A review conducted by The Australian Energy Market Commission (AEMC) is looking at possible changes to the National Energy Market (NEM) in order to aid consumers to manage their electricity consumption, which is currently 25% of the NEM.
The key issue identified by AEMC is that peak electricity demand is growing at three times the rate of total average demand. Households are using less electricity, but want to use it at the same time by using appliances such as air conditioners. As a result, the electricity networks are being engineered to meet this peak demand, which has been the main driver for electricity price increases.
The drivers of demand are not easily changed, according to the AEMC review and, may in fact, be harder to change than average demand. One suggestion to curb the rise of peak demand is to implement ‘time of use’ billing, but this is only feasible for those who have interval or ‘smart metering’.
This issue is being investigated by the Federal Government’s Senate inquiry into Australian electricity prices, which could lead to a national roll-out of smart meters or introduction of time-of-use charges.
The AEMC review says, "That the vast majority of residential consumers do not have the adequate information or knowledge about the costs of their consumption." It acknowledged consumers would benefit from the appropriate metering technology. In Victoria, where smart metering is being rolled out, electricity distributors and retailers are launching web based applications so households can monitor electricity usage.
While governments and regulators grapple with the issues, electricity retailers are positioning themselves in the market by the types of energy saving services they provide. This provides electrical contractors a real opportunity to offer customers energy management solutions that can be as simple as motion sensors for lighting, through to total home automation systems.
through its EcoSmart Electricians program have been a leader in the field of energy efficiency, providing training to electricians for a number of years. This program is set to be relaunched with an increased focus on energy management and energy efficient lighting. NECA is also looking to provide training in Energy Assessment of residential, office and retail premises so electricians can offer customers an extra service as part of a whole energy efficiency package.
Several indicators suggest Australian households are concerned about electricity prices. A recent poll conducted by Essential Research found 42% of respondents believe electricity and gas prices have increased over the last few years, and solar PV has been adopted across the country, with 9% of households now having a system installed.
Consumers have been encouraged to change their behaviour in order to save electricity for years, but it is becoming more evident homeowners would prefer to use technology to do this. The good news for electrical contractors is only electricians can install such technologies by providing customers with solutions that meet their needs.
While the residential sector is only a quarter of the electricity market it is the sector of the market that influences peak demand the most and is therefore the area of real interest for governments and regulators. There is no doubt that decision makers are keen to implement policies that will reduce the increases in peak electrical demand. Unfortunately one of the main ways to do this is for regulators to introduce metering and pricing methods that will discourage electricity use during peak times.
Governments have clearly identified the cause of electricity price increases and feel compelled to do something about it. At the moment all electricity consumers are paying for improvements to the network to cater for increases in peak demand, but with more advanced metering in the future, those who are using electricity during peak times will have to pay a premium for the privilege..