About 2.8 cents per kWh is the cost impost of the large and small generation certificates and the Victorian Energy Efficiency Certificates and the market operator charges.
Generators are getting around 7 cents per kWh on average for their electricity with the price fluctuating around a lot due to intermittent production that floods the market at certain times. This is causing the coal generators to lose money. They are no longer viable. They will be replaced by peaking gas.
Hi @gds! I am not sure what your answer has to do with the claim that prices have soared since the renewable energy push. Perhaps you could explain it in some other way or give a reference to somebody you think explains it well.
I am also not clear why you think peaking gas will replace coal. Gas can be useful as a stop-gap for short term supply when other forms of generation are not available. There are other ways to deal with that problem, such as pumped hydro or batteries, that will be cheaper in the long run and emit less greenhouse gases. In terms of cost to produce each megajoule of electricity peaking gas is one of the most expensive technologies.
If new gas fired power was a commercial opportunity you would see the big generators like AGL building them. However we donât see this as there is no money in it. We have the Prime Minister saying there ought to be one built in the Hunter region but so far that is just hot air as no money or any other solid commitment to the project has been made.
I donât think prices have soared. They have been relatively stable having fallen from a few years back but they have increased in the past twelve months due to the increasing unreliability of coal creating surge pricing events and coal generators withdrawing capacity to counter low prices when renewables are generating. Average generation prices of 7c/kWh is pretty good and comparable to prices 20 years ago.
As for the imposition of the RET-type charges, that is a decision of government but it now represents near enough to 3c/kWh.
The charges paid to distributors have increased in Victoria this year by around 15% to cover the cost of investment in upgrading the grid. That is a consequence of needing to deal with intermittent generation and solar roof top power. These costs make the grid smarter and more resilient.
Peaking gas will replace baseload coal because that is what is being built right now - it already has in SA and is starting to do so in NSW and Victoria. As peaking gas, it only kicks in when needed.
The system will have a lot more renewables - because they can generate electricity at low price points but they need to be backed with batteries (too expensive for storage beyond a few hours) or pumped hydro (also too expensive to build beyond a few GW of power) or something else and gas is the something else given current technology options. How long for? Who knows? A breakthrough in battery storage prices may be around the corner but it isnât going to be Tesla and Lithium.
I hope that clarifies my comments earlier.
It is almost axiomatic that energy prices are higher than they need to be. If energy sector was run by the government, then the policy decisions are made to please the people rather than for the benefit of the people. Democratic governments are not able to implement rational decisions. Anyone who thinks the proliferation of subsidised rooftop solar is a good idea is not looking at the whole picture. It would have been much cheaper to put all those panels where there is more sun, have them installed on racks on the ground rather than having thousands of people crawling around on rooftops, and have infrastructure to deliver the output.
So the energy sector is sold off to private enterprise, and policy decisions are made to benefit the shareholders rather than for the benefit of the people.
Introduce the AER to be meat in the sandwich. They are skilled at implementing political decisions while allowing private enterprise to make a profit. The process is nowhere near optimal to deliver at lowest cost while investing enough for the future. I think the AER do the job they are supposed to do quite well, but I donât think their job description reads âput the good of the country firstâ.
Do you have any costing to show this?
I didnât, but I compared the 5MW solar farm put in by Newcastle City Council with quoted prices for a 6.6kW home installation and it worked out about 10% cheaper per kW installed. I couldnât get figures on how much each received in RECS, but Iâm assuming similar. However, the NCC panels are optimally positioned and are yielding more (about 30% on average I believe) output than the average home system because most home systems are sub optimal. And Newcastle is not the ideal place, more cloud than inland places. It would be interesting to do a proper comparison but it would take more time than Iâm willing to invest.
That is rather crude and you have not considered network costs and power losses for solar farms in dry sunny regions away from cities.
They are definitely too high for a product you cant live without. The average person has no hope of ever understanding the so called great plans the suppliers offer us. Thanks
Welcome to the community @Macca69.
If you would like to add further comments, there was a request attached to the poll for a response the following questions:
An import terminal for the eastern seaboard could actually be an important building block in a more efficient market. (Think of it as buying cheap clothes from Fiji even though we can more than competently make the same clothes here in Australia.) Gas from the USA, which is cheap due to widespread fracking, could compete with onshore supplies and keep a brake on their prices. Spain has six import terminals and is able to withstand the price gouging that other European nations have to endure due to having just one pipeline from Russia to supply their market. While domestic gas is a critical part of our energy needs an import terminal is urgently needed and should be fast-tracked (ideally without public money being provided to make it happen). Fracking, the other option to create increased competition seems to be a step too far for Australia.
Why would you say that fracking will solve the problem? We donât have a shortage of gas we have a problem with how we deal with it.
How efficient is it to pay the overheads to compress the gas and put it on a ship, sail the ship across an ocean and then get it off the ship and expand it again in comparison to doing none of that?
If you are thinking of the more narrow concept of an efficient economical market how will that happen when it is not an open market but one dominated by a cartel?
Given the 19th-century technology that we still use to generate and distribute the energy, the price we consumers pay is about right. It is a comparatively costly way to provide households with energy, made even more costly by the fact that it is produced by setting fire to stuff, which we know now is working against our little planet.
We are a hairâs breadth away from virtually uninterruptible, practically free energy, which is what comes from zero-marginal-cost, zero-marginal-emissions, distributed âgenerationâ, if we find the way to continue the move towards household photovoltaic generation with battery storage.
This process would be accelerated by enabling household energy trading, which would provide the incentive for households (or indeed communities) to install additional storage, and speed up the transition away from the harmful central generation model.
Yes, in a short response there are a lot of dots to be joined that you donât see in âthinking of the more narrow concept of an efficient economical marketâ. I am only commenting on the options to reduce the cost of natural gas to consumers. One âdotâ you donât see is my assumption that onshore fracking and import terminals would be conducted by suppliers that are outside and competing against the existing suppliers. (I wonât describe them as a cartel but if it walks like a duckâŠ)
Onshore fracking and import terminals should be able to provide gas to the market at less than $6/GJ. Another assumption is that the Federal and State governments would stare down the protestations of giant natural gas conglomerates and make them compete in a more diverse market. (The long maintenance of joint marketing by the North West Shelf Project in WA shows that is not a given.)
Granted, it appears inefficient to market LNG (I understand that 9% of natural gas is lost/consumed in putting it into a pipeline but 21% is lost/consumed in putting it into a ship as LNG) but if it can landed cheaper than local suppliers can provide it then the consumer will receive the cost benefit.
Where there are parts of the gas and electricity transmission and distribution system (the poles, wires and pipes) that are not being fully used, (or where they are overused) the AER needs to take this into account in deciding how much the networks can charges for their services. . Another dimension of this , is where there has ben over investment or underinvestment as it may show inefficiency in the network.
The CRG would be interested to hear of examples of the underuse or overuse, underinvestment or overinvestment in networks
Does that require some inside expertise and knowledge?
How does the average consumer determine what the technical/design capacity of a network segment was prior to a particular point in time? What upgrades were subsequently done, what improvements were delivered and how much was expended? What were the demand and average loadings on the network segment prior to the work, after the works and forecast for the future?
It seems like the simple answer from consumers is there were no examples of over or under investment identified, therefore all is perfect.
P.S.
All I can offer is a comment on the regulation of the feeder and line which we are at the end of is very poor. My enquiries (SEQ) of the retailer and distributor produced an unsatisfactory outcome. Neither will initiate an investigation. I need to involve a third party to provide evidence there is a problem before it will be investigated further. The line is as it was 20 years past, aside from the termite chewed poles that have required replacement.
Why is the voltage regulation so poor?
Length of the line in a mixed rural environment. There is a chook farm, agriculture and acreage rural properties all hanging off the one line. Of more than 80 nearby customers the uptake of solar PV has been very high. More than 55% across the near 20+ neighbours. A number of these despite basic residential needs are 3 phase services with PV to match. Our PV system is a modest 5.5kW and 3 years old. It was one of the first locally.
It does open the discussion to a number of issues about the pace of uptake of solar PV, the lack of targeted investment in local distribution/regulation, as well as the design and condition of local networks.
Thanks for the comments.
Although I have no electrical engineering skills or access to inside information, I did see a story in the newspaper noting that Origin Energy has only been running the 2880-megawat Eraring generator at between 200 to 700 MW. This suggests that the transmission and distribution lines connected to it would be underused. I am sure there are lots more examples like that.
Your comments about poor service levels on a feeder line with 80 customers is suggestive of underinvestment. I wonder how many of the neighbors with solar PV invested in it because of the poor service? This may point to unnecessary investment by consumers.
These are the sorts of observations and experiences that the CRG wsa looking for.
Rather than asking âthe publicâ, and considering the expertise and equipment required to know, perhaps you may be better placed to get what you want by subscribing to a news clipping service.
It âmayâ point to many things. Locally we have lots of interrupts from trees blowing into power lines and possums with death wishes.
I empathise with your desire to get information, am sceptical anything that falls into âopinionâ matters at the end of the day, and wonder if the AER responds any better than [pick one or more] government when a citizen makes a comment contrary to what they really want to do, and probably will, although sometimes with slight modifications.
The glass half full would be âslight modificationsâ can happen.
Being more serious, I suggest if you are going to try polling you engage someone with experience to ask questions that can have meaningful responses prior to âputting it out thereâ. Many of us can be a difficult audience, some even sceptical of âcommunity consultationâ.
Thanks for the feedback
There is a proposal to (or is it from?) the Energy Security Board (ESB) that will require electricity consumers to pay conventional power generators not just for the actual electricity they produce, but also an extra fee for the size of their power plantsâ generating capacity, irrespective of how often it is actually needed.
NERA (National Energy Resources Australia) has modelled the existing market structure in the National Electricity Market (NEM) where generators only receive revenue for the electricity they generate, rather than their installed capacity, yet Energy Minister Angus Taylor has been keenly promoting to media outlets that consumers will save $1.3 billion dollars. Yes he is saying that by charging consumers more, the extra charge will mean âsavingsâ!
"The NERA model finds that when the maximum price a generator could earn is increased by 42% (âcapacity marketâ pathway), more capacity comes online compared to a situation when the market price cap is reduced by 50% (current pathway).
This leads to higher Reliability and Emergency Reserve Trader (RERT) costs and more outages in the current pathway scenario."
Do you think energy prices are too low?
That reminds me of a Wizard of Id cartoon in which Sir Rodney is surveying the peasants as to how they think the king is performing.
One peasant provides a glowing accolade about the great job the king is doing and Sir Rodney then asks the next peasasnt who replies.
âIâll go along with Lenny the Loon hereâ.
