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What Australia could learn from a US energy uprising

Around the world, people concerned about global warming and wary of higher energy costs are turning away from big power distributors in favour of local and “distributed” energy technologies and services…

Community activists in Boulder, Colorado rally outside Xcel Energy’s Valmont coal plant. Flickr: 350.org

Around the world, people concerned about global warming and wary of higher energy costs are turning away from big power distributors in favour of local and “distributed” energy technologies and services.

You may have seen this video doing the rounds lately. It tells the story of Boulder, Colorado, where the city council is planning to take over the electricity supply system from their utility, Xcel Energy.

Not surprisingly, Xcel is resisting. Boulder wants to reduce their reliance on fossil fuels and lower the cost of electricity. And they have framed this as a battle between a small community and a corporate energy giant.

It’s unclear whether Boulder will succeed in taking control of the grid, as while just this week the proposal was given the thumbs up by voters, it is bound to face legal challenges from Xcel.

But could this “people’s revolt” be a sign of future localised energy autonomy?

A global trend towards local energy autonomy

The village of Schönau in Germany has inspired many other villages by purchasing their local grid to secure cheaper power. These have become hot spots for investment in smart technology and renewable energy.

In post-Fukishima Japan, a trend towards individual households installing solar power, combined with hydrogen fuel cells and storage, is starting to take place, allowing them to be largely independent from the grid.

In Scotland, almost 300 community-driven renewable energy projects are stimulating economic development and providing jobs to previously struggling regional areas.

And now over a million Australian households, with the residential solar boom, have demonstrated a desire to lessen their grid dependence. Further, as many as 70 community renewable energy groups are looking to create clean energy projects and investment opportunities for local shareholders.

In Boulder, there is a single electricity company, Xcel Energy, which performs generation, grid and retail functions. But in most Australian jurisdictions, we have separate competitive markets for generators and retailers.

This means it is harder for disgruntled consumers to pin their dissatisfaction on any single organisation. While technically possible, stringent regulations and requirements for retail competition in most Australian states make it more challenging for local government areas to take over the grid.

Room for a smaller model of grid management?

A certain type of micro-grid, known as private networks, already exist in Australia in some caravan parks, universities, office buildings and shopping centres.

To implement a private network, the landlord applies for licenses to on-sell power to tenants or strata-title owners.

Could this model be expanded to allow communities to do the same?

One attempt to do this occurred in 2007, when GridX Pty Ltd proposed to build, own and operate island micro-grids in residential estates. It planned to supply electricity via gas micro-turbines, billed to customers via a retail agreement with AGL. A connection with the existing distribution network was to be maintained but only to export surplus power.

But the Australian Energy Regulator refused GridX on the grounds that their customers wouldn’t have access to retail competition. They were also concerned that network safety and reliability could be compromised. But the door was left open for case-by-case exemptions if these challenges could be overcome.

Six years on from their decision, after drastic network price rises and decentralised energy cost reductions, a business model might be able to comply with the regulator’s requirements on price certainty, safety and reliability.

Even more attractive to the regulator may be a situation in which the entity seeking network exemption is representative of a community. This could be as either a cooperative or a similar structure in which members are unanimous in their support of the project.

Keeping electricity networks in the picture

From a grid company’s perspective, is there a more attractive option that doesn’t involve new grid ownership models? Drawing lessons from Boulder’s experience, networks need to become facilitators of customer and community ambition and expectations.

One way in which networks could achieve this is through a concept called “Virtual Net Metering”, or VNM. This is when a local “distributed” generator is allowed to assign its electricity to other local customers.

Currently, if a large local generator wants to service more than one building, they incur full network charges for transferring power to surrounding buildings.

These charges effectively render the grid electricity transfer unviable, leading the generator to consider one of two options. They can build a local private network and duplicate infrastructure; or reduce the size of the system to eliminate grid exports (which limits achievable local greenhouse gas emission reductions).

This stalemate could be solved through the introduction of a dedicated “VNM” tariff class, replacing full network charges with cost-reflective charges for partial use of existing networks.

This scenario is more attractive to networks than individual customers removing themselves from the grid entirely or private networks being built.

Naturally, it is vital that this is done in a manner that reduces costs to consumers, as electricity prices are one of the key drivers of the movement away from the grid.

The design of the VNM tariff class is key to its success. Firstly, it must ensure that the right signals are created for generators to support the network at peak times. Secondly, it should promote the bundling of complementary peak load reduction and energy efficiency services, to manage and balance load within the local area.

The Consumer Advocacy Panel has just approved a proposal by the Total Environment Centre and the Coalition for Community Energy to further investigate how VNM could provide an efficient mechanism to connect local generators and consumers.

This may allow our utilities to better foster local energy ambitions, limiting the risks of a Boulder-style revolt or customers going off-grid entirely.

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47 Comments sorted by

  1. John Newlands

    tree changer

    I take it these mini generators would all be on the same voltage and frequency as the wider grid in case of equipment failure. PV with hydrogen fuel cell backup is known to be hopelessly uneconomic (see e.g. Stewart Island initiative) so the wider tax paying community is supporting these experimenters with subsidies. The ultimate goal must be self financing.

    I'm not sure I'd want to live in an otherwise quiet suburb with unsightly wind turbines or potentially explosive battery banks. Definitely no diesel backup generators. A better model is wall mounted cool temperature batteries that can safely store several kwh of PV generated electricity overnight. That's where the next big cost reduction is needed.

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  2. Greg North

    Retired Engineer

    Melbourne had a number of electricity retailers starting from the 1890s when electricity was becoming a service, about a dozen Municipal Electrical Undertakings or MEUs as they were referred to and Melbourne City Council even constructed their own power station which was in operation to about 1960, though other councils just distributed with bulk power being bought from the SECV.
    All MEUs ceased to exist with new electricity generation legislation in 1994 which saw further separation of SECV generation…

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    1. Paul Richards

      integral operating system

      In reply to Greg North

      Greg North wrote ; " We will continue to tinker with what ought to be a reliable supply of a basic service at our own peril and forever paying more." The aversion to change, the fear of the unknown the projected outcomes of dystopian peril fostered by the Abrahamic value system.
      This is exactly the line of logical fallacy that will be used by the energy distribution networks promoting their culture and its monopoly. Not unfamiliar ground for any reading issues around change.

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    2. Greg North

      Retired Engineer

      In reply to Paul Richards

      Contrary to your thoughts Paul, I've experienced plenty of change from both within the electricity industry and outside of it and whilst I generate more electricity myself than I consume, I might just have a better engineering perspective than you as an IOS whatever that is.

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    3. Paul Richards

      integral operating system

      In reply to Greg North

      Appreciate the comment.
      Greg North wrote; "Contrary to your thoughts Paul, I've experienced plenty of change." All good, our life conditions in this country thankfully are similar, but experience varied during our working life.
      The fear of changing values is an anathema to many, very transparent in comments across a wide range of geopolitical issues.
      Transnational / corporate control is the context of the article and the values held are evident in comment.
      On this issue the cloud serves as an equaliser via digital record. One of the benefits of our internet freedom currently and something we all need to be mindful of.
      It is interesting Edison the very first monopolist of energy distribution used the tactic of creating a 'climate of fear', the strategy is transparent to those at a certain altitude.

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    4. James Hill

      Industrial Designer

      In reply to Paul Richards

      If, however, one looks more closely at the Shepherding model which the Philosophers of the Scottish Enlightenment described as one of the stages of human development, then the next stage, settled communities, is the correct comparison to be considered
      In settled communities, new forms of personal interaction arose, as a result of the close contact.
      And those Abrahamic, shepherding types, were naturally suspicious of the "experiment".
      So can the "Abrahamic" sensibilities support the co-operative…

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    5. Paul Richards

      integral operating system

      In reply to James Hill

      James Hill wrote;" ...can the "Abrahamic" sensibilities support the co-operative model of the locally owned grid" Short answer is yes.
      Many individuals and groups have evolved from this tribal line of thinking. To put it more concisely these ideas are within the holon of understanding of individuals and groups and the values used in context appropriate.
      Allowing for an evolution of personal values is how great innovative memes or ideas integrate. However an example of a value that needs to be…

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    6. James Hill

      Industrial Designer

      In reply to Paul Richards

      Forgive me, Paul, if I suggest that we have not yet reached that modernity which those Philosophers of The Scottish Enlightenment defined as universal literacy and numeracy.
      If some are apparently stuck, for example, in the Abrahamic herding stage of human development, then it does not follow that their ignorance of the nuances of a settled village life, is as a result of them not having "grown up".
      It is a result of their ignorance, not a result of their immaturity.
      Modernity and all the benefits…

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    7. Paul Richards

      integral operating system

      In reply to James Hill

      Appreciate the comment and grok the ideas outlined.
      James Hill wrote; " .... I suggest that we have not yet reached that modernity which those Philosophers of The Scottish Enlightenment defined as universal literacy and numeracy." Totally agree with this idea and put it to you that the group "The Scottish Enlightenment"[TSE] had a value system on highly evolved SDI* blue and early orange.
      With the knowledge they as a group were a well educated, widely read and a highly evolved group on this…

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    8. James Hill

      Industrial Designer

      In reply to Paul Richards

      Thanks Paul, for your considerations, though Adam Smith's declaration that his work aimed "to understand commercial society and better it" indicates that he would understand the "corporatism" that you mention.
      The historical method which he introduced into economics is much neglected these days.
      Which is a shame, since some of the methods of corporatism were developed many many years ago.
      Though "corporatists" would be keen to see their "prey" devolve to a lower level of understanding the easier…

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    9. Paul Richards

      integral operating system

      In reply to James Hill

      A great converstion in context of applying relatively, new, safe and integral technology.
      James Hill wrote; "... that he would understand the "corporatism" that you mention." The principles of capitalism he would recognise within the holon of corporatism. But values used to apply capitalist principles today's culture he would not understand as capitalism. Our meritocracies SDi orange level of thinking or values opaque to his stage of personal development.
      Smith would only see see a regression…

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  3. Alice Kelly
    Alice Kelly is a Friend of The Conversation.

    sole parent

    It will be interesting to see what happens in Port Augusta in the next few years. The first solar powered greenhouse in the world which desalinates sea water into fresh water, extracts salts and minerals to be used on plants or sold, solar heats the greenhouse and creates electricity to run the system, is currently expanding into a full scale operation.
    http://www.sundropfarms.com/wp-content/uploads/2012/03/ADV06MAR12STF06.pdf
    A Solar desalination plant the "Point Paterson Desalination plant" ,which…

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    1. Andrew Gilmour

      logged in via Facebook

      In reply to Alice Kelly

      Re: there are large and small communities who want renewable energy

      For small communities this is understandable because the grid does not reach them. For large communities, well, if they are willing to pay a lot of money ...- why not, this is their choice.

      However, not a lot of people are willing. If I am connected to grid already why should I waste $25K or so (please do not tell me about the climate change, this is a separate discussion).

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    2. John Newlands

      tree changer

      In reply to Alice Kelly

      Re Space Age tomatoes note I previously used the term 'hopelessly uneconomic'. The article doesn't quite give enough data to calculate the average cost. These projects are expensive gestures subsidised by the wider community that runs on fossil fuels. We can only grow a small proportion of our food this way.

      Pt Augusta has just the one coal station left. The latest thinking is to give that unit a daytime solar boost (c.f. Kogan Ck Qld) not build a new solar thermal plant. I agree the SA west coast needs a new power source for various primary industries to get ahead. I suggest a mini-nuke.

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    3. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to Andrew Gilmour

      Well for you $25 K is an issue, and so what, for the South Australian communities (above) the issue is that renewable energy is a desired outcome, and new technology is now a matter of pride, and achievement. Prices have decreased for these technologies, and will decrease further. When governments fail communities, change is inevitable. for many in the US and Australia this is the case.
      Some electricity providers also want to produce clean energy, and if governments fail communities, they will start to produce smaller systems to match community expectations, because there is an increasing market. I'm not so sure grid reach is the only issue, and would be interested to know how you formulated that idea.
      Port Augusta is not a small community, they want a big solar thermal plant. South Australians have a historic willingness to accept change. I'm sure as Tony Abbot tries to stop all forms of renewable energy, new market solutions will begin to proliferate, all over Australia.

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    4. Greg North

      Retired Engineer

      In reply to Alice Kelly

      There'll always be uses for solar Alice, be it growing vegetables via desalination and a green house and such ventures will prosper if economically viable.
      I see the sundrop farms received a sizable grant for their pilot plant and hopefully their full size plant will be profitable, perhaps even offering a return on the taxpayers grant.
      Likewise if solar or wind can provide for communities to get a reliable water supply and even 24/7 power with good economics so be it.
      If the communities of those…

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    5. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to Greg North

      Being without power is a regular thing around here Greg, We get power from the snowy mountains. Whenever there's a storm or wind trees cause disruption. I think subsidising coal is a mistake, and one which impedes improvement in renewable power. Despite this there is always going to be projects which are "the first", what we need is the second third and fourth, which is where these technologies advance. Without willingness from government, some businesses and people will kick start the change.
      "Will you be happy to be without power at various times of day or night?" Doesn't scare me Greg, candles and gas camper stove ready, nor does renewable energy.

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    6. Andrew Gilmour

      logged in via Facebook

      In reply to Alice Kelly

      Re: Well for you $25 K is an issue, and so what, for the South Australian communities (above) the issue is that renewable energy is a desired outcome, and new technology is now a matter of pride, and achievement

      Nobody is arguing here against that Alice. If they want to be proud, so be it. However, two important things are in here to remember.
      1. They have to finance the whole exercise, I am not going to do so as a taxpayer.
      2. If they still would like to be connected to the grid, they have…

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    7. Fred Smith

      Electrical Engineer

      In reply to Alice Kelly

      Camp stove and candles are fine, but how will you post on The conversation! >;)

      Totally agree with you that subsidising coal is a mistake, but so is subsidising anything else in my opinion (be it cars, or FIT's for solar schemes)

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    8. Sean Arundell

      Uncommon Common Sense

      In reply to John Newlands

      correction John Newlands ... fossil fuel enterprises from mining to the power point are subsidised by the wider community via government programs funded from predominantly PAYE taxpayers... who pay the majority of govt revenue streams across the board.
      The same as the railroads, freeways, airports, back to the the olden days telegraph projects or the Roman Baths were likewise expensive gestures subsidised by the wider community.

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    9. Sean Arundell

      Uncommon Common Sense

      In reply to Andrew Gilmour

      "I am not going to do so as a taxpayer." Sure. Since when did you have a choice about how your taxes were used? Are you moving to Iraq or something? :)

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    10. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to Fred Smith

      Satellite dish fred, and I could easily remove myself from the grid. Or lobby the locals into collectively putting a wind turbine up on the hill behind me. We get a lot of wind. We all have solar. That's the point, it's becoming more and more feasible to become masters of our own technological choices.

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    11. Andrew Gilmour

      logged in via Facebook

      In reply to Alice Kelly

      Re: Being without power is a regular thing around here ..., We get power from the snowy mountains. Whenever there's a storm or wind trees cause disruption

      Then Alice of course green technologies are one of the ways to go. In this instance it is unrelated to economy and is driven by some other factors like reliability, convenience, independence. The only issue is how much it would cost and if the community can afford this cost.

      Your situation is totally different from ours here and this is the…

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    12. Andrew Gilmour

      logged in via Facebook

      In reply to Sean Arundell

      Re: correction ... ... fossil fuel enterprises from mining to the power point are subsidised by the wider community via government programs funded from predominantly PAYE taxpayers... who pay the majority of govt revenue streams across the board.

      Yes, this is correct. The only bit we have to remember is that if I pay subsidies, I would expect a stable price for services. My current service provider of electricity might in fact be subsidized, I do not know, but the provider does not elevate prices going through the roof. Yes, they increase prices according to our inflation or measures taken by the government but they are reasonable and clear to me why such increases happen.

      With lots of green technologies on top of paying subsidies people also experience sharp increase of prices, i.e. it is like the load is doubled. This is what people in Europe see now and strongly dislike.

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    13. Andrew Gilmour

      logged in via Facebook

      In reply to Sean Arundell

      re: I am not going to do so as a taxpayer." Sure. Since when did you have a choice about how your taxes were used? Are you moving to Iraq or something? :)

      No, just because they are building this stuff solely for their own community. Moreover, if they do not want to be connected to a network and they want to be independent. Good luck and please pay independently.
      P.S. I'd love to go there, I heard contractors earn a lot :)

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    14. James Hill

      Industrial Designer

      In reply to Alice Kelly

      Yes, why should small and distant communities be punished by a grid connection which demands their hard cash, but does not necessarily guarantee the wherewithal to generate that hard cash.
      All that results is that the limited cash in the local community, is to a measureable extent, "spirited" away, reducing local employment and, eventually, wiping them off the map.
      Renewable energy may indeed be expensive, but the grid comes with its own "tithe", which the grid enthusiasts are keen to obscure when making their comparisons.
      Australia, should such successful decentralisation of services occur, can look forward to less expensive housing, for a start, as the present $150,000 cost of services is severely reduced.
      The various, technocrat "grid" priests will squeal blue murder, as their sinecures are eroded.
      Tough!

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  4. Paul Richards

    integral operating system

    Appreciate the article.
    "... stalemate could be solved through the introduction of a dedicated “VNM” tariff class, replacing full network charges with cost-reflective charges for partial use of existing networks." The authors wrote.
    The question is being asked; can we use an integral model of energy distribution?
    Since micro grids became affordable, gave choice and advantages not available since they were first monopolised in the late 1880s, the era of the Edison's corporate grid model has been…

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  5. Peter Davies

    Bio-refinery technology developer

    Those in the industry with on site generation technologies know the future as dictated by circumstances is "behind the meter", not grid export which the utilities don't want. Every utility we have spoken to will provide every assistance short of help...

    Replacing existing grids and embedded vested interests is problematic, building new ones should not be, but they inherently require a greater level and commitment to higher organization of the local community involved (and acceptance of control…

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    1. Fred Smith

      Electrical Engineer

      In reply to Peter Davies

      A few interesting points there Peter. The first is your point about private grids and that "building new ones should not be" problematic - just like building a new telecommunications grid should not be! The infrastructure was done at a local government level before being amalgamated into the monolith DNSP's we have today, so there is some potential for that to happen again. However, I don't see it as at all likely.
      "What happens though when grid isolated communities end up with cheaper environmentally…

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    2. Peter Davies

      Bio-refinery technology developer

      In reply to Fred Smith

      "This is assuming that economies of scale do not exist." There are a number of ways to achieve this, in any case with our own tech we are already below cost of the cheapest mainstream alternative on a CAPEX basis, and even when you value the biomass at twice the price of coal then cheaper on OPEX than any of the renewables (and we can actually use coal...). The ideal though is a hybrid system with the biomass providing the "battery" storage and load following for wind &/or solar.

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    3. Peter Davies

      Bio-refinery technology developer

      In reply to Fred Smith

      In the EU we are working with companies developing plans for "self funded housing" using hybrid solar/biomass plants <40kwe capacity per connection where the bank will lend the homeowner the funds to build a new home on the basis of the FiT income returns and low home energy costs. This is an example of intelligent use of subsidies (which despite the outraged squarking on the topic are prevalent across all forms of energy generation) to generate cross industry employment and economic stimulus.

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    4. Fred Smith

      Electrical Engineer

      In reply to Peter Davies

      Very interesting concept Peter. What are you planning to use as biofuel? Is there surplus generation from the wind/solar and what happens to it? Be great if you could link me some details of what you are doing, if it is not commercial in confidence of course.

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    5. Peter Davies

      Bio-refinery technology developer

      In reply to Fred Smith

      Biofuel initially will be wood chips or ag pellets, eventually for the straight farm based plants this will be chopped straw. Our gasifier can handle both lower grades of fuel and much higher ash contents than pellet heaters. My understanding is the licensing allows up to 40kWe, so the solar/wind systems are sized below this, essentially not allowing a surplus. The biomass plant allows load following when this falls below a set level (<10kWe), as well as heat for buildings (the gasifier has a built…

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    6. Fred Smith

      Electrical Engineer

      In reply to Peter Davies

      Very interesting stuff you are working on there. I'll keep an eye out for future news.

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  6. Andrew Gilmour

    logged in via Facebook

    Numerous recent examples around the world demonstrate that the consumers dislike green power because of three prime reasons.

    1. Green power needs high subsidies, which in the end are paid by consumers.
    2. Green power unfortunately and surprisingly elevates prices instead of dropping them, therefore consumers in the US, Germany, the UK, Czech Republic and some other countries expressed their grave concerns. As a result of such concerns, the governments of the above countries cut subsidies to green…

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    1. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to Andrew Gilmour

      South Australia;
      "From 2011/12 to 2012/13, regulated prices in South Australia rose nominally by 13%. This is equivalent to a nominal increase of 3.8c/ kWh in the total regulated electricity price over that period. From 2012/13 to 2014/15 it is estimated that these prices will decrease at an average annual rate of one percent. This is equivalent to a total nominal decrease of 0.4/kWh in the regulated electricity price over this remaining period. From 2012/13 to 2014/15, increases in the transmission…

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    2. Andrew Gilmour

      logged in via Facebook

      In reply to Alice Kelly

      Re: The subsidies provided to coal in Australia are a costly impediment

      Please analyse where this money goes first to see if it falls into subsidies category only, the purpose, etc.
      Second, I saw figures of subsidies for some US green compnies (not our AU) and they are billions and then the companies just collapsed.

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    3. Darren G

      logged in via email @yahoo.com

      In reply to Andrew Gilmour

      Andrew, you seem to be operating from a "rational economics" perspective. You would know then that carbon fuels produce external costs. Given that those costs are not reflected in the price of carbon fuels it follows that carbon fuels are therefore subsidised (although the general public has, until recently, struggled to identify the external costs of carbon fuels, a fact that has - notoriously - been exploited by the unscrupulous). Given your apparent adherence to economic rationality are you therefore an advocate of a carbon tax?

      Incidentally, I don't agree with your conclusions and your views on the subsidisation of green energy sources. If I had time I could dig up some articles that are contrary to those you cite. In addition, carbon fuels are - again, notoriously - subsidised in many somewhat covert ways. I say "somewhat covert: because its not hard to find these tricks if you bother looking. Just google it for a start.

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    4. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to Andrew Gilmour

      Direct subsidies + tax concessions 12 billion.
      Renewables one billion, I can't find the articles I secreted on my computer. The point is, concessions for dirty energy far out weigh clean, and if you want to criticise subsidies, you should include both forms of energy, and make it a level playing field.
      Research it as Felix suggests.

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    5. Sean Arundell

      Uncommon Common Sense

      In reply to Alice Kelly

      Global Fossil Fuels overt subsidies $500 billion per annum @2012
      Renewables $100 Billion per annum
      sorry cant recall the ref, is on another page, or search the full top line above online, cheers

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    6. Andrew Gilmour

      logged in via Facebook

      In reply to Darren G

      Re: You would know then that carbon fuels produce external costs. Given that those costs are not reflected in the price of carbon fuels it follows that carbon fuels are therefore subsidised (although the general public has, until recently, struggled to identify the external costs of carbon fuels

      Darren, of course I know. What I see now, however, is hysteria about implementation of green technologies, for example by 2020, otherwise we would just die. During a recent green rally here in Melbourne…

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  7. Fred Smith

    Electrical Engineer

    The pros of VNM tarrifs is that local generators will be able to provide local generation and be subsidised by having to play lower fixed component costs.
    The cons of this is that the reduced fixed component costs will be insufficient to maintain the infrastructure that is being used to transport the energy without increasing the costs overall.
    It is difficult to determine how this idea would work with the detail provided. Currently generators do not pay the network charges as they sell electricity…

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  8. Doug Hutcheson

    Poet

    Considering the degree to which we are conditioned to think of the USA as a hotbed of virulent climate change denial, it is refreshing and instructive to find something positive we could learn from them. Thanks for this article.

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  9. John Bromhead

    logged in via email @netspeed.com.au

    The authors say, a "million Australian households, with the residential solar boom, have demonstrated a desire to lessen their grid dependence".
    The systems are totally dependent on the grid to regulate their frequency and to avoid the power surges that would otherwise occur, particularly on days with scattered cloud.
    Grid connected households are dependent on the grid so that their systems can export excess electricity and the household can import electricity at times when their systems are not producing enough.
    They are also dependent on the fossil fuel power stations and transmission systems for the same reason.
    Most of these systems would not be economic if they were not subsidised and if their owners had to pay a fair share of the grid costs they avoid.

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