Tesla leads charge against generators over market access

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Incumbent generators led by Snowy Hydro oppose a push by Tesla and other new technology providers to make demand response more widely available and open avenue for more “virtual power plants”.

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Tesla big battery

The Tesla big battery and demand response projects may well have delivered spectacular savings in the grid stability market last summer, but they face a wall of resistance from incumbent utilities over further access to the energy market.

Tesla, EnerNOC and others are pushing to make technologies like “virtual power plants” and demand response more widely available in Australia’s wholesale energy markets.

They argue, after their success in South Australia and across the National Energy Market, that they could deliver increases in competition and significant savings to consumers.

But Australia’s incumbent generators, led by Snowy Hydro and the main lobby group, are fighting back, having seen the gas cartel’s earnings smashed by the presence of the Tesla big battery in South Australia and EnerNOC’s demand response activities.

It has set the scene for another battle royale between the incumbents and the new technology developers – similar to the one that was fought over the introduction of the 5-minute settlement rule, which will be introduced, albeit with a 5 year delay.

This is a battle that is being fought between new and old technologies, new and old business models, and the push to shift from a centralised largely fossil fuel grid to a distributed, largely renewable based one.

As we reported last week, an analysis by the Australian Energy Market Operator found that the Tesla big battery and aggregated demand response delivered by EnerNOC delivered savings of more than 57 per cent over summer.

This was supposed by analysis from McKinsey and Co that prices in South Australia’s FCAS market over the first four months of operation from the Tesla big battery, known as the Hornsdale Power Reserve, were 90 per cent below their previous peaks.

The changes being considered by the AEMC would allow ‘aggregators’ like Tesla and EnerNOC to take their success in the FCAS markets, and replicate it in the energy market.

They want to offer “virtual power plants” – which aggregate distribute energy products including battery storage and demand response (such as voluntarily turning appliances or equipment down or off) – independently, without needing to work through retailers, and force customers to join those retailers.

This would remove the barriers to uptake and increase the focus on “demand side” solutions, rather than switching on a power plant and burning fuel whenever there is a pricing or supply issue.

In the case of Tesla, which is already proposing a 250MW virtual power plant in South Australia, it could mean playing directly in the market themselves.

However, generators such as Snowy Hydro are terrified at the prospect of these smart technologies and the potential of “eating their lunch”.

Its CEO Paul Broad has previously compared “demand response” to enforced blackouts, but his antipathy may be largely based on what it would do to his company’s revenues.

While much focus has been placed on the apparent threat of a new coal generator on the business case for Snowy 2.0 pumped hydro scheme, the bigger threat may be in allowing demand response in the wholesale market.

That’s because Snowy hydro is basing its case for Snowy 2.0 largely on its ability to sell “market caps”, which are effectively insurance products sold by peaking resources to help retailers hedge against high prices.

This strategy largely assumes that customers will continue to seek protection against price spikes of as high as $14,000/MWh, and Snowy’s website says these insurance products form the basis for around 40 per cent of revenues underlying the Snowy 2.0 business case.

But demand response and battery storage has the potential to kill those price spikes, or at the least diminish them, undermining a key part of the business case proposed by Snowy Hydro for its $6.5 billion plus pumped hydro scheme.

“Snowy Hydro is increasingly concerned by claims that any action that reduces short term high spot prices must be in the overall interest of consumers,” it says in its submission to the market rule maker, the Australian Energy Markets Commission.

“The introduction of the DRM would further distort and dampen high spot price signals. Longer term customer outcomes are best protected by undistorted pricing signals that provide the investment signal for ongoing investment in new assets.

It then points to the complexity and other pitfalls of the proposed demand response mechanism (DRM). “Snowy Hydro strongly believes that the DRM is a complex solution looking for a problem that simply does not exist.”

Tesla, EnerNOC, and other would-be aggregators and VPP operators such as Zen Ecosystems  have a strong ally, however, in AEMO, which is proposing to extend the recent trial of demand response in providing emergency back-up into the wholesale markets.

This has the potential to set up another contest of ideas between AEMO, whose CEO Audrey Zibelman is a strong advocate of demand response, and AEMC, whose chairman John Pierce is blamed by the industry for the rule-makers slow embrace of this idea.

The position taking is revealed in newly published submissions to an AEMC directions paper, of which wholesale demand response is one of four topics under consideration, but appears to be the most contentious.

Stakeholders appear to be polarised into two camps – on the one hand new energy technologies companies like Tesla, EnerNOC, and Zen Ecosystems, who want access to compete directly against generators in the wholesale market.

They are supported by consumer groups including the Major Energy Users Group, The Public Interest Advocacy Centre, and the Energy Efficiency Council.

On the other side of the debate there is the “old guard” generators and retailers determined to resist wholesale market competition from new entrants, and retain their ability to remain in control of a customer’s demand response access.

For a bit of history, a rule change to allow a wholesale demand response mechanism was proposed by COAG energy minister in 2015 but the AEMC knocked it on the head in 2016, following opposition from incumbents.

But after the Finkel Review came out in support of further reforms for demand response, and AEMO declared its enthusiasm for the technology, the AEMC is looking at the idea again through its Reliability Frameworks Review.

The new mechanism would allow aggregators like EnerNOC and Tesla to operate “multi retailer VPPs”, whereas today, a VPP in the energy market must be operated through a single retailer.

This means that Tesla could potentially be the market-facing operator of the VPP, rather than choosing a retailer partner to operate the VPP, and forcing consumers to churn onto those retailers in order to participate.

“Introducing a demand response mechanism will better enable distributed energy resources to provide energy market services and be properly compensated for the market benefits they provide,” Tesla argues in its submission.

“It overcomes several of the barriers to wholesale energy market participation faced under the small generation aggregator (SGA) classification.”

The AEMC has also canvassed a proposed mechanism that would mean demand response is bid into the market, is fully visible to AEMO and other market participants, and therefore will compete directly with generators.

And compete they will: The initial report from AEMO and the Australian Renewable Energy Agency into trials held over summer suggests that demand response is six times cheaper than diesel generators, for instance, which are normally switched on to deal with (and profit from) market peaks.

The Australian Energy Council – which represents most of the biggest generation and retail companies – opposes the idea, saying it would “muddy” the customers relationship with the energy market.

“The Directions Paper appears to pre-suppose that the existing market arrangements have exploited demand side response below the efficient level,” it says. “This is yet to be empirically demonstrated.”

AGL is also against the idea:  “Ultimately, AGL considers that retailers are best placed to draw on demand response.”

Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

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86 Comments
  1. john 6 months ago

    As more response type installations are connected to the grid
    What will happen is that the previous exploitation of price will be curtailed
    This will result in a lowering in the wholesale price of electric power.
    I hope lots more Storage Storage systems are put in place the sooner the better.

    • MaxG 6 months ago

      Prices for the consumer will not fall (in particular as long as current power structures are in place); the trend of hard data over 25 years supports my argument.

      • Andrew Roydhouse 6 months ago

        Just the quantity you buy will be plummeting. Shortly it will pay us to disconnect from the grid as since we put panels on in 2013 we have generated more energy than we have used. The present value of say 5 years grid connection fees more than covers the capital and running costs of a back-up generator running for around 5 hours a year based on our daily data since 2013.

        Just waiting for the battery pricing and tech to improve a little more. Who knows may create our own mini-grid and put a high ampage extension cord over the fence…

        • MaxG 6 months ago

          I should have been more specific (and will correct my post) with electricity price won’t fall. Maybe one day, but in the next 5 years (but I do not really believe it) 🙂

          • Phil NSW 6 months ago

            The likely tactic will be to jack the price up 20% then gouge for 12 months then drop the price 1-2% so you look like a good guy. Sound familiar?

          • Andrew Roydhouse 6 months ago

            Actually just like all to do with disruptive technology (remember the demise of the video recorder, cd player, fixed line phones, etc etc) – given the tsunami of funded, approved and proposed investment in wind/solar & some batteries – we will see -ve prices happening in daylight hours rather than in the early am hours as happens currently every so often.
            Some of the PV projects that have connected this year were contracted at values below those available on the futures for 2018 & 2019 LGCs at the time of financial close ie; the cost of electricity generated in 2018 and 2019 is NEGATIVE for them.
            So, taking a conservative approach and only selling off 70% of low ball estimate of LGCs to be generated in 2018 and 85% of those for 2019 increased the IRR on some projects by up to 15%.
            So in NPV terms although the contracts may have had a price per MW of say $62 the value of the LGCs locked in were substantial.

          • Joe 6 months ago

            I’ve still got and use the lot…video recorder, cd player and my fixed phone line and I’m happy as…Joe!

          • Phil NSW 6 months ago

            Wow, did I right the script. Origin did even worse than my prediction. The jacked up the prices last year. Wholesale prices go down over the last year so as a big hearted Gentalier they have put a price freeze in place for 12 months. How lousy.

        • solarguy 6 months ago

          Think about this Andy, if you can generate more than you can use then why disco from the grid? You can sell excess to them paying SAC charges and better. A credit.

          • Andrew Roydhouse 6 months ago

            Looking at the cashflow. 365 x daily access fee + GST is getting close to $400 per year.

            Power exported to the grid receiving less than 1/3rd of charge for grid supplied power and IPART looking primed to keep cutting it annually.

            Ability to timeshift severely limited – cooking evening meals, lights on (LED) etc etc.

            So to break even we have to export roughly 3x the power that we import from the grid but that still leaves us paying nearly $400 for grid access per annum.

            To offset the daily access charge if just $1 incl GST – we’d need to export and additional 11 to 12 kWh per day on average. So that means just to cover the daily fee we’d need to install an extra 3kW of panels. As the daily access fee increases then the extra panels required would also rise.

            Since the FIT shoudl decrease as the amount of renewables increases (as shown by zero values given to certificates in many utility scale projects over the last 20 months) then the amount required to be exported will keep rising.

            Then add in the 3:1 ratio for imported power

            Meanwhile provided battery prices do fall over the near term – the financial maths is significantly in favour of disconnection with battery and, yes, wasted power generation or a power cord over the fence or a new solution to emerge…

          • solarguy 6 months ago

            Andy, Going off grid is a big step and a household must be prepared for it by making changes to appliances if need be, like what you use to heat water, (E.T SHW is best) space heating and cooling, type of cooker, refrigeration etc. Led lighting is a good step, but lighting is only a very small load.

            You say you have limited ability to time shift loads, but depending on what they are it could be critical. Do you know how much energy is used from dusk to dawn? Only once you know the worst case scenario can you design how much storage is needed, then add on battery charging losses and inverter losses. And then you will come to the conclusion that you will need more PV and a bigger battery.

            Saturday our 9.3kw system produced only 6.1kwh due to the whole day being heavy overcast, sure you can use the genset, but it had better be reliable, stale fuel has ruined many party’s.

            Perhaps if you stayed on the grid with a hybrid system that has more PV than you currently have will be a cheaper alternative.

            All of this will require some investment in money and planning and possibly more than you realize. Either way you will need to spend some bucks to have the comforts you are used too.

          • Andrew Roydhouse 6 months ago

            Spending some bucks vs approx $400 per yr (and increasing) cost of grid access PLUS differential from FIT vs cost of grid electricity generates big bucks quite rapidly. If only we could claim depn (business opportunity like the way Qantas refinanced their entire fleet before the share float…)

            Data – minimum daily data back to 2013, extensive periods 30 minute data.

            The price differential from FIT vs drawn from grid is undeniable. Add in the daily access fee and the financial maths is conclusive.

            We know exactly what every device uses and when – sourced by putting every device on monitors for normally 2 month period during their peak use (winter or summer etc).

            Have gadgets must play with them….

            Factored in losses due to battery charging, calculated cost of generator producing require shortfall on extended low/no production periods.

            Using last 5 years as approx guide with current panels less than 14 times needed. If add 1kW extra panels then 5 times in 5 years ceteris paribas, if add 2kW then never need generator.

            BUT things change so would have generator. Extensively modelled different battery capacities vs extra panels vs FIT rates vs access fees vs interest rates/opportunity cost etc.

            With the ridiculous nature of power charges – lower price per kWh the more you use and the way the wholesale power price is set – benefiting all (& granting windfall profits to PV, wind or brown coal equally) when the majors play the system totally legally – the vicicious/virtuous cycle driving people to go off grid can only accelerate IF battery prices do fall even 1/3rd as fast as supposed.

          • solarguy 6 months ago

            Wow Andy, you’re like a GPMG that keeps missing the target, all over the shop. Firstly, if you go off grid, you will need a genset and not just to make up a short fall of PV generation, but also if equipment goes tits up. If you get lower prices for power you don’t use anymore, you need some discipline. You can’t do that if you go off grid.

            Talk about leading a horse to water. I haven’t got the time to go though this anymore. Do what you want.

          • Hettie 6 months ago

            Where in this big country are you? And have you checked what deals other retailers give? That’s the first thing to do, make sure you are getting the best feed in tarrif and the best price per kwh that you can.
            Unlike just about anything else in this world, with electricity, you don’t get what you pay for. An electron is an electron is an electron. Some companies charge a lot more per kWh than others, and pay a lot less when they buy.
            So get the best deal you can. The quality of that product does not vary.

          • Andrew Roydhouse 6 months ago

            What I have found over the last 5+ years in Sydney Metro is that regardless of which ‘offer’ you take up the retailer significantly increases both the daily access fee and grid kWh cost significantly and often after the first quarterly bill has come through.

            One VERY heavily promoted offer which I took up then increased its daily access fee by close to 20% 7 months later, increased the grid kWh significantly (for our existing plan) yet when I checked online putting in a different address with the meter ID number – the current offer resembled what we had been on.

            We have changed 4 times in the time since we added panels and the 5th time is coming up this month.

            Daily access fees (including GST) range from approx 92 cents/day to $1.12/day (worst I came across). Multiply by 365 and close to $400/year is common (and above in the worst cases).

            After the first time this happened I created a more detailed sheet which lets me compare multiple offers at once using my usage over the rolling 3 year period to allow for the weather impact to even out.

            What needs scrutiny is how the retail companies are permitted to impose increases without justification. The extreme example, as I outlined above, where the company uses a ‘teaser’ to get you in and whilst still offering that pricing to new customers – proceeds to ramp up your prices to above the wider market rates.

          • Hettie 6 months ago

            Have you tried Powershop?

          • Andrew Roydhouse 6 months ago

            Not yet.

          • Hettie 6 months ago

            Do it.

      • Francesco Nicoletti 6 months ago

        A good TDLR of the article.

        • MaxG 6 months ago

          ??
          Did you mean TLDR?
          🙂

  2. MaxG 6 months ago

    While we can all go gang-ho on issues like these floating on the surface, the underlying story is always the same: neither government nor corporations are working in the interest of the people (consumer); any technology or movement threatening the incumbents will be opposed with all the might these incumbents have and can muster, which does not shy back from killing people through either slander and lies or even literally… and is further supported by legislation which outlaws any resistance, either through organisation, protest, speech, or satire.
    Welcome to to the rise of fascism, oligarchism and vulture-capitalism… it is so obvious, but hardly anyone recognises it.

    • Hettie 6 months ago

      more know this than you realise, max

      • MaxG 6 months ago

        I do… and you know the difficulties of language… hardly sounds like very little, and no disrespect to this forum community; it is a minority who sees and understands how it all fits together… and my reference to 50% of Aussies voting for the clowns just underlines this fact.

        • Hettie 6 months ago

          If you have any engagement with social media, you will know there is a great deal of awareness and anger about the headlong rush towards fascism.
          There are also vast numbers of people who are more interested in “My Kitchen Rules” than in what rules their lives, and sadly, in this country, they vote. In most other countries, that lot wouldn’t bother.

          • Joe 6 months ago

            Voting is compulsory in Australia but not so in a lot of countries around the world. Public policy / Politics isn’t a priority for many Aussies. Some by necessity are too concerned with their daily lot but plenty of others who only focus on themselves in the here and the now. So when the COAlition throws the money around like confetti before an election they say wow, thanks very much,….tick ‘1 Liberal’ on their ballots.

          • JWW 6 months ago

            Absolutely right. The fact that people are forced to vote even when they are not interested in politics at all and the fact that because of the weird preference system your lower house vote can only ever go to one of the two biggest parties in your electorate makes for very poor political debate. Blatant vote buying just before elections and pork barreling in marginal seats is the consequence.
            Australia would do well to say goodbye to Westminster system to

          • Hettie 6 months ago

            The preferential system actually allows for independent and minor party candidates to be elected. It allows for electors to vote *against* as well as for candidates. If no candidate has an absolute majority on the count of first preference votes, the candidate who received fewest 1 votes is eliminated, and their second preference votes allocated. This process is repeated until one candidate has an absolute majority.

          • JWW 6 months ago

            The electoral system in Australia does not allow to vote against anybody. While most Australians understand how the preference system works, most do not understand what it means: No matter for which party you vote for, your vote will always end up with either of the two biggest parties (in your seat). The small parties have a big disadvantage. Only a proportional system (common outside the Anglosphere) will fix that problem.

          • Hettie 6 months ago

            Sorry to contradict you, but you are not correct. We have independents and minor party members in the House of Representatives, many more in the Senate.
            By numbering the most despised candidates last, one prevents one’s vote ever being allocated to them, effectively a vote against.
            I agree that proportional representation is more democratic, and indeed the State Parliament of Tasmania’s has a proportional electoral system, but I can’t see the two major parties ever agreeing to such a sensible scheme.
            The preferential system is far better than first past the post, and far less costly to implement than repeated runoffs to get down to the better of two.

          • JWW 6 months ago

            Sorry to contradict you, but I think I am correct, indeed. Voting against something would mean to most people that your negative vote reduces the (positive) votes by one. That is what voting against would mean.
            Let me again summarise the Australian system for the lower house election :

            1) You can vote for either of the two biggest parties in your electorate. This can be Labour and Liberals, or -as an exception from the rule- it might be a Greens candidate or an independent candidate to replace one of the Labour or the Liberal candidates.
            2) If you vote for a smaller party, your vote will ALWAYS go to either of the two biggest parties .
            3) You only have to choice to choose which one of the two biggest parties the vote goes to, by -as you correctly described- putting the other party last on your preferences.
            I will give you an example: If Adani is the main driver for which party you vote for – tough luck! Unless you live in one of the three (or so) electorates where a Greens candidate has a chance, you can only vote informal. I don’t think having no choice is very democratic!

            A friend of mine told me he has voted informal all his life, for exactly that reason. It took me a couple of years to understand his point.

            It is astounding to me how hard it is for people to think outside the box, when they have been brought up in the believe that their voting system is great, and in fact much better than the (appalling) system that the British have.
            The lived experience of first generation immigrants who came to Australia from outside the Anglo-sphere could immensely contribute to this great country, but the inertia of the Anglo heritage is almost insurmountable.

          • Hettie 6 months ago

            You have your point of view, which I believe is incorrect.
            By putting the candidate you most despise last, as well as those you least despise first and second, etc, you not only score a positive vote, you ensure that your vote cannot be counted to elect those you numbered last.
            To my way of thinking, that is a vote against.

        • Joe 6 months ago

          And the latest Newspoll shows 52/48 in favour of Labor. How is it that so many still cling to The COALition?

    • John Boyd 6 months ago

      I am obviously dated by the fact that I graduated in Electrical Engineering in 1962. At that time, ‘we’ could not build capacity fast enough to keep up with demand. The Snowy scheme was one of the big items, as were the big stations in the Hunter. The whole idea was to provide power at the best price to the rapidly expanding population. The ability of the Snowy scheme to provide short term peak capacity was seen as very important. The whole thing was an integrated state wide public system. Interconnectivity with Victoria was only just beginning, and the idea of a national grid was in the works, but a long way off. The whole idea was an integrated system that provided best value for money for the community as a whole. I am aware of old criticisms of the state electricity commissions for building grandiose buildings and so on, but the fundamental point was that they were accountable to the government, not shareholders of the component parts as we have now. I would like to see a comprehensive analysis which demonstrates that we are better off now with the current shambolic privatised system, than we would be with a government owned system, albeit with the problems that working across state governments can bring.

      • MaxG 6 months ago

        🙂 You are only dated if you stopped learning since 1962…
        I hear what you are saying, and agree with you… actually, I have done comprehensive calculations with government departments around 1998-ish, which confirmed over and over that IT outsourcing does not benefit the government (and therefore the people). The next wave of ‘hosted’ IT provided the same result, so did cloud IT in recent years.
        Back to your point though, it was the new neoliberalism (starting in the 70s) with its most prominent proponents (Reagan and Thatcher) in the 80s, 90s, which in essence claimed that government has no business in doing business. In Australia, Keating commissioned the Hilmer Report, which suggested that privatisation would be the pancea for better services and efficiency in inefficient markets run by the government, such as electricity, public transport, water, etc. This report started the sell-off of public assets; which back then was clear to any half-arse economist that selling monopolies to corporations would be the feast they have been waiting for. After all, the capitalist maxim is to become dominant in a market, eliminating the competition to become a price setter, in contrast to the ideal market where competition exists and demand sets the price.
        And the rest you know… it is shambles, the people have been shafted and this will continue until health and education and what not is being privatised… and the very same people (the majority I may add) supports the thuggery the current government is comprised of. Some here call them criminals, and IMHO rightly so, when you see policy and action that contradicts evidence-based science.
        In closing, the media (bought by the corporations over the years) supported the corporate stance that the government run shops behind the eight ball, run by lazy bastards aided in shifting the public view to this day that privatisation was and is the right thing to do. The public today would still be better of and better served by public utilities, despite a few lazy buggers tarnishing the system.

        • Hettie 6 months ago

          Well said.
          Those of us who are old enough to have dealt with officials of state owned water and power authorities will all have memories of front desk people that one would hate to be stuck behind in a fire, but having worked as a nurse, in private industry, and in Centrelink, I can safely say that there are lazy bludgers in every work place, but not nearly so many in government employment now as you might think. The workload is horrific. Far higher than is compatible with good results. The slackers get weeded out smartly.
          In many cases, the baby has been thrown out with the bathwater. Taking care of the needy should not be treated as a series of profit centres.
          There are many areas of a civilised society that are not suitable for private enterprise. Adding shareholders to the mix perverts provision of a public service into provision of profits for the shareholders. Essential services are too important to be laid open to that perversion.

  3. Ben Dixon 6 months ago

    Thanks for shining the the light Giles

  4. DogzOwn 6 months ago

    Brown shirts uber alles? Democracy needs urgent protective action, before it’s too late.

    • Joe 6 months ago

      Der Fuehrer still lives.

  5. Chris Drongers 6 months ago

    “The introduction of the DRM would further distort and dampen high spot price signals.. .. the investment signal for ongoing investment in new assets.”
    Surely the pricing signal is that behind -the-meter pv is substantially cheaper than grid power for many users. Optional participation in demand management retail plans is another price signal.
    And these are the signals that the actual users of the electricity respond to, not wholesale prices inflated by retail margin for generation, transmission , retail and churn.

    • Peter G 6 months ago

      “behind -the-meter pv is substantially cheaper than grid power for many users” Chris I think we can safely say all users.

      Here in Perth 5kW/6-6.5kW retail systems are widely advertised at $3500- $4500. The cheapest are below $3K.

      At these prices you can put one on the mortgage and pay it back in five years just from the 7c FIT.

      • Hettie 6 months ago

        Making cost alone the criterion for buying a major system of equipment that should last for 25 years is just dumb. You get what you pay for, and if you pay a crap price you are likely to get a crap product.

        • Joe 6 months ago

          Hettei, I live in Sydney and I see ‘cheapies’ advertised in my weekend papers all the time. They promise good name solar panels and inverters…..6kW systems for $4500.00 installed. My mind boggles at what ends up sitting on the roof.

          • solarguy 6 months ago

            In short Joe, shit ends up on the roof.

          • Joe 6 months ago

            Hello my Solar man. I spotted another ad for a ‘cheapie’ in my Sun Herald newspaper yesterday ( 3/6 ) for a 6kW system of Jinko 300W Premium Black panels and Goodwe inverter ( and promising a bonus 10 year guarantee ) all for $4221.00 installed.

          • solarguy 6 months ago

            Hello Joe, The wife read me a piece from the daily telegraph whist cruising on the web, talking about the cheapy disasters and how people were being sucked in and how many complaints to fair trading that have increased in the last year or two.

          • Joe 6 months ago

            There are shysters, con artists and rip off merchants everywhere. The solar industry is not immune to the ‘crooks’.

          • solarguy 6 months ago

            Sadly no.

        • Andrew Roydhouse 6 months ago

          Did you know that virtually every solar panel made since the 1970s is STILL generating electricity? 40+ year old panels providing free power is something to think about. Inverters do need replacing but the panels ‘keep on keeping on’ although not at 90 or 80% of capacity but well above 50 or 60% for some of the 70s era ones.

          ——————
          One aspect of installing your own panels is the certainty of the cost of your power, the ability to control a high proportion of your future energy costs is never ‘costed’ as a benefit even though it is.

          ——————

          The cost difference in buying tier one P panels is often less than $12 per panel (was in 2017 last time I ran comparisons). Biggest single cost these days for 5kW system is fast becoming the labour and other materials cost.
          Payback on tier one panels and inverters for a company can be around 3 years, a small company even sooner due to $20,000 instant write-off.
          Payback for residential, if you do the numbers is around 5 years + or – – depending on whether you have excess cash to pay for it (shorter payback period) or you divert funds from paying mortgage(longer total cost of interest paid on mortgage – payback). Either way it is an after-tax risk-free return at least double the most optimistic forecasts for superannuation and approx 4x the cost of most mortgage interest rates.

          • Hettie 6 months ago

            I’ve calculated 25% RoI for my 5.3 kW system, and I’m paying 8% interest. So 33% if I had been able to pay cash. Then there is the saving by switching from gas heating to RCAC. Haven’t started to work that out yet, because the winter is just starting, but it should be substantial.

          • solarguy 6 months ago

            In my 10yrs of business in Solar I have seen panels that have failed. With out going into it too deeply the cheap crap fails quite often.

        • solarguy 6 months ago

          Too right!

      • solarguy 6 months ago

        For those stupidly low prices you will get fleeced bigtime.

        • Peter G 6 months ago

          The Clean energy regulator has picked up some bad practices over the years that have been well reported here – including a whole bunch of de-laminating panels around WA. Much bad practice/materials has been dealt with with fines and warranty replacement, possibly much has not.
          PV importation/installation is highly regulated and is now a very mature business. There is a good case that price competition reflects this maturity more than a continuation of the unregulated bad practices that blighted the industry early on.
          The numbers indicate that the fat lady has sung and that the rush to rooftop will only heat up from here…

          • solarguy 6 months ago

            Sadly, Peter the industry is full of shysters, bad things still happening. Complaints to NSW fair trading has doubled in the last 2yrs. Too cheap is too cheap.

  6. phred01 6 months ago

    Push back by stranded assets

  7. Rob G 6 months ago

    Senate estimates when faced with the Snowy Hydro guys focused a lot on coal (Abetz and Co pushing coal and ALP looking at renewables). The key question missing in all of the discussion was “Could batteries of scale beat the costs of snowy hydro?”. They most certainly will by the time 2.0 is built – quite possibly already do. And they would have the added advantage of being able to be placed in more suitable locations. Would batteries of scale make Snowy 2.0 a white elephant?

    • Andy Saunders 6 months ago

      I’m not so sure. Snowy 2.0 may or may not be a good idea, but the current crop of battery proposals mostly have energy to power ratios of about 4 hours. Fine for peak shifting on an intraday scale, but not a huge store of energy (Snowy would have many days of storage and is more of an energy store).

      I do worry about Snowy’s poor round-trip efficiency, though.

    • Alastair Leith 6 months ago

      I’m not a Snowy 2 fan (not least because everything Turnbull does is touched with a anti-micas glove of radiation poisoning) mainly b/c you can do Pumped Hydro Energy Storage (PHES) with more head, less horizontal run, zero tunnelling and stay out of national parks for a lot less money per unit of power and unit of energy in off-river distributed PHES turkey nest schemes.

      But to say you could store that amount of energy that they are proposing in batteries for less money is an odd claim to make, what price storage do you think batteries will be at in say seven years? and what level of production available to a single purchaser in Australia? Of course it does beg the question how many times would that capacity be called on to do full depth of discharge a year and is it economic compared with building more wind and solar or biofuel OCGT/CCGT.

  8. Chris Fraser 6 months ago

    Often it feels like AEMO is the only barrier to the luddites successfully strangling newer technologies and common sense things like DRM. I hope they never sell out …

  9. Barri Mundee 6 months ago

    A future federal government should buy back the coal-fired generators and then manage their phase-out/closure as renewables ramp up.

    That will short-circuit continued attempts to stymie the necessary transition to clean energy.

    The federal government is the only entity that has the capacity to do this. If you ask where will the money come from I ask: how come we always have “the money” to buy military hardware, engage in overseas conflicts, and the like ??

    • Andy Saunders 6 months ago

      I’m not in favour of governments buying out coal generators. They will inevitably stop running as renewables increase, so the government will inevitably be over-paying for dud assets.

      • Barri Mundee 6 months ago

        Coal generators are assets for their owners but liabilities in the urgent need to decarbonise. As the federal government is not fiscally restrained it can do this and “over-paying is a neoliberal ideological concept.

        .

        • Andy Saunders 6 months ago

          Barrie, if you have no problem with over-stiff because it’s a neo-liberal ideological concept then I have plenty of dodgy assets for you to but!

          I suggest as a practical alternative to have an effective carbon price; the economics of renewables means a pretty quick coal fleet exit.

          • Barri Mundee 6 months ago

            Thanks Andy. I prefer that coal be squeezed out more directly via regulation, ie by imposing a cap on emissio. The limit would reduce as time goes by. No exemptions, no market shenanigans, no emissions trading.

          • Andy Saunders 6 months ago

            Fine, you have a cap. Now how much emissions can a particular entity emit?

            You have to have way of allocating it, doing allocation by fiat has corruption risks and is economically inefficient.

            So there really should be trading, and therefore at least an implicit (preferably explicit) carbon price.

    • Hettie 6 months ago

      Don’t be daft. That mob couldn’t run a chook raffle.
      Besides, the current owners have made a mint. If they have been too stupid and one eyed to diversify into renewables, and they go bust with stranded assets, well, tough. That’s business. And the shareholders too. Did anyone bail out the shareholders of a million other companies that have gone broke over the years? No. That’s the stockmarket.
      Companies go broke every day.
      A change of Gov’t should see sensible policy, encouraging and giving certainty for investment in clean energy. Hopefully, ending all subsidies for fossil fuels and insisting that the miners fully fund remediation of the ruination they have caused. Perhaps a new carbon price could factor that cost in.
      There is no time to dick around.
      There is no planet B.
      Coal and oil companies have known since the 1950s that rising CO2 was causing global warming. Let them bear that the cost of what they have wrought.

      • Barri Mundee 6 months ago

        I sincerely hope a change of government happens, come the next election.

        • Hettie 6 months ago

          And so say all of us.

      • Joe 6 months ago

        Big Tobacco, Big Asbestos and Big Fossil Fuel what do they all have in common? They all lied. Tobacco and Asbestos received ‘governemnt attentions’ and now it is Big FF’s turn to get the treatment. Like you say Hettie, “there is no time to dick around”, we have a climate emergency and FF has to be ended now not 20, 30 years into the future.

        • DogzOwn 6 months ago

          Didn’t big nukes lay the foundations for spread of propaganda sources and strategies?

      • solarguy 6 months ago

        Unfortunately the miners aren’t going to fully remediate the damage, they should but they won’t and they will get away with it.

        • Hettie 6 months ago

          Weeellll, since the mining companies have mostly posted some sort of bond to cover the cost of remediation, a quick law, passed as soon as the Gov’t changes, to treat any shortage between the money provided for remediation and the money actually needed as criminal fraud or embezzlement, with the penalty being that the directors and managers responsible for underestimating must do community service by personally, physically doing the remediation themselves, that would see said directors etc very smartly pouring megabucks into their remediation funds.
          Anyone like that idea?

          • solarguy 6 months ago

            If remediation also includes filling in huge frigging holes, then the gov has given them some amnesty. The President of my rifle club is a Geotech at Newcastle Uni, who wrote a piece about it in the Newcastle Herald some years ago. We were discussing it at the range back then and he informed me the problem is huge, the gov realized they would never have the funds to completely fill them (cost would be more than digging it out in the first place). So the major concern is that they will fill with water and become a toxic salt problem.

            Charming isn’t it!

          • Hettie 6 months ago

            There is of course also the problem that any 21st century society faces, of waste disposal. Mountains of waste.
            Big , deep holes.
            Also, mountains of tailings. Fill the holes with waste, up to say 3 or 4 meters from natural ground level, cover with the tailings, which are rich in carbon. Plant native trees and ground covering shrubs. Lots of unpleasant, dirty, physical work. Just right for a bunch of greedy bastards.

          • solarguy 6 months ago

            Not a bad idea and waste LNP pollies can go in too as a return and earn scheme. LOL.
            Yeah, I know I’m wicked!

          • Hettie 6 months ago

            Roadkill makes excellent compost.

  10. Colin Edwards 6 months ago

    Query: How is the Chair of AEMC appointed, and for what term?

    • Colin Edwards 6 months ago

      Checked AEMC website. Looks like the appointments are for 5 years – present Chair re-appointed in 2015. Appointed by COAG ministers.

  11. Mike Westerman 6 months ago

    Snowy is correct to say that DRM will destroy the market signals for schemes such as Snowy 2 and many other forms of generation proposed as replacements for the current fleet. There is little doubt that continuation of the current trends in behind the meter solar will eventually lead to insufficient generation to cover evening peaks if the current energy only tariffs are not reformed. The key question is “what is a rational way to encourage efficient coverage of non-solar periods and to efficiently use excess solar generation without curtailment?”. And the current range of policy settings, including the NEG and S2, and lack of an EV policy, do nothing in this space.

    • Alastair Leith 6 months ago

      Good points, Mike. This discussion goes to not just cost benefit analysis, but also to fundamental rights to participate in markets. It’s one thing to compare the cost of providing utility scale tracking PV in the sunniest part of your state and exporting that to the grid for say 6-10 cents/kWh in the wholesale market (the utility PV LCoE is 3 cents in Dubai under tight “take or pay” PPAs transitioning away from the worlds cheapest gas at 9 cents) versus encouraging BTM PV installations with STCs and FiTs.

      You can make the argument that even with network costs (~45% of a Synergy domestic electricity bill in Perth and ~50% or higher for retailers on the NEM) utility scale PV is more “economic”, i.e. lower overall cost to deliver the same about of power. But there’s other questions around the need to encourage people to ‘vote with their feet’ in favour of renewables by investing their own hard-earned in BTM PV and the Energy Efficiency technologies it sometimes inspires people to proceed with. In the face of a recalcitrant and two-faced federal government on RE and Climate policy a good democracy encourages people to take matters into their own hands and to even reward them with STCs and FiTs (some would also make a good argument that the FiTs aren’t high enough to reflect the value to the network in reducing peak demand infrastructure investment and the retailers are making obscene profits taking that energy and marking it up three or four fold and sending it over the fence on a grid that is already paid for with the retail fixed charge component).

      DRM/DSM are different technology same issues around equity of access to participation in markets. Why can’t we have both, if the gentailers/retailers can do better DRM services at better costs then they’ll attract more of that market, but if market facing “virtual batteries” and so on can do better then they’ll take more of that market. Not sure why it needs to be either/or, though I can see why the retailers don’t want any competition in that space.

      Especially a monopoly retailer for customers below 50,000 kWh like Synergy in WA. Western Power (network owner) and Synergy (both GTEs) are combining efforts to make a “power bank” a large grid battery residents can export their solar PV to and use later. I’m sure WP would like to do it on their own but the law in WA prohibits them putting a battery anywhere in the state on their network because that is legally classed as generation. Not sure about any UPS systems they have in their server rooms or back-up batteries in their alarm clocks 😉

      • Hettie 6 months ago

        Alastair, it would be a courtesy to your readers to write out the terms in full the first time, before resorting to acronyms. A pain in the neck, I know, but first time readers of Renew Economy would not have a clue what you are talking about. That’s a pity, because you are discussing issues that many of those first time readers would seize on with interest, if they only knew what BTM and DRM stood for.
        💜

        • Alastair Leith 6 months ago

          I just wrote to a journalist and spelt everything out for him. I also noticed this today. Assumed people here can keep up or use Google Hettie!

          RenewEconomy Glossary

          DRM is discussed in the story above, see glossary. BTM = Behind the Meter (the electricity meter at you house or business)

          • Hettie 6 months ago

            As I said, first time readers would be put off.

          • Alastair Leith 6 months ago

            Not my biggest interest, Hettie — but I appreciate your perspective.

            Like I said the main acronym is covered in the story. If I don’t know an acronym in a comment first thing I do is Find “acronym” to see where it was first used on the page.

            It then points to the complexity and other pitfalls of the proposed demand response mechanism (DRM). “Snowy Hydro strongly believes that the DRM is a complex solution looking for a problem that simply does not exist.”

          • Hettie 6 months ago

            That’s cool. You do as you think best. It was just a suggestion.

  12. Les Johnston 6 months ago

    No free market here. New entrants not welcome!

Comments are closed.