The Problem with Australia’s National Electricity Market

Australia is an industrialized country and one of those where greenhouse gas emissions have gone through the roof as much as 29 tons per year. In the last 20 years amount of emissions that are generated per dollar of GDP are increased, this has made it emission intensive economy holder.

The biggest source for the addition of greenhouse gas to the system was the electricity generation and it contributed 34% in 2005 to emit these gasses polluting the environment. This has been seen to be growing up 3% every year and since 1990 it has increased up to 68%. The reason of high emissions is that one-third of the energy is lost before it reaches the consumer and from the remainder energy 10% is used in Aluminum smelting. The mode of production of energy is also what is adding up to the greenhouse gases that is the production of 78% power from coal, 14% from natural gas, 4.7% from water and just 3.3% of energy is produced from renewable energy sources. Almost 20% of energy is just used to meet the peak demand of energy on the shear weather days that is hottest and coldest days.

The electricity prices in Australia are the cheapest in the whole word because it is very easy to mine coal there. The total bill received is divided such that 40% is given to the power station, 10% to the transmission line company, another 40% to the distribution company and the last 10% is the profit of energy retailer. But these prices are now increasing because ageing infrastructure is now replaced with the new one in order to fulfill the consumption demand of the people especially in the peak periods. This includes replacement of poles and wires. These all demands are however, not changed much over some time and it is because there is not much of an economic growth and other major actions. Find the facts here!

The context

90% electricity generated is from National Electricity Market (NEM), this extends from Port Douglas that is in far North Queensland to Port Lincoln in South Australia. The regulatory system that is running NEM is the one that was formed by an agreement between the states and territories in 1995 and was overseen by the Standing Council on Energy and Resources and this complex regulatory system was implemented through National Electricity Laws and Rules.

The main objective promoted by National Electricity is to provide electricity that fulfils the long term interest of consumers that is its price, quality, reliability, security all is in favor of consumer. But when we compare to other countries such as UK, there are no environmental or social objectives that are introduced in fact SCER has resisted from its introduction and implementation. When the demand of electricity is rising there can be two responses. Either reduce demand or increase energy efficiency.

National Electricity Rules are making poles and wires companies to invest in new infrastructure rather than managing the demand solutions especially in the peak times of demand. This has increased the investment in the infrastructure development.

The solution

The transition from carbon polluting energy to investment to renewable energy, the problem exists due to the absence of the energy market. This is the main road where the transition is regulated or hindered. If the grids of the Australia are made more responsive to consumer and as well as environmental needs and also improve the energy efficiency of machinery and manage the demand of electricity. This can result in making the renewable energy approachable to people and also lesser greenhouse emissions.

TEC has been focusing on the energy efficiency and demand management in order to make sure that the greenhouse gases are lowered by 2050. But according to studies 60% of reduction in pollution is only possible by energy efficiency but demand management has also positive effects but very less. Discouraging the investment in poles and wires is also one way of increasing productivity.

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TEC has been working in Australia since 2004 to promote awareness of solar power and renewable energy with the aim to assist in the development of a green environment. We are doing this by introducing environmental objective in the national energy market and applying to change rules to make energy efficiency better and demand management better. “Poles and wires” companies are made to know the better alternatives to make the green energy.

TEC has supported the efforts that ensure the production of lesser fossil fuel that is rich in carbon emission while increase the renewable energy generation. This also includes production of 4 rankings related to annual Green Electricity Watch so that the consumers are more attracted towards carbon reduction and choose the environment friendly energy resources. The CO2 reductions are also encouraged by making law changes in state and national laws.

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The Author

I took an interest in the Australian energy sector close to ten years ago and since then have monitored the trends, technologies and direction of the Australian Energy Market. I was drawn to the Australian solar market in 2008 and since then have worked heavily in the field. I am partnered with national and international solar energy companies, from manufacturers of solar panel and inverter technology, online software developers that introduce tools to quote, monitor and manage solar power systems and media organisations who like myself, closely monitor the solar and renewable energy sector.

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