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Archive for the ‘Power Generation’ Category

Why might your power bills more than double by 2020?

Monday, October 11th, 2010

The Institute of Public Affairs last week issued some research, based on Australian Bureau of Statistics data, that revealed that retail electricity prices increased by 51 to 61 per cent in the most populous states of Australia between 2005 and 2010. These increases were up to four times the 16 per cent inflation rate over the last five years.

We believe that this trend of spiraling electricity prices will continue over the coming decade, with electricity rates to at least double and perhaps triple over the next 10 years. This would mean the average household can expect to pay an extra $1500 per year for electricity by 2020, equivalent to about an extra $30 per week taken from the household budget.

Such a large increase in retail electricity prices is expected due to the following five factors:

  1. Australia’s population is forecast to continue to grow, which means more investment is needed in the electricity network (transmission, distribution) to provide power to more people. This has to be paid for by the end user – households and businesses.
  2. Whilst many electrical appliances are twice as efficient as they were 10 years ago, Australians are using more power at home due to:
    • massive growth in purchases of large, power guzzling, flat screen TVs, often with two or three TVs in the same house
    • rapid growth in number of people installing air-conditioners and dishwashers in their homes (only about one third of homes currently have these)
    • increased multi-tasking especially among younger generation e.g. watching TV and surfing the Internet whilst listening to music
  3. Australia currently produces the majority of its power from cheap coal but the price of coal is likely to increase as fast growing countries like China and India demand more and more coal to fuel their rapidly growing energy needs. Local power generators are likely to have to pay prices for coal at higher international levels.
  4. State governments have in the past often kept consumer electricity prices artificially low but this trend has now come to an abrupt end as evidenced by the 15 to 20 per cent price rises in New South Wales and Queensland in July this year.
  5. The Federal Government’s mandatory renewable energy target dictates that by 2020 Australia must produce 20 per cent of its energy from renewable sources such as wind or solar. This will mean much higher costs to produce and distribute power to households and businesses because:
    • renewable energy power plants cost more to build and run as they are relatively new technologies
    • the networks that carry electricity from these new power plants to homes will need to be upgraded and extended at significant cost
    • wind power can be unreliable and would likely require back up power plants to ensure reliable supply

What can you do to reduce the heat?

There are two ways to keep your power bills under control:

  1. Reduce what you use at home – we recommend reading our electricity savings tips as well as requesting an energy audit to better understand where you might be wasting power at home.
  2. Reduce what you have to pay for this usage - regularly compare energy suppliers to ensure you are getting the best possible deal.
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Google gains approval to sell power in the US

Wednesday, February 24th, 2010

The United States Federal Energy Regulatory Commission (FERC) has given Google the green light to sell electricity and related services in the US. You might rightly wonder why Google would want to get into the power business and act as a utility – you think they would have better ways to make money.

Google says it wants to make itself carbon-neutral. Given the large number of data centres it operates, with probably thousands of servers in each, one could imagine the grand scale of Google’s electricity consumption. According to Google’s official blog, Google’s engineers did some analysis and found that an average Google search query consumes “about 1 kilojoule of energy and emits about 0.2 grams of carbon dioxide”. Obviously each search is tiny in isolation but multiply this figure by the billions of searches that it handles and it is clearly a big deal.

FERC’s approval gives Google the right to install as many solar panels as it likes in its quest to achieve carbon-neutrality. It also means that should Google generate lots of surplus solar power it could effectively resell this on the market; in other words Google could become a solar power generator and a net contributor to the electricity grid.

Google is already involved in energy in many ways, with applications like Google PowerMeter to assist consumers better manage their household energy consumption directly from their iGoogle homepage. Google has already signed up ten utility companies in North America and Europe to allow smart meters in their customers’ homes communicate with PowerMeter. There are also a couple of companies such as AlertMe in the UK selling self-install power management devices that are pre-configured to work with Google PowerMeter.

However, Google’s motives might not be entirely altruistic in helping the world use less energy; there is no doubt an excellent opportunity for Google to position itself as a large scale provider of energy management services to consumers and businesses around the world.

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Carbon emissions reduction is all about higher prices

Wednesday, November 25th, 2009

It’s probably the most hotly debated issue around the world today – global warming – and I’ve finally decided to share a few thoughts on the subject. My starting point is that you buy into the concept that global warming is a real crisis facing mankind. If you don’t, you might as well stop here.

Before we start, if you have been wondering what CPRS, ETS, carbon taxes and “cap and trade” are all about then I suggest you read the article written by Glenda Kwek in today’s Sydney Morning Herald, which provides a high level, easy to read guide to the the science and politics of carbon emissions.

Today I wish to write about one aspect of emissions reduction – its impact on prices. It’s a subject that politicians the world over try to avoid. I guess I can understand – telling your electorate that it will have to pay more for most of what it consumes would require the kind of courage and leadership we rarely see.

So what will the Carbon Pollution Reduction Scheme (CPRS) mean for you, Mr or Mrs Consumer? In the most simple terms, many of the goods and services you buy will end up costing more. Why? Prices will be higher due to the fact that, for the first time in history, the social and environmental costs of producing goods and services will be reflected in the prices of those goods and services. How much more? Too hard to say at this stage; it will vary for every good and service – the greater the amount of carbon required to produce a particular good or service the greater the impact on its price. As you know, energy is used and CO2 created in all steps of the production process from extracting and processing raw materials through to manufacturing and distribution to the end user (you) – so there will likely be additional costs added at each step of the supply chain.

So, if it’s bad news for every Australian’s family budget, why does the Government want to introduce the CPRS? The simple answer is to reduce our carbon emissions (or at least the rate of growth of our emissions) to try to slow down global warming. Unfortunately, basic economics tells us that the best way to achieve this reduction in emissions is through prices:

  • Higher prices for more energy intensive goods and services should lead to reduced demand from consumers for them (i.e. less are produced)
  • Higher prices for electricity produced from “dirty” sources (i.e. coal) should lead to increased investment in more expensive, “clean” sources of generating energy (e.g. wind or solar)
  • Higher prices for energy should incentivise producers to find more efficient ways of producing goods and services to keep down their costs
  • Higher prices for household power and gas should incentivise consumers to use less energy

In other words, consumers and businesses will only “do the right thing” by the environment if they are incentivised to do so (or punished for not doing so).

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