NSW poles and wires privatisation ignores the technology revolution
|
Version 0 of 1. A NSW parliamentary inquiry will table its findings into the Baird government’s proposal to privatise the state’s distribution and transmission assets on Tuesday. Just a week before the inquiry began last month, US electric vehicle manufacturer Tesla released details of its home, business and utility-scale batteries. The two events are inextricably linked and are, between them, game changers for the energy and economic future of this state. Related: The benefits of solar do outweigh its costs. Some have a hard time accepting it | Giles Parkinson For a tranche of remote households, the cost-effectiveness of standalone power based on batteries and solar panels has arrived. While small enough to mount on a suburban garage wall, Tesla’s home Powerwall unit packs a punch with the capacity to store a day’s worth of generation from a typical 1.5 kilowatt solar installation. For all households with north-facing roofs and access to a few thousand dollars, the point at which grid connection becomes more expensive than going it alone is expected by most commentators to arrive within the next three years, if it has not already. Despite being excluded from the terms of reference for the inquiry, this sea change of technology has two inescapable consequences for the Baird government’s privatisation scheme. First, the corporate owners of the grid leases will not want to forgo profit to reconfigure their infrastructure to allow local trading of electricity. To create opportunities to maximise the value of rooftop solar and batteries, interconnections between households and between communities will need to become smart links that allow two-way flows of energy, supported by high-quality information exchange. Together with wind power and large-scale solar, a reconfigured and reinvented electricity grid could become the backbone of a lower cost, zero emissions future. None of this would suit the profit model of the private owners who would be in a position to frustrate most of the changes. They could simply refuse to make the capital investments needed to transform the grid from a one-way highway from large fossil-fuel power stations to household into a market place for house-to-house and community-to-community energy trading. The loss of public ownership takes away the capacity of this government – and future state governments – to direct grid operators to make decisions that advance the best interests of the community at the expense of profits. Just as cost-effective battery storage technology emerges, the NSW government is pushing hard to flog off the lever that puts the state in the best possible position to lead the world in its uses and benefits. The economy would consequently miss the boat on the employment and innovation boom that the early adopter states and nations will enjoy. There is a second way in which the Tesla announcement impinges on the Baird government’s so-called asset recycling scheme. Unless the leases, licences and other agreements create penalties and barriers to stop consumers disconnecting from the grid and providing for their own electricity needs, there will be many households who will cut the ties and go it alone with batteries and storage. Electricity grids in Australia are regulated on the basis of efficient cost recovery. Under current regulatory practice, the total revenue transmission and distribution utilities can extract from their customers would be affected by a reduction in the number of connections. As one group of consumers desert the system, the costs of keeping the network running and paying profits to the leaseholders would fall on fewer and fewer users, thus encouraging yet more disconnections. The economic death spiral would then dump an increasing proportion of the burden of cost of maintaining and upgrading the network onto renters, apartment dwellers and those without access to the capital needed to purchase solar and battery technologies. Under the Baird government’s proposed lease, the private owners could become the modern-day equivalent of slum landlords in energy ghettos, ripping profits and cost recovery out of those who can least afford to pay. The human and social consequences of removing the protection that public ownership offers are alarming. There is a real risk that a new class of energy poverty will emerge. Even those who can afford to go it alone will be paying more for their energy than if they could share resources with their neighbours and other communities through a modern, reconfigured grid. Related: NSW government fast-tracks legislation for planned power privatisation bills NSW faces a very stark set of energy choices. The Baird government is pushing ahead with a model that ignores the consequences of the technology revolution. The uptake of energy storage is inevitable but, at best, privatisation will make it harder and more costly to protect the most vulnerable from the consequences. At worst, a privately-owned grid could create an economic and social disaster. The alternative, supported by the Greens and others who embrace the opportunities created by new technology, is to maintain public ownership and use it to ensure that the grid becomes the centre of a clean energy revolution that protects and engages with low-income households and renters. That choice will be made when the NSW Upper House decides on the Baird government’s privatisation legislation. |