tag:theconversation.com,2011:/us/topics/electricity-infrastructure-92108/articleselectricity infrastructure – The Conversation2023-11-09T22:35:27Ztag:theconversation.com,2011:article/2172322023-11-09T22:35:27Z2023-11-09T22:35:27ZMaine voters don’t like their electric utilities, but they balked at paying billions to buy them out<p>Frustration with electric utilities is universal today. Whether it’s concerns over <a href="https://www.maine.gov/mpuc/regulated-utilities/electricity/delivery-rates">high rates</a>, <a href="https://www.ktvu.com/news/aging-infrastructure-missing-data-and-backlog-of-repairs-continue-to-plague-pge-new-state-report-shows">poor service</a> or a combination of both, people are constantly looking for a better answer to the systems that serve them.</p>
<p>In the Nov. 7, 2023, election, voters in Maine had a chance to consider a new model for electricity service that would replace the state’s <a href="https://mainebeacon.com/cmp-versant-once-again-ranked-last-in-residential-customer-satisfaction-survey/">two widely unpopular private utilities</a>, but they balked in the face of multibillion-dollar cost projections. </p>
<p>This decision took the form of <a href="https://www.maine.gov/sos/cec/elec/upcoming/ballotquestionsnov2023.html">two ballot questions</a>. Question 3 asked whether voters wanted to create a new publicly owned power company, dubbed Pine Tree Power, to take over the existing assets of Maine’s two privately owned utilities. The related Question 1 asked whether consumer-owned electric utilities should have to get public approval before taking on more than US$1 billion in debt. Voters <a href="https://wgme.com/news/local/2023-election-results-for-maine">adopted Question 1 and soundly defeated Question 3</a>.</p>
<p>Municipal ownership of utilities is not new: Across the U.S., <a href="https://www.publicpower.org/public-power/stats-and-facts">about 2,000 communities have public power utilities</a>. In Nebraska, <a href="https://www.eia.gov/state/analysis.php?sid=NE">all electricity providers are publicly owned</a>.</p>
<p>But private utilities <a href="https://www.reuters.com/article/pge-us-sanfrancisco-assets/pge-turns-down-san-franciscos-2-5-bln-offer-to-buy-assets-idUKL3N26W40A">often fight against public takeover attempts</a> – and Maine was no exception. The parent companies of Central Maine Power and Versant Power <a href="https://www.bangordailynews.com/2023/11/07/politics/maine-voters-reject-utility-takeover-after-heavy-spending-from-cmp-and-versant/">spent nearly $40 million</a> campaigning against the ballot measures, compared with $1.2 million on the pro-public power side.</p>
<p>At the University of Florida’s <a href="https://warrington.ufl.edu/public-utility-research-center/">Public Utility Research Center</a>, I work with utilities and regulators around the world to assess different ways of structuring power companies. Questions about what kinds of utilities best serve the public have <a href="https://theconversation.com/what-the-battle-over-control-of-pgande-means-for-us-utility-customers-126992">intensified</a> in recent years. As the Maine vote shows, people want different and sometimes competing things from their utility systems.</p>
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<figcaption><span class="caption">Maine utilities have struggled to modernize their networks and cope with increasing outages caused by climate-driven storms.</span></figcaption>
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<h2>Three basic structures</h2>
<p>There are three basic ownership models for electric utilities. Investor-owned utilities, or IOUs, are owned by private shareholders, who might live next door or halfway around the world. Their stock is publicly traded, and their CEOs have a fiscal responsibility to shareholders as well as to serve their customers.</p>
<p>Municipally owned utilities, often known as munis, are owned locally, generally by the government of the city they serve. Some municipal utilities also serve customers in surrounding areas.</p>
<p>Cooperative utilities are owned entirely by their customers, much like housing or food co-ops. Initially, cooperatives tended to be located in more rural zones. Some of these areas, such as <a href="https://www.lcec.net/">southwest Florida</a>, have grown so rapidly that the term “rural cooperative” no longer applies. </p>
<p>Both munis and cooperatives operate as nonprofits. There is no consistent nationwide link between rates and ownership structure, but it is notable that five of the nine municipal and cooperative utilities in <a href="https://www.maine.gov/mpuc/regulated-utilities/electricity/delivery-rates">Maine</a> charge less then 15 cents per kilowatt-hour for residential customers, compared with 27 to 30 cents for Central Maine Power and Versant. This may have influenced voters’ perception that a municipal utility could provide power at lower prices. </p>
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<p>Municipal utilities do return a portion of their revenues to their investors, but a muni’s investor is the city it serves. According to the American Public Power Association, in 2020, public power utilities <a href="https://www.publicpower.org/system/files/documents/2023-Public-Power-Statistical-Report.pdf">returned a median of 6.1% of their revenues</a> to the communities they served. This return allows local governments to keep taxes lower than would otherwise be necessary to provide government services.</p>
<p>These utilities are also regulated in different ways. Investor-owned utilities are regulated by state <a href="https://www.naruc.org/">public utility commissions</a>, which oversee everything from what kinds of facilities to build and where to build them to how to reflect those costs in electricity rates. </p>
<p>Municipally owned and cooperative utilities are typically regulated on a limited basis by state public utility commissions – usually on matters of safety, reliability or the utilities’ impacts on the rest of the grid. Responsibility for municipal utility rates lies with either the city council or an independent local utility board. Cooperative utilities typically set their rates through a board elected by their customers.</p>
<h2>Maine’s approach</h2>
<p>The structure proposed in Maine was a fascinating hybrid case. Pine Tree Power’s ownership would have closely mirrored that of a municipal utility, governed by a board, but its rates would have been regulated by the Maine Public Utilities Commission. It is unclear what the board’s responsibilities would have been.</p>
<p>Further, since the public utility commission would have been required to set rates according to the actual costs of providing service, it is unclear whether Pine Tree Power would have been allowed to charge rates sufficient to return revenue to the state, similar to what most municipal utilities do. </p>
<p>There was intense debate about Pine Tree Power’s potential benefits. <a href="https://pinetreepower.org/wp-content/uploads/2023/05/review-and-assessment-of-lei-model-2020-1.pdf">One study</a> showed that shifting from private to public power would produce significant benefits, while <a href="https://maineaffordableenergy.org/wp-content/uploads/2021/12/Whitepaper-Analysis-of-Government-Controlled-Power-in-Maine.pdf">another</a> showed significant costs. A <a href="https://legislature.maine.gov/doc/4350">third study</a> forecast long-term benefits but short-term costs, primarily from buying out the state’s two private utilities. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/558670/original/file-20231109-23-ksakcg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A 1942 sign in east central Oklahoma announces that local power is provided at cost by a cooperative utility." src="https://images.theconversation.com/files/558670/original/file-20231109-23-ksakcg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/558670/original/file-20231109-23-ksakcg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=465&fit=crop&dpr=1 600w, https://images.theconversation.com/files/558670/original/file-20231109-23-ksakcg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=465&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/558670/original/file-20231109-23-ksakcg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=465&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/558670/original/file-20231109-23-ksakcg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=584&fit=crop&dpr=1 754w, https://images.theconversation.com/files/558670/original/file-20231109-23-ksakcg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=584&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/558670/original/file-20231109-23-ksakcg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=584&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Rural electrification was a central element of President Franklin D. Roosevelt’s New Deal. The 1936 Rural Electrification Act authorized low-interest federal loans to local cooperatives that would build and maintain power plants and lines and charge reasonable fees for membership.</span>
<span class="attribution"><a class="source" href="https://www.okhistory.org/publications/enc/entry.php?entry=RU007">Encyclopedia of Oklahoma History and Culture</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
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<p>In a municipalization, the cost to buy out the private utility strongly influences how much net benefit will result – and it’s not as simple as writing a check for the book value of the assets. Typically, price determination is a quasi-judicial process overseen by an arbitrator. </p>
<p>For example, when Winter Park, Florida, took control of the local assets of its power provider in 2005, the city estimated the value of the physical assets at $15.8 million. The eventual purchase price determined by an arbitrator was <a href="https://doee.dc.gov/sites/default/files/dc/sites/ddoe/publication/attachments/An%20Analysis%20of%20Municipalization%20and%20Related%20Utility%20Practices.pdf">just over $42 million</a>. The city also incurred legal and technical support costs. Winter Park issued almost $49 million in bonds to cover all of the costs of the acquisition.</p>
<h2>Maine’s cost safeguard</h2>
<p>One curious element of the Maine vote that could have future impacts is the voter approval process under Question 1, which was adopted. Typically, when a community municipalizes its electric power, voters would consider an initial referendum authorizing the government to explore the possibility of purchasing the private utility’s assets, and then a second referendum when the costs of the purchase were known. </p>
<p>The second vote would be more specific – something like, “Should the City issue bonds in the amount of $200 million to finalize the purchase of the assets of XYZ Corp. for the express purpose of establishing a municipal utility?”</p>
<p>This approach is expensive to administer, since it requires two votes, and a defeat at either stage can stop the acquisition process. But it also safeguards voters, since it ensures that they have information about how much municipalizing their utility will cost before they vote to approve it.</p>
<p>Cost estimates for buying out Maine’s utilities and creating Pine Tree Power <a href="https://www.mainepublic.org/politics/2023-10-05/heres-everything-we-know-about-the-referendum-to-replace-cmp-and-versant-with-pine-tree-power">ranged from $5 billion to $13.5 billion</a>, and buyout opponents – including Maine Gov. Janet Mills – <a href="https://www.utilitydive.com/news/maine-votes-takeover-cmp-versant-pine-tree-power/696078/">strongly emphasized the potential price tag</a>. However, the fact that voters approved Question 1 might actually make a future municipalization vote more likely to pass, since voters now know they will have a safeguard of knowing the purchase price prior to their final approval. </p>
<p><div data-react-class="InstagramEmbed" data-react-props="{"url":"https://www.instagram.com/p/Cw5XjbBMfXq/?utm_source=ig_web_copy_link\u0026igshid=MzRlODBiNWFlZA==","accessToken":"127105130696839|b4b75090c9688d81dfd245afe6052f20"}"></div></p>
<p>Ultimately, in my view, there is no best model for utility ownership and operation. One strength of private utilities is that they are subject to clear, consistent oversight by professional utility regulators. For their part, municipal and cooperative utilities offer local control and greater flexibility to address local concerns. However, all types of power companies <a href="https://www.powermag.com/public-power-and-ious-the-same-but-different/">face daunting challenges</a>, including <a href="https://theconversation.com/electricity-grid-cybersecurity-will-be-expensive-who-will-pay-and-how-much-114137">grid cybersecurity</a>, the <a href="https://theconversation.com/bidens-proposed-tenfold-increase-in-solar-power-would-remake-the-us-electricity-system-167605">clean energy transition</a> and <a href="https://theconversation.com/green-jobs-are-booming-but-too-few-employees-have-sustainability-skills-to-fill-them-here-are-4-ways-to-close-the-gap-193953">hiring and retaining skilled workers</a>.</p>
<p>As I see it, a community’s best strategy is to choose a model that has strengths residents value, and whose weaknesses are less important or can be mitigated in other ways. While Maine voters may not love the system they have, their fear of the unknown was apparently stronger.</p><img src="https://counter.theconversation.com/content/217232/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Theodore Kury is the Director of Energy Studies at the University of Florida’s Public Utility Research Center, which is sponsored in part by the Florida electric and gas utilities and the Florida Public Service Commission. In 2018, he was principal investigator on a grant from the Jessie Ball duPont Fund to study the value of municipal utilities in a changing marketplace. That work informs portions of this piece. However, the Center maintains sole editorial control of this and any other work.</span></em></p>Power companies can be publicly or privately owned and may report to corporate boards, local governments or co-op members. But there’s no one best way to deliver electricity reliably and affordably.Theodore J. Kury, Director of Energy Studies, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1629552021-06-18T03:54:24Z2021-06-18T03:54:24ZThree weeks without electricity? That’s the reality facing thousands of Victorians, and it will happen again<figure><img src="https://images.theconversation.com/files/407157/original/file-20210618-27-14k3p2r.jpg?ixlib=rb-1.1.0&rect=0%2C316%2C5551%2C3367&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">James Ross/AAP</span></span></figcaption></figure><p>Last week’s <a href="https://www.abc.net.au/news/2021-06-10/wild-weather-batters-victoria/100203532">storm system</a> wreaked havoc across Victoria. Some <a href="https://www.abc.net.au/news/2021-06-17/storm-hit-houses-in-melbourne-without-power-for-weeks/13394476">220,000</a> households and businesses lost power, and residents in the hills on Melbourne’s fringe were warned yesterday it might not be restored for three weeks.</p>
<p>The extreme weather severely damaged the poles and powerlines that distribute electricity, particularly in the <a href="https://www.abc.net.au/news/2021-06-17/storm-hit-houses-in-melbourne-without-power-for-weeks/13394476">Mount Dandenong area</a>. Senior AusNet official Steven Neave said of the region this week, “we basically have no network left, the overhead infrastructure is pretty much gone. It requires a complete rebuild”.</p>
<p>That leaves about 3,000 customers without electricity for weeks, in the heart of winter. The loss of power also cut <a href="https://www.abc.net.au/news/2021-06-15/victoria-deadly-storms-hundred-homes-destroyed/100215990">mobile phone and internet services</a> and reportedly <a href="https://www.triplem.com.au/story/yarra-valley-water-issues-a-contaminated-water-warning-for-88-suburbs-in-melbourne-165821">allowed</a> untreated water to enter drinking supplies. </p>
<p>So, could this disaster have been avoided? And under climate change, how can we prepare for more events like this?</p>
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<img alt="fallen tree on powerlines" src="https://images.theconversation.com/files/407162/original/file-20210618-23-kpficc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/407162/original/file-20210618-23-kpficc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/407162/original/file-20210618-23-kpficc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/407162/original/file-20210618-23-kpficc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/407162/original/file-20210618-23-kpficc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/407162/original/file-20210618-23-kpficc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/407162/original/file-20210618-23-kpficc.jpg?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">
<figcaption>
<span class="caption">Fallen trees brought down power lines across Melbourne.</span>
<span class="attribution"><span class="source">Daniel Pockett/AAP</span></span>
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</figure>
<h2>An uncertain future</h2>
<p>The Mount Dandenong area is heavily forested, and the chance of above-ground power infrastructure being hit by falling trees is obviously high.</p>
<p>Without electricity, people cannot turn on lights, refrigerate food or <a href="https://www.emergency.vic.gov.au/relief/#health_and_wellbeing">medications</a>, cook on electric stoves or use electric heaters. Electronic banking, schooling and business activities are also badly disrupted. For vulnerable residents, in particular, the implications are profound.</p>
<p>Such disruptions are hard to avoid, at least while the electricity network is above ground. Good management, however, <a href="https://theconversation.com/an-act-of-god-or-just-bad-management-why-trees-fall-and-how-to-prevent-it-162754">can prevent</a> some trees coming down in storms.</p>
<p>The more pertinent question is: how can we prepare for such an event in the future?</p>
<p>Scientists warn such extreme weather will <a href="https://www.carbonbrief.org/what-the-ipcc-report-says-about-extreme-weather-events">increase in both frequency and severity</a> as climate change accelerates. The Australian Energy Market Operator <a href="https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--8.pdf">is acutely aware</a> of this, warning climate change poses “material risks to individual assets, the integrated energy system, and society”.</p>
<p>However, it’s challenging to predict exactly how future heatwaves, storms, bushfires and floods will affect the power network. As <a href="https://www.readcube.com/articles/10.1007%2Fs10584-016-1822-y?author_access_token=XIEkZWCvLC_UXoFV8STMsfe4RwlQNchNByi7wbcMAY6Vs4sxFNDLfv-3vubMVdvEVWkWprVJc6SRUEAYmf7mp3P1fghhEXk1RIeuDHU5JqBYTZ0CWL6FWUFZXX3el7WxaFex4t5k_Pm12qnHbgHNag==">AEMO notes</a>, many climate models related to storms and cyclones involve an element of unpredictability. So, plans to make the electricity system more resilient must address this uncertainty.</p>
<p>As researchers have <a href="https://www.readcube.com/articles/10.1007%2Fs10584-016-1822-y?author_access_token=XIEkZWCvLC_UXoFV8STMsfe4RwlQNchNByi7wbcMAY6Vs4sxFNDLfv-3vubMVdvEVWkWprVJc6SRUEAYmf7mp3P1fghhEXk1RIeuDHU5JqBYTZ0CWL6FWUFZXX3el7WxaFex4t5k_Pm12qnHbgHNag==">noted</a>, there is no “one future” to prepare for – we must be ready for many potential eventualities.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/victorias-wild-storms-show-how-easily-disasters-can-threaten-our-water-supply-162846">Victoria's wild storms show how easily disasters can threaten our water supply</a>
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<img alt="tree fallen on house" src="https://images.theconversation.com/files/407160/original/file-20210618-26-xjcssl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/407160/original/file-20210618-26-xjcssl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/407160/original/file-20210618-26-xjcssl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/407160/original/file-20210618-26-xjcssl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/407160/original/file-20210618-26-xjcssl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/407160/original/file-20210618-26-xjcssl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/407160/original/file-20210618-26-xjcssl.jpg?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">
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<span class="caption">Under climate change, extreme weather is predicted to become more severe.</span>
<span class="attribution"><span class="source">Daniel Pockett/AAP</span></span>
</figcaption>
</figure>
<h2>Yallourn – the bigger problem?</h2>
<p>Meanwhile, in Victoria’s LaTrobe Valley, a situation at the Yallourn coal-fired power station which may have even greater consequences for electricity supplies. </p>
<p>A coal mine wall adjacent to the station is at risk of collapse after flooding in the Morwell River caused it to <a href="https://www.afr.com/companies/energy/victoria-faces-energy-emergency-after-yallourn-flooding-20210617-p581uw">crack</a>. If the wall is breached and the mine is flooded, <a href="https://www.theage.com.au/national/victoria/yallourn-coal-mine-flood-worsens-20120715-224ef.html">as happened in 2012</a>, there will be no coal to power the station and almost a quarter of Victoria’s power supply could be out for months.</p>
<p>Victoria’s energy needs are <a href="https://www.smh.com.au/environment/climate-change/victoria-s-grid-runs-on-50-per-cent-renewable-energy-for-first-time-20210326-p57ee5.html">increasingly supplied by renewables</a>. However, losing Yallourn’s generation capacity would reduce the capacity of the network to adapt to other possible disruptions.</p>
<p>If further disruptions seem unlikely, it’s worth noting the Callide Power Station in Queensland is still operating <a href="https://www.afr.com/companies/energy/return-of-callide-c-power-station-units-delayed-again-20210611-p580cq">at reduced capacity</a> after <a href="https://www.bing.com/videos/search?q=queensland+power+statuion+fire&docid=608047333481989826&mid=1C2E1227A48A4B69148F1C2E1227A48A4B69148F&view=detail&FORM=VIRE">a recent fire</a>.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/an-act-of-god-or-just-bad-management-why-trees-fall-and-how-to-prevent-it-162754">An act of God, or just bad management? Why trees fall and how to prevent it</a>
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<img alt="power plant with chimneys" src="https://images.theconversation.com/files/407161/original/file-20210618-16-1iy266y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/407161/original/file-20210618-16-1iy266y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/407161/original/file-20210618-16-1iy266y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/407161/original/file-20210618-16-1iy266y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/407161/original/file-20210618-16-1iy266y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=495&fit=crop&dpr=1 754w, https://images.theconversation.com/files/407161/original/file-20210618-16-1iy266y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=495&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/407161/original/file-20210618-16-1iy266y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=495&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">A wall adjacent to the Yallourn power plant may collapse.</span>
<span class="attribution"><span class="source">Julian Smith/AAP</span></span>
</figcaption>
</figure>
<h2>Look beyond the immediate crisis</h2>
<p>The Victorian government has offered <a href="https://7news.com.au/news/disaster-and-emergency/acting-premier-announces-new-1600-payment-for-victorians-without-power-in-storms-c-3136383">up to A$1,680</a> per week, for up to three weeks, to help families without power buy supplies and find alternative accommodation.</p>
<p>Welfare groups say the assistance <a href="https://vcoss.org.au/news/2021/06/more-storm-support-needed/">could be improved</a>. They have called for changes to make it quicker and easier for people to access money, cash injections to frontline charities and more temporary accommodation facilities for displaced people and their pets.</p>
<p>While no doubt needed, these are all reactive responses targeted at those without electricity. When any system is disrupted, however, the effects can be widespread and felt long after the initial problem has been addressed.</p>
<p>Take dairy farmers in Gippsland, for example, who <a href="https://www.abc.net.au/news/2021-06-11/gippsland-farmers-help-each-other-and-assess-flood-damage/100207358">could not milk their cows without electricity</a>. Cows must be milked regularly or else they stop producing milk – they cannot be “switched back on” when electricity is restored. Longer-term assistance may well be required for farmers facing such ripple effects.</p>
<p>And as welfare groups <a href="https://vcoss.org.au/news/2021/06/more-storm-support-needed/">have noted</a>, power companies should support affected customers over the long-term, with electricity discounts, deferrals and payment plans.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/no-food-no-fuel-no-phones-bushfires-showed-were-only-ever-one-step-from-system-collapse-130600">No food, no fuel, no phones: bushfires showed we're only ever one step from system collapse</a>
</strong>
</em>
</p>
<hr>
<figure class="align-center ">
<img alt="Sign reading 'power and shower'" src="https://images.theconversation.com/files/407152/original/file-20210618-26-1d75wfb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/407152/original/file-20210618-26-1d75wfb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/407152/original/file-20210618-26-1d75wfb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/407152/original/file-20210618-26-1d75wfb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/407152/original/file-20210618-26-1d75wfb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/407152/original/file-20210618-26-1d75wfb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/407152/original/file-20210618-26-1d75wfb.jpg?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">
<figcaption>
<span class="caption">Relief centres offer affected residents a hot shower and electricity access, but longer-term solutions are also needed.</span>
<span class="attribution"><span class="source">Daniel Pockett/AAP</span></span>
</figcaption>
</figure>
<h2>A call for backup</h2>
<p>So, what else can be done to prepare for future power disruptions? Those with backup options, such as portable fuel-powered generators, or off-grid household batteries connected to solar panels, will undoubtedly be more resilient in such events.</p>
<p>These are examples of “<a href="https://medium.com/@AxelUnlimited/redundancy-in-systems-is-critical-5471b79a3b17">system redundancy</a>”, providing alternative electricity until the network is restored. </p>
<p>But it costs money to invest in household batteries or a generator that may never be used. Resilience is <a href="https://www-cdn.oxfam.org/s3fs-public/file_attachments/bp172-no-accident-resilience-inequality-of-risk-210513-en_1_0.pdf">often a function of wealth</a>, and the less well-off risk being left behind.</p>
<p>Certainly, governments can act to make society as a whole more resilient to power outages. For example, mobile phone towers have backup battery life of <a href="https://www.abc.net.au/news/2021-06-15/victoria-deadly-storms-hundred-homes-destroyed/100215990">just 24 hours</a>. As Victoria’s Emergency Management Commissioner Andrew Crisp said this week, extending that is something authorities “need to look at”.</p>
<p>Power and communications infrastructure could be moved underground to protect it from storms. While such a move would be expensive, it has <a href="https://www.treenet.org/wp-content/uploads/2017/08/2009_SymposiumProceedings_FINAL.pdf">been argued</a> not doing so will lead to greater long-term costs under a changing climate.</p>
<p>The recent challenges at Yallourn and Callide show the risks inherent in a centralised electricity network dominated by coal. </p>
<p>Certainly, integrating renewable energy sources <a href="https://theconversation.com/explainer-what-is-the-electricity-transmission-system-and-why-does-it-need-fixing-147903">into the power network</a> comes with its own challenges. However, expanding energy storage <a href="https://www.energy.vic.gov.au/renewable-energy/the-victorian-big-battery">such as batteries</a>, or shifting to small, community-level <a href="https://theconversation.com/texas-electricity-grid-failure-shows-how-microgrids-offer-hope-for-a-better-future-155708">microgrids</a> will go a long way to improving the resilience of the system.</p>
<p><em>This story is part of a series The Conversation is running on the nexus between disaster, disadvantage and resilience. It is supported by a philanthropic grant from the Paul Ramsay Foundation. Find the series <a href="https://theconversation.com/au/topics/disaster-and-resilience-series-97537">here</a>.</em></p><img src="https://counter.theconversation.com/content/162955/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony Richardson 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>Could this disaster have been avoided? And under climate change, how can we prepare for more events like this?Anthony Richardson, Researcher and Teacher, Centre for Urban Research, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1560312021-03-01T05:12:14Z2021-03-01T05:12:14ZRenewables need land – and lots of it. That poses tricky questions for regional Australia<figure><img src="https://images.theconversation.com/files/386894/original/file-20210301-15-14u409x.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3866%2C2089&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Renewable energy capacity in Australia is <a href="https://www.aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/ISP/2019/Draft-2020-Integrated-System-Plan.pdf">expected to</a> double, or even triple, over the next 20 years. There is one oft-overlooked question in this transition: where will it all be built?</p>
<p>Many renewable energy technologies need extensive land area. <a href="https://www.researchgate.net/publication/230284417_Optimal_turbine_spacing_in_fully_developed_wind_farm_boundary_layers">Wind turbines</a>, for instance, cannot be located too close together, or they won’t work efficiently.</p>
<p>Some land will be in urban areas. But in the transition to 100% renewable energy, land in the regions will also be needed. This presents big challenges, and opportunities, for the farming sector.</p>
<p>Two important factors lie at the heart of a smooth transition. First, we must recognise that building renewable energy infrastructure in rural landscapes is a complex social undertaking. And second, we must plan to ensure renewables are built where they’ll perform best.</p>
<figure class="align-center ">
<img alt="Aerial view of solar farm" src="https://images.theconversation.com/files/386896/original/file-20210301-15-mxmf96.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/386896/original/file-20210301-15-mxmf96.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=449&fit=crop&dpr=1 600w, https://images.theconversation.com/files/386896/original/file-20210301-15-mxmf96.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=449&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/386896/original/file-20210301-15-mxmf96.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=449&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/386896/original/file-20210301-15-mxmf96.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=564&fit=crop&dpr=1 754w, https://images.theconversation.com/files/386896/original/file-20210301-15-mxmf96.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=564&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/386896/original/file-20210301-15-mxmf96.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=564&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Australia’s renewable energy expansion will require plenty of space – most of it in the regions.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>Bringing renewables to the regions</h2>
<p><a href="https://www.springer.com/gp/book/9789811594953?wt_mc=Internal.Event.1.SEM.ChapterAuthorCongrat">My research</a> has examined how much land future energy generation will require, and the best way to locate a 100% renewable electricity sector in Australia. </p>
<p>A National Farmers Federation <a href="https://nff.org.au/wp-content/uploads/2021/02/NFF_A4_Regionalisation-Agenda_2021_V7-compressed_1.pdf">paper</a> released last week called for a greater policy focus on renewable energy in regional Australia. It said so-called renewable energy zones should “be at the centre of any regionalisation agenda” and that this would give the technology a competitive advantage.</p>
<p>Hosting renewable energy infrastructure gives farmers a second income stream. This can diversify a farming business and help it withstand periods of financial pressure such as drought. An influx of new infrastructure also boosts regional economies. </p>
<p>But successfully integrating renewables into the agricultural landscape is not without challenges.</p>
<h2>A wicked problem</h2>
<p>Renewable energy enjoys widespread <a href="https://www.theguardian.com/australia-news/2018/aug/06/most-australians-want-more-renewables-to-help-lower-power-prices-poll">public support</a>. However its development can lead to social conflicts. For example, opposition to wind wind farms, often concentrated at the local level, can be <a href="https://www.sciencedirect.com/science/article/pii/S0301421516304888?via%3Dihub">motivated by concerns</a> about:</p>
<ul>
<li>perceived health impacts</li>
<li>changes to the landscape</li>
<li>damage to wildlife</li>
<li>loss of amenity</li>
<li>reduced property values</li>
<li>procedural fairness.</li>
</ul>
<p>A proposed A$2 billion wind energy development on Tasmania’s King Island shows the difficulties involved in winning community support. The project was eventually <a href="https://www.news.com.au/national/breaking-news/b-king-island-wind-farm-scrapped/news-story/8fb4923b62e2c13a53dcd47552b0c051">scrapped</a> in 2014, for economic reasons. </p>
<p><a href="https://www.sciencedirect.com/science/article/pii/S0301421516304888?via%3Dihub">Research</a> showed how despite the proponents TasWind using a “best practice” mode of community engagement, the proposal caused much social conflict. For example, the holding of a vote served to further polarise the community, and locals were concerned that the community consultation process was not impartial.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/against-the-odds-south-australia-is-a-renewable-energy-powerhouse-how-on-earth-did-they-do-it-153789">Against the odds, South Australia is a renewable energy powerhouse. How on Earth did they do it?</a>
</strong>
</em>
</p>
<hr>
<p>The local context was also significant: the recent closure of an abattoir, and associated job losses, had increased the community’s stress and sense of vulnerability. This led some to frame the new proposal as an attempt by a large corporation to capitalise on the island’s misfortune. </p>
<p>The King Island experience has all the hallmarks of a “<a href="https://nnsi.northwestern.edu/wicked-problems-what-are-they-and-why-are-they-of-interest-to-nnsi-researchers/">wicked problem</a>” – one that is highly complex and hard to resolve. Such problems are <a href="https://www.apsc.gov.au/tackling-wicked-problems-public-policy-perspective">common in policy areas</a> such as land-use planning and environmental protection. </p>
<figure class="align-center ">
<img alt="People protest against wind farm proposal" src="https://images.theconversation.com/files/386897/original/file-20210301-19-14vly6t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/386897/original/file-20210301-19-14vly6t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/386897/original/file-20210301-19-14vly6t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/386897/original/file-20210301-19-14vly6t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/386897/original/file-20210301-19-14vly6t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/386897/original/file-20210301-19-14vly6t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/386897/original/file-20210301-19-14vly6t.jpg?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">
<figcaption>
<span class="caption">Achieving community consensus on wind farm developments can be challenging.</span>
<span class="attribution"><span class="source">Daniel Mariuz/AAP</span></span>
</figcaption>
</figure>
<p>Wicked problems typically involve competing perspectives and interests. Often, there is no single, correct solution that works for everyone. For example at King Island, the abattoir closure did not mean all locals considered the wind energy proposal to be the answer. </p>
<p>When seeking to address complex policy problems, such as building renewable energy in regional areas, the <a href="https://www.apsc.gov.au/tackling-wicked-problems-public-policy-perspective">best approach</a> involves:</p>
<ul>
<li>collaboration between all affected parties, including people beyond the property where the infrastructure will be located </li>
<li>relationship-building between all those involved, to allow each to see the other’s perspective</li>
<li>shared decision-making on whether the infrastructure will be built, and where.</li>
</ul>
<p>Competition for land is <a href="https://www.springer.com/gp/book/9789811594953?wt_mc=Internal.Event.1.SEM.ChapterAuthorCongrat">intensifying</a> around the world, especially as the population grows. High consumption levels in the West require ever-more land for resources such as food, and land degradation is rife.</p>
<p>To help alleviate this pressure, renewable energy developments may need to co-exist with other land uses, such as cattle <a href="https://edlenergy.com/project/wonthaggi/">grazing</a> around wind turbines. And in many cases, renewable energy should not be built on the most productive cropping land.</p>
<figure class="align-center ">
<img alt="Cows graze in front of wind turbines" src="https://images.theconversation.com/files/386898/original/file-20210301-23-1oh7r0x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/386898/original/file-20210301-23-1oh7r0x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/386898/original/file-20210301-23-1oh7r0x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/386898/original/file-20210301-23-1oh7r0x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/386898/original/file-20210301-23-1oh7r0x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/386898/original/file-20210301-23-1oh7r0x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/386898/original/file-20210301-23-1oh7r0x.jpg?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">
<figcaption>
<span class="caption">Cattle grazing and wind turbines can co-exist.</span>
<span class="attribution"><span class="source">Mick Tsikas/AAP</span></span>
</figcaption>
</figure>
<h2>Recipe for success</h2>
<p>A successful energy transition will require strategic, long-term planning to determine where renewable generation is best located. </p>
<p><a href="https://www.sciencedirect.com/science/article/pii/S0306261916309400?casa_token=MQLjNzEVIzsAAAAA:cxKgbE30d72eWV_Uj71SNS1mjGz4QDf0uD5LPDG8wiZh3qlcvCxNf7lnhnBKitTx-xO-kJIf5LOS">Our research</a> indicates that while many places in Australia have renewable energy potential, some are far better than others. Wind energy is usually best located near the coast, solar farms in arid inland regions and rooftop solar power in densely-populated eastern Australia.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-is-the-electricity-transmission-system-and-why-does-it-need-fixing-147903">What is the electricity transmission system, and why does it need fixing?</a>
</strong>
</em>
</p>
<hr>
<p>Traditionally, Australia’s electricity grid infrastructure, such as high-voltage transmission lines, has been located around coal-fired generators and large population centres. Locating renewables near this infrastructure might make it cheaper to connect to the grid. But those sites may not be particularly windy or sunny.</p>
<p>Australia’s electricity grid should be upgraded and expanded to ensure renewables generators are located where they can perform best. Such strategic planning is just what the National Farmers Federation is asking for. Improved connectivity will also help make electricity supplies more reliable, allowing electricity to be transferred between regions if needed.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/h4XlSkoDq0k?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
</figure>
<h2>Making renewables do-able</h2>
<p>The economic and environmental benefits of renewable energy are well known. But without social acceptance by communities hosting the infrastructure, the clean energy transition will be slowed. There is more work to be done to ensure new renewables projects better respond to the needs of regional communities. </p>
<p>And to ensure Australia best fulfils its renewable energy potential, electricity grid technology must be upgraded and expanded. To date, such planning has not featured prominently enough in public conversation and government policy. </p>
<p>If Australia can overcome these two tricky problems, it will be well on the way to ensuring more reliable electricity, the best return on investment and a low-carbon energy sector.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/people-need-to-see-the-benefits-from-local-renewable-energy-projects-and-that-means-jobs-138433">People need to see the benefits from local renewable energy projects, and that means jobs</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/156031/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bonnie McBain received funding from the Australian Research Council Linkage Grant (LP0669290) to undertake some of the work reported in this article.</span></em></p>The transition to 100% renewable energy will require a lot of land – mostly in regional Australia. This presents big challenges, and opportunities, for the farming sector.Bonnie McBain, Lecturer, University of NewcastleLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1451682020-08-27T06:40:59Z2020-08-27T06:40:59ZSure, no-one likes a blackout. But keeping the lights on is about to get expensive<figure><img src="https://images.theconversation.com/files/355028/original/file-20200827-14-1n3ndh1.jpg?ixlib=rb-1.1.0&rect=14%2C7%2C4905%2C3245&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>A new official report shows blackouts in eastern Australia’s grid this summer are unlikely. While that’s welcome news, it casts doubt on the wisdom of a recent government decision to tighten electricity reliability standards – a decision that will cost consumers.</p>
<p>The <a href="https://aemo.com.au/newsroom/media-release/2020-esoo">report</a> from the Australian Energy Market Operator, published this morning, is known as the Electricity Statement of Opportunities. It says no “unserved energy” is expected this summer and tight reliability standards will be met for the foreseeable future. This is largely due to increased installations of renewable generation, the return to service of a few coal plants after maintenance and lower electricity demand due to COVID-19.</p>
<p>For the first time, reliability was assessed against new standards substantially tighter than the last. State and federal energy ministers <a href="http://www.coagenergycouncil.gov.au/publications/23rd-energy-council-meeting-communiqu%C3%A9">quietly agreed</a> to tighten the standard earlier this year, and just last week <a href="http://www.coagenergycouncil.gov.au/reliability-and-security-measures/interim-reliability-measures">the change was finalised</a>. </p>
<p>While electricity supply is expected to be fine this summer, beyond that reliability will deteriorate, particularly for New South Wales, as old power plants close. That’s when the new standard will bite: a grid without power cuts is <a href="https://theconversation.com/amid-blackout-scare-stories-remember-that-a-grid-without-power-cuts-is-impossible-and-expensive-102115">impossible and expensive</a>.</p>
<figure class="align-center ">
<img alt="Adelaide during blackout in 2016." src="https://images.theconversation.com/files/355029/original/file-20200827-16-1jsc1q3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/355029/original/file-20200827-16-1jsc1q3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/355029/original/file-20200827-16-1jsc1q3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/355029/original/file-20200827-16-1jsc1q3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/355029/original/file-20200827-16-1jsc1q3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/355029/original/file-20200827-16-1jsc1q3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/355029/original/file-20200827-16-1jsc1q3.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">Adelaide during blackout in 2016. Eliminating outages entirely is expensive.</span>
<span class="attribution"><span class="source">Daniel Mariuz/AAP</span></span>
</figcaption>
</figure>
<h2>What is electricity reliability?</h2>
<p>In electricity systems, reliability is a measure of the ability of electricity generation infrastructure to meet consumer demand. </p>
<p>When users require more energy than generators can supply, this can cause outages or blackouts. However, this is a rare cause of blackouts: <a href="https://www.aemc.gov.au/markets-reviews-advice/reliability-frameworks-review">more than 96%</a> are caused by faults or other incidents on the network, such as trees falling on power lines. </p>
<p>In the National Electricity Market, which covers the eastern states, the term “unserved energy” is used to measure the ability (or not) of the power system to meet consumer demand. Unserved energy occurs through “load shedding”, when electricity to large groups of customers is cut to keep the overall system running. </p>
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<p>The former reliability standard required expected unserved energy be no more than 0.002% in a given year. In other words, the system was expected to deliver 99.998% of the electricity consumers demanded. </p>
<p>The new interim reliability standard reduces this to 0.0006%, out to 2023 when it will be reviewed. The tighter standard will cost energy companies money, which will be recouped from customers.</p>
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<img alt="A $50 note sticking out of a power socket." src="https://images.theconversation.com/files/355030/original/file-20200827-24-e2nuc6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/355030/original/file-20200827-24-e2nuc6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/355030/original/file-20200827-24-e2nuc6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/355030/original/file-20200827-24-e2nuc6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/355030/original/file-20200827-24-e2nuc6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/355030/original/file-20200827-24-e2nuc6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/355030/original/file-20200827-24-e2nuc6.jpg?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">
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<span class="caption">The cost of tighter reliability standards will be passed onto consumers.</span>
<span class="attribution"><span class="source">Julian Smith/AAP</span></span>
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<h2>Why has the reliability standard changed?</h2>
<p>It’s important to understand the extent to which consumers care about electricity reliability over affordability.</p>
<p>Last December, the Australian Energy Regulator published a review of reliability “<a href="https://www.aer.gov.au/networks-pipelines/guidelines-schemes-models-reviews/values-of-customer-reliability">values</a>”. It found in general, residential electricity customers valued reliability slightly less in 2019 than in 2014, with the exception of customers in suburban Adelaide (presumably due to the <a href="https://www.theguardian.com/australia-news/2016/sep/28/south-australia-braces-for-storm-that-could-be-most-severe-in-50-years">statewide blackouts</a> there in 2016). </p>
<p>So why has the reliability standard been tightened? Blackouts and outages are politically sensitive issues. Politicians, and the market operator for that matter, have strong incentives to ensure reliability, and yet <a href="https://link.springer.com/chapter/10.1007/978-94-015-7957-5_16">don’t have to pay</a> to achieve it.</p>
<p>For this reason, the reliability standard is supposed to be reviewed and set by an independent <a href="https://www.aemc.gov.au/about-us/reliability-panel">reliability panel </a>. The reliability panel has not recommended an increase to the standard. </p>
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<p>Tightening of reliability standards is not a theoretical problem. In particular, we’ve seen the repercussions in the network sector – otherwise known as the “poles and wires”. Following network outages in NSW and Queensland in <a href="https://reneweconomy.com.au/this-is-no-time-for-energy-ministers-to-panic-over-reliability-standards-37320/">early 2004</a>, both states rushed in tighter standards for network reliability. This contributed to multibillion-dollar network infrastructure upgrades which consumers have been paying off for years. </p>
<p>Tightening of the reliability standard will similarly increase the costs of generation. From next year, retailers may be <a href="https://www.energy.gov.au/publications/retailer-reliability-obligation-factsheet">required</a> to enter contracts with electricity generators to meet their share of expected peak demand. Or the market operator may <a href="https://aemo.com.au/en/energy-systems/electricity/emergency-management/reliability-and-emergency-reserve-trader-rert">secure more electricity capacity</a> when needed – such as by asking large energy users to power down, or bringing diesel or gas generators online.</p>
<p>In either case, the costs are passed on to consumers. </p>
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<img alt="Workers perform maintenance on power lines." src="https://images.theconversation.com/files/355032/original/file-20200827-20-lyejm5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/355032/original/file-20200827-20-lyejm5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/355032/original/file-20200827-20-lyejm5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/355032/original/file-20200827-20-lyejm5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/355032/original/file-20200827-20-lyejm5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/355032/original/file-20200827-20-lyejm5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/355032/original/file-20200827-20-lyejm5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&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">Consumers were still paying for huge infrastructure upgrades to poles and wires in NSW.</span>
<span class="attribution"><span class="source">Jason Lee/Reuters</span></span>
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<h2>Silver lining?</h2>
<p>There may be a thin silver lining. The promise of “demand response” measures – when electricity consumers reduce their electricity demand to help supply and demand match during extreme peaks – could lower the cost of meeting the new reliability standard. This is because with less energy being used, fewer more expensive measures may be needed to maintain supply. </p>
<p>The government-appointed Energy Security Board <a href="https://prod-energycouncil.energy.slicedtech.com.au/sites/prod.energycouncil/files/ESB%20Decision%20Paper%20%E2%80%93%20Interim%20Reliability%20Measure.pdf">has said</a> tightening the standard may in fact encourage more demand response measures. Supporting demand response is an admirable goal, but tightening the reliability standard is an odd way to go about it. </p>
<p>While the outlook for reliability this summer looks good, the changes in reliability standard ring alarm bells for the future. Consumers are generally happy with their reliability, and the vast majority of outages are not the result of demand outstripping supply. The changes don’t appear well justified or targeted, and they will come at a cost. Things are going to get expensive. </p>
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<p class="fine-print"><em><span>Dylan McConnell has received funding from the AEMC's Consumer Advocacy Panel and Energy Consumers Australia. He has also previous been funded by the Department of Foreign Affairs and Trade.
</span></em></p><p class="fine-print"><em><span>Anne Kallies 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>An official report on Thursday said blackouts are not expected this summer. But consumers will still have to pay through the nose to make the system more reliable.Dylan McConnell, Research Fellow at the Australian German Climate and Energy College, The University of MelbourneAnne Kallies, Senior Lecturer, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.