By David Ashton
Contrary to what some critics claim, electricity from renewables – primarily solar, wind and hydro – is coming in cheaper than that from coal.
Wholesale prices reflect this, so why haven’t retail prices (what we pay) come down, and are they going to in the future? The Minister for Climate Change and Energy, Chris Bowen, recently announced that the “Default Market Offer” – the maximum retailers can charge for electricity – will be coming down in varying degrees in the next 12 months. However, most retailers have also increased their daily supply charge – their base price for connecting you to the grid – which could negate any decrease in the consumption charge, depending on your
electricity use.
So why have prices stayed so high for so long? The answer lies in the grid. It is now a vastly more complex beast than in the past, where you had a few big coal-fired power stations, and poles and wires to take the electricity to homes and businesses. Pretty simple, one-way electricity. But even then, a lot of the old network needs some maintenance, and demand keeps increasing. And even without renewables, we’d need to build new coal fired power stations, and those cost lots…
Today, even your house becomes a power station. Houses that previously just consumed electricity might now generate and store their own most of the time, only drawing on the grid on gloomy days, or even exporting to the grid on sunny days. So not much revenue for the provider.
Instead of a few big coal-fired power plants, you have many solar and wind farms across the country, many in places where there was little or no electricity infrastructure previously. Add batteries into the equation, and power lines that were built to deliver electricity in one direction only, now have it flowing both ways, depending on the time of day or the weather.
So the electricity regulators, providers and retailers have many new challenges. Making sure the grid has enough capacity to cope with days when the wind doesn’t blow and the sun doesn’t shine. Installing new poles and wires to connect remote solar or wind farms. Dealing with houses that are also mini-power stations.
Metering to record power flows in both directions on a line. Connecting customers who might not actually use much power from the grid. All this costs money and is the reason prices haven’t come down much yet,
even though cheaper renewables are currently supplying more than half of our power needs.
So yes, wholesale power prices ARE coming down, but they’re going to take time to trickle through to the retail price that the customer pays. What you can do right now is to put in the biggest solar array and battery system that you can afford. That way you are getting the benefit of renewables directly. You probably wouldn’t be able to (or want to) go completely off-grid, but the power company still has to connect you. So, ensure that you are getting the best grid prices you can – many retailers have good plans for this, sometimes including free power in the middle of the day. Get the sun working for you, not the electricity company.
David Ashton is a member of Bathurst Community Climate Action Network.
