Smarties and sparkies: How to fix our power price crisis
Mark Taylor has a lot to answer for.
For years the former Test captain has been interrupting matches to implore Australians to run out and buy air conditioners. It’s working.
Air conditioner penetration in Australia has exploded rapidly in recent years from 30 per cent in 2001, to 70 per cent in 2011. That’s a massive jump.
It’s also a massive part of why the Prime Minister now has a problem with the states, who, in turn, have a problem with their energy policies.
Essentially, the PM is absolutely correct when she points out that our energy infrastructure is excess to requirements 99 per cent of the time.
It’s also true that expensive energy infrastructure is being constructed all around the country at a time when our total demand for electricity is actually stagnant – or even falling.
And yet it would be wrong to suggest that the construction of this infrastructure is all ‘gold-plating.’
The mitigating factor is peak demand. Peak demand refers to the heights our energy demand can hit. It only occurs on approximately one per cent of days, but it can result in a 50-100 per cent surge in demand.
The explosion in AC means that while total demand for energy in Australia has been relatively steady of late, peak demand has skyrocketed.
That’s where the drive for new infrastructure is largely coming from.
In fact, a recent review of the Queensland grid showed that for each $1,500 air conditioning system, a further $7,000 must be invested in the electricity network to ensure it can run that system during peak periods.
So unless we all give up our air conditioners does it mean that the PM’s plan to get the states to rein in energy costs is doomed?
It’s true that if we keep using power the way we have been we’ll face an unpalatable choice: spending many billions on energy infrastructure that we only need one per cent of the time – or acceptance of regular brown outs.
But there is a third path: limit the peaks by getting smarter about energy consumption. Getting smarter – in energy as in everything else - is all about information. Information is essentially the difference between a smart grid and the traditional ‘dumb grid’.
A smart grid is capable of processing information about the behaviours of suppliers and consumers.
Smart grids allow us to manipulate – from both the supply and demand ends - the way energy gets used.
There are two key options the information from a smart grid opens up.
The most obvious is intelligent pricing. Currently, the way we are currently charged for electricity is an economist’s nightmare.
The bloke who turns on his washing machine at 3pm on a summer stinker – when millions of ACs are at full blast – doesn’t incur any extra cost. That’s because the system has no way of accurately monitoring what he’s doing.
Similarly, the woman who runs her dishwasher in the early hours of the morning receives no reward.
But if consumers – and we’re talking here not just about households, but commercial enterprises and industry – are able to shift their usage around certain times of the day and year, peak demand should fall sharply.
Commercial and industrial enterprises in particular could enter into all sorts of creative contracts with energy suppliers not to use power at critical times.
The other option opened up by smart grids is more direct – the remote control of appliances. It sounds scary in theory, but it could be relatively painless.
Through this system, a consumer could sign on for a cheaper energy package, and, in exchange, offer to allow the energy company remote control of key smart appliances.
How would this work in practice? Well, when demand surges in a heatwave, the power company could remotely control your air conditioner to switch off intermittently for, say, one minute out of every ten.
The effect on the temperature of your room would be negligible – but the reduction in energy would be huge when multiplied out over many users.
Australia is taking steps in the right direction. For example, the NBN will make operating smart grid functions easier and more reliable.
But despite the savings, the switch to ‘smart’ will require one extra important investment from government - in skills.
The role of energy worker and information and communication technology professional are merging, and the skills required are becoming more complex.
Yet along with greater sophistication, we will also need more pairs of hands. Already in this country demand for electricians is growing by seven per cent per year – far faster than our training system can currently keep pace with. A transition to smart technology will accelerate this further.
So while the opportunity is there for governments to save a packet on infrastructure over the long term, there is also a pressing need to plough some of those savings into training a new generation of workers.
Get it right though, and we can take a fair bit of the heat out of this energy debate.
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