Hungry for power

23 Jul 2009Archived News Energetics in the News

PUBLISHED: BRW Magazine by Damon Frith, Energetics is mentioned as a specialist provider on energy saving tips. 

The carbon pollution reduction scheme casts uncertainty over Australia’s vast power generation network.

Australian businesses enjoy some of the lowest electricity pricing in the world but there are several headwinds threatening to upset the status quo with potentially disastrous effects on the economy.

For any manufacturing or resource business, power is one of the primary costs. It is Australia’s isolation that has created an environment for cheap power. Despite the huge cost to build the transmission networks necessary to supply the nation, the largest integrated network in the world, the abundance of coal and stranded gas has ensured the supply of cheap raw fuel to supply power stations.

However, a new regime is emerging. Government is in the process of mandating that 20 per cent of generated power come from higher cost renewable sources by 3030 and its carbon pollution reduction scheme has thrown uncertainty over the entire generation network, affecting the ability to plan for new generation and for big customers to seek long-term electricity supplies to continue and expand operations.

Rusal Australia chairman John Hannagan says it has been a stunning achievement for Australian manufacturing to remain competitive against aggressive intrusion by low labour-cost producers in Asia, particularly China, India and South Korea.

However, electricity prices are rising and some analysts predict they may double in coming years. If this occurs, Hannagan expects manufacturing in Australia will wither.

Hannagan has a vital interest in the outcome as the Russia-based Rusal has substantial aluminum assets in Australia.

The cost of power is the overriding consideration in locating an aluminum smelter. There are six aluminum smelters in Australia, producing nearly 2 million tones of metal a year and earning some $8 billion a year in exports.

The energy arrangements negotiated by the smelters up to 30 years ago run out between 2015-17. Renegotiating those contracts will be difficult to impossible unless the pricing uncertainty overhanging the electricity industry is removed.

This is not a single-industry problem. Big energy users are unwilling to commit to new projects as uncertainty on electricity pricing means long-term costs cannot be reliably built into financing packages.

The banks will not lend to electricity producers to build new production or refinance current operations unless they can accurately model electricity pricing.

It is all pointing to a power-shortage debacle in the next decade. The global financial crisis and its impact on economic activity, and therefore power requirements, means Australia is likely to have a grace period of four or five years to resolve electricity issues before it becomes a national catastrophe.

A carbon pollution reduction scheme with a longer time frame for targets to 2050 will allow the power industry to make transitional changes in an orderly manner and provide certainty for electricity producers, customers and financiers, the chief executive of the Energy Supply Association of Australia, Brad Page, says.

It is almost impossible to get electricity contracts that extend beyond 2011 because of the uncertainty of power costs under the carbon pollution scheme, Page says.

The private sector is unwilling to invest in new fossil fuel base-load power generation until uncertainties are removed, he says. Transmission infrastructure is not being upgraded to ensure a continuity of supply.

For smaller energy users, ranging from office buildings to small enterprises and households, pricing is now a market-based outcome.

Prices for wholesale electricity drawn from the National Electricity Market are set every 30 minutes and depend on levels of supply and demand. Pricing can range between a minimum regulated rate of $1000 a megawatt hour to a maximum regulated rate of $10,000 a MWh.

Any regulation that affects wholesale electricity prices will be immediately transmitted to customers of the national market, which takes in New South Wales, Victoria, Queensland, South Australia, Tasmania and the Australian Capital Territory. Western Australia operates under a different network that provides pricing transparency but is more regulated.

For energy-efficient buildings and businesses, the key is using large draw downs of power during off-peak times and minimizing peak-hour power usage.

New buildings have systems in place to use heat from the building, solar panels, insulation and a host of other technologies to reduce power usage during peak draw downs.

Even old buildings can be refurbished to become more energy efficient. The Perpetual heritage building in Hunter Street, Sydney, achieved a 25 per cent reduction in peak-power use through an extensive refurbishment that allowed the 100-year-old building to achieve a six green-star certified rating.

Emission controls

Ten ways to slash energy, costs and greenhouse gas emissions:

1. Understand the basic principles of climate change, sustainability and energy saving.

2. Check bills carefully for errors as you start to document energy use.

3. Compare providers using sources such as Switchwise, Choice and the Climate Institute.

4.Check sources for energy saving tips. Starting points include:

  • Sustainability Victoria
  • Business.gov (US government)
  • Water and energy department NSW (and equivalent sites in all states)
  • Choice
  • Switchwise
  • Green Business Council of Australia
  • Specialist advisers such as Energetics and Shock Therapy.

5.Twitter – put out a call for advice on social networking sites.

6.Find out about local, state and federal government grants and incentives such as the following offered by the NSW government:

  • A subsidized energy assessment and actions plan
  • A 50 per cent rebate of up to $5000 for businesses that spend $2000 to $20,000 a year on electricity
  • A 50 per cent rebate of up to $2000 for businesses that use less thatn $5000 a year in electricity

7. Watch for technology that tracks and reports on energy use.

8. Look for suppliers with a commitment to sustainability, innovation and accreditation. Various self-appointed standards bodies make money and may require scrutiny.

9. Involve staff by forming green action groups. Many staff are keen to make a difference.

10. Try these cheap and simple ideas:
Lighting

  • Remove unused fixtures.
  • Replace incandescent light bulbs with compact fluorescent ones.
  • Install occupant sensors
  • Lower light levels where possible, such as around computer monitors.
  • Install LED exit signs
  • Install photocells and timers on outside lights.

Water heating

  • Use hot water sparingly
  • Insulate hot water tanks and pipes
  • Set water heaters at lowest temperatures.
  • Find and fix leaks

Equipment

  • Turn off office equipment when not in use
  • Use energy-efficient equipment
  • Buy energy star rated products

Heating and cooling

  • Make sure systems are working efficiently.
  • Inspect and clean or replace air filters
  • Repair leaks in pipes, steam traps, couplings.
  • Adjust or install thermostats
  • Reduce air-conditioning.

Buildings

  • Block direct sunlight in summer
  • Let sun shine in winter; covers windows at night.
  • Closer external doors.
  • Use fans to delay or reduce air-conditioning.
  • Improve insulation.
  • Plug window, door leaks.
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