Antinuclear

Australia’s power utilities losing money because of falling electricity demand, not because of carbon pricing

lower demand and the impact of renewables is actually delivering cheaper electricity, even if it means that generators are suffering because of lower profits

South Australia’s perfect energy mix: Cleaner, greener, cheaper  REneweconomy, By Giles Parkinson on 18 September 2013   “……..Of the other states, Tasmania (because it is mostly hydro) had the lowest carbon impact of just $43 per capita, while Victoria had the highest courtesy of its brown coal generators, and Queensland and NSW, which both rely heavily on black coal generation, also had high impacts.

However, the impact of falling demand and renewables offset much of these price impacts. In Victoria, which takes a lot of the excess South Australian generation, and where the local energy efficiency program has also had a signficant impact (household consumption is down 10 per cent over the last year according to EnergyAustralia), the fall in wholesale prices represented $124 per capita. That means, even with a carbon price, average payments to generators rose only $55 over the four years.

(It should be noted that the Pitt & Sherry calculations assumed 100 per cent pass-through of costs – not taking into account compensation to brown coal generators. It is calculated the carbon cost component of wholesale prices in each NEM state in 2012-13, based on the emission intensity of electricity supplied in the state).

In NSW, because wholesale prices (net of carbon price) have fallen also due to the impact of renewables and falling demand, there has been no rise in per capita payments by consumers to generators over the past five years.

Queensland and Tasmania experienced significant wholesale cost increases, but these were due to exceptional factors, not directly related to the carbon price.

In Queensland, wholesale prices were the lowest in Australia for some years prior to 2012-13, but a series of disruptive market events (high temperatures, unexpected generator failures, transmission congestion), resulted in very high market prices over extended periods in January and again in March and June.

Pitt & Sherry says that if these prices, net of carbon, been the same as in 2011-12, the net carbon price increase over 2009-10 would have been only $11.

In Tasmania, , electricity flows through BassLink allow wholesale prices in Tasmania to be strongly affected by prices prevailing in the much larger adjoining Victorian market, meaning that Tasmanian prices went up by much more than just the pass-through of the local carbon cost.

Pitt & Sherry’s finding are interesting in the context of the Abbott government’s pledge to repeal the carbon price, and to review the renewable energy target, in the interest of reducing the cost of electricity. It highlights the fact that lower demand and the impact of renewables is actually delivering cheaper electricity, even if it means that generators are suffering because of lower profits. http://reneweconomy.com.au/2013/south-australias-perfect-energy-mix-cleaner-greener-cheaper-34979

September 19, 2013 - Posted by Christina Macpherson | AUSTRALIA - NATIONAL, energy