Strayan energy costs highest of all

Via The Australian:

Australia should focus on lowering energy costs rather than guaranteeing reliability, Australian Competition & Consumer Commission chairman Rod Sims said yesterday, as he declared high ­energy prices to be the biggest crisis facing the nation.

Mr Sims said Australia should not “overdo” its focus on ensuring the reliability of energy supply, because of the high cost implications.

“Let’s make sure that we keep the energy focus on affordability,” he told The Australian and Visy’s sixth annual Global Food Forum in ­Sydney yesterday. “We want to make sure that we don’t overdo the conversation about the reliability of electricity because the more you try to take any outage out of the equation — and that’s what we’ve seen in the past with the high network costs. Most of those increasing network costs are due to concerns over the system not being reliable enough.”

Mr Sims said the issue of ­energy policy would be discussed at the next meeting of the Council of Australian Governments meeting, which would look at a paper from the Energy Security Board on the Coalition’s national energy guarantee.

Although now completely buried under an avalanche of political manure, the answer remains very simple:

  • install gas reservation that keeps 10% of east coast exports here;
  • if prices don’t fall then fix them at $5Gj;
  • gas sets the marginal cost of electricity in the National Electricity Market so power cost will also crash.

Why this is OK is equally straight forward:

  • the east coast gas boom was a classic malinvestment bubble and the big gas companies that are shipping the east coast’s cheapest reserves to Asia at huge losses lied about having enough gas to fill their LNG plants;
  • as such they have been buying up all of the third party gas on the east coast and driving up prices;
  • by allowing them to do this we are bailing them out for misallocating capital;
  • if we fix the price of gas they will have to bear the brunt of their bad decisions rather than passing them on to everyone else via local discriminatory pricing.

This solution to the gas market failure will crash Australian energy costs and put our decarbonisation program back on track as well. Cheaper gas can fulfill the role it was always planned to have displacing base load coal as renewable storage catches up.

Any other solution is, frankly, bullshit.

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Comments

    • As someone with a Masters in Radiation Science – I assure you those photons are ready to have rough prison sex with your DNA

      • I respectfully disagree. If the noted physicist, Bruce Banner, has proven anything in his lifetime study of gamma radiation, it’s that my cells will undergo a radical transformation, unlocking vast amounts of rage fueled power.

    • Jumping jack flash

      The last I heard the molten salt ones were a good idea. Low risk and all that.
      Not sure what happened to them.

      Probably a China-load of cheap solar panels happened to them.

  1. The price of reliability is coming down with the price of batteries.

    Professor Sadoway says cheap batteries will mean the grid can be built for average load rather than peak load.

    These peak-loads are only reached at 1% of the time.

    Why not require new houses to have a Powerwall? Instead of paying $250k for a plot of land and $250k for the building, it would be $264k for the building and $236k for the land.

    • “Why not require new houses to have a Powerwall?”

      I would also add – any house sold over $1mil must have PV & batteries.

      • But solar panels might make the mansion look ugly.

        Instead, you can put a tax on houses sold after 1 July 2018 if the house does not have solar panels.

      • Jumping jack flash

        Any house sold must have PV & batteries.
        there I fixed it for you.

        At least in the area where I live, almost every house has PV now.
        The tariff has increased to 14c, tipped for 16c. Up from 4c/kWh.

        Electricity companies are a bit scared, no?

  2. Jumping jack flash

    The death spiral is real.

    Every person for themselves!
    Generate that free energy!
    Live happily forever after, free from the grip of the oligarchs.

    Let the government wrestle with the failed experiment of privatisation and deregulation while they count the remaining money they made from the deals… I don’t think there’s too much left.