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SMART Energy Demand Forum

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This event provided an opportunity to discuss the real issues relating to energy demand and pricing from leaders in this field. ...

This event provided an opportunity to discuss the real issues relating to energy demand and pricing from leaders in this field.

Assessing future high level policy options for energy demand will ultimately assist us to understand the implications and to better manage the effects of the falling overall demand, rising peak demand and rising prices in the energy sector.

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  • Don’t pay too much attention to the detail of these charts, they are just to illustrate the difference between the typical costs incurred by retailers, and the most common residential retail tariff structure. In some cases, a flat tariff may actually be roughly cost-reflective (because network and wholesale peaks occur at different times) - (although you would still expect a day-night differential) Recognise that not all retail tariffs are just one flat charge – many have inclining blocks for example, and a few are time-sensitive. There appear to be significant cost advantages to retailers from passing through costs (and that should also minimise costs overall). So does it make sense for retailers to install interval meters for their customers? In many cases, retailers may not actually face these peaky costs - flat network charges for most residential consumers - they hedge against wholesale price volatility Even where they do, retail price regulation may restrict to some extent the ability to fully reflect costs But market offers are allowed - if a retailer wants to win customers, doesn’t it make sense to offer a variety of tariffs? Are there other restrictions, such as cashflow requirements?
  • AEMO projects that annual energy consumption will be flat in 2012–13 and grow annually by around 1.7 per cent over the next decade. Most of the growth that is occurring is linked to major industrial projects in Queensland. The growth forecasts are significantly lower than those made 12 months ago; the national demand forecast for 2012–13 has been revised down by 8.8 per cent.

SMART Energy Demand Forum Presentation Transcript

  • 1. Welcome to the Inaugural SMART Energy Demand ForumGarry BowditchCEOSMART Infrastructure FacilityUniversity of Wollongong
  • 2. The inaugural International Symposium for Next Generation Infrastructure Grand Research Challenge "What is required to design, develop and carry through the effective provision of Infrastructure to sustain the development of modern society?“ ‘Factor 8’ "Given that infrastructure is not an engineering artefact but an agent of change, is it possible to imagine infrastructure systems that can meet the needs of twice todays population with half todays resources while providing twice the liveability? "Business Policy Dialogue session 30th September 2013, SydneySymposium 1st-4th October 2013, Wollongong
  • 3. www.smart.uow.edu.auGarry BowditchCEOSMART Infrastructure Facility+612 4298 1241Garry_bowditch@uow.edu.au
  • 4. SMART Energy Demand ForumLes HoskingNon-Executive Director AGLHonorary Professorial Fellow, SMART InfrastructureFacility
  • 5. SMART Energy Demand ForumSteven GrahamCEOAustralian Energy Market Commission
  • 6. SMART Energy Demand Forum Tuesday 5 February 2013 Sydney Mr Steven Graham Chief Executive AUSTRALIAN ENERGY MARKET COMMISSIONAEMC PAGE 7
  • 7. Role of the AEMCAEMC PAGE 8
  • 8. COAG & SCER reform packageAEMC PAGE 9
  • 9. Electricity market paradox – South Australian exampleAEMC PAGE 10
  • 10. AEMC Power of Choice Review Policy responses to support coordination across the electricity market supply chain – promoting efficient demand side participation (DSP)AEMC PAGE 11
  • 11. Designing efficient and flexible prices: network costs plus energy costs Substation daily demand profile1 Relative hourly prices in the NEM 120.0% 100.0% 80.0% Average hourly price compared to daily average price 60.0% A v e ra g e Pr ic e = 0% 40.0% 20.0% 0.0% -20.0% -40.0% -60.0% -80.0%Eastern St George Area, Sydney (AusGrid network) Typical retail tariff $ AEMC PAGE 12
  • 12. Utilising consumption thresholds Source: AEMC Power of choice review – giving consumer options in the way they use electricity, November 2012.AEMC PAGE 13
  • 13. Flexible pricing – integrated strategy Source: AEMC Power of choice review – giving consumer options in the way they use electricity, November 2012.AEMC PAGE 14
  • 14. AEMC PAGE 15
  • 15. SMART Energy Demand ForumEd WillettAER Board Member
  • 16. Demand and the energy market Ed Willett AER Board Member SMART Energy Demand Forum February 2013
  • 17. Demand and the Energy MarketWholesale Transmission and Retail Markets Distribution Networks Market
  • 18. Falling Energy Consumption 250,000 240,000 230,000 220,000 210,000 W G A h g u n y e a r ) ( l 200,000 190,000 180,000 Year Actual 2012 Forecast 2011 Forecast• Energy consumption has slowed due to: • Consumers responding to rising electricity prices • Energy efficiency programs • Increase in solar PV uptake.• Over the next decade, AEMO expects energy consumption to grow by around 2%.
  • 19. Changing Peak Demand Profile• AEMO estimates peak demand will continue to increase, but may take several years to return to its historical peaks in New South Wales, Victoria and South Australia.
  • 20. Wholesale Market Volatility• Wholesale market is designed to accommodate different generation technologies with different cost structures to meet varying demand efficiently.• But also provides opportunities for some generators to: • Exploit market power • Exploit network congestion• Market power is an issue in most regions at various times• AER considers that incentives for disorderly bidding are a serious problem with the current NEM design• Demand side participation can help alleviate market power and disorderly bidding issues
  • 21. New Tools and Rules for the AER
  • 22. Regulated Networks• Rising network costs have been the main contributor to price increases in all states• Rising costs, in part, driven by rising peak demand• Recent significant overhaul of the rules for setting network charges• Changes will mean that network investments focus more on consumer needs and interests • Clearer view on the value of particular investments and alternatives• Demand side participation can also help alleviate rising network costs by flattening peaks
  • 23. Empowering Consumers to Manage Their Demand
  • 24. Empowering Consumers to Manage Their Demand continued... EnergyRetailer A Visit the Energy Retailer A website
  • 25. Panel Discussion
  • 26. Thank you