Energy White Paper 2014 –
Issues Paper submission template
Details of person making the submission
First Name
Keith
Surname
Reynard
Country (if not Australia)
State
Queensland
Company or Organisation (if relevant)
International Energy Centre
Position in Organisation (if relevant)
Research Student
Type of Organisation. Please choose from the
dropdown list right
Non-Government Organisation
Sector. Please choose from the dropdown list
right
Education and Training
Email. Please provide an email address if you
would like to receive updates from the Energy
White Paper Taskforce
keith.reynard@gmail.com
Confidentiality
Submissions may be published on the Department of Industry website.
If you do not wish to have your submission made public, please tick the box.
Issues for comment are listed against each of the Chapter Headings. In making your submission, you
are welcome to make comment against some or all of issues in the fields provided. A field for general
comments is provided at the end of the template.
Input Fields for Energy White Paper – Issues Paper submission template
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1. The Security of Energy Supplies
The Government seeks comment on:

ways community expectations can be better understood and reflected in reliability standards;

the value of developing fuel reserves to meet Australia’s international oil security obligations, and augment
domestic security;

ways to increase new gas sources to meet demand and measures to enhance transparency in market
conditions; and

issues relating to the regulation of energy infrastructure.
Please provide any comments on The Security of Energy Supplies below:
2. Regulatory Reform and Role of Government
The Government seeks comment on:

priority issues, barriers or gaps within the COAG energy market reform agenda;

possible approaches and impacts of review of tariff structures including fixed network costs, further time-ofuse based electricity tariffs and the use of smart meters;

possible measures to promote greater price transparency in gas markets; and

areas where further privatisation of government-owned assets would contribute to more effective regulatory
frameworks and better outcomes for consumers.
Please provide any comments on Regulatory Reform and Role of Government below:
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3. Growth and Investment
The Government seeks comment on:

commercial or market initiatives that could enhance growth and investment in the energy and resources
sectors;

areas where approvals processes could be further streamlined while maintaining proper environmental and
social safeguards;

further ways that regulatory burdens could be reduced while maintaining appropriate levels of disclosure and
transparency in energy markets; and

the impacts of variable land access policy and ways the community could be better informed and engaged on
development in the energy sector.
Please provide any comments on Growth and Investment below:
4. Trade and International Relations
The Government seeks comment on:

how to grow the export of value-added energy products and services;

ways to remove unnecessary barriers to continued foreign investment in Australia’s energy sector;

ways to strengthen support for access to export markets; and

ways to support business to maximise export opportunities for Australia's energy commodities, products,
technologies and services, including the value of Australia’s participation in the variety of international forums.
Please provide any comments on Trade and International Relations below:
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5. Workforce Productivity
The Government seeks comment on:

the nature of any current skills shortages being experienced and how these could be addressed by and with
industry;

the capacity of industry and education sector-led programs to meet long-term training and skills development
needs of the energy and resources sectors; and

specific long-term training and skills development needs for alternative transport fuel, renewable energy,
energy management and other clean energy industries.
Please provide any comments on Workforce Productivity below:
6. Driving Energy Productivity
The Government seeks comment on:

the current suite of energy efficiency measures, ways these could be enhanced to provide greater energy
efficiency or possible new measures that would enhance energy productivity;

the use of demand-side participation measures to encourage energy productivity and reduce peak energy
use; and

measures to increase energy use efficiency in the transport sector.
Please provide any comments on Driving Energy Productivity below:
Demand Side Participation (DSP):
The government is committed to energy reforms to ensure consumers pay no more than is necessary for
a reliable and secure supply of electricity.
Despite Australia's electricity demand reducing in recent years, domestic electricity prices are still rising.
The Australian Energy Market Commission (AEMC) has forecast price rises in the order of 7% per annum
from 2012 - 2015. [1]
The National Electricity Objective (NEO), as stated in the National Electricity Law [2] is to promote
efficient investment in, and efficient operation and use of, electricity services for the long term interests
of consumers of electricity with respect to –
1.
price, quality, safety, reliability, and security of supply of electricity; and
2.
the reliability, safety and security of the national electricity system.
The Productivity Commission (PC) Inquiry into Electricity Network Regulation [3], the recent Power of
Choice review by the AEMC [4], and the Senate Select Committee on Electricity Prices have all identified
peak demand periods that occur for as little as 40 hours per year as the major driver of electricity price
rises.
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Network costs are between 45-55% of a typical electricity bill and the AEMC project that infrastructure
investment will account for almost all price rises to 2015, while the PC draft report observes that
approximately 25% of electricity bills are required to meet the 40 hours of peak demand periods each
year. This highlights an obvious failing of the NEO to provide for the long term interests of the consumer
in respect to price and highlights a skewed framework where a large proportion of electricity
infrastructure capacity is redundant for much of the year.
Peak demand periods predominantly coinciding with heatwave periods (as experienced in SE Australia
13th-17th Jan) drive up electricity consumption and the need to invest in electricity infrastructure to meet
community expectations and stringent reliability standards during these periods. Yet this infrastructure
capacity may be redundant for large parts of the year. The capital investment required to meet these
short peak periods is passed through to the consumer, and is the major factor in electricity price rises.
The seasonal peak electricity demand periods have reduced in recent years across all states in the NEM.
The highest ever peak demand in Victoria occurred in the lead up to Black Saturday in 2009, while for
Queensland the peak day in 2011-12 was hotter than any since 1999-2000, but peak demand was lower
than it had been in either 2009-10 or 2010- 11. Both New South Wales and South Australia experienced
their highest ever peak demand days 2 years ago.
Analysis by Pitt & Sherry [5] has demonstrated that increased energy efficiency, changing electricity
consumer behaviour and increased uptake of solar PV are largely responsible for reducing the size of
demand on peak days.
Demand side participation (DSP) in conjunction with a smart meter, an in-home-display (IHD) and an
iPhone App, enables the customer to make better decisions and better manage their electricity use,
potentially leading to lower electricity bills.
Making electricity consumption more visible improves the customers understanding of how much
electricity they are using. Trials have shown improved understanding of energy use, leads to an
improved understanding of the financial costs and benefits of electricity and in turn encourages greater
energy efficiency behaviours.
Demand response programmes have begun to emerge across the EU in recent years delivering a wider
choice of demand response options and greater potential benefits for consumers. The gradual rollout of
smart metering systems, the development of network codes for the internal electricity market, as well as
the related guidelines on tariffs, create the right conditions for policy-makers, regulators, network
operators and energy businesses to consider how to trigger more demand side participation in the
market in the near term. [6]
In the US, demand response has the capacity to reduce the total electricity generation needed in peak
hours. In some parts of the US electricity system, up to 8% of peak demand could be reduced through
demand response; 29 GW of load in the US is already registered for existing demand response programs.
It is estimated that the volume of controllable load in the EU is at least 60 GW – shifting this load from
peak times to other periods can reduce peak-generation needs in the EU by about 10%. [6]
Demand response programs are underpinned by technological solutions, which will need to be
accessible, flexible and attractive for residential and small business consumers. Some key elements in a
demand response program could be:
appliances able to modulate their energy use, without compromising their function eg. air
conditioners;
smart metering systems that record energy use and register consumption in differentiated time
periods for billing purposes;
development of iPhone App monitoring real time energy use;
storage possibilities that facilitate the shift in consumption in time. These could be in the form of
heat storage (in winter) or battery storage (EV possibilities).
A market based system for electricity savings could be established to trade certificates based upon the
amount of electricity saved. There are currently some state based systems trading in energy efficency
certificates such as the Victorian Energy Efficiency Target (VEET) scheme. Such a market based scheme
would increase the potential of demand response programs achieving even greater savings, by opening
up new possibilities for participation as follows:
i.
residential, industrial and commercial consumers may benefit from dynamic or differential retail
prices that reward shifting their demand to off peak periods;
ii.
residential, industrial and commercial consumers may bid their demand in the energy demand
market, or they may be provided incentives to shift their electricity loads during high demand periods;
iii.
facilitators, or aggregators of demand, will recruit residential, commercial and small or large
industries to participate in the demand response programs and energy savings markets;
iv.
electricity retailers can also provide aggregation services to consumers and sell energy demand
savings into the market;
v.
manufacturers of smart metering equipment and smart appliances need to ensure their products
are compatible with the demand response requirements, and ensuring interoperability of technology
across all sectors of the industry;
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vi.
transmission and distribution system operators need to accommodate new operators in the
network such as demand aggregators and enable their participation in relevant electricity markets.
Demand response programmes will open up access to the network services for a broader range of
clients from individuals and small consumers, micro generators through to larger distributed generators
and energy intensive industries, who may all want more self management of their electricity demand and
supply. Network operators will need to co-operate with this broad base of prospective clients to ensure
network supply and demand equilibrium.
Demand response is crucial for meeting future energy needs with the least necessary supply and
transmission capacity making the supply chain more efficient and triggers lower energy costs with better
prices for consumers. For Australia to implement an effective demand response program the following
opportunities, barriers and the possible responses are outlined.
Opportunities:
a.
Improved understanding of electricity and energy systems
b.
Flexible use and management of electricity
c.
Differential pricing incentivizes shift away from peak use periods
d.
Facilitators and aggregators of demand savings
e.
Network flexibility
f.
Energy storage
Barriers:
a.
Energy literacy of consumers is low;
b.
Flexibility to shift electricity use may be limited
c.
Electricity tariffs may not offer significant price difference between peak and off peak pricing
d.
Limited number of consumers opt-in for voluntary scheme
e.
Network access is strictly controlled and limited
f.
Cost
Solutions / Response
a.
Energy information and education programs; Combine with Smart Phone App with Energy
tutorial; In-Home-Display wi-fi linked to Smart Meter provides visibility of electricity use
b.
Smart appliances that can be controlled remotely; Energy audit helps to identify efficiency
savings; DSP is a voluntary, opt-in program
c.
Retail rates need to reflect significant difference between peak and off peak periods to provide
real incentive to change behavior
d.
Ensure price signals will provide significant incentive; Develop market based rewards for
electricity savings
e.
Technology improvements enable dynamic balancing of the network, enabling more clients to
play a role such as demand saving market participants
f.
Heat storage in winter and battery storage systems can be accommodated in a smart, dynamic
network
Recommendation:
i.
undertake analysis of controllable load electricity volumes across the NEM and SWIS;
ii.
prepare for education program to improve the broader public understanding of flexible pricing
options and better individual management of electricity;
iii.
develop national standards that ensure interoperability and communication systems between
smart meters, IHD’s, smart appliances and network operations;
iv.
investigate and implement a market framework for electricity demand savings that may be bid
into traditional electricity market;
v.
regulatory reform to enable aggregators / facilitators to participate in an energy savings market;
vi.
ensure existing electricity stakeholders including generators, distributors and retailers support
the program by offering appropriate price signals to move away from the peak pricing periods.
References:
[1] AEMC (2013). Electricity Price Trends Final Report: Possible future retail electricity price movements
1st July 2012 to 30th June 2015. Australian Energy Market Commission.
[2] National Electricity (South Australian) Act 1996
[3] Productivity Commission (2013). Electricity Network Electricity Framework. Productivity Commission
Inquiry Report, Vol.1 No.62. Government of Australia.
[4] AEMC (2012). Power of Choice Review – giving consumers options in the way they use electricity.
Australian Energy Market Commission, Sydney.
[5] Pitt & Sherry, 2014. Fall in emissions continues to outpace ongoing drop in electricity demand
http://www.pittsh.com.au/news/fall-in-emissions-continues-to-outpace-ongoing-drop-in-electricitydemand
[6] European Commission (2013). Incorporing demand side flexibility, in particular demand response, in
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electricity markets. Commission Staff Working Document. European Commission, Brussels, Europe.
2. Minimum Energy Performance Standards (MEPS):
Minimum Energy Performance Standards (MEPS) specify the minimum level of energy performance that
appliances, lighting and electrical equipment must meet or exceed before they can be offered for sale or
used for commercial purposes.
MEPS are an effective way to increase the energy efficiency of products. By specifying a minimum
energy performance level they prevent inefficient products from entering the marketplace and help to
increase average product efficiency over time. For consumers, this means that products available in the
market use less energy and have lower running costs over the life of the product.
Australia and New Zealand have an agreement in place ie. the Trans Tasman Mutual Recognition
Standard (TTMRA) for appliance performance standards, but this needs to be harmonized against the
best overseas standards of our trading partners such as the EU EcoLabel scheme or the US Energy
Efficiency Standards Program (EESP) to continually 'raise the bar'. This will ensure appliance
manufacturing keeps improving to achieve the best available energy efficiency standards globally.
For example the US EESP illustrates the case of improving refrigerator efficiency over time and
demonstrates the impressive impact a standard can have on appliance efficiency. U.S. refrigerator
standards, which began in the mid-1980s, are expected to save consumers almost $40 billion by 2015.
The 1993 U.S. refrigerator standard represented a 25-30% increase in energy efficiency, eliminating 99%
of the models that were previously on the market. Then, due to the innovation of new technologies in the
intervening years, the 2001 standard required an additional 25-30% efficiency increase that eliminated
about 95% of the models on the market by that time.
Recommendation:
i. ensure the Trans Tasman Mutual Recognition Arrangement (TTMRA) established between Australia
and New Zealand in 1997 reflects the latest MEPS;
ii. harmonize Australian Standards to the best standards currently available with our Trading Partners.
This will reduce costs involved in duplication of programs;
iii. ensure Australian appliance manufacturers are compliant with MEPS and incorporate world leading
manufacturing standards.
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7. Alternative and Emerging Energy Sources and Technology
The Government seeks comment on:

ways to encourage a lower emissions energy supply that avoids market distortion or causes increased energy
prices;

the need to review existing network tariff structures in the face of rapidly growing deployment of grid-backedup distributed energy systems, to ensure proper distribution of costs;

additional cost-effective means, beyond current mandatory targets and grants, to encourage further
development of renewable and other alternative energy sources and their effective integration within the wider
energy market;

how the uptake of high efficiency low emissions intensity electricity generation can be progressed;

any barriers to increased uptake of LPG in private and commercial vehicles and CNG and LNG in the heavy
vehicle fleet; and

any barriers to the increased uptake of electric vehicles and advanced biofuels.
Please provide any comments on Alternative and Emerging Energy Sources and Technology below:
1. Battery Electric Vehicles
The government is committed to energy market reforms that ensure consumers pay no more for their
electricity than is necessary, while also ensuring a reliable and secure supply of electricity.
Our submission earlier in this paper for Demand Side Participation (DSP) under Section 6: Driving
Energy Productivity, outlines the primary driver of electricity price rises being the investment in the
Transmission and Distribution networks to meet the stringent reliability standards across the network.
Yet this infrastructure capacity may be redundant for large parts of the year. The capital investment
required to meet these short peak periods is passed through to the consumer, and is the major factor in
electricity price rises.
AEMC analysis indicates network costs are between 45-55% of a typical electricity bill and they project
that infrastructure investment will account for almost all price rises to 2015 [1], while the PC draft report
observes that approximately 25% of electricity bills are required to meet the 40 hours of peak demand
periods each year [2]. This highlights an obvious failing of the National Energy Objective to provide for
the long term interests of the consumer in respect to price.
Energy storage systems are set to play a vital role in energy reform and would complement other
measures such as demand side participation (DSP). Energy storage could optimise the use of existing
electricity infrastructure by providing distributed back-up systems that could be called upon in periods
of high electricity demand. This would improve system efficiency and defer network upgrades at lower
cost.
Battery Electric Vehicles (BEV’s) are a form of Electrical Energy Storage (EES) and represent both a
new demand for electricity and a possible storage medium that could supply power to utilities. The
"load shifting" and “vehicle-to-grid” concepts could help cut electricity demand during peak periods
and prove especially helpful in smoothing variations in power generation introduced to the grid by
variable renewable resources such as wind and solar power.
Today in Australia there are 13 million passenger vehicles and 2.7 million light commercial vehicles of a
total motor vehicle fleet of 17.2 million vehicles. Domestic passenger vehicles represent 75% of all
motor vehicles and are nearly all petrol powered vehicles; some are diesel powered. [3]
Analysis of car ownership indicates 50% of households in Australia had access to two or more motor
vehicles, representing 4.0 million households having access to multiple vehicles.
The ability of the population to access services and employment is strongly influenced by access to
transport. In 2011, ABS statistics reveal that 10.3% of Australians commute to work by public transport
while 67.3%, or 6.76 Million Australians drove to work in private vehicles.[3] Many of these trips are
relatively short distances and short drive times, with cars often parked for most of the day.
These figures indicate there is much scope for promoting BEV use in many Australian situations, and
could potentially provide a mobile battery storage system as a back-up for the electricity network in
periods of high demand.
Batteries in BEVs are regularly charged from the power grid after use. On an energy basis, the price of
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electricity to run a BEV is determined by the price of grid electricity, and is often a small fraction of the
cost of liquid fuel needed to produce an equivalent amount of energy (energy efficiency). The cost of
replacing the batteries dominates the operating costs for BEV’s.
Charging time is limited primarily by the capacity of the grid connection. A normal household outlet
delivers 1.5 kilowatts in the US, Canada, Japan, and other countries with 110 volt supply, while in
countries such as Australia with 230V supply 2300 Watts charge can be delivered from a standard
outlet, or 3450 Watts from a 15A outlet.
The effective power recharge rate is slow when you compare it to the effective power delivery rate of the
average petrol pump of about 5,000 kW, however most people do not require fast recharge as they have
enough time during the work day, or at home over night to recharge. Even if the supply power can be
increased, most batteries do not accept charge at greater than their charge rate because high charge
rate has adverse effect on the discharge capacities of batteries.
Currently the Mitsubishi MIEV available in Australia has a battery charge capacity of approximately
16kWh providing a range of up to 100 kilometres. The new Tesla has a battery charge capacity up to
85kWh which would provide a driving range of 400-500 kilometres.
These vehicles have a slow charge option and a quick charge option. The slow charge takes
approximately 6-7 hours to recharge the Mitsubishi and can be undertaken from any standard
household 240V 10amp powerpoint in Australia. The quick charge option requires a special electrical
socket using 300V and 90amp wiring enabling the Mitsubishi to be fully recharged in approximately 20
minutes.
In recent years emerging development of battery technology presents new possibilities with batteries
displaying increased energy densities and will improve the BEV conversion performance. Some battery
options are listed:
•
Lead-acid batteries are the most available and inexpensive. Such conversions generally have a
range of 30 to 80 km. Production BEVs with lead-acid batteries are capable of up to 130 km per charge.
•
NiMH batteries have higher energy density than lead-acid, with some test vehicle EVs
delivering up to 200 km of range.
•
New lithium-ion battery-equipped EVs provide 320–480 km of range per charge. Lithium is also
less expensive than nickel.
Wireless charging technology is now also being developed. This could be in the home or along
roadsides, for instance on a regular bus route, the buses could be automatically charged as they pull in
and out of each bus stop via a wireless recharging system. Smart phone App's are being developed that
can monitor the charge of your EV.
Norway is the first country in the world to boast an electric vehicle as their number 1 new car seller,
with the Nissan Leaf now being the number 1 best selling vehicle in new car registrations in both
September and October, 2013. This has come about through a committment to policies that encourage
the uptake of BEV’s, such as the absence of import duties, discount on registration fees, absence of toll
payments on roads and priority sharing of bus lanes. Furthermore they are able to recharge vehicles
free of charge at some public charging stations.
Recommendations:
1.
Electric vehicles can be used as mobile battery storage systems and provide a far greater dual
benefit than static storage systems do. Australia needs to establish policy that recognises the potential
for grid back-up and electrical storage of BEV’s.
2.
Policy development to promote the uptake of BEV’s, especially targetting the 2nd family car
situation could see:
i.
significant discount for car registration,
ii.
discount on road tolls,
iii.
free car parking;
iv.
amendments to the Australian Energy Regulation enabling the roll out of public charging
facilities,
v.
tax deductibility for costs of recharge
vi.
waive the luxury car tax and import duties on BEV’s.
3.
Training for electricians to install domestic fast charging stations in home. These should be set
up to provide two way ‘vehicle-to-grid’ transfer of electricity for household use.
4.
Facilitate the roll out of public fast charging stations to enable vehicles to recharge at regular
intervals on highways and major roads.
References:
[1] AEMC (2013). Electricity Price Trends Final Report: Possible future retail electricity price movements
1st July 2012 to 30th June 2015. Australian Energy Market Commission.
[2] Productivity Commission (2013). Electricity Network Electricity Framework. Productivity
Commission Inquiry Report, Vol.1 No.62. Government of Australia.
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[3] ABS (2013). Motor Vehicle Census, Australia 2013. Australian Bureau of Statistics. Available online
at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/9309.0/
General Comments
Any further comments?
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