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 August 2012 (chapters added since)

 

 

 

Introduction

 

The present government interventions in electricity markets, intended to move the industry from coal to renewable energy sources, are responsible for most of the rapidly rising cost of electricity in Australia.  These interventions have introduced unanticipated distortions and inefficiencies in the way that electricity is delivered.

Industry experts point to looming problems in supply and even higher price increases.

A 'root and branch' review of these mechanisms is urgently required to prevent ever increasing prices and to prevent further potentially crippling distortions.

If you currently pay an electricity bill or use electricity in your place of employment it is worth gaining an understanding of the key issues surrounding the generation and transportation (transmission) of electricity.

The electricity price we pay our retailer is made up of a number of different components.  These are the cost of:

  • Transmission and local distribution - local distribution is by far the largest part of the total grid costs - but large transmission projects cause incremental price increases that increase the effective electricity price in your bill;
  • wholesale electricity from the National Electricity Market (NEM) - incorporating the cost of fuel and thus the impact of the new carbon tax;
  • renewable energy certificates - once known as REC's but now of two kinds: Small-Scale Technology Certificates (STCs) and Large-scale Generation Certificates (LGCs);
  • the retailer's costs and overheads (marketing) - this includes additional costs associated with local feed-in generation; principally from rooftop photo-voltaic (PV) solar.

 

Although some elements of the Australian electricity market operate competitively, there are a number of elements that do not; and some cannot. 

In particular, the duplication or multiplication of 'wires and poles' to provide competition in the grid is not considered desirable; both on the grounds of economies of scale and issues around actual physical space required to run competitive wires.  This sector is therefore heavily regulated and often in government hands. 

The retail sector, while nominally open to multiple competitors, is complicated by one of these retailers usually also being the owner of the local distribution infrastructure.

But generation is generally regarded as a competitive sector, with over 260 large generators contributing to the NEM. 

The carbon tax impacts the effective cost of fuel for the largest of these generators.  Initial estimates put the tax pass-through cost to consumers at around 2 cents per kWh.  But as I will point out this is not presently being felt evenly across all carbon based fuels.  There is not a 'level playing field'; because some competitors are enjoying an unfair advantage. 

In addition there are distortions introduced by the LGC's.  Together with other government interventions, discussed below, these are distorting the marketplace in generation.  It is widely reported that investment decisions required for ongoing electricity security have been deferred or even abandoned.  Very large plant with long lead-times is involved.  This is likely to result in a serious shortfall in capacity in the next decade or two.

Renewable energy certificates are already an important factor in pre-tax price increases and are forecast to become a major part of your electricity bill in future.

Maintaining and expanding local distribution infrastructure is a big part of your bill - as new suburbs are built distribution is increasingly underground raising the overall cost to all consumers.

Transmission grid capital cost and losses are on the increase with the introduction of relatively remote and very variable wind generation and this too pushes up the effective cost of electricity in the NEM.

Mains electricity from the grid comes from a multitude of energy sources.  Electricity is simply a convenient way of transporting that energy in a way that is easily converted back to mechanical energy, heat, light, and the motive force to drive electronics. 

I argue that it is urgent that the renewable energy target is absorbed into a single carbon reduction initiative, in which no industry sector or consumer is exempt or privileged, similar to that originally proposed by Federal Treasury and the Garnaut committee in 2010.

If you don’t understand where electricity comes from; how it is transmitted or potential technology 'breakthroughs', still in the laboratory, there is a short (simplified) primer on this website.  

The ultimate competitor, if the grid fails to supply or if it becomes too expensive, is 'self generation'.   I also briefly examine the self generation option in the 'primer'.  Read More… 

 

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Travel

Berlin

 

 

 

I'm a bit daunted writing about Berlin.  

Somehow I'm happy to put down a couple of paragraphs about many other cities and towns I've visited but there are some that seem too complicated for a quick 'off the cuff' summary.  Sydney of course, my present home town, and past home towns like New York and London.  I know just too much about them for a glib first impression.

Although I've never lived there I've visited Berlin on several occasions for periods of up to a couple of weeks.  I also have family there and have been introduced to their circle of friends.

So I decided that I can't really sum Berlin up, any more that I can sum up London or New York, so instead I should pick some aspects of uniqueness to highlight. 

Read more: Berlin

Fiction, Recollections & News

The new James Bond

 

 

It was raining in the mountains on Easter Saturday.

We'd decided to take a couple of days break in the Blue Mountains and do some walking. But on Saturday it poured.  In the morning we walked two kilometres from Katoomba to more up-market and trendy Leura for morning coffee and got very wet.

After a train journey to Mount Victoria and back to dry out and then lunch in the Irish Pub, with a Cider and Guinness, we decided against another soaking and explored the Katoomba antique stores and bookshops instead.  In one I found and bought an unread James Bond book.  But not by the real Ian Fleming. 

Ian Fleming died in 1964 at the young age of fifty-six and I'd read all his so I knew 'Devil May Care' was new.  This one is by Sebastian Faulks, known for his novel Birdsong, 'writing as Ian Fleming' in 2008.

Read more: The new James Bond

Opinions and Philosophy

Australia's $20 billion Climate strategy

 

 

 

We can sum this up in a word:

Hydrogen

According to 'Scotty from Marketing', and his mate 'Twiggy' Forrest, hydrogen is the, newly discovered panacea, to all our environmental woes:
 

The Hon Scott Morrison MP - Prime Minister of Australia

"Australia is on the pathway to net zero. Our goal is to get there as soon as we possibly can, through technology that enables and transforms our industries, not taxes that eliminate them and the jobs and livelihoods they support and create, especially in our regions.

For Australia, it is not a question of if or even by when for net zero, but importantly how.

That is why we are investing in priority new technology solutions, through our Technology Investment Roadmap initiative.

We are investing around $20 billion to achieve ambitious goals that will bring the cost of clean hydrogen, green steel, energy storage and carbon capture to commercial parity. We expect this to leverage more than $80 billion in investment in the decade ahead.

In Australia our ambition is to produce the cheapest clean hydrogen in the world, at $2 per kilogram Australian.

Mr President, in the United States you have the Silicon Valley. Here in Australia we are creating our own ‘Hydrogen Valleys’. Where we will transform our transport industries, our mining and resource sectors, our manufacturing, our fuel and energy production.

In Australia our journey to net zero is being led by world class pioneering Australian companies like Fortescue, led by Dr Andrew Forrest..."

From: Transcript, Remarks, Leaders Summit on Climate, 22 Apr 2021
 

 

Read more: Australia's $20 billion Climate strategy

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