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January 20, 2021

Australian electricity grid stumbles under its own weight

The major Australian electricity grid connects millions of customers with largely coal-fired power generators, but hefty price rises, inefficient demand peaks and the widespread adoption of rooftop solar are disrupting the status quo.

The National Electricity Market, commonly referred to as ‘the grid’, is the world’s longest interconnected power system and includes generators, transmission companies and retailers operating in Queensland, New South Wales, Australian Capital Territory, Victoria, South Australia and Tasmania.

electricity grid australia

The system started to come together in 1998 and is considered centralised in the sense it is built around a small number of big power generation facilities. Around 90 per cent of the power in the system comes from large fossil fuel generators dependent on coal and gas.

The Australian Photo-Voltaic Institute (APVI) promotes solar power, and argues the system came together when people thought bigger was better, and the benefits from economies of scale could be shared by all.

The actual result however, is a large and unwielding system that can take many years, if not decades to adapt.

electricity power pole

Consumer expectations and the guarantees of supply built into the system means it has to be able to meet peak demand periods, during heat waves and cold snaps, even if they are short lived.

Research has shown that $11 billion worth of network infrastructure in the Australian electricity grid is used for peak periods of just 100 hours per year (about one per cent of the time).

The CSIRO also points out that roughly 10 per cent of the power produced by centralised generators is lost transmitting it over hundreds of kilometres of power lines.

Since 2007 retail electricity prices have gone up by 60 per cent and 40 per cent of this was in the last few years. The replacement and refurbishment of infrastructure (essentially, these are the poles and wires), compliance with reliability license conditions, and the building of new infrastructure to cater to peak demand played the largest role in these price rises, according to the CSIRO.

Put simply, the Australian electricity grid has got its problems.

Little wonder the renewable industry and environmentalists are calling for a more decentralized power supply system, based on more, small-scale energy generators spread more evenly across the country.

The Total Environment Centre wants more incentives for electricity networks to invest in alternatives to building poles and wires, and particularly in peak power, according to Mark Byrne TEC energy market advocate.

“Under the present rules, networks make most of their money by building new lines and substations, from which they can earn a return for up to 40 years. We are proposing a new system that would change this perverse incentive,” he said. “Networks will avoid having to build a lot of new infrastructure if they invest in shifting some demand away from peak periods, and encouraging energy efficiency and local generation.”

“It’s as simple as paying industrial and commercial customers to turn off their freezers; or asking householders to delay their dishwashing and laundry for an hour or two during peaks;  or subsidising small battery units with rooftop solar systems, so they can produce power later in the day,” he said.

The APVI notes that one in ten households now generate their own power via roof-top solar systems primarily because it is cheaper to do so. This disruption to the old system is undermining the centralised model by straining income streams and the business models of the big incumbent energy retailers.

“The responses by utilities and governments to date have essentially attempted to maintain the current business models, however, disruptive technologies such as solar and energy efficiency will likely drive the need for more fundamental changes,” it said.

Stay tuned, the Australian electricity grid is in for a shock.

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