost of gas energy versus electrical energy when those commodities are compared on a dollar-per-megajoule or per-kilowatt-hour basis. </p>
<p>In 2014, reverse cycle air conditioners were such significant harvesters of renewable energy in Australia that our research found they recovered twice as much renewable energy as did rooftop solar photovoltaic (PV). The following chart compares these 2014 figures and also shows the future potential of reverse cycle air conditioners as more people learn of their capabilities.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/94072/original/image-20150908-1986-1qw1dxe.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/94072/original/image-20150908-1986-1qw1dxe.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/94072/original/image-20150908-1986-1qw1dxe.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=388&fit=crop&dpr=1 600w, https://images.theconversation.com/files/94072/original/image-20150908-1986-1qw1dxe.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=388&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/94072/original/image-20150908-1986-1qw1dxe.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=388&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/94072/original/image-20150908-1986-1qw1dxe.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=488&fit=crop&dpr=1 754w, https://images.theconversation.com/files/94072/original/image-20150908-1986-1qw1dxe.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=488&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/94072/original/image-20150908-1986-1qw1dxe.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=488&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>In the <a href="https://www.ofgem.gov.uk/environmental-programmes/domestic-renewable-heat-incentive">United Kingdom</a>, the renewable-energy-harvesting power of reverse cycle air conditioners is recognised and they are even eligible for renewable energy certificates in that jurisdiction. </p>
<p>In Australia, where governments have not been interested in rewarding people for buying air conditioners, no similar scheme exists. However, in an application of the same technology, hot water heat pumps do receive renewable energy <a href="http://www.cleanenergyregulator.gov.au/DocumentAssets/Pages/Air-source-heat-pump-models.aspx">credits</a> here.</p>
<h2>Gas stays in the ground – for longer</h2>
<p>One consequence of falling gas demand in eastern Australia is that it will take longer to deplete already-developed conventional gas resources. As shown in the following figure, the <a href="http://www.aemo.com.au/Gas/Planning/Forecasting">Australian Energy Market Operator’s</a> recent gas demand forecast results in the depletion of 10,000 petajoules of gas by 2032. In the Melbourne Energy Institute scenario (also plotted below), which projects that less gas is used in buildings, the same volume of gas lasts for more than an extra decade.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/93840/original/image-20150904-28914-alh1ow.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/93840/original/image-20150904-28914-alh1ow.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/93840/original/image-20150904-28914-alh1ow.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=437&fit=crop&dpr=1 600w, https://images.theconversation.com/files/93840/original/image-20150904-28914-alh1ow.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=437&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/93840/original/image-20150904-28914-alh1ow.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=437&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/93840/original/image-20150904-28914-alh1ow.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=549&fit=crop&dpr=1 754w, https://images.theconversation.com/files/93840/original/image-20150904-28914-alh1ow.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=549&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/93840/original/image-20150904-28914-alh1ow.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=549&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="http://www.energy.unimelb.edu.au/switching-gas-report-available-here">Melbourne Energy Institute</a>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Using less gas in buildings, thanks to economic fuel-switching, energy efficiency measures (such as <a href="https://theconversation.com/how-to-heat-your-house-efficiently-14036">insulation</a>, draught-proofing and improved window treatments) and other factors, means that a significant volume of gas can be freed up for higher-value industrial uses, as illustrated in the following chart.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/93841/original/image-20150904-28878-nvgpub.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/93841/original/image-20150904-28878-nvgpub.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/93841/original/image-20150904-28878-nvgpub.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=428&fit=crop&dpr=1 600w, https://images.theconversation.com/files/93841/original/image-20150904-28878-nvgpub.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=428&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/93841/original/image-20150904-28878-nvgpub.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=428&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/93841/original/image-20150904-28878-nvgpub.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=538&fit=crop&dpr=1 754w, https://images.theconversation.com/files/93841/original/image-20150904-28878-nvgpub.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=538&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/93841/original/image-20150904-28878-nvgpub.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=538&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Industrial gas demand compared with gas that can be saved in buildings.</span>
<span class="attribution"><a class="source" href="http://www.energy.unimelb.edu.au/switching-gas-report-available-here">Melbourne Energy Institute</a></span>
</figcaption>
</figure>
<p>Plenty of people in Australia are talking about disconnecting from the <a href="https://theconversation.com/the-winners-and-losers-in-teslas-battery-plan-for-the-home-41151">electricity grid</a>. However, the costs and technicalities of <a href="https://theconversation.com/battery-costs-drop-even-faster-as-electric-car-sales-continue-to-rise-39780">battery storage</a> and the possibility of needing to resort to a back-up petrol generator will convince many to stay connected to that often-reliable electricity grid.</p>
<p>On the other hand, we’ve shown the gas network is different. Households are making, and will continue to make, economics-based decisions to reduce gas use. </p>
<p>When planning the future of our energy grids, we think it is time that energy planners move away from decades of focusing strictly on supply-side options, and now consider gas and electricity demand-management options as well.</p><img src="https://counter.theconversation.com/content/47087/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The University of Melbourne Energy Institute publishes independent, technology-neutral energy research. Funding for this gas demand study came from specific individual donations made to the University of Melbourne and from The Australia Institute.</span></em></p>Heating your home using electricity is not just cheaper, it’s more efficient and can be considered renewable.Tim Forcey, Energy Advisor, Melbourne Energy Institute, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/470352015-09-03T06:50:33Z2015-09-03T06:50:33ZAustralia’s new cap on emissions is a trading scheme in all but name<figure><img src="https://images.theconversation.com/files/93747/original/image-20150903-8836-12fx0j4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Businesses that emit large amounts of greenhouse gases will have their emissions capped.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/greenstonegirlpix/4426965140/">Greenstone Girl/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>The Australian government has released its <a href="http://www.environment.gov.au/system/files/pages/dbabd13c-f8f1-49cd-ab40-621f056de35a/files/es-safeguard-rule.pdf">final draft</a> for a cap on greenhouse gas emissions. The “safeguard mechanism” will form part of the government’s central climate policy, and will fine large businesses for exceeding emissions baselines. </p>
<p>Businesses that produce over 100,000 tonnes of greenhouse gases each year will have their emissions capped. The scheme makes some allowances for power generators and landfill (which produces greenhouse gases as rubbish breaks down), as well as those that expand production while improving their emissions efficiency. </p>
<p>The annual cap for the future will be based on the annual greenhouse gases emitted between 2010 and 2014. A final decision on the scheme will be made in late 2015 before starting in July 2016. </p>
<p>In effect, Australia’s climate policy armoury will include aspects of a “baseline and credit” emissions trading scheme.</p>
<h2>Lower cost to business</h2>
<p>An emissions trading scheme is a way of making businesses pay for the greenhouse gas emissions released from their business operations.</p>
<p>In a “baseline and credit” scheme each company must keep its emissions below a government-mandated level, for example, below the average of its previous five years’ emissions. </p>
<p>Let’s assume that the company’s “baseline emissions” had been set at 28,000 tonnes for a year. Also assume that the business emitted 30,000 tonnes of greenhouse in a year. </p>
<p>The company then has to pay for emissions that exceed the baseline, in this case 2,000 tonnes. They can pay for it by buying carbon credits locally or on the international market. Assuming a carbon price of A$10, the company’s cash outflow will be a modest A$20,000.</p>
<p>In contrast, under Labor’s “cap and trade” scheme, the government would release a number of permits into the market, based on national emissions reduction targets, such as Australia’s current 2020 5% less than 2000 levels by 2020. There is no limit imposed on individual companies’ emissions as long as they buy (pay for) enough permits, each permit giving them a right (but not an obligation) to emit 1 tonne of greenhouse gas. Assuming a permit price of A$10, then the same business will be paying A$300,000 under a “cap and trade”.</p>
<p>Thus the cost impost on businesses, and on the economy, is much less under the coalition’s safeguard mechanism compared to a cap and trade scheme. </p>
<h2>Baseline and credit or cap and trade?</h2>
<p>The two types of emissions trading schemes were debated in depth in the early 2000s, before the European Union favoured the cap-and-trade design in 2005 and it became the blueprint for Labor’s emissions trading scheme, introduced (albeit with a fixed initial price) in 2012. <a href="http://www.c2es.org/us-states-regions/key-legislation/california-cap-trade">California</a> and the Canadian province of Quebec have also adopted cap-and-trade schemes.</p>
<p>The case against the “baseline and credit” schemes back in 2005 included the fact that governments had insufficient information to set credible “baseline emissions” at individual business levels and that it involved more intrusive regulation than cap and trade schemes.</p>
<p>However, Australia has now detailed annual, company-level greenhouse gas emissions data for the large to medium-sized businesses, thanks to the <a href="http://www.environment.gov.au/climate-change/greenhouse-gas-measurement/nger">National Greenhouse and Energy Reporting</a> scheme introduced from 2008. Setting “baseline emissions” for each business need not be onerous, particularly if they are linked to individual companies past greenhouse gas emissions and their future plans.</p>
<p>The “baseline and credit” principle has already been used in the NSW Greenhouse Gas Abatement program in the last decade delivering low permit prices. That now-defunct scheme has been reviewed and presumably the lessons learnt would have informed the details the safeguard mechanism.</p>
<p>The actual performance of the <a href="http://ec.europa.eu/clima/policies/ets/index_en.htm">European Union’s “cap and trade”</a> scheme over the last 10 years shows its key weakness, namely governments’ inability to release the right number of carbon permits into the market, say for five future years at a time, based on various forecasts. </p>
<p>Random shocks such as the global financial crisis in 2008 impacted EU’s economic growth and greenhouse gas emissions. Demand for permits plummeted and the supply glut resulted in the permit price nose-diving from above 20 to around 5 Euros. So, the EU is now postponing the release of new permits to stabilise the supply demand balance.</p>
<h2>Complementing other climate policies</h2>
<p>The safeguard mechanism is complementary to the voluntary <a href="http://www.environment.gov.au/climate-change/emissions-reduction-fund">Emissions Reduction Fund</a> (ERF), where the government pays businesses to reduce greenhouse gas emissions for specific projects.</p>
<p>The government will select only the low-cost emissions reduction projects using a tendering process. Those who get funding will reduce their emissions, but what about those who choose not to apply or do not get the funds? Will they continue to emit as before or more?</p>
<p>The safeguard mechanism is designed to ensure that there are mandatory obligations on greenhouse reductions from large businesses to not exceed their baseline emissions. Without a safeguard in the ERF design, emissions reductions by participants in the ERF could be nullified by emissions increases in other areas and businesses not participating in the ERF.</p>
<p>The safeguard mechanism - a baseline and credit emissions trading scheme - involves a fair degree of regulatory intrusion into the operations of liable businesses by mandating their individual baseline emissions. </p>
<p>While such high-handed regulation may be unwelcome, businesses would appreciate the lower cost of compliance to a baseline and credit scheme and the flexibilities built into the baseline setting process. </p>
<p>On the other hand, a “cap and trade” scheme is more market-based while imposing a higher cost of compliance on liable business.</p>
<p><em>This article is based on a <a href="http://monash.edu/news/show/yes-we-need-an-ets-but-which-ets">post</a> published on the Monash University website.</em></p><img src="https://counter.theconversation.com/content/47035/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gujji Muthuswamy received funding from Deakin University in 2014 for assisting in their ARC-funded research project into the carbon risk management practices adopted by businesses in a changing regulatory environment. </span></em></p>Australia’s new cap on emissions includes aspects of a “baseline and credit” emissions trading scheme. That’s cheaper for businesses, but means more regulation.Gujji Muthuswamy, Industry Fellow, Faculty of Business and Economics, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.