# Where did all the electricity demand go??



## sydboy007 (10 January 2013)

Electricity consumption in the National Electricity Market (NEM) states has decreased for the fourth consecutive year. In 2012, electricity demand in the NEM decreased 2.5 per cent (4,818 GWh), when compared to 2011 consumption, which represents the largest annual reduction since this trend began.

Reduced electricity consumption in the NEM is not a recent phenomenon; electricity demand has fallen every year since 2008. Electricity demand in 2012 was 196,000 GWh, 11,400 GWh lower than the peak reached in 2008.  At retail prices of around 25c / kWh it's a reduction of $2.85B being spent on electricity.

Could it be solar PV and roofing insulation, along with other efficiency improvements, are finally starting to pay off?

Standout performer New South Wales, where demand fell by 4,000 GWh.


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## Gringotts Bank (10 January 2013)

sydboy007 said:


> Electricity consumption in the National Electricity Market (NEM) states has decreased for the fourth consecutive year. In 2012, electricity demand in the NEM decreased 2.5 per cent (4,818 GWh), when compared to 2011 consumption, which represents the largest annual reduction since this trend began.
> 
> Reduced electricity consumption in the NEM is not a recent phenomenon; electricity demand has fallen every year since 2008. Electricity demand in 2012 was 196,000 GWh, 11,400 GWh lower than the peak reached in 2008.  At retail prices of around 25c / kWh it's a reduction of $2.85B being spent on electricity.
> 
> ...




Just the gd expense of it I reckon.  People turn off the heater/ac/lights rather than waste power.


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## orr (10 January 2013)

This is a great line of inquiry. And makes all the participants in the fossil fuelled electricity fraternity very wobbly. When you look at the 2020 20% renewable energy target that was put together using projections that have now proven to be fundamentally floored. The planned renewable  infrastructure now looking like suppling  27% (odd percent ) that was designed on those floored projections. The shrill warnings of the gross incapacity of renewable energy to cover the nations energy needs into the future seem a little over cooked. 
And on a pricing note, I lived in London in the mid nineties where you bought electricity up front from the post office and took your receipt number home and put it into your meter to be credited @ a price of .12p/ kwh at an exchange rate at the time of .33p to the Au dollar. Thats .36c/kwh in 1996 dollars for domestic retail usage. At that time.


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## sydboy007 (10 January 2013)

orr said:


> This is a great line of inquiry. And makes all the participants in the fossil fuelled electricity fraternity very wobbly. When you look at the 2020 20% renewable energy target that was put together using projections that have now proven to be fundamentally floored. The planned renewable  infrastructure now looking like suppling  27% (odd percent ) that was designed on those floored projections. The shrill warnings of the gross incapacity of renewable energy to cover the nations energy needs into the future seem a little over cooked.
> And on a pricing note, I lived in London in the mid nineties where you bought electricity up front from the post office and took your receipt number home and put it into your meter to be credited @ a price of .12p/ kwh at an exchange rate at the time of .33p to the Au dollar. Thats .36c/kwh in 1996 dollars for domestic retail usage. At that time.




Australians generally have pretty cheap energy still.  Pop over to Europe, Singapore, Japan and see what they pay for petrol.

For all the vitriol that LNP supports heap on "Pink batts" (mine are a very conservative friendly beige ) i do wonder how much energy they have been saving households.  I can honestly say I've seen around a 2 kWh / day reduction in my annual consumption, and I don't have aircon at home.  I can only imagine the energy savings for those with aircon would be much higher.

With increased efficiency and an effort into renewables why can't we aspire to much higher renewable energy targets.  SA already hits 26% with wind energy, and while I know the Waurbra foundation akins wind turbines with the apocalypse, I've yet to hear of a pandemic of illnesses in the state.


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## DocK (10 January 2013)

Maybe the demand is less due to the decreased productivity?  Many businesses have closed or have reduced hours.
Production being relocated overseas?  I look around the industrial area our business operates from and I'm certain that electricity demand for 2012 would have been far less than that for 2011 - quite a number of the businesses that were in full operation have closed or drastically cut production levels.

A breakdown of commercial demand vs domestic demand would be interesting.


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## sptrawler (10 January 2013)

DocK said:


> Maybe the demand is less due to the decreased productivity?  Many businesses have closed or have reduced hours.
> Production being relocated overseas?  I look around the industrial area our business operates from and I'm certain that electricity demand for 2012 would have been far less than that for 2011 - quite a number of the businesses that were in full operation have closed or drastically cut production levels.
> 
> A breakdown of commercial demand vs domestic demand would be interesting.




What do yoy mean dock 
We have only lost 100,000 jobs in manufacturing since 2008.

http://nett.com.au/news/more-than-100000-manufacturing-jobs-lost-since-gfc-100319/


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## medicowallet (10 January 2013)

+1 dock

Decreasing economic growth helps make the figures look cuter than they are.


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## sydboy007 (10 January 2013)

medicowallet said:


> +1 dock
> 
> Decreasing economic growth helps make the figures look cuter than they are.




How do u equate decreasing economic growth with higher GDP growth?

Isn't higher GDP with less energy consumption a good thing?

Not sure if there's been any reduction in aluminium smelting over the last couple of years.  I know tomago was due to close, or has closed recently.

From memory Aluminium smelting consumed around 15% of electricity produced in Australia.  Most of it was provided and below market cost.

Gotta love Govts and their "value" adding.


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## sptrawler (10 January 2013)

Also Dock, did you read in the article they expect a further loss of 85,000 jobs in the next 5 years.
So we will probably see a further reduction in manufacturing electricity demand.
So it is probably a win all round, reduced carbon emmissions and a freeing up of workers for the mining sector.
Add to this all the able bodied workers, the Labor party are currently processing in detention. It won't be long before we may be able to scrap the 457 visa system.

Only down side, there may be a glut of taxi drivers.


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## sydboy007 (10 January 2013)

sptrawler said:


> Also Dock, did you read in the article they expect a further loss of 85,000 jobs in the next 5 years.
> So we will probably see a further reduction in manufacturing electricity demand.
> So it is probably a win all round, reduced carbon emmissions and a freeing up of workers for the mining sector.
> Add to this all the able bodied workers, the Labor party are currently processing in detention. It won't be long before we may be able to scrap the 457 visa system.
> ...




Maybe the jobs at mesoblast, sirtext, phosphagen, reva medical, sai global, star pharma can help.

Unless you're looking at the manufacturing of high value physical products (usually due to the IP embedded in them) Australia is going to have to accept that we don't have the domestic market to help foster the production here.  The late 80s culled the companeis that could only survive behind the tariff walls.  probably 2013 is when the productivity everyone keeps blaring on about takes off because there'll be less workers doing more work.

With Govt neglect we have world leading biomedical companies.  With neglect we have high end design firms that off shore most of the production, keeping the true value adding to be done in Australia.

Now if only some political party could give up yellow vest photo ops and do what's needed to foster these companies, we might have a chance of keeping them here.

Can't remember the name of the company that had some form of water treatment process, but none of the water companies in Australia would use it.  They eventually moved to Germany because the Germans were willing to fund them.  They are the ones who will reap the billions in returns of the new technology.


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## sptrawler (10 January 2013)

sydboy007 said:


> Maybe the jobs at mesoblast, sirtext, phosphagen, reva medical, sai global, star pharma can help.
> 
> Unless you're looking at the manufacturing of high value physical products (usually due to the IP embedded in them) Australia is going to have to accept that we don't have the domestic market to help foster the production here.  The late 80s culled the companeis that could only survive behind the tariff walls.  probably 2013 is when the productivity everyone keeps blaring on about takes off because there'll be less workers doing more work.
> 
> ...




Talking about the tarrif reductions of the 80's has nothing to do with 100,000 jobs lost 20years later and a further 85,000 expected in the next 5 years.
Look no matter how you look at it, the economy has been a disaster over the last 5 years. Just look at the all ords to see how much confidence there has been in the economy, just look at your superannuation performance to see how it affects you.
Getting back on track electricity demand won't pick up untill the major manufacturing climate improves.
If it doesn't improve, well there will be more job losses in the sector and it will result in a resource driven economy. This in turn will drive our general living standards toward the regions we are competing with i.e South America and Africa.
Sad but true. If you believe I.T will save our ar$e, your dreaming.


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## Julia (10 January 2013)

Of course, sydboy, don't for a moment consider that electricity has become so expensive that many low income households are simply having to do without it.  Consumers being cut off because of not being able to pay their bills are increasing all the time.

All very fine for you to rant on with your left ideology.  Real people are genuinely suffering.


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## Smurf1976 (10 January 2013)

I'll comment.... 

First thing to realise is that the Australian Energy Market Operator (AEMO) is only counting centrally dispatched electricity generation. That is, that which comes from what most people think of when power generation is mentioned - actual power stations.

What they aren't counting is on-site generation at places like sewage works, paper mills, oil refineries and the like unless such places are producing a lot more electricity than they use themselves, thus leading them to be counted as a power station. At the larger end of this one are places such as oil and gas processing plants or metal smelters. They use waste products, either heat or from flammable materials that are burnt to produce heat, to generate some of their electricity. At the smaller end are things like household solar power - nobody's house is counted as a power station, and AEMO doesn't record this form of electricity generation directly.

So what's changed?

1. There is more production of electricity at places other than large power stations. Production is increasing in industry, even places like universities now sometimes have their own small power plant on site. And of course there's household solar installations as well.

2. Significant industrial production has been relocated offshore, with one relatively large one a direct outcome of rising electricity prices. Closure of the Hydro Aluminium (a company unrelated to either Snowy Hydro or Hydro Tasmania) smelter at Kurri Kurri (NSW) is the reason consumption in NSW dropped so much. This production now occurs offshore (using Australian raw materials) instead.

3. Increasing use of electricity substitutes. Sales of gas appliances, particularly water heaters, have boomed in recent years and it's to the point that some states offer grants to install them. Likewise it's no secret that there is renewed interest in firewood for heating houses and in solar for heating hot water. These technologies all displace electricity consumption to some extent. This is driven largely by the recent steep increases in electricity prices (especially in the case of firewood) and to a lesser extent by government regulation.

4. Energy efficiency. These days, practically all replacement appliances use less energy than their predecessors, largely as an outcome of technological development. Likewise there is a trend for consumers to replace appliances (particularly room heaters replaced with reverse cycle A/C or hot water heaters replaced with heat pumps) for the sole or primary reason of reducing electricity consumption as a response to rising prices.

5. There is a lot of evidence that many consumers are "priced out" of the market. That is, they do without (mostly) heating and in some cases hot water or lighting because they simply can't afford it. A disproportionate share of those in this category are elderly and unable to afford heating the house all day when at home.

6. Electricity is a "hard" economic statistic not easily masked. Practically all economic activity involves electricity either directly or indirectly. Historically, previous falls in electricity consumption were associate with recession and it is reasonable to assume that electricity demand would fall in any future or current recession.


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## sptrawler (11 January 2013)

Funny you should mention firewood Smurph.
My mum lives in a country town and wanted to get rid of her wood fire to replace it with reverse cycle.
No matter how I explained it to her she wouldn't have it.
Now she is asking how do I replace the reverse cycle and get back my wood fire.lol
It is hard work pushing $hit uphill.lol
The more you clear away, the more they shovel down on you.


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## So_Cynical (11 January 2013)

sptrawler said:


> Look *no matter how you look at it, the economy has been a disaster over the last 5 years. *Just look at the all ords to see how much confidence there has been in the economy, just look at your superannuation performance to see how it affects you.




What a crock..

Disaster huh, so what do you call the US and Euro economy's? seriously how can you realistically call our economy a disaster and maintain any credibility? sure complain away in political terms and ill ignore you as per usual, but to say something that is so deluded and so baseless in fact.

You really remind me of Christine Milne on the news last night, talking about the WHC thing...deluded.


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## sptrawler (11 January 2013)

So_Cynical said:


> What a crock..
> 
> Disaster huh, so what do you call the US and Euro economy's? seriously how can you realistically call our economy a disaster and maintain any credibility? sure complain away in political terms and ill ignore you as per usual, but to say something that is so deluded and so baseless in fact.
> 
> You really remind me of Christine Milne on the news last night, talking about the WHC thing...deluded.




O.k put up a graph the all ords against the Dow Jones over the last 5 years. What the

Go On Post it right here.lol
Lets not let crap and bullying get in the way of facts.LOL
In relative terms theirs is up 10% ours is down 20%.
They are the ones, who you are saying are struggling, we apparently are flying, what a joke. Pull your head out.

I love how you people who throw around comments like "what a crock"
I've got another one on the go that is saying I'm going to be burden on his tax.LOL
All you have in common is an innate ability to throw crap without any subjective experience to substantiate your claims


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## sptrawler (11 January 2013)

sptrawler said:


> O.k put up a graph the all ords against the Dow Jones over the last 5 years. What the
> 
> Go On Post it right here.lol
> Lets not let crap and bullying get in the way of facts.LOL
> ...




I posted that 3 minutes after you .
Could you respond by throwing up a graph that will justify your comment?
Over 4000 posts, christ knows how you get away with it.


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## sydboy007 (11 January 2013)

What does the level of the ASX prove?  Are you forgetting US currency debasement and QE to infiniteeeeeee?  Jpana haas taken tot he same with great gusto, and the Europeans are not too far behind either.  Trillions of dollars in practically interest free money looking for an asset that offers the chance of an above inflation rate of return.  Hard to find with most Govt bonds these days - Australia being a rare exception.

Unless you're arguing that markets are 100% rational then why do shares jump around by as much as they do every day?  Surely profit forecasts can't be changing by that much on a daily, and even on an intra day basis shares bounced around more than can explained in purely rational terms.

There's a whole heap of research out there that shows economic growth and stock market performance eg jay Ritter 2004

It is widely believed that economic growth is good for stockholders. However, the cross-country correlation of real *stock returns and per capita GDP growth over 1900-2002 is negative*. Economic growth occurs from high personal savings rates and increased labor force participation, and from technological change. If increases in capital and labor inputs go into new corporations, these do not boost the present value of dividends on existing corporations. Technological change does not increase profits unless firms have lasting monopolies, a condition that rarely occurs. Countries with high growth potential do not offer good equity investment opportunities unless valuations are low.

Current energy use is back down close to 2006 levels, and still on a downward trend, yet we're being told we still need billions in regulated network upgrades.  I don't know about you, but I'd happily invest for a ~7% guaranteed return.  Where does the retail investor sign up?

All the angst over a 9% carbon tax increase, when the main reason is being relatively ignored.


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## basilio (11 January 2013)

Smurf that was an excellent summary of how electricity production is changing.  Certainly puts a context around the topic of this thread. Thank you.

I was puzzled however by your final statement which seemed to go against all your previous points. You were saying that falling electricty use has traditionally been associated with a recession and would continue to do so. I think you demonstrated that we might see continuing falls in nominal electricity production (from the big producers) while still having a an economy buoyed by energy efficiency, substitution and local  electricity production.

 __________________________________________________________



> Current energy use is back down close to 2006 levels, and still on a downward trend, yet we're being told we still need billions in regulated network upgrades. I don't know about you, but I'd happily invest for a ~7% guaranteed return. Where does the retail investor sign up?
> 
> All the angst over a 9% carbon tax increase, when the main reason is being relatively ignored.  Sydboy




Sydboy hits the nail on the head. The demand of energy retailers for expansion in grid resources is a self serving lie - which are colle3ctively paying.  And don't even mention the Smart Meter rip offs!


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## Smurf1976 (11 January 2013)

basilio said:


> I was puzzled however by your final statement which seemed to go against all your previous points. You were saying that falling electricty use has traditionally been associated with a recession and would continue to do so. I think you demonstrated that we might see continuing falls in nominal electricity production (from the big producers) while still having a an economy buoyed by energy efficiency, substitution and local  electricity production.



I could probably have expressed it a bit better. I'm just noting that during previous recessions there has been a marked stagnation, and at times small falls, in electricity consumption in much of the country. It is thus reasonable to assume that if we were now having a recession (some say we are, some say we aren't - that's a different debate however) then it would be logical to expect falling electricity consumption.



> Sydboy hits the nail on the head. The demand of energy retailers for expansion in grid resources is a self serving lie - which are colle3ctively paying.  And don't even mention the Smart Meter rip offs!



Agreed although peak demands are an issue in some locations even with falling overall demand. 

For example, South Australia is one of the peakiest electricity systems in the world, versus Qld and Tas which are the opposite. In recent years, largely as a consequence of the various "reforms" there has been as loss of focus on maintaining a high load factor (average load as a % of peak). This results largely from the separation of generation from retail and associated marketing stategies, and results in higher costs per unit of actual production for consumers as a whole.

A lot of network investment comes about simply to collect the regulated return on it. Also worth mentioning is that the industry's focus these days is on the network whereas historically it was on generation. Hence big transmission and distribution projects happen now in much the same manner as big power stations were built previously. Trouble is, we still have to generate the power - much of the increased spending on transmission and distribution is of dubious value depending on the actual circumstances.

A classic example of the "network mentality" can be seen in the fire affected parts of Tasmania right now. Earlier today two RAAF planes each landed with a large generating unit on board. These have been borrowed from Queensland and taken to the Tasman Peninsula to power what remains of the grid down there.

Now, the sad part is that it was always known that the lines to this area were highly vulnerable to damage from various sources (in practice mostly storms). This was identified as needing a solution back in the old days of the vertically integrated HEC.

Then along came separation of the industry into generation (Hydro Tas), Transmission (Transend Networks) and distribution (Aurora Energy) as has occurred elsewhere. 

Now, when a company that does power lines is presented with a problem it should come as no surprise that building another power line ends up as the preferred solution. And so they canned the idea of permanently locating a small (diesel) power plant down there, and instead built a duplicate line along the only practical alignment - just a few metres from the old one. Suffice to say that both lines were burnt in the fires, and they are now setting up the diesel generators.

An integrated "do everything" company could easily see that locating a small generating plant (operated remotely via radio communications) was the most robust solution. And it made sense financially once the value of actually generating power is considered (that is, the plant could be run at times of peak demand as an extra generation source in addition to using it in the event the lines are damaged in storms etc). But network companies aren't generation companies and so that was the end of that idea. Suffice to say this isn't the only such example in Australia - there are plenty.

I can assure you that deregulation, disaggregation and "competition" hasn't lead to lower bills. Anyone who thinks otherwise is living in economists' fairy land where it may have worked in theory. In the real world however, the technical inefficiencies introduced by splitting things up far outweigh any productivity etc gains in the marketing department which may come about (that being the only place they could in practice really happen).


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## Smurf1976 (11 January 2013)

Should have added to my other comments that electricity (and gas) demand is highly sensitive to weather.

Hot weather is a major driver of peak load in Qld, Vic, SA, WA. Cold weather is the major driver of peak load in Tas. Both are of significance in NSW.

At least one electricity company tried going into the insurance business and as part of standard house and contents insurance they offered an automatic payout in the event of an unusually cold winter. It was a simple thing to do, given that the payouts would be more than offset by the additional electricity revenue associated with a colder than normal winter.

Electricity has gained space heating market share over the past 20 years but in more recent times the trend has stagnated as prices have risen. Another thing affecting overall load.


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## IFocus (11 January 2013)

sptrawler said:


> O.k put up a graph the all ords against the Dow Jones over the last 5 years. What the




DOW vers XAO not really apples vers apples with all the printing of USD

Try unemployment Aus vers US


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## Julia (11 January 2013)

IFocus said:


> DOW vers XAO not really apples vers apples with all the printing of USD
> 
> Try unemployment Aus vers US



You cannot seriously be suggesting that Aus vs US unemployment is 'apples vs apples'???


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## Smurf1976 (11 January 2013)

I'd argue that electricity is a reasonably "hard" economic measurement that isn't easily fudged. Any change in overall consumption patterns demand happens only quite slowly as new technologies are adopted etc.

In contrast, stock markets and unemployment stats are subject to all sorts of manipulation which distorts the true picture. But a megawatt is a megawatt, no manipulation.


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## Knobby22 (11 January 2013)

Julia said:


> You cannot seriously be suggesting that Aus vs US unemployment is 'apples vs apples'???




It would be a better comparison.


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## Julia (11 January 2013)

Knobby22 said:


> It would be a better comparison.




Would it be apples with apples?


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## Knobby22 (11 January 2013)

Julia said:


> Would it be apples with apples?




It would be different varieties of apples, say Fuji vs Granny Smith. 

We are getting into how many angels can dance on a pin territory.


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## IFocus (11 January 2013)

Julia said:


> You cannot seriously be suggesting that Aus vs US unemployment is 'apples vs apples'???





If you are talking about economic performance then yes although unemployment can be a lagging indicator as such.

An interesting fact on US middle class income currently just below 1989 levels when adjusted for inflation.


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## medicowallet (11 January 2013)

sydboy007 said:


> How do u equate decreasing economic growth with higher GDP growth?
> 
> Isn't higher GDP with less energy consumption a good thing?




Well, if you grow at 4% and then grow at 2.5%, that is decreasing economic growth.

and eg. ff the targets for percentage of renewables factored in a higher growth, then the figure will be easier to achieve.


This kind of logic is similar to people thinking labor has done a good thing because interest rates are so low.. um, no, the economy is struggling in areas, which accounts for both situations

MW


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## Smurf1976 (12 January 2013)

medicowallet said:


> This kind of logic is similar to people thinking labor has done a good thing because interest rates are so low.. um, no, the economy is struggling in areas, which accounts for both situations



A very large chunk of the issue does come down to economics. 

In the not too distant past, interest rates were seen as a big issue. People watched with baited breath to hear the RBA's decision. People went to great lengths to save a few $ here and there with lower rates from different banks etc.

I'd say that electricity bills outrank interest rates as a concern for a lot of people these days. Hence there's an increasingly large focus on reducing this area of household expenditure. Electricity has gone from a subject that nobody outside the industry really ever thought about, to one that has its' own internet forums and has at least one thread on anything from stock market to music forums. It's gone mainstream as a topic, and that's making people aware that there are indeed many ways to cut consumption. And so they are.


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## white_goodman (12 January 2013)

is it a surprise to the OP that oil followed a similar drop off the cliff in terms of demand... what happened in 2008?

sydboy u seem to go off on wild tangents without any grounding in economics, post less, read more


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## white_goodman (12 January 2013)

orr said:


> This is a great line of inquiry. And makes all the participants in the fossil fuelled electricity fraternity very wobbly. When you look at the 2020 20% renewable energy target that was put together using projections that have now proven to be fundamentally floored. The planned renewable  infrastructure now looking like suppling  27% (odd percent ) that was designed on those floored projections. The shrill warnings of the gross incapacity of renewable energy to cover the nations energy needs into the future seem a little over cooked.
> And on a pricing note, I lived in London in the mid nineties where you bought electricity up front from the post office and took your receipt number home and put it into your meter to be credited @ a price of .12p/ kwh at an exchange rate at the time of .33p to the Au dollar. Thats .36c/kwh in 1996 dollars for domestic retail usage. At that time.





you could have 100% of electricity produced by renewables  if youd like to crash demand and the economy..


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## white_goodman (12 January 2013)

sydboy007 said:


> With Govt neglect we have world leading biomedical companies.  With neglect we have high end design firms that off shore most of the production, keeping the true value adding to be done in Australia




picking winners has had a great political history.. 

herp a derp


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## IFocus (12 January 2013)

white_goodman said:


> is it a surprise to the OP that oil followed a similar drop off the cliff in terms of demand... what happened in 2008?




In the US / EUR yes but Australia?


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## sptrawler (12 January 2013)

IFocus said:


> If you are talking about economic performance then yes although unemployment can be a lagging indicator as such.
> 
> An interesting fact on US middle class income currently just below 1989 levels when adjusted for inflation.




So by that statement, you would be expecting a resultant increase in unemployment in Australia.

If U.S middle class income is inflation adjusted, equivalent to 20 years ago, and ours are going through the roof.

One would expect a resultant massive contraction? Your starting to sound like Gina Rinehart.
Funny how we all end up on the same page, eventually.


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## sydboy007 (12 January 2013)

white_goodman said:


> is it a surprise to the OP that oil followed a similar drop off the cliff in terms of demand... what happened in 2008?
> 
> sydboy u seem to go off on wild tangents without any grounding in economics, post less, read more




So as far you are concerned the only factor that could have caused the reduction in energy usage the GFC?

Curiously the reduction in electricity demand has been highest in the last 2 years.

I asked a question, provided a bit of food for thought.  I've yet to see you provide much evidence of doing your research.

In the consumer space it wouldn't surprise me if solar PV is having a reasonable impact.  My dad has just had solar installed  mid last November.  I know we've had plenty of sunny weather and this time of year will provide the highest level of electricity production, but with a small 1.5 kw system most days he's exporting energy back into the grid compared to their daily consumption.

I posted this topic because there still seems to be a perception - brought about by the vested interests of the companies that benefit from the regulated returns on assets - that energy consumption is on some inexorable rise.  As we can see it's not.  Even better, we're achieving a greater reduction of the carbon intensity of that production, with no associated rise in costs.

I would say these days weather forecasters have a better avg than the electricity industry's forecasts for future demand.


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## sptrawler (12 January 2013)

All some people are trying to point out Sydboy, is that a loss of 100,000 jobs in manufacturing, with an expected 85,000 further job losses, will have a commensurate reduction in consumption. Roof mounted solar helps, but doesn't help in the evening, or early morning before people go to work. Actually it causes chaos with distribution transformers during the day, when no ones home and they are pumping up the street voltage to 260v.lol

With regard carbon intensity, I would think the mining sectors increased usage of fossil fuels will negate any benefit in reduced output from our generators.

I was talking to a gentleman in Iron Knob last month, he does FIFO to Port Headland. Drives triple tankers, I asked him how much fuel do they move. Apparently 1.2m/l per day.


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## CanOz (13 January 2013)

They say that in China the only numbers that really count to gauge the economy are the electricity generation/consumption numbers. Seeing that Australia is so closely linked with the Chinese economy it would make sense to me that the reason for the lack of demand is mining/China related somehow...Timing wise it seems plausible as well. Just a hunch though.

Love to see some figures, great thread. 

CanOz


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## sydboy007 (13 January 2013)

sptrawler said:


> All some people are trying to point out Sydboy, is that a loss of 100,000 jobs in manufacturing, with an expected 85,000 further job losses, will have a commensurate reduction in consumption. Roof mounted solar helps, but doesn't help in the evening, or early morning before people go to work. Actually it causes chaos with distribution transformers during the day, when no ones home and they are pumping up the street voltage to 260v.lol
> 
> With regard carbon intensity, I would think the mining sectors increased usage of fossil fuels will negate any benefit in reduced output from our generators.
> 
> I was talking to a gentleman in Iron Knob last month, he does FIFO to Port Headland. Drives triple tankers, I asked him how much fuel do they move. Apparently 1.2m/l per day.




You will find the energy intensity of Australian mining, and around the world, has been reduced significantly.  It's such a huge cost, especially if you have to use diesel for electricity generation.  The US military is making similar gains as oil is a significant cost, especially for land based operations.

A few examples:

Galaxy Resources’ Mt Cattlin lithium mine currently uses renewable energy sources for up to 15 per cent of its total power.  They intend to install three wind turbines, each with a 1.2 megawatt capacity, as well as a solar power system with a one megawatt capacity to power the site.  Using the renewable energy already saves the company 200 tonnes of carbon emissions each year.

China’s Jinko Solar is working to build a 1-MW solar energy array at a chromium mine in the northern South African province of Limpopo

Brazil–based Vale SA will invest $315 million to finance construction of two wind farms developed by Melbourne, Australia’s Pacific Hydro Pty. These wind farms will help meet its growing energy needs.

According to a new report from Pike Research, worldwide investment by the mining industry on renewable energy and energy conservation will reach approximately $8.4 billion by 2016 and nearly $20 billion by 2020.

It wouldn't surprise me if a large % of the drop over recent times is due to the closure of Aluminium smelting in Australia.  Now before people go on about how that's not reducing emissions because it will be smelted in another country, the fact is the Australian aluminium smelting industry was at the top of the cost curve, with outdated technology.  It took around 50% more electricity for each ton of aluminium compared to the far more efficient plant overseas, including a lot in China.  Factor in the horrendous subsidies provided via below cost electricity contracts and it's probably a win win for the environment and energy consumers in Australia as we will be far less likely to require the capital costs involved of new generation capacity.

I remember reading about an electricity generation company in the US which did their figures and worked out it was cheaper for them to give all their customers with electric hot water systems a blanket to improve the thermal efficiency of the hot water heaters than it was to build a new power station.  Unfortunately with regulated returns on assets those kinds of market forces don't apply in Australia :bad:


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## Smurf1976 (13 January 2013)

sydboy007 said:


> It wouldn't surprise me if a large % of the drop over recent times is due to the closure of Aluminium smelting in Australia. Now before people go on about how that's not reducing emissions because it will be smelted in another country, the fact is the Australian aluminium smelting industry was at the top of the cost curve, with outdated technology. It took around 50% more electricity for each ton of aluminium compared to the far more efficient plant overseas, including a lot in China. Factor in the horrendous subsidies provided via below cost electricity contracts and it's probably a win win for the environment and energy consumers in Australia as we will be far less likely to require the capital costs involved of new generation capacity.




There has only ever been one "old technology" smelter built in Australia so far as I'm aware. It was the No.1 potline at what was then the Australian Aluminium Production Commission (government owned as the name implies, essentially a joint venuture of the Australian Government and Tasmanian state government) which opened in 1955. It was established for reasons of national defence, aluminium being a key strategic material.

The Australian Government sold out of that smelter circa 1960 to Comalco although the Tasmanian Government retained an interest for quite some time (worth noting that Comalco tried to sue the state govt some years later). No. 2 potline was commissioned 1962, No. 3 in 1967 and No.4 was commissioned in two stages 1976 and 1980. The original No.1 line was closed upon completion of No.4 in 1980. No's 2, 3 and 4 remain in production today.

So the smelters in Vic, NSW and Qld never had old technology to start with and the one in Tasmania has got rid of it. There haven't really been any major improvements technically over the past few decades so there's no need to keep replacing things (a point some in another certain industry would do well to note).

So far as energy price is concerned, I will simply note that there's a massive difference between supplying several hundred megawatts to a single site running 24/7/365 as opposed to supplying the same volume across hundreds of thousands of houses, each with constantly varying consumption. Your electricity retailer buys from the wholesale market as do the smelters, and the prices they pay are actually quite similar.

I could also point out that if we didn't have the constant loads that the likes of smelters provide then that completely undermines the economics of wind energy. We may well end up with a smaller load, but it would be fully powered by coal, gas and hydro.

Back to the original point, here are my own household figures and I think this makes the point. I'm probably a lot more energy aware than most (my avatar is a power station control panel.....) but with all the price rises Joe Average is waking up to this one. Over the last 12 months I used (figures don't add to 100 due to rounding):

Grid electricity = 33% of household energy
Wood = 33% of household energy
Solar = 31% of household energy
LPG = 1% of household energy
Oil = 1% of household energy

Suffice to say that if "electric" Smurf is primarily using things other than electricity then that says enough. Wood and solar are, quite simply, cheaper. Meanwhile there's no point worrying about the oil either, since it's now cheaper than electricity.

I've got some more solar panels sitting on a pallet in the driveway literally right now. Earning a 15% or so return with no tax is just too hard to ignore.


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## sptrawler (14 January 2013)

While we are on about reduced demand due to loss of manufacturing. These unfortunate workers are losing manufacturing jobs. 

http://www.couriermail.com.au/news/...s-almost-70-jobs/story-e6freoof-1226553593193

http://www.smh.com.au/business/bluescope-starts-year-with-job-cuts-20130114-2co7y.html



It will be good to see some of these new 'clean energy' jobs that Gillard and Brown were promising, come online.


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## nulla nulla (14 January 2013)

I put some of it down to the national instalation of Pink Bats or other forms of insulation. Apparently there is less demand now in peak periods such as summer and winter where normally there are spike in demand due to use of airconditioning in summer and heaters in winter


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## Julia (14 January 2013)

nulla nulla said:


> I put some of it down to the national instalation of Pink Bats or other forms of insulation. Apparently there is less demand now in peak periods such as summer and winter where normally there are spike in demand due to use of airconditioning in summer and heaters in winter



I'd not want to dent your enthusiasm for the dreaded batts, nulla, but the common suggestion I've seen about the drop in demand is that so many people have the solar panels on the roof.


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## sptrawler (14 January 2013)

sptrawler said:


> While we are on about reduced demand due to loss of manufacturing. These unfortunate workers are losing manufacturing jobs.
> 
> http://www.couriermail.com.au/news/...s-almost-70-jobs/story-e6freoof-1226553593193
> 
> ...




How is that massive solar power station in central NSW comming along?

Is it all starting to sound like 'rope a dope'.lol

By the way, haven't heard of many new technology industries happening.
Maybe some of the Labor stalwarts, could post up some of these new clean energy or energy efficient industries.
You know the ones ones that will replace the energy intensive ones we are shutting down.


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## sydboy007 (15 January 2013)

sptrawler said:


> How is that massive solar power station in central NSW comming along?
> 
> Is it all starting to sound like 'rope a dope'.lol
> 
> ...




If the newer clean energy industries received the same subsidy levels as the current fossil fuel ones, I think there'd be a lot more to report about.

It would be nice if the various levels of Govt could come up with a common sustainable subsidy.  With the way solar PV prices are dropping, I'd suspect in a couple more years it will be on par with retail electricity prices.  Throw in some peak demand reduction and I could see an end to the drastic price rises we've had for the last 5 years


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## Smurf1976 (15 January 2013)

sydboy007 said:


> If the newer clean energy industries received the same subsidy levels as the current fossil fuel ones, I think there'd be a lot more to report about.
> 
> It would be nice if the various levels of Govt could come up with a common sustainable subsidy.  With the way solar PV prices are dropping, I'd suspect in a couple more years it will be on par with retail electricity prices.  Throw in some peak demand reduction and I could see an end to the drastic price rises we've had for the last 5 years



Trouble is, the "newer clean energy industries" tend to not be in the business of exporting something, indeed in most cases they are the exact opposite. Exports being the primary benefit of things like aluminium smelters.

Conventional electricity prices recover fixed costs of the network as part of consumption volume pricing. In the absence of a major increase in fixed charges (which I do think will happen - to somewhere around $200 per quarter for household connection charges) the industry would actually go broke if net consumption were fall below a critical point. Hence the historic push to sell as much electricity as possible.

Scale of economy is a concept that has always been very well understood in the electricity industry. It is why competition directly increases, not reduces, prices and has sent bills through the roof. I can hear the economists objecting to that statement, but the harsh reality is that on the generation side it is absolutely true and on the retail side the only "competition" is in areas where the cost used to be close to zero anyway - the had to add entire new charges in order to "compete" to reduce them. Sad but true.

Scale of economy is also why even for-profit privately owned utilities were always keen on having large industries established. It drops the overall cost of production across the system.


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## Happy (16 January 2013)

Quite a few items are less Power Hungry.

LED LCD TV consumes much less energy compared to old type Plasma TV 

Also I replaced some globes with LCD ones that even compared to CFL globes consume about 40% energy.


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## sydboy007 (16 January 2013)

Smurf1976 said:


> Trouble is, the "newer clean energy industries" tend to not be in the business of exporting something, indeed in most cases they are the exact opposite. Exports being the primary benefit of things like aluminium smelters.
> 
> .




In Newcastle they have a pilot solgas plant.  The chemistry behind how it works is beyond my year 12 level, but they use heliostats to heat water to a few hundred degrees, mix it wil natural gas and the resulting gas has an energy content some 25% higher than the standard gas.

I don't understand why they're not funding this project, especially with LNG such a big export from Australia.  It could be a HUGE competitive advantage.  I've no idea on how much an LNG tanker costs to rent, but if you can get the equivalent of 5 loads in 4 there has to be a reasonable benefit in that.  It's touted as a good way to store solar energy.

lack of cheap scalable electricity storage is probably the biggest limiting factor we have.  When that problem is cracked I can see going off grid causing a hug fragmentation of the network as the fixed costs sky rocket as they're funded by few and few households.


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## sydboy007 (16 January 2013)

Happy said:


> Quite a few items are less Power Hungry.
> 
> LED LCD TV consumes much less energy compared to old type Plasma TV
> 
> Also I replaced some globes with LCD ones that even compared to CFL globes consume about 40% energy.




Thew new fridge freezer i bought my parents uses half the energy of their old one.

My 50" plasma bought 1.5 yrs ago used 25% less electricity than my old 37" LCD that it replaced.

I would nearly say if you have a 10 year old fridge that you would save in electricity the purchase price within 3 to 4 years.


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## sptrawler (16 January 2013)

Smurf1976 said:


> Trouble is, the "newer clean energy industries" tend to not be in the business of exporting something, indeed in most cases they are the exact opposite. Exports being the primary benefit of things like aluminium smelters.
> 
> Conventional electricity prices recover fixed costs of the network as part of consumption volume pricing. In the absence of a major increase in fixed charges (which I do think will happen - to somewhere around $200 per quarter for household connection charges) the industry would actually go broke if net consumption were fall below a critical point. Hence the historic push to sell as much electricity as possible.
> 
> ...




The sad fact of privatisation is, there has been a massive shift of profit to shareholders at the expense of the general population.
No longer do they share in the profits, they have transfered their dividend to the shareholders.


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## Smurf1976 (16 January 2013)

sydboy007 said:


> I would nearly say if you have a 10 year old fridge that you would save in electricity the purchase price within 3 to 4 years.



Comparing a modern 420 litre fridge / freezer versus the 32 year old one that my mother has, the difference is about 420 kWh per annum. That is, 460 for the new one versus 880 for the old one. Financially, that's worth $116.70 a year.

On a simple payback the new one takes 7 years to pay for itself, or about 10 years if you apply even a low rate of interest on the purchase price to reflect opportunity cost of the money used. But will the new fridge still be going 10 years from now? Possibly, but the odds are probably no higher that it will still be working versus the chance that the old one is still going at that time.

In any event, the energy consumption of all fridges could be greatly reduced if it wasn't for the fashion of embedding the condenser within the skin of the appliance rather than being external where it ought to be from an engineering perspective. It ain't rocket science, but the marketing departments have won the battle and practically every fridge is using extra power as a result.


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## sptrawler (16 January 2013)

Well talking about fridges, all the new fridges have Chinese compressors that last 3 to 5 years.
Most of the older fridge compressors lasted 20years and it was a rupture in the pipework that caused the failure.
The old round bodied Kelvinators weighed a ton, because of insulation, they had a tiny compressor.


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## sydboy007 (26 January 2013)

Just read an interesting article on how LED lighting may impact electricity consumption.

Lighting accounts for around 7% of household and 30% of Commercial building and retail buildings electricity consumption.

LED lighting already accounts for around 9% of lighting and is forecast to hit 45% by 2016 (I'd say the commercial sector will experience the biggest growth due to the faster pay back from lower labour costs for replacement and lower heat generation with associated cooling cost savings)

Electronics giant Philips has completely ceased research and development into fluorescent lighting technology, recognising that the future is in LEDs.

Beyond Zero Emissions' Buildings Plan research is proposing a full switch to replace all existing lighting with LEDs within 10 years. This would result in up to 80 per cent reduction in lighting energy use for most building categories.

These energy savings are in the order of 15 terawatt-hours of electricity per year: more than Victoria's notoriously polluting Hazelwood power station could produce if it ran flat out, non-stop, for an entire year. Avoiding the burning of all that brown coal would avoid CO2 emissions of over 20 million tonnes of CO2 per year. 

That would cut around 1.5B from wholesale electricity sales (10c / kWh) and could help with reducing some of the peak load - more so in winter when it's darker at dinner time.


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## Smurf1976 (26 January 2013)

sptrawler said:


> Well talking about fridges, all the new fridges have Chinese compressors that last 3 to 5 years.
> Most of the older fridge compressors lasted 20years and it was a rupture in the pipework that caused the failure.
> The old round bodied Kelvinators weighed a ton, because of insulation, they had a tiny compressor.



Once you take this into account as well as embodied energy it is a financial and environmental false economy to be replacing a working refrigerator with a comparable new one on the basis that doing so will save energy.

It may well save electricity on your bill, but it won't save energy or money overall in most cases once manufacturing energy, lifespan and the purchase price are considered.


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## Smurf1976 (26 January 2013)

sydboy007 said:


> Just read an interesting article on how LED lighting may impact electricity consumption.
> 
> Lighting accounts for around 7% of household and 30% of Commercial building and retail buildings electricity consumption.
> 
> LED lighting already accounts for around 9% of lighting and is forecast to hit 45% by 2016 (I'd say the commercial sector will experience the biggest growth due to the faster pay back from lower labour costs for replacement and lower heat generation with associated cooling cost savings)



I'd dispute any claim that LED's have 9% of the currently installed asset base at least in Australia. I'd say it's more like 1 or 2% but it's rising very rapidly in commercial usage (particularly retail stores). 

If Philips are claiming that LED's account for 9% of their lighting sales then I'd believe that for sure. But not that they account for 9% of lighting actually in use today.

So far as efficiency is concerned, for general illumination commercially available LED lights at present are somewhat less energy efficient than linear fluorescent tubes. Their efficiency is comparable to that of compact fluorescent. Eg a 12W LED replaces a 60W incandescent which is about the same saving as achieved by switching to compact fluoro's.

Pushing the technology somewhat, there's a company down here in Hobart that has developed some pretty nice technology with LED's. It's a small operation run by engineers (one of whom, somewhat ironically, is a former trader with the Hydro) and they do have some products in production being sold under contract to large users. I won't disclose too much other than to say that they are achieving typically 88% energy savings compared to older lighting technologies. This compares to the typically 80% savings achieved with the major commerical LED suppliers so it's a significant improvement. The company is privately owned.

Personally however I must confess that my household lighting isn't too efficient at all. It's mostly incandescent throughout the house apart from a halogen in the hallway, a mercury vapour light (!) in the home office, a fluoro above the bathroom mirror and a bunch of old T12 fluoro's in the workshop. I'm reasonably efficient in other areas but not with the lights. They work fine however. I'll get energy saving globes when the current ones break.


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## drsmith (22 January 2014)

Interesting piece on managing the heatwave peak problem in today's SMH,

http://www.smh.com.au/comment/breath-of-fresh-air-to-peak-power-problem-20140121-316to.html


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## sydboy007 (22 January 2014)

drsmith said:


> Interesting piece on managing the heatwave peak problem in today's SMH,
> 
> http://www.smh.com.au/comment/breath-of-fresh-air-to-peak-power-problem-20140121-316to.html




California have had a similar system in place for at least a decade, maybe longer.

Seems the best way forward, otherwise in another decade we'll have a lot more than 10% of the network used for a couple of days worth of peak consumption.

The only reason I can see demand management hasn't been introduced on a broad scale is because of the profits paid out by the generally Govt owned electricity generators.  In the USA they have for a long time realised it's cheaper and easier to help customers reduce demand than continue to build infrastructure for increased base load and peak consumption.

All the focus of the cost of the NBN and yet the electricity network CAPEX has been nearly ghost like till the last 12 months, but even now there's still little focus on trying to avoid increased spending.  All these sunk costs, either cause higher electricity prices for residential and business consumers, or there will have to be large asset right downs as some of the peaking capacity is retired well before it's economic life is over with.

I wonder if the current Abbott Govt will allow bidding for demand reduction under their DA policy?  Might be the only well spent money out of the program


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## Knobby22 (22 January 2014)

My Australian made fridge finally packed it in after 19 years due in part to that hot weather we had.

I joined Choice to see who makes the best fridges. 
They do tests and also gather results of early failures.
Guess what?
The best quality was Electrolux and Fisher and Pykel. 
The best performance long term was Electrolux.
Samsung, was pretty good, LG a bit worse. Miele was in that bunch. The worst fridge on the list was Bosch, don't touch them. Huge early failure rate and rubbish cooling.

So I bought Electrolux. You could actually see the quality compared to the Asian brands. The seal in particular not to mention the finish. It was nice to buy Australian because it was the best choice and it wasn't any more expensive.


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## sydboy007 (22 January 2014)

Knobby22 said:


> So I bought Electrolux. You could actually see the quality compared to the Asian brands. The seal in particular not to mention the finish. It was nice to buy Australian because it was the best choice and it wasn't any more expensive.




You probably got one of the last Aussie made ones then.  I think most F&P is made in Thailand(?) these days.  I bought an F&P about 4 years ago.  So far so good.


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## Knobby22 (22 January 2014)

sydboy007 said:


> You probably got one of the last Aussie made ones then.  I think most F&P is made in Thailand(?) these days.  I bought an F&P about 4 years ago.  So far so good.




That's right. I think they were NZ before that. Their fridges came in 1st on technical aspects such as uniformity of cooling. Good company. I looked at them but they were a bit more expensive.


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## Smurf1976 (22 January 2014)

Heatwave.

The recent heatwave affecting SA, Vic and parts of Tas resulted in supply being stretched to the absolute limit on the Wednesday, and fairly close on Tuesday, Thursday and Friday.

It would only have taken a single failure of a large generating unit at any power station in Vic or SA to push the system over the edge on the Wednesday, and that would have resulted in rolling blackouts. This is a hard fact, not opinion - there was basically nothing left in terms of spare capacity.

A big part of that is that wind generation became pretty much useless on that day. At the time of the peak, here's where the power was coming from in Vic + SA (which at that point were effectively one isolated market, there being spare capacity to transfer power between the two but no more was available from other states):

Coal = 6033 MW (5490 in Vic, 543 in SA)
Gas = 4002 MW (1740 in Vic, 2262 in SA)
Hydro = 2333MW (all in Vic*)
Wind = 177 MW (103 in Vic, 74 in SA)
Oil = 47 MW (all in SA)

Supply from interstate. 

Tasmania = 420 MW limited by transmission technical problems in Vic (otherwise it could have been up to 594 MW). Peak demand in Tas is during Winter, with demand on a Summer afternoon being well below the peak (to the point that even if the Vic - Tas link had been able to operate at full capacity, load on the generation system in Tas would still have been below the peak demand in Winter). For this reason Hydro Tas actually does a lot of maintenance work in Summer, since demand is low and it's easier to manage the water inflows when rainfall is low. 

NSW = 182 MW limited by the capacity of transmission lines in Vic which are shared with a number of hydro plants (ie more supply could have come from NSW if those plants weren't running, but the total would not have changed since it's limited by transmission capacity). NSW did have spare capacity from various sources (coal, gas, hydro) during the peak but no means of getting it into Vic. There was also some spare in Qld, some of which was being supplied into NSW.

*Note that the hydro generation figure is for plants in Vic plus Murray 1 & 2 power stations which, whilst physically located in NSW, are part of Victoria from an electrical perspective.

Other technical issues:

A 530 MW unit was out of service at Loy Yang (Vic) due to technical problems. This is a coal-fired plant.

A 200 MW unit was out of service at Torrens Island B (SA) due to technical problems. This is a gas-fired plant.

Both of the above were returned to either partial (Loy Yang) or full (Torrens Island) operation later in the week, hence the better situation with respect to supply in Thursday and Friday although it was still rather tight.

The 240 MW Playford B power station (SA, coal) is unavailable for service due to being mothballed following the introduction of the carbon tax. It would take 10 weeks to get the plant up and running according to the owners.

The 190 MW Morwell (aka Energy Brix) power station (Vic, coal) has only 45 MW of capacity available due to having only 2 boilers in service (primarily to produce steam for the briquette works at the same site although they diverted the steam into the power station during the peak demand period) following the introduction of the carbon tax. They no longer employ sufficient staff to operate the rest of the plant, since it is not profitable to do so, although from a technical perspective they could bring it back to a full 190 MW by employing more staff.

The single largest source of supply into Vic + SA on Wednesday came from Hazelwood (Vic, coal) which produced just over 1700 MW (versus its' original design capacity of 1600 MW - it was being pushed _very_ hard in order to keep the lights on and was the best performing plant in terms of output relative to nominal capacity). Once Loy Yang unit A3 came back on line at partial capacity (350 MW), Loy Yang A became the largest supplier although it didn't operate to its' full design capacity.

Overall, supply was certainly very tight during the heatwave. Whilst there may or may not be some spare capacity in parts of the distribution system, there sure isn't much spare so far as generation is concerned and that's despite most power stations working better than could reasonably be expected given the heat.

As for demand, some large industries do respond to high spot prices and reduce their load for purely financial reasons (ie the electricity price reaches a point where continued production at the factory is unprofitable and/or they have surplus capacity in the factory so shift production to times when electricity is cheaper)

Some households with Time of Use (TOU) metering would also presumably be shifting load away from the peaks. But since the prices are generally the same each day regardless of actual demand, this load shifting would happen anyway regardless of whether it's 20 degrees outside or 45.

AEMO (Australian Energy Market Operator - they who run the market and dispatch power stations into the grid) also has a number of demand reduction contracts and they did say they were activating some on Wednesday (not sure to what extent they actually did so however). These contracts are essentially an agreement with large users (typically factories) which enable disconnection of load at times of supply shortage.

Beyond that, all that's left is to disconnect load blocks if demand exceeds available supply. In layman's terms that's rolling blackouts.


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## Smurf1976 (6 February 2014)

http://www.qt.com.au/news/swanbank-e-will-close-as-asset-sell-offs-tipped/2161844/

Well here we go. A modern, highly efficient gas-fired plant to be mothballed and a coal-fired plant brought back online to replace it. 

With the exception of governments and a few CEO's, practically everyone in the industry has known for years that we'd reach this point sometime around the middle of this decade. Gas becomes uneconomic and it's back to coal.

This isn't the first cut in the use of gas to generate electricity and it won't be the last. The only real question is why politicians and a few CEO's were so keen on the idea in the first place, since it was always going to end in a price shock and uneconomic gas-fired power stations being a problem for the next 20 to 30 years.

Gas fired plants either being mothballed or operating less often, over-production of hydro resources coming to an end soon too - here comes the big jump in coal burning and that's going to happen regardless of who's in government or what happens with the carbon tax.


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## chiff (6 February 2014)

Why is the price of gas so high?Do we pay world parity price for this plentiful resource?I think that I heard the Australian CEO of Dow chemicals advise that one way to rev up the Australian economy was to enable cheaper gas.
Do other countries all pay parity price for their gas?I am not trying to be cute,I just do not know?


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## burglar (6 February 2014)

Smurf1976 said:


> ... - here comes the big jump in coal burning and that's going to happen regardless of who's in government or what happens with the carbon tax.






While coal is cheap, we would rather choke, than cough up more dough.
I would love to believe that it is untrue.


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## Smurf1976 (6 February 2014)

chiff said:


> Why is the price of gas so high?Do we pay world parity price for this plentiful resource?I think that I heard the Australian CEO of Dow chemicals advise that one way to rev up the Australian economy was to enable cheaper gas.
> Do other countries all pay parity price for their gas?I am not trying to be cute,I just do not know?




In short, gas isn't easy to transport and thus markets tend to be regional unless a transport facility (pipelines or LNG production) is built. 

Turning gas into LNG is a costly process in itself, the plants cost a lot to build as do the ships and they also take a lot of energy to operate. The LNG plants being built in Qld will use about two thirds as much electricity as is currently used in the whole of South Australia, for example or enough to power around 1 million homes. It's a lot of power to operate them and overall it's an expensive (and somewhat polluting) process to produce LNG.

But there are overseas markets willing to pay a high price to import LNG and as such it's going ahead for financial reasons. 

The downside is that LNG plants can be built to practically any scale, limited only by the available gas resources. In simple terms, that means these plants can "buy up" whatever gas we produce and turn it into LNG. A bit like someone walking into a shop with an unlimited supply of cash and trying to by the entire stock in the shop, plus whatever is in the warehouse, plus everything that's going to be delivered for the next 30 years. If you or I want to buy something then we're going to have to outbid them and they've got deep pockets.

So in short, building the LNG plants in Qld has the effect of bringing about export parity pricing for all gas used in what the industry terms "Eastern Australia", that being Qld, NSW, ACT, Vic, Tas and SA.

A bit of a history lesson explains how we ended up in this situation. Trying to keep it fairly short:

Significant use of natural gas in Australia commenced in 1969. Prior to that there was some minor use locally in parts of Qld, but nothing of significance. In 1969 we built:

1. Longford gas plant (Vic) drawing on the Bass Strait fields and associated pipelines to Melbourne. The gas replaced town gas (made in gas works from coal and oil) that was previously used. It also resulted in a large decline in the cost of gas, thus encouraging many homes and industries to convert from other fuels (coal, oil) to gas. There was no use of gas for power generation in Vic at this time however, that commenced with the construction of the Jeeralang peaking (gas turbine) plant in 1979-80 and the Newport D steam plant in 1980. Newport replaced some older coal and oil fired power stations in the Melbourne metro area, including some located at the same site.

2. Moomba gas plant (SA) drawing on the Cooper Basin fields and a pipeline to Adelaide. It served the same function as in Vic, but the major use (roughly 70% of all gas in SA) has always been for electricity generation. Initially it replaced fuel oil at the then new Torrens Island power station. That power station was subsequently expanded greatly and by 1983 had 8 generating units in operation with that one power station generating two thirds of SA's power back in those days. Some smaller gas turbine peaking plants were also built in the late 70's and early 80's. 

3. A pipeline from the Roma fields to Brisbane with the gas used solely to replace town gas in Brisbane's gas system. Consumption remained pretty low however, since due to climate the non-industrial market for gas isn't that large in Qld. No gas was used for electricity in Qld until quite recently.

Then in 1976 Sydney started using natural gas, supplied from the Moomba plant in SA. As with Qld, the gas was used for industry and households, with no gas-fired power in NSW until quite recently.

And that was it, not a lot changed. One gas supplier in SA sold gas to a single gas distributor (AGL, privately owned) in NSW and to SAGASCO (government owned) in SA as well as to the Electricity Trust of SA and that was it. In Vic it was BHP - Esso selling primarily to the Gas and Fuel Corporation of Victoria (government owned) and to the State Electricity Commission (also government owned). 

So it was all pretty simple, and government was heavily involved and it's notable that in both Vic and SA the state governments were _very_ conscious that it was a finite resource. Hence the continued construction of new coal-fired power generation in both states rather than going solely to gas. In the case of Vic, a tax was also applied to avoid retail prices being so low as to encourage wasteful consumption.

Then the Qld government got keen on gas (to put it mildly) and started looking for ways to ramp up the industry. They bought gas and built the Swanbank E power station and some others to use it and they mandated that 13% of all Qld electricity must come from gas regardless of economics.

Then Tasmania decided that the state needed gas, largely due to the end of hydro-electric construction and concerns about the price of oil. At that time, the only non-hydro power station in Tas ran on fuel oil, and with rising demand for electricity it was going to be used a lot more in the future. Likewise some major industries were also keen to have gas, noting their exposure to the cost of imported fuel oil. And so the Vic - Tas gas pipeline was built, completed late 2002 with conversion of the Bell Bay power station in 2003. Tasmania now had a gas supply, albeit one sourced from Victoria.

Then we've built a Vic - SA and a Vic - NSW pipeline with the predominant flow being from Vic to the other states as production in SA (Cooper Basin) declines due to depletion. Meanwhile a number of new gas-fired power stations have been built in SA, Vic, NSW and Qld and a smaller one was also built in Tas.

So if you go back 20 years then SA was the only one (apart from WA and NT) to use gas significantly for power generation. There was some minor use in Victoria and nothing elsewhere. Qld and NSW relied on coal with a bit of hydro, Tasmania relied almost entirely on hydro with a bit from oil. But now we have very significant use of gas for power in Qld, still using a lot in SA, and more use in NSW, Vic and Tas also. Meanwhile gas has pretty much replaced oil, and to some extent coal, in industrial applications.

Then came the huge coal seam gas discoveries in Qld along with the development of a few smaller gas fields in Victoria. Gas use was rising but supply was rising even faster, thus bringing about the "golden era of gas" hype and plans to massively increase use for power generation. At one point there were plans to build new gas-fired plants on the same site as existing coal-fired plants to replace them. No prizes for guessing that those plans have since been dropped.

But the gas producers had other ideas. Rather than sell the gas at $3 - $3.50 to local users, they decided instead to go for the export market via huge LNG plants now being built in Qld. And that puts a value on the gas somewhere around $9 so it's a huge increase. And since there's a connection between Moomba (SA) and the Qld gas system, and that SA ultimately connects to Vic and thus Tas as well, it gives rise to the "Eastern Australia" gas market and some rather expensive gas.

I've left out a lot of the detail obviously to avoid a 50 page essay, but that's roughly the history of it.

What does this mean for power generation? Well here's a few figures.

For a steam turbine plant, that is any coal-fired plant and the older gas-fired ones like Torrens Island or Newport, gas at $3.50 gives a cash cost for generation at somewhere around $35 per MWh with every thing included. For the combined cycle plants, such as Pelican Point, Swanbank E or Tamar Valley (Tas), it ends up with a cash cost in the low $20's. 

But make that gas cost $9 and now we're looking at $60 or so for production at the combined cycle plants, and around $90 for the steam plants. And for the peaking (open cycle) gas turbines it's well over $100. In contrast, operating an existing coal-fired plant without the carbon tax and using non-export quality coal costs under $20 and even with the carbon tax it's still only in the low to mid 40's. Those figures are for black coal, for brown coal it's a lot less than that for most plants with their highly mechanised coal mines right next door and no other market for the coal. 

So gas quite simply isn't competitive for baseload generation at these higher prices and it's not really competitive for intermediate (daytime 7am - 11pm) generation either. We'll still see it used to meet the peaks (Summer afternoons and Winter evenings) but not a lot of gas is actually needed to do that anyway.

In terms of what the industry is doing, actually mothballing Swanbank E is an extreme step but they aren't the only ones to be thinking along those lines. 

In what turned out to be a bit of a failed effort, Hydro Tas offloaded its' gas contracts and gas power station in 2009. Unfortunately the new operators had a lot of problems financially, government then took it on and it has since (2013) ended up in the Hydro's hands once again. It's not a disastrous deal, Hydro got rid of an old plant and has ended up with a nice new one (at below cost) that uses a third less gas per unit of output (and which doesn't keep anyone nearby awake at night like the old one did either), but it's never going to make a massive profit as gas prices rise. Suffice to say that Hydro has cut operation of the plant for financial reasons, limiting it to only when it's actually profitable, and is also looking at getting into the gas retail business since that's a more profitable way to use the bulk gas they've acquired as part of the deal (ie sell it to someone else once the price goes up rather than using it to generate electricity - same thing that's being done at Swanbank in Qld).

Meanwhile in SA, the operators of the state's only coal mine and associated coal-fired power stations have drastically cut production over the past couple of years. In short, they're just sitting on the coal and waiting for gas and thus electricity prices to rise and then they'll be generating flat out. They're still operating at present, but well below capacity. They're not the only coal-fired generation business taking this approach.

In terms of non-electricity consequences, well we already have the Gove alumina refinery (NT) closing because they can't get cheap gas and oil has become too expensive and they won't be the last industry to go that's for sure.


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## Smurf1976 (6 February 2014)

burglar said:


> While coal is cheap, we would rather choke, than cough up more dough.
> I would love to believe that it is untrue.




Since you're in SA I'll answer it fairly specifically.

You'll end up seeing the major gas-fired plants (Torrens Island, Pelican Point, Osborne) as well as the gas-fired peaking units simply bid into the market at much higher prices than has historically been the case. 

The practical effect of that is that generation from Northern (at Port Augusta, coal-fired) will be cheaper than that from gas and will end up running a lot harder than it has been recently. Depending on how it all pans out, they could well end up mining the deeper coal at Leigh Creek which is presently uneconomic to mine, thus extending the life of the mine considerably. 

You're also likely to see a greater transfer of power from Vic to SA particularly at off-peak times when generation in Vic, NSW and Qld can be supplied from coal with little use of gas. That is, the gas-fired plants will mostly not be operated overnight. 

On a positive note, any increase in the average spot price in SA will tend to encourage more wind, and possibly other, generation development in SA. It won't really increase the total amount of wind farms that get built, but it will encourage location in SA rather than Victoria to an even greater extent than occurs at present. So that's potentially some good news in terms of jobs in SA (although it could certainly be argued that more costly gas and electricity will cost more jobs than any wind farms create).


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## burglar (6 February 2014)

Smurf1976 said:


> Since you're in SA I'll answer it fairly specifically ...




I was once involved in the power scene. 
Now I see your posts and relive some of those days.

Some good.
Twenty five years in rail!

Some not so good.
Protested at Pelican Point.
Not so much against National Power's pretty li'l power station, 
but all the bad things it would bring.

Fortunately, many rumours did not eventuate!


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## sptrawler (7 February 2014)

burglar said:


> I was once involved in the power scene.
> Now I see your posts and relive some of those days.
> 
> Some good.
> ...




As is the case with many emotive political issues. 
However a show of public concern ,usually causes a review of the supporting evidence for the decission.
Which can't be bad.


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## Smurf1976 (14 June 2014)

Where did all the power demand go? Well we're doing our best to fix that little problem.....

144,000 Watts all up, visible for at least 15km and the lights can be controlled by anyone. Just walk up and have a play. In Hobart every night until 22nd June as part of Dark Mofo.


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## sydboy007 (15 June 2014)

Smurf1976 said:


> Where did all the power demand go? Well we're doing our best to fix that little problem.....




With a few changes at home I've got my last qtrly electricity bill down to an avg 6.55 kWh / day for a 3 person household.

energymadeeasy.gov.au lets you get an idea of how you compare to households in your post code.

I'm shocked / surprised to see the average 3 person household in my area is 15.7kWh for autumn.  I have to wonder what they're doing to consume that much electricity every day.  It's not like the houses are particularly large.

We use that little gas I'm starting to regret replacing my hotwater system a year ago with another gas one and not getting a heat pump version and going to off peak electricity.  I'm at the point now where fixed charges are roughly 40% of my the energy component.


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## Julia (15 June 2014)

Perhaps, syd, not everyone is as worried about reducing their energy consumption as you, and simply choose to have a warm house, use a clothes dryer, whatever.


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## SirRumpole (15 June 2014)

> I'm at the point now where fixed charges are roughly 40% of my the energy component.




And that's the real problem isn't it ? If the Elco's keep jacking up the connection fees, there is nothing the consumer can do about it.


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## sydboy007 (15 June 2014)

Julia said:


> Perhaps, syd, not everyone is as worried about reducing their energy consumption as you, and simply choose to have a warm house, use a clothes dryer, whatever.




I use a heater if it's cold in winter - we've just gone thru the longest "heatwave" in Sydney - but decided to install LED lights through as much of the house as I could.

I do shake my head when I hear my neighbours dryers running and it's a nice day to air dry the washing.  Couple of clothes horses and ya ready to go.

Being energy efficient / wise does not mean you can't enjoy the benefits of modern life.


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## sydboy007 (15 June 2014)

SirRumpole said:


> And that's the real problem isn't it ? If the Elco's keep jacking up the connection fees, there is nothing the consumer can do about it.




Very much so.  If battery technology does catch up to solar in the near future I can see the economics of going off grid becoming a reality for a lot of households.

The fixed charges are inflated because the Governments can't bite the bullet and change the way households are charged for their consumption.

I can certainly see natural gas customers more likely to disconnect from the networks as it comes time to replace water heaters / cook tops. My gas bill is pretty much 50% fixed costs these day.


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## Julia (15 June 2014)

sydboy007 said:


> I use a heater if it's cold in winter - we've just gone thru the longest "heatwave" in Sydney - but decided to install LED lights through as much of the house as I could.
> 
> I do shake my head when I hear my neighbours dryers running and it's a nice day to air dry the washing.  Couple of clothes horses and ya ready to go.



Well, perhaps people don't want to have wet clothes draped on clothes horses all round them, syd.
You make your lifestyle choices.  Let others do likewise, surely.

Some people gasp in horror at my winter power bill because I heat the pool.  None of their business.
Often they're the people who rack up god knows what emissions and expenses with a couple of overseas holidays every year.



sydboy007 said:


> I can certainly see natural gas customers more likely to disconnect from the networks as it comes time to replace water heaters / cook tops. My gas bill is pretty much 50% fixed costs these day.



And the more people disconnect from networks, presumably the more the costs will go up for those who remain.  Basic infrastructure  and maintenance etc will still have to be paid for.
Just as with the solar panels fewer people are taking electricity, so the remaining customers are faced with ever increasing bills.

The whole energy situation has been poorly thought through imo.


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## Smurf1976 (15 June 2014)

Looks like I've re-opened a debate here.

Original intent was just to post the photos of the lights somewhere..... 

It seems that a lot of people like them too, people everywhere actually even well after midnight there's people queuing up to play with the controls. 

If you're going to have public art, it may as well be measured in kilowatts.....


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## Ijustnewit (15 June 2014)

Smurf1976 said:


> Looks like I've re-opened a debate here.
> 
> Original intent was just to post the photos of the lights somewhere.....
> 
> ...




Loving the lights too Smurf  I can't wait for the festival nude swim !! How much power will it take to warm up the contestants after the swim ?


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## Smurf1976 (16 June 2014)

Ijustnewit said:


> I can't wait for the festival nude swim !!




Think I'll pass on the nude swim. Don't want to scare anyone..... :


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## sydboy007 (16 June 2014)

Julia said:


> Well, perhaps people don't want to have wet clothes draped on clothes horses all round them, syd.
> You make your lifestyle choices.  Let others do likewise, surely.
> 
> Some people gasp in horror at my winter power bill because I heat the pool.  None of their business.
> ...




Julia

it's more the angst shown about rising energy costs, yet so many of the people complaining about their high power bills make choices that are in fact burdening them with relatively easily avoided costs.  

The fact our politicians have allowed natural gas prices to be linked to the Asian market IMO is probably the worst decision ever made for the country.  It'll decimate a lot of manufacturing companies.  The stupidity of it is up there with allowing the east coast electricity distributors to spend over $45B on network upgrades that were based on faulty usage projections and we're now left in the situation where households and businesses have inflated energy bills because the over investment gets a guaranteed rate of return.

Unfortunately the politics around making those who cause the need for roughly 10% of the investment in the electricity distribution system that's only used for a few days a year actually pay for it means we'll likely not see any improvement to how things stand.


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## SirRumpole (16 June 2014)

> Some people gasp in horror at my winter power bill because I heat the pool. None of their business.




Your pool, your business.

10,000 people doing the same thing might need half a power station just so people can heat their pools. That's a potential infrastructure (fixed cost) increase for all of us.

So if ways can be found so that some people can heat their pools in winter by other means that don't involve a load on the grid I think most people would support that.


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## Julia (16 June 2014)

SirRumpole said:


> 10,000 people doing the same thing might need half a power station just so people can heat their pools. That's a potential infrastructure (fixed cost) increase for all of us.



Pfft!  Another 10,000 people might run fan heaters, use clothes dryers, multiple electronic devices, big TVs etc etc.
Very, very few people  heat their pools.

Smurf, could you comment on routine capacity of the system?  My understanding, which might well be faulty, is that, especially since the proliferation of the solar panels, there is no shortage of electricity at most times, and, as I mentioned earlier, part of the reason overall bills are higher is because all the construction of additional capacity has been carried out and has to continue to be paid for.  (My terminology might not be great but you'll understand what I'm asking, I'm sure.)



> So if ways can be found so that some people can heat their pools in winter by other means that don't involve a load on the grid I think most people would support that.



I don't actually think anyone would give it a moment's thought.  A good solar system (which I have) is very efficient and will raise the temp of 50,000 litre pool a degree in an hour on an autumn day, but it isn't enough to provide comfortable temp for the two or three months of winter when ambient temps and cold winds prevail.


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## SirRumpole (16 June 2014)

Julia said:


> Pfft!  Another 10,000 people might run fan heaters, use clothes dryers, multiple electronic devices, big TVs etc etc.




So people want to stay warm and have dry clothes, that's normal and not to be scoffed at. Do people who live in apartments or with tiny backyards have a Hills Hoist they can use ? I doubt it.



> Very, very few people  heat their pools.




In that case I guess it's good to know that you are one of the elite.


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## Julia (16 June 2014)

SirRumpole said:


> In that case I guess it's good to know that you are one of the elite.



Nothing elite about it.  It's an investment in health I make over other choices, not that it's any of your business.

We all have different priorities.  I choose to swim throughout winter.  Other people might choose to buy a new car.  Have overseas holidays.  Wear designer clothes.  Eat out often.

And to ease your confected concern about the demand on the grid, the pool is connected to offpeak tariff so only accesses electricity when there is surplus available.


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## SirRumpole (16 June 2014)

Julia said:


> And to ease your confected concern about the demand on the grid, the pool is connected to offpeak tariff so only accesses electricity when there is surplus available.




Well that's taken a load off my mind, as well as the grid.


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## Smurf1976 (17 June 2014)

Julia said:


> Smurf, could you comment on routine capacity of the system?  My understanding, which might well be faulty, is that, especially since the proliferation of the solar panels, there is no shortage of electricity at most times, and, as I mentioned earlier, part of the reason overall bills are higher is because all the construction of additional capacity has been carried out and has to continue to be paid for.




It really depends on location. At the state level:

Qld & NSW - surplus capacity to the point that entire power stations have been shut down.

Vic & SA - still a very tight supply situation during a heatwave.

But at the local level there can be constraints on transmission or distribution. Eg there might be plenty of power available from the power stations, but that's not much help if the line that runs to your town is overloaded and trips off when demand peaks. 

Distribution capacity varies hugely, but as a general comment there's a surplus in Qld and NSW mostly. It's somewhere nearer to balance in Vic and SA due to the different load profile and the sharp Summer peaks.

In Tas solar has no impact, since the timing of peak demand on the system as a whole (just after 8am) and in residential areas (just after 6pm) is when the sun isn't shining to any significant extent. So solar has no benefit in terms of reducing peak loads in Tas. That said, on the other hand Tas is the only state where the constraint is energy rather than peak power, and solar certainly does contribute to firm energy input to the system (as does wind). 

So far as heating a pool is concerned, if it's on an off-peak supply then there's really no issue with it at all. It's just not going to cause anyone a problem even if lots of people had it. Same with anything else that isn't drawing power during the peak periods - just not an issue really, indeed an increased base load actually drives prices down not up.

But heating water, either in a pool or for hot water supply, using peak electricity is about as close as you'll get to outright madness in terms of resource use. It just doesn't make sense to build more power stations, transmission and distribution in order to heat water that is then stored for use later anyway. It makes far more sense to heat the water outside the peak demand periods.


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## sydboy007 (17 June 2014)

seems AEMO is still unable to wrap their heads around the fall in electricity demand.  It's this kind of out of whack forecasting that's caused electricity prices to nearly double over the last 5 years.


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## Smurf1976 (17 June 2014)

sydboy007 said:


> seems AEMO is still unable to wrap their heads around the fall in electricity demand.



It's the same story with practically every industry that has undergone a sustained decline. Much the same after a top in the share market too. They always keep predicting "good times just around the corner" until it's obvious to everyone that this isn't the case, by which time most of the decline has usually already occurred.

Gas companies a century ago when they were primarily in the lighting business. Even into the 1930's they were still talking about the latest developments in gas lighting that were going to kill electric lights for good.

Or you could look at tobacco companies circa 1980 with their reassuring (to shareholders presumably) reports that the drop in cigarette sales was temporary and that growth would inevitably resume.

Countless other such examples exist. Predicting a return to growth all the way to the bottom.

So far as electricity is concerned:

Some decent load growth in Qld is about to happen as the LNG plants start up. LNG being a pretty energy-intensive business.

Substantial decline in Vic with the imminent closure of a smelter being the main one, plus the demise of the car manufacturing industry and others too.

But then there's one new 24/7/365 load under consideration. No further comment as to who, where or what the load is, but it's a possibility. I'm talking about a 24/7/365 constant load that could be built. It's smaller than an aluminium smelter, but big enough to be dealing directly with a generator. Time will tell if it happens or not

On the supply side, well things are getting a bit interesting there in terms of a change in who generates how much and by what means. What happens with the carbon tax is one issue, price of gas is another, the inability of at least one generator to sustain their current production rates much longer is another. So some changes coming in terms of where the power comes from.


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## sydboy007 (19 June 2014)

Smurf1976 said:


> It's the same story with practically every industry that has undergone a sustained decline. Much the same after a top in the share market too. They always keep predicting "good times just around the corner" until it's obvious to everyone that this isn't the case, by which time most of the decline has usually already occurred.




The issue I have is we've saddled the economy with yet another dead weight expense.  The over investment is really just like a new tax.  The fact that energy efficiency is really starting to have an impact is being ignored, and will become a greater share of the downturn as houses are renovated and need to comply with stricter efficiency codes.

Factor is gas prices probably close to tripling, unless Russia really ramps up production with their deals to China, and I have no idea how making explosives / fertilisers / manufacturing reliant on gas is expected to survive.  I'm not even sure if gas peaking plants will be so viable in 3-4 years as all the old cheap gas contracts expire.

I can only hope the new lithium battery technology using silicon comes to fruition.  60% higher capacity, 40% less weight, 16 times faster to charge and discharge, increase capacity after high usage cycles (longer lasting).  Could make going off grid a possibility.


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## Smurf1976 (19 June 2014)

sydboy007 said:


> The over investment is really just like a new tax.




Expensive energy kills the economy. That's fairly basic, since all economic activity requires at least some energy from some source, and most of it uses at least some electricity.



> I'm not even sure if gas peaking plants will be so viable in 3-4 years as all the old cheap gas contracts expire.




Gas is a relatively limited resource. Not as limited relative to consumption as oil, but still quite limited when compared to coal. Gas sits in the middle so far as, usefulness, abundance and price is concerned. Oil is the most useful / least plentiful / most expensive. Coal is the least useful / most plentiful / cheapest. Gas is in the middle and that's why many thinking people have said over the years that using gas for baseload power is madness and will end in tears once the price goes up. Just like what happened with the oil-fired power plants a generation ago when oil became expensive and those plants ended up as economic millstones for utilities, and in some cases entire countries, for the next few decades.

Hydro Tas is on record publicly as not seeing any certain future for gas-fired generation beyond the next 3 years. Whilst most of Hydro's operations are based around hydro and wind energy, it does have some gas-fired generation as well. This is used in two ways. First is the conventional approach of just supplying into the national market when profitable to do so. 

Second is that a hydro system can be pushed a lot harder if you can accept the risk of failure. That is, you have a "firm" rating but it's entirely possible to run a lot harder than that _if_ you can accept the risk of an output collapse that fails to meet demand. And since HT is in the unique situation of actually being obligated to maintain power supply in Tas (generators in other states have no such obligation by the way), failure is not acceptable. But if you have some gas turbines sitting there well then you can accept a partial failure of the hydro system without the lights actually going out. It is thus quite possible to make money from gas generation without actually burning any gas most of the time.

Looking at it recently, HT took ownership of the gas-fired units at the beginning of June 2013. The combined cycle unit (of which there is one only) was run to supply into the national market until 6th July, then shut down until being restarted on 9 December. It then ran at full load until output was cut on 31 May, then shut down entirely on 3 June. It's now sitting there idle, but its' presence can still make money by enabling the hydro system to be pushed harder (and it's being pushed _very_ hard in recent times, generally running around 160% of firm capacity during May for example although baseload output (but not peaking) it has been backed off a bit since then).

For the peaking units (of which there are 4), they generally run to take advantage of short term price spikes in Vic at times when the hydro system is unable to fully load the Tas - Vic link northbound. That can happen due to either high local load in Tas, or due to plant outage for maintenance etc. One of the units, the most efficient one, was run for a couple of hours last night for this reason. That said, the peaking units are technically capable of an extended baseload run at full output if required. They don't need to shut down regularly, they could run flat out 24/7 if the need arose. As such, they also earn revenue by means of backup to hydro and enabling the system to be pushed harder either peaking and/or baseload. 

So the economics of gas-fired plant are different in the context of being owned by a predominantly hydro generation company. But even there, as gas prices go up their usefulness becomes limited to a backup / push the system harder role rather than generating into the market as such. We won't likely see extended baseload runs that often post-2017.

For everyone else, well it's not so good economically and that's the reason for things like Swanbank E (Qld) being withdrawn from the market. They just can't make money on it, so they won't be running it.

Back to Tas, integration of the gas-fired plant, by means of having the same owner as the hydro system and thus not competing against it, enabled at 5.22% reduction in retail electricity prices in Tasmania as of 1 January 2014. Prices are to be cut by another 7.8% from July 1 this year. So all up that's a 12.6% price cut so far driven by various factors.

PS - for anyone in Tas who wants to have a look, the doors will be open to the general public at a number of power stations later this year. Details, times etc are being sorted, but anyone can come and have a look inside and see how it all works.


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## sydboy007 (25 June 2014)

http://www.businessspectator.com.au...tts-alan-jones-script-has-just-been-destroyed

_The federal government’s hand-picked economic modeller to evaluate the impact of the Renewable Energy Target, ACIL-Allen, has found that a wind-back of the scheme’s target would end up costing electricity consumers money, to the benefit largely of fossil fuel suppliers and generators.

*This is even though the modeller was instructed by the government to attribute no monetary value whatsoever to carbon emissions.*

Also, the modelling suggests that the renewable energy industry should be able to meet the current level of the target without a blowout in the cost of renewable energy certificates to the price cap._

As well, the review found that raising the target would decrease energy costs further with the optimal blend being a raised 30% target.  By 2030 a real 30% renewable target would be saving households over $150 annual.  It will be very interesting to see how the Abbott Govt spins this to the public. So who do they side with.  Largely foreign owned generators or Australian electricity consumers?  Possibly some education session on the merit order effect and how it's the marginal producer that sets the wholesale price.

It's also interesting to note that wholesale electricity prices are roughly where they were a decade ago.  The below chart shows where the retail costs are coming from, and it's not the RET or other carbon reduction schemes that have caused the blowout


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## Smurf1976 (27 June 2014)

sydboy007 said:


> It's also interesting to note that wholesale electricity prices are roughly where they were a decade ago.




If you take out the carbon tax then for most of Australia the wholesale cost today is lower than it was back in 1980. Lower not in "real" terms but in actual nominal $ it's lower. Sure, there wasn't a traded market in electricity back then that is true, but the price today is less than it actually cost to generate it back then in many cases.

If you look at it in real terms, then prices have dropped roughly 84% in the past third of a century. That's massive, especially when you consider that quite a lot of the electricity we use today still comes from power stations that were already running back then.


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## Ijustnewit (28 June 2014)

"Hydro Tasmania to cut about 100 jobs"

www.abc.net.au/news/2014-06-27/hydro-tasmania-to-cut-100-jobs/5555732


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## macca (28 June 2014)

Smurf1976 said:


> If you take out the carbon tax then for most of Australia the wholesale cost today is lower than it was back in 1980. Lower not in "real" terms but in actual nominal $ it's lower. Sure, there wasn't a traded market in electricity back then that is true, but the price today is less than it actually cost to generate it back then in many cases.
> 
> If you look at it in real terms, then prices have dropped roughly 84% in the past third of a century. That's massive, especially when you consider that quite a lot of the electricity we use today still comes from power stations that were already running back then.




I would be interested in more comment on this Mr Smurf if you can.

If the above is the case then it would seem that we are paying a lot of money within our bills to upgrade the distribution network rather than improve the efficiency of the generation process. I noticed in the graph before your post that the marketing costs have also increased. Perhaps if they used price as a marketing tool and stopped wasting millions sponsoring sport stadiums and sporting events they would be far more successful.

Every one I know is only interested in two things, reliability of supply and price, the rest is an ego trip  for the CEOs so they can social climb IMO 

In our area we used to have a serious surge problem, we are on a peninsula about 20ks long with about 20k people and when a surge came, all sorts of overloads would trip, brown outs would occur and in vacation times blackouts would happen because of the extra demand by population increase.

We now have an extra power line in but we also have all these small sub-station things ? up on the poles that are supposed to stop spikes blowing up appliances and motors throughout the area, can you explain a bit more about this please. If it helps we are postcode 2315

thanks


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## Smurf1976 (28 June 2014)

In 1980 the benchmark for new thermal generation was around 4.2 cents per kWh.

In 1990 it was generally accepted as 4.0 cents per kWh.

In 2000 it was generally put around 3.7 cents per kWh. The actual average market price across Qld, NSW and Vic over 1999-2000 and 2000-01 was indeed close to that, at 3.705 cents per kWh.

And if you look at the market in 2011-12, so the year immediately prior to the carbon tax, then the market price averaged 2.978 cents per kWh across Qld, NSW, Vic, Tas and SA.

Those are actual nominal prices, not adjusted for inflation, and the trend is pretty clear. As for where it comes from, here's some figures for 2011-12 (year chosen to exclude carbon tax impacts) and some real data based on age of generating plant.

Production in Victoria:
Plant built 2010 onwards = 1%
Built 2000-09 = 3%
1990's = 15%
1980's = 42%
1970's = 15%
1960's = 22%
1950's = 2%
1920's and 1940's = minor 

Production in NSW:
2010's = minor
2000's = 6%
1990's = 16%
1980's = 48%
1970's = 28%
1960's = 1%
1950's = 1%

Tasmania:
2010's = 5%
2000's = 12%
1990's = 8%
1980's = 14%
1970's = 19%
1960's = 25%
1950's = 12%
1930's = 5%
1910's = less than 1% 

SA has significant production from newer plants (due to wind farms plus a couple of gas-fired plants that are relatively modern) and there is significant reliance on more modern generation in Qld and WA due to load growth and new plant construction in recent years. But so far as NSW and Vic are concerned, not much has changed in the past 20 years really.

So overall, most electricity today comes from power stations that aren't exactly new. And since the cost per kWh of building them in the first place is higher than that of simply running them once built (especially in Vic and Tas, less so in NSW) there's not a lot of cost increase to be had if you're still running the same old machines.


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## Smurf1976 (28 June 2014)

macca said:


> We now have an extra power line in but we also have all these small sub-station things ? up on the poles that are supposed to stop spikes blowing up appliances and motors throughout the area, can you explain a bit more about this please.




Not being familiar with the area it's a bit hard to comment. But at a guess, the problem was probably one of voltage collapse / overload rather than a surge as such. 

So they may have installed transformers along the line and possibly a capacitor bank somewhere to compensate for voltage drop under high loads.

Either that or they might have simply added a lot more transformer capacity between the HV (high voltage) and LV (low voltage - what goes to your house) set of lines in order to cope with the high seasonal loads. For reasons of minimising voltage drop, you'd put several smaller ones at various locations rather than one or two big ones.

Another workaround for a localised problem is to embed some generation into the distribution network. There's a few rather significant ones, eg there's a couple of actual power stations (gas-fired) in Vic that were built for this reason. There are also less significant ones, eg a diesel generator installed in a shipping container. For reasons that are largely coincidental but somewhat ironic, quite a few of these supplementary generators have ended up in locations not far from major power stations. Somewhat ironic that, but there's a few like that.


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## Value Collector (4 July 2014)

SirRumpole said:


> Well that's taken a load off my mind, as well as the grid.




LOL


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## macca (4 July 2014)

Smurf1976 said:


> Not being familiar with the area it's a bit hard to comment. But at a guess, the problem was probably one of voltage collapse / overload rather than a surge as such.
> 
> So they may have installed transformers along the line and possibly a capacitor bank somewhere to compensate for voltage drop under high loads.
> 
> ...




Thanks, they have also installed a few mysterious boxes about 1m x 2m x1m near shopping centres and marinas so I guess they would be generators.


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## SirRumpole (15 July 2014)

Just floating an idea for the power gurus here.

Would it be practical for a home solar system to have on site storage consisting of a water tank underground and one in the roof, and have excess power from the solar cells pump water to the upper tank, and have a water turbine with generator attached to provide power at night ?

Would this be cheaper and more efficient than storage batteries ? In good conditions could it provide enough storage to fully power a home at night ?


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## bellenuit (15 July 2014)

SirRumpole said:


> Just floating an idea for the power gurus here.
> 
> Would it be practical for a home solar system to have on site storage consisting of a water tank underground and one in the roof, and have excess power from the solar cells pump water to the upper tank, and have a water turbine with generator attached to provide power at night ?
> 
> Would this be cheaper and more efficient than storage batteries ? In good conditions could it provide enough storage to fully power a home at night ?




I may be wrong, but I couldn't imagine a storage tank big enough to provide sufficient power generation overnight that would be capable of being supported by typical roof structures. Perhaps an artificial platform beside the house might support a tank sufficiently big to do the trick. A farm with a natural hill might be able to include such a scheme, but I still think that with the research and development that is going into storage batteries, they may in a few years be a cost effective solution. 

For a roof top tank, apart from other costs such as reinforcing the roof support, you might also have insurance issues with such a large capacity of water sitting above the house.

The idea is reasonable though and has been used by several commercial power providers for years to smooth supply and demand. They built such a facility just outside Dublin in 1968.

Here is some info on it.....

http://en.wikipedia.org/wiki/Turlough_Hill


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## SirRumpole (15 July 2014)

bellenuit said:


> I may be wrong, but I couldn't imagine a storage tank big enough to provide sufficient power generation overnight that would be capable of being supported by typical roof structures. Perhaps an artificial platform beside the house might support a tank sufficiently big to do the trick. A farm with a natural hill might be able to include such a scheme, but I still think that with the research and development that is going into storage batteries, they may in a few years be a cost effective solution.
> 
> For a roof top tank, apart from other costs such as reinforcing the roof support, you might also have insurance issues with such a large capacity of water sitting above the house.
> 
> ...




Yes, thanks bellenuit, I got from another forum that I would need 2 swimming pools of water to store as much energy as 1 12V battery. Oh well, dream on !


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## skc (11 August 2014)

I found this two-part article about the electricity industry quite informative and eye-openning.

http://www.sharecafe.com.au/ii.asp?a=AV&ai=31057

http://www.sharecafe.com.au/ii.asp?a=AV&ai=31154

Here are some snippets.



> The industry depends on generators to produce the electricity, distributors to transport it and retailers to sell it to consumers. These parts of the electricity industry have long been stable, reliable business, generating stable, reliable returns. Not anymore.
> 
> Changing patterns of consumption and production, particularly the introduction of renewable power, now threaten to turn the power industry on its head. In Europe, utilities that were once stable engines of profit now risk bankruptcy and irrelevance. The very viability of the electricity business is threatened and yet, in Australia, few have noticed the threat at all.






> Although base load supply is constant, electricity demand is lumpy. It spikes and falls at predictable times. For example, demand increases on hot days and during evening peaks, causing prices to spike and making it profitable to fire up expensive but flexible peaking power plants, usually gas, that can supply marginal demand.
> 
> Renewable energy challenges that business model because it boasts two unbeatable traits. Firstly, it generates power at zero marginal cost which means that, when it’s available, renewable energy is always the cheapest on the market, displacing both peak and base load power plants. Secondly, it does this just when demand – and hence prices – are at their highest.
> 
> Power plants rely on peak periods to generate their profit. In Australia, for example, 25% of all generation profits come satisfying just 36 hours of peak demand.






> In Europe they’ve been declining for years, settling at around 45%. Origin Energy reports that its Eraring power plant operates at just 44% capacity, while Stanwell, Queensland’s largest generator, says that its base load plants are running at 60%. Without higher utilisation, base load plants are unsustainable.
> 
> So why have utilisation rates fallen so dramatically?
> 
> Since 2008, electricity demand has fallen every year for six straight years. Total demand for electricity is now 15% lower than it was in 2007 but, due to the incentives for power generators to ‘gold plate’ the system, supply has grown.


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## SirRumpole (12 August 2014)

> So why have utilisation rates fallen so dramatically?




Two reasons I would say, increased take ups of solar panels and the closing down of intensive energy users such as steel and aluminium producers (due to high electricity prices).

So why should not electricity companies sell excess power back to industry at cheap prices ? Surely that is how supply and demand is supposed to work in a market based economy ?


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## Smurf1976 (12 August 2014)

SirRumpole said:


> So why should not electricity companies sell excess power back to industry at cheap prices ? Surely that is how supply and demand is supposed to work in a market based economy ?




Or you could do both. Sell the power cheaply to industry with a contract agreement that it can instead be sold into the market whenever the spot price reaches a high level. End result = power company still makes $ and the factory stays in business too.

It's public knowledge that TEMCO (Tasmanian Electro-Metallurgical Company) is surviving only due to such a deal with Hydro Tas, the plant actually having closed at one point before that arrangement came into being to get it up and running again. TEMCO operates 4 furnaces producing manganese alloys (used to make steel) as well as a sintering line and is the only Australian producer of such alloys. This deal isn't unique, there are other such arrangements in Tas, although I'm not aware of any examples in other states (might be some, not sure).

Anyway, it's business as usual in the power generation industry down here and if you'd like to have a look inside a real, fully operational power station or two then here's the details for upcoming public tours. All plants are in Tas and all are hydro stations.

31 August 2014. Trevallyn Power Station tour.  Time: Tours will run every 20 minutes from 10am until 2pm.
Location: 21 Elouera Street, Trevallyn 7250 (suburban Launceston, just a short drive from the CBD). Trevallyn is a 95MW plant commissioned 1955 with 4 units (francis turbines) sourcing water from Lake Trevallyn.

Sunday 21 September 2014. Gordon Power Station tour. Time: Tours will run every 20 minutes from 11.30am until 2.30pm Location: Gordon River Road, Strathgordon, 7139 (remote SW Tasmania, about 2.5 hours drive from Hobart - road is sealed all the way). Gordon is a 432MW plant commissioned 1977 (2 x 144MW machines) with a third 144MW machined added in 1988. All are francis turbines, water is sourced from Lake Gordon (itself fed from Lake Pedder) and the plant is underground - yes the tour goes underground to the power station.

10 October 2014. Lake Margaret Power Station tour. Part of the Queenstown Herritage & Arts Festival. Further details TBA. The power stations (there are 2) are near Queenstown with the Upper power station consisting of 7 x 1.2MW pelton turbines commissioned 1914 (4), 1918 (2) and 1930 (1) and yes the 100 year old machines are still running in full production. The Lower power station consists of a single 3.2MW turgo turbine commissioned 2010, replacing a previous 1.6MW francis turbine which remains in-situ but no longer operating. The Upper power station remains pretty much as it was 100 years ago with only minor modifications and the recently constructed (2009) replacement pipeline from Lake Margaret dam is made from wood as was the original - it's a giant 2.2km long wooden barrel basically, a bit like a wine barrel in construction. The Lower station also features a recent (2010) wooden pipeline.

Sunday 12 October 2014. Paloona Power Station tour. Time: Tours will run every 20 minutes from 10am until 2pm. Location: Paloona Dam Road, Paloona, 7310 (not far south of Devonport). Paloona is a 28MW plant commissioned 1972 and uses a single kaplan turbine due to the low head (pressure) available at the site. Water is sourced from Lake Paloona, and is the lowest of 7 power stations in the Mersey-Forth catchment.

Sunday 12 October 2014. Devils Gate Power Station tour. Time: Tours will run every 20 minutes from 10am until 2pm. Location: Barrington end of Devils Gate road (south of Devonport). Devils Gate has a capacity of 63MW from a single francis turbine and was commissioned in 1969. Water is sourced from Lake Barrington, formed by Devils Gate Dam, the second lowest station in the Mersey-Forth catchment.

Sunday 9 November 2014. Tarraleah Power Station tour. Time: Tours will run every 20 minutes between 10am and 2pm. Location: Tarraleah Power Station, on the right hand side of the Lyell Hwy travelling west from Hobart toward Queenstown (Tungatinah Power Station is almost opposite on the left hand side of the road near the public BBQ area). Tarraleah consists of 6 x 15MW machines (all pelton turbines) commissioned 1938 (3), 1943 (1), 1945 (1) and 1951 (1).   

Notes:

Bookings - no need to book, just turn up.

Parking - no problems parking at any site, and all roads are suitable for any normal car.

Physical fitness - if you can walk up normal steps etc then you'll be fine.

Clothing etc - normal clothing and shoes are fine, no need for anything special. The power stations aren't as noisy inside as you might be thinking (not silent but nothing that will send you deaf) and aren't overly hot inside (unless it happens to be a hot day outside). 

Further details at hydro100.com.au 

Photos: Lake Margaret Upper machines B - G and Tarraleah control room.


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## sydboy007 (13 August 2014)

skc said:


> I found this two-part article about the electricity industry quite informative and eye-openning.
> .




Dramatic changes need to occur to make the system stable again.  So far the power companies and energy distributors are fighting against the change required, and politicians are scared of a voter backlash from those who would end up paying more in a fairer chagrin system.

A lot of studies I've read show that even with economical battery technology, there is an inherent benefit to remaining on grid as the amount of storage each property would need is lowered dramatically.

The industry needs to stop talking about how renewable energy has to have backup in case the sun ain't shinning or the wind ain't blowing.  You have to have backup capacity for fossil fuel energy production as well, and it's not at a 1 to 1 level for either form.

We need the rollout of smart energy readers and then moved to a system where you pay for a particular rate of access for peak energy periods.  So on the 2 or 3 hottest days and similar for the coldest nights, when the cost of electricity sky rockets and the gas peaking plants are running, you pre-purchase in kWh blocks how much access to the system you are entitled to at standard rates, and if you go over this level you face the true cost of your network access.  That way the fixed charges better reflects a households use of electricity infrastructure. 

This is a fairer system than TOU charging that penalises households who may use the bulk of their energy in peak times but that level of use is lower than average and not the primary cause for the roughly 10% of energy asssets that are used for less than a week a year.

The problem is having the political leaders who are able to drive through the appropriate reforms while also being able to stand up to the electricity generators and distributors and also educate the public enough to know that the changes are fair, even though there will be howls of protest from those who will start to pay more due to their high peak time usage.


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## sydboy007 (13 August 2014)

Smurf1976 said:


> Anyway, it's business as usual in the power generation industry down here and if you'd like to have a look inside a real, fully operational power station or two then here's the details for upcoming public tours. All plants are in Tas and all are hydro stations.




The control room pics always make me think this guy designed the layout

I'm very disappointed the control wheel was dropped from the final specs


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## Smurf1976 (13 August 2014)

sydboy007 said:


> I'm very disappointed the control wheel was dropped from the final specs




Have a close look at that photo of Tarraleah. Yep, we've got some wheels there.... 

That stuff isn't used these days by the way, it's all remote controlled now, but there's no practical need to remove it so it remains in place. Visitors like looking at it, and it preserves as much as possible the historical integrity of the old stations which had those big control rooms.


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## JohnDe (7 July 2022)

sydboy007 said:


> Electricity consumption in the National Electricity Market (NEM) states has decreased for the fourth consecutive year. In 2012, electricity demand in the NEM decreased 2.5 per cent (4,818 GWh), when compared to 2011 consumption, which represents the largest annual reduction since this trend began.
> 
> Reduced electricity consumption in the NEM is not a recent phenomenon; electricity demand has fallen every year since 2008. Electricity demand in 2012 was 196,000 GWh, 11,400 GWh lower than the peak reached in 2008.  At retail prices of around 25c / kWh it's a reduction of $2.85B being spent on electricity.
> 
> ...




Even though the original post is almost 10 years old, I thought it relevant after listening to How did it come to this — the energy crisis we had to have?



> Australia has everything it needs to produce electricity - coal, gas, sun, and wind. Yet we've wound up with energy shortages and huge price hikes. How did we get here - why is our energy system in such a mess? And what can we do to fix it?
> 
> Guests:
> 
> ...


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