Fear and Loathing in the energy sector

These are crazy times in the energy industry. A confluence of some external factors sure but this is the direct result of the raging dumpster fire otherwise known as “Energy Policy” in Australia. It has been coming down the pipe for some time. In reality the basis of the system has been cooked since the very beginning of the National Energy Market (NEM).

Long rant story short, it was set up as result of the National Competition Policy and its stated purpose was to deliver efficiencies in the generation and delivery of electricity. The quickest way to summarise how well did is a graph of retail electricity prices, the NEM starts in 1997. There Are various – equally cooked - factors at play but basically it took some of the cheapest electricity prices for consumers in the OECD and tripled them, good job.

Imagine what that line will look like once the impacts of the current meltdown are included.

The sinkhole that passes for policy has actively prevented the transition of the energy system from the reliance on unreliable coal fired generation to one that has a zero-cost input fuel which can’t be exported, and has the minor benefit of not cooking the planet.

Instead, we have coal and gas fired generators that prefer to sell their fuel for higher returns overseas and flog 40-year-old coal fired kit until it explodes; and otherwise, game the system without fear of sanction – the odd tersely worded letter from the regulator notwithstanding.

The reality is the energy system is dominated by fossil fuel companies that have made relatively small (for them) investments in the form of political donations to rig the system so they can make out like bandits, all while paying next to no tax on resources that belong to the people who live here.

Rant aside, where to from here? It’s a dash to slap as much renewable generation as possible, as quickly as possible, in the wide-open spaces of this country and open up networks to those who can supply services to help stabilise the network. In short, it’s storage and aggregators that can provide demand management.

Specifically, household demand management. Households only account for a quarter of energy consumed but everyone going home and switching on heating/cooling and cooking from five to eight pm sets peak electricity use and drives billions in network spending. You increase the number of households that can generate their own power (one of the few things Aus has gotten right - I.e.households have themselves invested in the network) and store enough to cover those few hours and you have changed the game. Grouping households together to coordinate or aggregate their resources and you have a network that can generate, store and stabilise itself through aggregation.

The billions saved in network spending would easily pay for it.  That and massive solar and wind out in the wide brown lands is what the functional and non-planet-cooking energy system -that we should have already been half way to – looks like.

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