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Frydenberg says government 'on track' to meet Great Barrier Reef protection targets
The A$1.2 billion saving Australia's electricity rule-maker just knocked back
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The governing body for our energy market, the Australian Energy Market Commission, has just missed a major opportunity to modernise our electricity networks. Last week the commission rejected a proposal to pay credits to small, local generators (such as small wind, solar and gas). Our research shows that this could save electricity consumers A$1.2 billion by 2050.
In July 2015, the City of Sydney, Total Environment Centre and NSW Property Council proposed the Local Generation Network Credit rule change. This would have required network businesses to pay a credit for electricity exported into the distribution grid – that is, close to where it is actually consumed.
This is different to the credit (known as a “feed-in tariff”, or FIT) paid by electricity retailers for solar households that export power, which reflects the energy value of the solar rather than any network value. FITs are a fixed payment for the amount of power exported with no variation for the time of day. In most states, retailer FITs have replaced generous mandatory FITs set by state governments, and usually have an upper limit on system size somewhere between 5 and 100 kilowatts.
The network rule change would have been a small but crucial step towards recognising that in the future electricity will flow both to and from consumers, as more and more individuals, communities and businesses install their own generation.
It is just one of the rule changes needed to make an orderly, efficient transition, rather than a cycle where consumers get more and more frustrated as they are forced into workarounds to deal with outdated regulations, and regulators and markets play catch-up.
The cost of connectionAbout half of our electricity prices are made up of network charges. These cover the cost of building and maintaining the poles and wires that get electricity from generators to our homes and businesses. Traditionally, that was a long way, as electricity all came from large centralised generators.
This is all changing, as homes and businesses increasingly install their own solar, wind or gas generators. These trends are being driven by the increase in electricity prices, cost reductions in renewable energy, and a range of other motives such as climate targets, aspirations for self-sufficiency, and wishing to take control of energy spending.
Network costs have been the main contributor to a big jump in Australian electricity prices over the last 15 years. There was a huge investment to cope with the projected rise in electricity demand, which has so far failed to happen.
Described as “gold plating”, it would have been smarter and cheaper to do a whole mix of other things – energy efficiency, local generation and so on – instead of the big investment focused on network infrastructure.
Because the electricity from local generators is used physically close to where it is generated, it reduces congestion on the network and so can reduce the need to upgrade. The proposed rule change is aimed at rewarding local generators for export at peak times, when the network is under most strain, and so avoiding the long-term need for network investment.
The rule change would also enable many local generation projects, and keep them using the network to share energy. Without this incentive most generators will use their energy onsite rather than exporting to the grid.
This gets the biggest return, as it means each unit you generate avoids the entire volume charge of a unit imported from the grid.
Consumers lose outBut what if you have several buildings and want to generate at one and use it at the other? Tough luck.
Unless you can connect those buildings with a private wire – instead of connecting them via the grid – it’s unlikely to be economic. Consumers pay the same network charges whether the energy is transported across the road or halfway across the state.
This rule change would have meant that you got a network credit for the generation, and therefore helped reduce what you pay to use the network. It would be a win-win for everyone, as putting in a private wire is just duplication of the network that already exists and makes everyone – the network business, the organisation and, by implication, other consumers – worse off.
Of course, a private wire isn’t possible in all situations, but the principle remains: the local network credit offers an alternative to behind-the-meter generation.
The Institute for Sustainable Futures recently led a year-long project looking at local generation network credits and local electricity trading. The results showed pretty clearly that, if designed well, this rule change would be good for local energy projects and good for electricity consumers.
As a result of the economic modelling, we recommended that existing systems and all small (less than 10 kilowatt) systems do not receive the network credit, in order to maximise benefits for everyone. The payments are unlikely to make a difference to whether those small systems go in, and paying them the credit would means an overall cost, rather than a long-term benefit of A$1.2 billion for everyone.
This was a change from the original proposal and was presented to the AEMC in great detail. The rule change proponents were also quite happy with these limits being imposed.
So what did the AEMC decide?The AEMC considers rule change proposals – and accepts, rejects, or makes what is called a “preferred rule”. It is a very arcane process, with little scope for collaborative outcomes.
On this issue, the AEMC delivered a “preferred rule” – which does nothing to solve the problem. The commission ignored the opportunity to work with stakeholders to deliver an alternative rule that would benefit both local projects and all consumers.
Instead, it proposes that network businesses be required to provide information on upcoming constraints, including a dollar value for alternatives to network investment. That’s all well and good, except that the information is already available in the form of Network Opportunity Maps.
Unfortunately it’s just more evidence that the AEMC has lost touch with what is actually happening in the market, and with what consumers want.
So where to now? There is a six-week consultation period on the draft rule – and we can only hope that the AEMC reconsiders its decision.
Jay Rutovitz will be online for an Author Q&A between 4 and 5pm on Wednesday, September 28, 2016. Post any questions you have in the comments below.
![The Conversation](https://counter.theconversation.edu.au/content/65952/count.gif)
The research by Institute for Sustainable Futures was supported by funding from ARENA, UTS, Ergon Energy, Moira Shire Council, Swan Hill Rural City Council, Wannon Water, City of Sydney, Byron Shire Council, and Willoughby City Council, with in-kind support from AGL, NSW Government Department of Industry, Powercor the Total Environment Centre, and other project participants.
Huge blue topaz stone on loan to Natural History Museum
Greenpeace blockades IOI palm oil refinery in Rotterdam port
Protest follows report linking company’s suppliers in Indonesia to deforestation, forest fires and human rights abuses
Greenpeace activists have blockaded a palm oil refinery owned by IOI in the port of Rotterdam after a report linked the company’s third-party suppliers in Indonesia to deforestation, forest fires and human rights abuses, including child labour.
For seven hours on Tuesday, a felled tree barricaded the entrance to the Croklaan refinery, which processes palm oil mostly sourced from Indonesia and Malaysia.
Continue reading...Wind trumps gas: shale tanker unable to dock in Scotland due to weather
After days expensively moored awaiting party in its honour, Ineos ship carrying shale gas from US fails to make entrance
There are some things even a billionaire petrochemicals baron can’t control.
Jim Ratcliffe, the founder-chairman of Anglo-Swiss firm Ineos, had carefully choreographed the arrival of the company’s first shipment of shale gas from the US. Its planned arrival in Scotland was the culmination of a $2bn (£1.5bn) investment designed to make its loss-making Grangemouth plant profitable again, not to mention a high-profile platform to lobby publicly for Britain to launch a fracking revolution.
Continue reading...Toxic emissions surged after AGL acquired Bayswater coal-fired power plant
Federal government figures show sulphur dioxide, hydrochloric acid, fine particle pollution and mercury output rose steeply in 2014-15
Toxic emissions from the power plant that made AGL Australia’s largest carbon polluter surged in the year the gas company acquired it, commonwealth figures reveal.
Bayswater power station in New South Wales recorded double-digit rises in sulphur dioxide, hydrochloric acid, fine particle pollution and mercury output in 2014-15, according to the National Pollutant Inventory.
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Total ban on ivory sales would endanger art | Letters
A singularly distinguished roster of scientists, and others, with an interest in wildlife conservation have signed a petition calling for Theresa May to impose a “total UK ban on ivory sales” (Conservationists and MPs call for a total UK ban on ivory sales, theguardian.com, 22 September), claiming that Andrea Leadsom’s announcement of a ban on post-1947 ivory “falls short of what is needed”. I beg to differ.
The entire community of art historians, curators, connoisseurs and collectors unequivocally supports the preservation of endangered species. But by the same token it can be said with confidence that bona fide, pre-1947 works of art documented by Cites (Convention on International Trade in Endangered Species) made of or incorporating ivory have no impact whatsoever on the thirst for modern tusks and trinkets: these are two utterly separate issues.
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Elon Musk outlines Mars colony vision
Do you live in an area where proposed fracking is condemned by your council?
If you live in an area where your council is opposed to fracking, we’d like to hear from you. Get in touch below
Within the next fortnight, the government will decide whether to accept shale company Cuadrilla’s appeal against Lancashire county council’s decision last year to turn down its application for two fracking sites.
Related: Bid to drill shale wells in Nottinghamshire 'should get green light'
Continue reading...Bid to drill shale wells in Nottinghamshire 'should get green light'
Officials say IGas application to drill two wells at Springs Road, former cold war missile launch site, should be approved
A planning application to drill two exploratory shale gas wells at a former cold war missile launch site in north Nottinghamshire should go ahead, officials have said.
In a report hundreds of pages long, planning officers for Nottinghamshire county council said the bid by shale company IGas to drill at Springs Road, Misson, should be granted.
Continue reading...Brexit ‘could trigger’ UK departure from nuclear energy treaty
The UK’s withdrawal from the EU could also force it to exit the Euratom treaty on nuclear energy, ENDS has learned
The UK’s withdrawal from the EU could also force it to exit the Euratom Treaty on nuclear energy, ENDS has learned.
The Euratom Treaty, which applies to all EU member states, seeks to promote nuclear safety standards, investment and research within the bloc. Although it is governed by EU institutions, it has retained a separate legal identity since its adoption in 1957.
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Shale gas ban 'would cement decline of UK manufacturing'
As Ineos takes first shale gas shipment from US, its CEO Jim Ratcliffe says without fracking UK manufacturing’s future is ‘gloomy’
The billionaire hoping to become Britain’s biggest fracker has said banning shale gas would cement the decline of UK manufacturing, as he brushed off environmental concerns about the hotly disputed energy source.
Speaking as his petrochemicals firm Ineos took delivery of the first ever shipment of shale gas from the US, Jim Ratcliffe addressed Labour’s announcement that it would ban fracking, which he insists could create jobs in some of the party’s former industrial heartlands.
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China accused of defying its own ban on breeding tigers to profit from body parts
Beijing faces pressure at global summit to close 200 farms where tigers are bred for luxury goods and end its obstructive tactics
China has been accused of deceiving the international community by allowing a network of farms to breed thousands of captive tigers for the sale of their body parts, in breach of their own longstanding ban on the trade.
The Chinese government has allowed about 200 specialist farms to hold an estimated 6,000 tigers for slaughter, before their skins are sold as decoration and their bones are marinated to produce tonics and lotions. Campaigners say this has increased demand for the products and provoked the poaching of thousands of wild tigers, whose global population is now down to just 3,500.
Revealed: how senior Laos officials cut deals with animal traffickers
Evidence obtained by the Guardian shows how treasury coffers swelled with 2% tax on trades worth up to $45m including tigers, rhinos and elephants
- Help fund our journalism by becoming a Guardian supporter.
Officials at the highest level of an Asian government have been helping wildlife criminals smuggle millions of dollars worth of endangered species through their territory, the Guardian can reveal.
In an apparent breach of current national and international law, for more than a decade the office of the prime minister of Laos has cut deals with three leading traffickers to move hundreds of tonnes of wildlife through selected border crossings.
Can the aviation industry finally clean up its emissions?
With biofuel potential limited and emissions rising, the need for industry to act is urgent. Hopes rest on a global UN carbon offset scheme to be negotiated at the ICAO summit this week - but critics remain unconvinced
When a South Africa Airways scheduled flight flew from Johannesburg to Cape Town last month, it carried nearly 300 passengers.
Neither the passengers or the pilots would have noticed any difference between that flight and any other.
Continue reading...