No this isn’t quite correct either.
While the network has been designed for reliability during maximum loads on the network (peak demand), it is paid through network fees attached to each unit of consumption (kW).
The transmission and distribution networks charges operate in a similar way to a toll road. The amount of money paid per car at each toll booth is the same and doesn’t change based on the level of traffic. If there are 100 cars through the toll booth each day, then the revenue would be 100 x toll. If there were 5000 cars per day, the toll for each car at the toll booth remains the same and the revenue would be 5000 x toll.
The network charges are attached to the unit of electricity used (kilowatt), just like attached to a car using a toll road. So, irrespective of the amount of energy used or flowing on the network, the unit rate of the network charge remains the same. Therefore, in periods of peak demand, the amount of network charges would be at a maximum and if the demand was 50% of peak demand, the total network charge paid by consumers for be 50% of that which would have occurred at the time of peak demand.
Therefore, the payback of the assets has little to do with the demand on the network but the total flow on the network.
The network is however designed to be reliable at times of peak demand. As we live in a developed, industrialised country, the community/electricity consumer has an expectation that electricity will be available at all times. This is particularly the case when electricity is most needed on hot days for cooling/refrigeration and cold days for heating. These cold and hot days also correspond to days of peak demand.
The effect is the less total flow on the network (between major generators and consumers) means that while the depreciation, operating and maintenance costs on the network remain the same, these costs are spread over a smaller total flow. Over time the network charges increase to ensure the same amount of revenue is generated. One an network asset is built, the depreciation, operating and maintenance costs remains almost the same.
As the network is designed for peak demand, the reduction in flow during the middle of the day hours has little impact on the design of the network…as the peak demand occurs at a different time as outlined in the previous post.
Those with solar installed has in effect increased the network charges for everyone on the network including those with out solar, which in many cases are those who can least afford higher electricity prices or the upfront cost to install solar.
If there was sufficient storage in the network, peak demand could be reduced reducing the network costs associated with delivering a reliable supply at peak demand. In such case, over the longer term the depreciation, operating and maintenance costs of the network would reduce and be passed onto consumers. Unfortunately since domestic storage is unreliable and uneconomic, it is unlikely to be a contribution in the short to medium term.
Having worked in the network industry, if the State Government solar programs had been run differently, we would face the challenges which exist at the moment.