Rising power costs: blame aircon, not renewables!

Cheap shots at renewable energy often blame it for rising power bills.

The June 10 Australian published an article that reinforces this attitude:

“While business lobbies have pressed for a carbon price no higher than $10 a tonne, the Productivity Commission estimates that taxpayers have been subsidising the reduction of emissions at prices of up to $1000 a tonne through rooftop solar panels.”

Rooftop solar panels are accurately described as one of the most expensive renewable energy sources. Large scale renewable energy is far more efficient. But do solar panels actually rate as a cause of our much-touted rising energy costs?

A June 14 article published in the Climate Spectator gives some interesting background to electricity price rises. Many would assume it is simply a matter of renewing an ageing infrastructure, run down over years of cost-cutting. But that’s not the whole story.

A major factor requiring upgrades to the grid is the increase in peak demand, caused especially by growing use of airconditioners.

Referencing a June 10 report from the Australian Energy Market Commission (AMEC), the article says that

“the increasing use of air conditioners is expected to push peak demand up by more than 3 per cent in most states, forcing distribution and transmissions business to spend billions of dollars expanding the capacity of their networks, even though this may be required for only a few peak periods over the course of a year. The rate of peak demand is growing 50 per cent quicker than the increase in overall energy consumption and customer numbers.”

In Queensland,

“The investment in distribution networks will add nearly 3c/kWh to the cost of residential electricity costs in that state by 2012/13. By contrast, the state’s solar feed-in tariff, which pays a net 44c/kWh rate, will add just 0.03c/kWh to electricity costs.”

Going south, the highest peak demand time in NSW is moving from winter to summer, blamed on “higher and more sustained peak temperatures” and more airconditioners.

“The upgrade to the NSW distribution network will add 4.32c/kWh to residential retail prices in NSW by 2012/13, nearly two thirds of anticipated price rises. The state’s solar bonus scheme, which has been by far the most generous in the country, and has recently been shut down, will add 0.45c/kWh by 2012/13, AMEC estimates.”

In South Australia,

“more than half of the increased capital expenditure on distribution networks is being caused by anticipated increased demand driven by the growing use of air conditioners during summer heatwaves. SA already has the highest penetration of air conditioners in the country, and peak demand is forecast to grow by another 2.4 per cent per year, despite consumers using less energy, on average, as a result of energy efficiency programs.”

Over the 2009/10 to 2012/13 period, the AMEC report forecast a 19%  increase in household electricity costs. By contrast, feed-in tarriffs that support rooftop solar panels are expected to add only 0.6% over the period.

The Climate Spectator also mentioned a report from the Australian Alliance to Save Energy, which suggested that for every dollar spent on demand management, $2 is saved in network costs.

Given that solar panels are most productive during summer airconditioner peaks, it would seem entirely sensible to provide some support to them. And that’s without even touching on large scale renewable energy like solar-thermal and wind power.

(As an aside – BC) All this is not so say that airconditioning should be abandoned, but that it should not be the primary method of dealing with heat. The upfront cost may be smaller for an airconditioner, but with proper investment in energy efficiency the need for airconditioning can be greatly reduced (and medium term costs reduced too).

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