What's really
driving electricity
price increases?
How the National Electricity Market Works




                                                       ill
                                          Electricity B




Generator    Transmission      Retailer   ‘your bill’
            and Distribution
What really makes
up an energy bill?


                                      14%
                   ill                                                                            ill
     Electricity B               The retailer's
                                                      41%                            Electricity B



                                                                                                        $
                                   charges
                                                     Networks



                                34%
                              Wholesale
                            price of power
                                                  6% 5% the
                                                    Other   carbon
                                                   green     price
                                                  schemes


                                [1]
                                                                     Building and   New
                                                                     maintaining    infrastructure
                                                                     of network     makes your
                                                                                    bill higher


[1] Forecast data from Australian Government, National Energy Savings
Initiative Discussion Paper pg 5, for 2012-2013
Network expenditure
is growing fastest




          2010                                2015                                               2030
                                                              [2]                                                [3]
                                          $46 Billion                                     $240 Billion
[2] Ernst and Young (2011) Rationale and drivers for DSP in the electricity market – demand and supply
of electricity Prepared for the AEMC Power of Choice Review - giving consumers options in the way they use electricity
[3] Australian Energy Markets Commissions, Fact Sheet 2: demand side participation and prices
How networks are used
          12                                           12
     11        1                                  11        1
10

9
                       2

                           3
                               Most of the   10

                                             9
                                                                    2

                                                                        3
                                                                            Peak time    January
                                                                                                   Rare peak times
8
     7             5
                       4
                               time (day)    8
                                                  7             5
                                                                    4
                                                                            (evenings)             (40 hours /year)
                                                                                                   hot or cold days
          6                                            6




                                                                                                      100%
Network spending over five years
 (2010-2015) = $46 billion

                                                                                  21.4
         Peak
        Demand
                                          100%
                                                                              $   Billion
        Growth
                                                                                   +
                                                                                  24.6
          Total                                                               $   Billion
         annual
        demand                                                                      =
[2] Ernst and Young (2011) Rationale and drivers for DSP in the electricity
market – demand and supply of electricity Prepared for the AEMC Power
                                                                              $     46
                                                                                    Billion
of Choice Review - giving consumers options in the way they use electricity
The Solution


                   !                                                                      50%




         A set of                                       Will                                  That could
                                                                                                           [4]
       smart system                                    unlock                                save billions
         changes                                      benefits

[4] Think Small 2012: The Australian Decentralised Energy Roadmap. Institute for Sustainable Futures,
   University of Technology Sydney.
Where will the savings come from ?

                                                   22608 MW


                                                         19                   %
                                        46
                                                                                                 Cogen-trigen
        Energy efficiency
             (10423MW)
                                                       %                                         (4216MW)

                                                                                                   Storage
                                                                                   2%              (380MW)
                                                                                        4%        Local renewables


                                                                   25         %                   (875MW)

             Local bioenergy
                   (1032MW)
                                                      5%                                      Peak demand measures
                                                                                             (5682MW)




[4] Think Small 2012: The Australian Decentralised Energy Roadmap. Institute for Sustainable Futures,
   University of Technology Sydney.
Why is it green?


                         73MT
                        CO2 per
                          year




          Could save 35%                              More energy                        Prevents local
         of Australia’s 2009                          supplied by                   impacts of mining and
          electricity sector                          renewables                     building high-voltage
             emissions[4]                                                             transmission lines


[4] Think Small: The Australian Descentalised Energy Roadmap, ISF.
   The International Energy Agency estimates up to 60% of global emissions reductions must come from efficiency.

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How It Works

  • 2. How the National Electricity Market Works ill Electricity B Generator Transmission Retailer ‘your bill’ and Distribution
  • 3. What really makes up an energy bill? 14% ill ill Electricity B The retailer's 41% Electricity B $ charges Networks 34% Wholesale price of power 6% 5% the Other carbon green price schemes [1] Building and New maintaining infrastructure of network makes your bill higher [1] Forecast data from Australian Government, National Energy Savings Initiative Discussion Paper pg 5, for 2012-2013
  • 4. Network expenditure is growing fastest 2010 2015 2030 [2] [3] $46 Billion $240 Billion [2] Ernst and Young (2011) Rationale and drivers for DSP in the electricity market – demand and supply of electricity Prepared for the AEMC Power of Choice Review - giving consumers options in the way they use electricity [3] Australian Energy Markets Commissions, Fact Sheet 2: demand side participation and prices
  • 5. How networks are used 12 12 11 1 11 1 10 9 2 3 Most of the 10 9 2 3 Peak time January Rare peak times 8 7 5 4 time (day) 8 7 5 4 (evenings) (40 hours /year) hot or cold days 6 6 100%
  • 6. Network spending over five years (2010-2015) = $46 billion 21.4 Peak Demand 100% $ Billion Growth + 24.6 Total $ Billion annual demand = [2] Ernst and Young (2011) Rationale and drivers for DSP in the electricity market – demand and supply of electricity Prepared for the AEMC Power $ 46 Billion of Choice Review - giving consumers options in the way they use electricity
  • 7. The Solution ! 50% A set of Will That could [4] smart system unlock save billions changes benefits [4] Think Small 2012: The Australian Decentralised Energy Roadmap. Institute for Sustainable Futures, University of Technology Sydney.
  • 8. Where will the savings come from ? 22608 MW 19 % 46 Cogen-trigen Energy efficiency (10423MW) % (4216MW) Storage 2% (380MW) 4% Local renewables 25 % (875MW) Local bioenergy (1032MW) 5% Peak demand measures (5682MW) [4] Think Small 2012: The Australian Decentralised Energy Roadmap. Institute for Sustainable Futures, University of Technology Sydney.
  • 9. Why is it green? 73MT CO2 per year Could save 35% More energy Prevents local of Australia’s 2009 supplied by impacts of mining and electricity sector renewables building high-voltage emissions[4] transmission lines [4] Think Small: The Australian Descentalised Energy Roadmap, ISF. The International Energy Agency estimates up to 60% of global emissions reductions must come from efficiency.