Home' Future Building Australian Infrastructure Review : Volume 8 Number 1 Contents futurebuilding 73
Dr Kerry Schott AO
get information promptly to consumers.
The other thing that could help with bills is if people use
less power. It really does strike me, coming from the water
industry, how little focus there has been in electricity on demand
response. It is starting to happen, and it has always happened
with big customers that write contracts where they are rewarded
for cutting back at particular times. On 10 February this year,
New South Wales had a big scare, and Tomago had to cut back
on the power that they were using for the aluminium smelter –
they would have received a handsome sum of money for cutting
back when they did.
Not all companies can do that, but with all of the solar
PV that exists in the market, we are now at a stage where
there is technology that can join panels together in ‘mini
communities’. This allows the panels to share power between
them, and introduces innovative technology to control things,
such as pool pumps, and allows for your hot water system
to be turned on at 3:00 pm instead of 4:30 pm. All of these
measures will save enormous amounts of power. In America,
the amount of power that’s saved through these sorts of
demand-response mechanisms is at least two times the size
We can expect huge advances in the distributed energy
resource world – there are incentives being designed by some
of the market players in order to do this at the moment. The
amount of small-scale solar at the start of the last decade was
about 100 megawatts – it’s now up to 4,600 megawatts, which
is the size of a large power station. AEMO predicts that this will
be 20,000 megawatts by the late 2030s.
It is also becoming increasingly difficult to hedge against
price risk. The big users have always done this both bilaterally
with the supplier and through financial contracts in the market.
With the current price volatility, it is difficult to obtain market
information – market gossip suggests that it is quite illiquid.
That’s been making it quite hard for both generators and
large customers to protect themselves against price volatility.
When prices are unable to be hedged, the likelihood of higher
spot prices and ceiling caps increases. This does not help to
moderate volatile price behaviour.
Dr Finkel made 50 recommendations in his report, and in an
unprecedented level of agreement, the COAG Energy Council
accepted 49. The one recommendation not agreed upon was
the Clean Energy Target – work on that is still ongoing. I would
not give up on it. When you look at the Finkel Report, there is a
lot of information – a lot of relatively small technical measures
grouped in with big policy changes. These can be addressed
under four headings:
► lower emissions
► consumer rewards.
Reliability is about demand exceeding supply. The main
solution to this problem, according to Dr Finkel, is to set a Clean
Energy Target, because once industry has certainty, they will
invest in more plant, and there will be more supply. There are
industry stakeholders with gas-fired plants that are almost ready
to go, but they are uncertain about the future, which means that
investment is delayed.
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