Electricity Generation in the Australian States: More Coal not Less

These charts put the shifts towards renewables in perspective. 

Coal usage is up across Australia, particularly in Western Australia. Wind is up but still relatively minor as a percentage of the total and other renewables including solar are also still relatively insignificant.

Renewables
From http://reneweconomy.com.au/2013/graph-day-colour-coded-chart-australias-generation-22672

Electricity Price Rises

Electricity prices are a constant source of annoyance for many Australians because they seem to be always rising.

No doubt this has led many of us to change our behaviour so that we use as little as possible. I must admit that I'm not the greatest example of this as my thinking often revolves around the fact that I'd prefer to pay a little extra if it means I can sleep in summer and work at home in winter.My thinking is that I'd prefer to pay an extra hundred on my bill and forego a night out for comfort. Not the most environmentally sound thinking process I know. Prices would have to rise much further for me to change my behaviour.

Living in Brisbane does not mean that you don't get cold in winter. Although the days are generally sunny in winter here (hard to imagine right now given that it seems to have rained every day for a month or more - indeed my backyard flooded for the first time ever yesterday), my house is like a sieve and requires a good deal of heating to be comfortable.

Giles Parkinson is a great writer on environmental issues and in this article he includes three great graphs that show how extensive electricity price rises have been. The data is for Sydney and NSW, but the story is similar Australia wide.

According to Parkinson "The first graph shows electricity prices based on average consumption of 3,300kWh a year. It should be noted that Australian average consumption is about double that, although it is falling."

So if you're living in Sydney, you're not imagining the price rises! Now even though many households have been compensated for the carbon price component of price rises (quite small as will be shown below), I imagine that many people just see the increase in prices and forget about any compensation. Price rises, especially in the form of a bill, are generally more noticeable than price decreases in other areas or increases in disposable income.

Note that the first graph is a growth or flow graph, while the second is a price comparison as at January 2013. According to Parkinson, those cities "featuring at the high end, and with at least a little sun, are proving to be among the most vibrant markets for rooftop solar PV"

The final graph shows the breakdown of price increases and as is now fairly well known, by at least the partly informed, most of the increase is taken up by network improvements (or in more pejorative language"gold plating"). According to Parkinson, the graph "shows the component increase in NSW from 2007/08 to 2012/13. It’s pretty self explanatory, network costs accounted for half the bills five years ago, have accounted for around two thirds of the increase in the ensuing years, and now account for more than half of the current bill." The middle sections show the breakdown of the increases in electricity bills. As you can see carbon pricing is not the major factor.

The problem for the Gillard government is the perception that they are responsible for the price increases, despite all the evidence to the contrary. Obviously we can all use less electricity and those who own their own houses can install solar and be cross-subsidised by others, but up to a point electricity usage is inelastic- that is to say it is difficult to lower our consumption without a corresponding change in lifestyle and this is exactly what environmentalists believe is necessary. Still, I imagine that prices would have to increase a good deal further to make consumers fundamentally change their behaviour, rather than just complain about the government.

The 'good' news is that the costs of renewables are coming down, which will mean that new renewable electricity generation capacity, when it is eventually needed, will be competitive with fossil fuel generation.
According to Parkinson, in an earlier article:

Australia needs no new baseload power plants for another 10 years – that’s according to the Australian Energy Market Operator and the utilities themselves. So this shows that the new plants we are getting built now – wind farms, thanks to the renewable energy target – are the cheapest option. By the time 2020 comes around, solar PV will have well and truly joined wind on the southern side of the cost curve (and will no doubt be competing for space in the RET), and solar thermal – with its ability for storage and dispatchable energy, will be competing vigorously with gas."

I hope this is true but there is so much gas capacity coming on board throughout the world that it is my guess that gas prices will drop significantly over coming years and  make gas also attractive. The gas lobby in Australia and elsewhere will be a fairly powerful force to reckon with and given the scepticism of the Coalition towards renewables, Parkinson's optimistic scenario might face some headwinds (pun intended).

Coal is King: Electricity Generation Predictions in Australia out to 2037

From the The Australian Energy Market Operator's  2012 NATIONAL TRANSMISSION NETWORK DEVELOPMENT PLAN for the National Electricity Market.

Predictions for energy generation by technology make interesting reading for those who think that the growth of renewables and a shift away from coal is inevitable in the near-ish future. Certainly the bureaucrats don't think so!!

Key findings from the 2012 NTNDP modelling for generation investment involve the following:
• Eastern and South Eastern Australia will still rely on coal-fired generation during the outlook period, and new generation investment until 2020 (particularly wind generation) will primarily be driven by the Large-scale Renewable Energy Target (LRET).
• The carbon price, new renewable generation resulting from the LRET, a changing fuel mix and lower energy growth will change the operation and output of different types of electricity generation.
• Least-cost modelling, assuming Treasury’s core carbon price projections, retires or mothballs 4,300 MW of brown and black coal-fired generation, which constitutes 16% of the current coal-fired installed capacity, over the outlook period, with the remaining coal-fired generation maintaining its competitiveness.
• There is less need for combined cycle gas turbine (CCGT) generation, which requires a higher carbon price or lower gas fuel prices than modelled to compete with coal. There is a need for additional generation to meet peak demand, however, and this will largely be met by open
cycle gas turbine (OCGT) generation, which provides reliable generation reserves in an environment of significant levels of intermittent generation (such as wind) and reduced coal-fired generation.
• Greenhouse gas emissions from electricity generation in Eastern Australia will largely persist at current levels, before decreasing at the end of the outlook period.

The orange and yellow bits are coal. Wind grows significantly over the next few years in line with renewable targets but then stagnates. These are just estimates but the surprising thing for many people would be the negligible role for solar and the relatively insignificant role for gas.

Right now there is an important debate going on about whether a level of gas supply should be quarantined for exports as most countries in the world do. FWIW I think some surety of gas supply for domestic purposes would be good policy even if gas producers think it's a restriction on the 'free' market.

Renewable Electricity Generation in Australia

Renewable Sources of electricity production have been growing rapidly in recent years, but the contribution of solar still remains minuscule as I reported here a little while ago. I imagine most people would be quite surprised by the figures.

The Clean Energy Council has just released a report on the state of Clean Energy in Australia.

Though the news reports laud the achievements we still have a long way to go before we can call ourselves a clean energy country.

Most of our renewable contribution to electricity production (remember that electricity and energy are two different concepts with the former a component part of the latter).

Basically about 10 per cent of our electricity generation is accounted for by renewable sources.

So what are these renewable sources. Most important of course is hydro power, which has benefited from high rainfall, allowing more run-off and hence more electricity generation. Wind is obviously next most important and most of the most significant proposed increases in renewable generation are wind projects.

Solar accounts for very little of this. Indeed Solar in total accounts for 2.315% of 9.64%, which equals 0.22% of total electricity generation.

Undoubtedly, solar installations have been increasing rapidly.

But the benefits of generous state schemes to pay households for solar contributions to the electricity grid are only available to those able to afford solar systems on their roof tops. This means poorer households and renters gain no benefits and have at the same time seen significant increases in electricity costs.

Although there is debate about the reasons for electricity price increases, there is no doubt that electricity prices have increased. The CEC reports that "Electricity prices in Australia have risen about 30 per cent over the last four years." The CEC argues:

There are several factors behind the recent price rises. By far the largest is the need to
replace and upgrade the ageing poles and wires of the national electricity grid, some of
which have been in service for more than 40 years. Recent estimates suggest that more
than $130 billion will be necessary to upgrade the network over the next decade, growing
to $220 billion over 20 years.(1) Research indicates that these network costs will cause price
rises of up to 66 per cent in NSW and Queensland by 2015.(2) Similar increases are likely in
other states and territories.

Other reasons for power price rises include the increasing cost to generate electricity with
both coal and gas along with the increased use of energy-intensive appliances such as
air-conditioners and flat-screen televisions, which increase peak demand for electricity
and overall costs.

1 K Orchison, Coolibah Pty Ltd, Powering Australia, 2011, page 19.
2 P Simshauser, T Nelson, T Doan, AGL,The Boomerang Paradox Part 1: how a nation’s wealth is creating fuel poverty, The Electricity Journal, 24(1), 2001,
pages 72-91. 

They are rather more sanguine than others about solar rebates: 

According to analysis prepared for the Clean Energy Council by ROAM
Consulting in 2011, the combined cost of both small and large-scale renewable energy
comes to approximately $78 per year for the average Australian household. This works
out to $1.50 per week. By 2020 the cost of renewable energy is expected to make up
between 4 and 7 per cent of the average household power bill.(3)

3 J Riesz and J Gilmore, ROAM Consulting, The True Costs and Benefits of the Enhanced RET, 2011, page iii