Shock to the system: dealing with falling electricity demand

This report argues that Australians are using less power but paying more for it, with potentially highly damaging consequences for the electricity system.OverviewElectricity use in Australia is falling. From the 1960s to the end of the 20th century, electricity consumption increased at an average annual rate of six per cent. Investment in power stations and electricity networks also rose steadily. Since 2009, however, eastern states’ electricity production has fallen and in Western Australia growth has plateaued since 2011.Yet this extraordinary fall in demand has not led to a fall in price, as would occur in a conventional market. Since 2006 the average household has reduced power use by more than seven per cent. But in that period the average household power bill has risen more than 85 per cent: from $890 to$1660 a year. One reason is that Australians are funding billions of dollars of infrastructure that falling consumption has made redundant. These price rises are unsustainable, but who will pay for the correction: power companies, governments or – once again – consumers?Falling consumption has several causes. Customers are responding to high prices by reducing use or switching to a new breed of more energy-efficient appliances. The cost of solar energy has fallen: a million households now have solar PV panels on their roofs. The economy has become less energy intensive as the manufacturing sector has declined.The nature of Australia’s energy market means that these changes are not leading to lower prices. Electricity generators operate in a free market: when consumption falls they must produce power at a lower price in order to sell it, or reduce production. But network businesses – which carry power from the generator to the business or home and which take about 45 per cent of a household’s electricity bill – are regulated monopolies not subject to market forces.For years, regulators have allowed these companies to earn excessive profits by setting tariffs that are too high given the low risk they face as monopolies. Some states have also allowed the companies to overinvest in infrastructure. This was less of a problem when demand was rising and higher costs were spread over a larger volume of sales. But when electricity use falls, the high cost of the network is spread over a smaller volume and customers pay more. Continually rising prices could induce them to disconnect from the network. Enough disconnections would trigger a crisis that insiders call the ‘death spiral’.To prevent this from happening governments must:Ensure that network companies make future investments that better match future power needs. Begin the hard task of reforming network tariffs so that prices companies charge reflect the costs they incur. Review the value of network assets to decide who should pay for any write-down of surplus infrastructure. These solutions are neither simple nor painless. But consumers deserve a better system. A future Grattan Institute report will produce recommendations for how that can be achieved

Getting gas right: Australia’s energy challenge

The global gas revolution is poised to significantly raise bills for Australian households and some gas-using businesses, but government should resist calls to protect domestic households and businesses from high gas prices. Getting gas right: Australia’s energy challenge finds that development of Australia’s liquefied natural gas export industry, which could be the world’s largest by the end of the decade, could lead to price rises for households of up to $170 a year. For years local prices have been low by world standards, but when suppliers can get a higher price exporting than on the domestic market, the domestic price will rise to the export level. The change will not be popular, especially when electricity prices have also been rising, but it is a natural consequence of an evolving market. Calls for a moratorium on new LNG developments or the reservation of a proportion of gas for domestic consumption are pleas for protectionism. They will lead to distorted price signals, inefficient industries, lower investment and, ultimately, higher prices. The report examines the creation of an east coast gas export market – which will join with Western Australian exports to produce an estimated$50 billion-a-year industry by 2017 — and Australia’s role in a gas revolution created by surging demand in Asia and new discoveries of shale gas in the United States. The report also examines Australia’s possible shortage of supply, arguing that government must resolve the impasse over coal seam gas in New South Wales, while industry must ensure that enough infrastructure is built to ensure that gas flows. Governments should also move to create a more transparent and competitive market by accelerating the development of gas trading hubs, introducing a published price index, freeing up trading in pipeline capacity and more tightly constraining joint marketing arrangements by gas producers. For three decades, Australia has thrived from opening trade and removing protection. It should not turn the other way now

Fair pricing for power

This report recommends a change to the way consumers pay for the network that carries electricity from generators to homes, so that it better reflects the cost of running the network. Overview Australians are paying too much for power. In the five years to 2013, the average household power bill rose 70 per cent: from $970 to$1660 a year. The prices we pay are also unfair: some people are paying more than their fair share. These consumers are paying on average about $150 a year more than they should to subsidise other consumers. To get fairer and cheaper prices, network tariffs need urgent reform. Electricity networks transport power from generators to our homes and businesses. Like roads and freeways, they are built at a size to keep electricity moving at times of maximum demand – peak hour. Yet the price we pay to use electricity networks is the same whatever the time of day or season. The price therefore provides no incentive to use the network efficiently by avoiding peak times. It also provides little incentive for network owners to invest efficiently because it is unrelated to their main cost: building enough infrastructure to meet peak demand and avoid blackouts. Network owners spent$17.6 billion on expanding power networks between 2009 and 2013. If prices had encouraged consumers to use less power in periods of peak demand, $7.8 billion of this investment could have been avoided and the savings passed on as lower power bills. It is widely agreed that reform is needed. Yet there is a lack of specific proposals to improve the structure and operation of network tariffs. This report, the third in a series of Grattan reports on the excessive cost of electricity, fills that gap. It proposes two major reforms to the way network companies charge customers for the cost of carrying power to homes and small businesses. First, the 43 per cent of the consumer bill that goes to fund the network should no longer be based on total energy use. Instead, consumers should pay for the maximum load they put on the network. This tariff is called a capacity-based charge because it is based on the capacity of the infrastructure that must be built to carry this maximum load. A capacity charge far better reflects the cost of building and running the network. Yet this reform alone may not reduce peak demand in areas where the network is under pressure. Therefore the report also proposes the introduction of a new tariff in areas that - in the absence of prices that better reflect the cost of running the network - will require expensive infrastructure upgrades. Under this tariff, consumers will be charged more for use during times (usually in summer) when the network is under most strain. Because these periods drive total investment in infrastructure, reducing peak demand levels ultimately leads to lower prices. These reforms will give all consumers incentives to use electricity more efficiently. When they do, the pressure on network companies to invest in infrastructure will fall, and power prices with it. But governments must commit to these reforms and carefully explain their benefits. Advanced electricity meters will need to be installed on most Australian homes, at material shortterm cost. Politicians may decide it is too hard. But if they do, they will miss an opportunity to deliver cheaper and fairer power prices. &nbsp

Hoardings around Hackney: sociology, art and barriers

I recently did a piece of research on construction hoardings. The primary function of hoardings is to keep the public safely out of construction sites, but the boards also provide a surface for advertising – for communicating ideas. It seemed to me that these hoardings share many of the same characteristics as evangelical Christian texts, particularly in the way they deal with time and the future. Both encourage speculative, faithful investment in a future of some kind, with a requisite buying into something immaterial

\u27Poetry that does not die\u27: Andrew Lang and Walter Scott’s \u27Immortal\u27 Antiquarianism

The late 19th century essayist Andrew Lang, born in the Scottish borders, shared with Walter Scott a passionate devotion for the Borders landscape, mapped and mediated by Scott’s fictions; in his introductions to the Border Edition of Scott\u27s novels, Lang argued that, by “immortalising” national antiquities, Scott ensured that Scotland\u27s geographical and architectural heritage would be preserved

Introduction:Reworking Walter Scott

An overview of Walter Scott\u27s contemporary celebrity and evolving reputation, of scholarship on his afterlives, of the way his work has been reshaped in a variety of settings and media, and of the essays collected in this special issue

Evolution of the progenitor binary of V1309 Scorpii before merger

It was recently demonstrated that the eruption of V1309 Sco was a result of a merger of the components of a cool contact binary. We computed a set of evolutionary models of the detached binaries with different initial parameters to compare it with pre-burst observations of V1309 Sco. The models are based on our recently developed evolutionary model of the formation of cool contact binaries. The best agreement with observations was obtained for binaries with initial masses of 1.8-2.0 solar masses and initial periods of 2.5-3.1 d. The evolution of these binaries consists of three phases: at first the binary is detached and both components lose mass and angular momentum through a magnetized wind. This takes almost two thirds of the total evolutionary lifetime. The remaining third is spent in a semi-detached configuration of the Algol-type, following the Roche-lobe overflow by the initially more massive component. When the other component leaves the main sequence and moves toward the giant branch, a contact configuration is formed for a short time, followed by the coalescence of both components.Comment: 5 pages, 1 figure, Astronomy and Astrophysics, in prin

Working with external partners to support climate change education through a focus on design

In this paper we reflect on the opportunities and potential pitfalls encountered when schools work in partnership with external organisations. To illustrate wider issues, we examine the implementation of a pilot project aimed at introducing the role of design in the context of climate change in the primary setting. Our data comprise observational field notes of activities in situ, interviews with participating teachers, focus groups with children, and interviews with designers who led the activities across five different schools in England. In reviewing the data, we highlight the need for partners to build upon each other’s skills, genuinely co‐creating activities and co‐leading lessons. Most importantly, we call for all climate change initiatives to be grounded in children’s realities and provide ample opportunities for children to be agentic