IT WAS Intel founder Gordon E. Moore who observed in 1965 that there was a doubling in the power of computer chips every two years.
Moore predicted this trend would persist for another 10 years and his prognostications have proven eerily correct.
Even extrapolating Moore’s Law, as it became known, beyond the realms of semiconductors into digital technology and elsewhere, technology tends to double in power every couple of years.
And as the performance increases, the price drops in sync.
It is to this phenomenon that electricity consumers can pin their hopes in coming years as they grapple with rising power bills. The technology to deliver cheaper energy is here.
The question is: can industry and government deliver?
Already, solar power has hit a ”tipping point’,’ where it is economic without government subsidies.
This was one of the findings of a recent draft report by engineer Robert Rollinson on the electricity industry on the New South Wales mid-north coast.
The Melbourne Energy Institute’s Professor Mike Sandiford says solar PV (photovoltaic) is close to ”grid parity”. ”PV
This, however, is no guarantee of relief from surging prices.
The electricity industry needs to get a return on its massive spending over recent years – spending which has been the impetus behind nosebleed power bills.
Thanks to the high fixed costs of the network, even if consumers were to flee the grid in droves for wind and solar power, many would still use it for a portion of their power needs.
Less savvy consumers – read the most needy – will still be stuck on the grid.
For industry, the unpleasant consequence of falling demand and the incursion of solar power is the prospect of large write-downs at a time when the Queensland and NSW governments are keen to privatise their transmission and distribution assets.
There is a little ray of sunshine, though.
Electric cars may take up surplus capacity on the grid in the off-peak hours. You charge them at night.
Like TV sets, digital cameras and DVD players, electric cars have rapidly improved in performance and dropped in price.
A paper from the Australian Energy Markets Commission estimates that electric cars will make up 20 per cent of all new vehicle sales in Australia by the end of this decade and 45 per cent by 2030.
If consumers charge their cars overnight the AEMC says that electricity demand will rise only 4 per cent by 2030.
The cost of charging an electric car during the night is about 1¢ per kilometre versus 10¢ a kilometre to fuel a petrol car.
Ergo, lower costs for consumers and higher demand for the networks at times of when they have most un-utilised capacity and therefore no need to make capital expenditures (or operating expenditures, for that matter).
The incremental off-peak revenue flows to industry (the five-year regulatory periods allow for significant capture; then it’s, fingers-crossed that the regulators don’t roll the same opportunities for ”gold-plating”, or unnecessary expenditure, into the next period). Off-peak prices are lower, but this is incremental revenue nonetheless, and revenue gained without offsetting capital or operating costs.
Are electric cars at a tipping point, too?
Over the New Year, Nissan unveiled the pricing for its entry level LEAF electric vehicle at $US28,800 ($A27,900) – that’s 18 per cent cheaper than the most basic 2012 model and presents a robust challenge to GM’s dominant offering, the Volt.
Applying the US federal incentive, the price of the new LEAF is an aggressive $US21,300, or as low as $US18,800 in California once the state rebate has been discounted.
The tumbling Japanese yen will make imported electric cars far cheaper in Australia, too, or at least for as long as the $A remains high.
In Australia though, if high power prices persist, particularly in off-peak, they may act as an impediment to take-up of electric cars.
As an interesting aside, one corollary of the carbon tax is that it will also act as an impediment to take-up as it is a very large share of off-peak costs but not so much for on-peak – and the tax is not levied on its competitor: petrol.
While electric cars may prove a happy if unintended consequence of technology for the electricity networks, industry remains in denial when it comes to solar PV.
Research by Mike Sandiford last year estimated that, thanks to the spectacular take-up of solar panels, there would be in excess of 2 gigawatts of solar PV capacity installed by now, enough to produce about 8 per cent of the average daytime electricity demand.
Rather than being hard to measure, Sandiford says the solar PV signature is ”blindingly obvious”, putting big dents in electricity consumption figures in the places where PV penetration is highest.
”In South Australia, midday to early afternoon demand was down over the financial year 2011-12 by about 8 per cent on the average for the period spanning mid- 2007 through mid-2009. That contrasted with a negligible change in demand outside daylight hours,” said Sandiford.
If his estimates are even roughly correct, the electricity industry is in for a shock.
Revenues were down 35 per cent, or $3.3 billion, across the National Electricity Market in 2011-12, compared with the $9.6 billion in turnover for the two years prior to mid-2009.
If solar PV deployment proceeds at its present pace, it will take only 18 months to reduce midday demand to current midnight levels.