Gillard is missing the real prospects to cut power bills and emissions

Beyond Zero Emissions released the statement below on August 8.

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If Julia Gillard wants to support households against price-gouging by electricity companies, she should look closer at renewable energy and energy efficiency, says think-tank Beyond Zero Emissions (BZE).

Electricity retailers accused of over-investing in grid infrastructure (like poles and wires) would lose their justification if peak energy use spikes were reduced.

One easy way would be to continue with programs such as the ill-fated roof insulation scheme of the Kevin Rudd government. Upgrading inefficient air conditioners would be another low-hanging fruit.

“We have estimated that subsidising half the cost of upgrading old, inefficient home air-conditioning units could save the public about $2900 in avoided network upgrade costs,” says Matthew Wright, executive director of BZE.

“Solar panels and wind farms also keep prices down, because they displace the more expensive peak gas generators,” Wright said. “This is known as the Merit Order Effect.

“Every time we avoid using expensive peak generators, by energy efficiency or by using renewables instead, it creates big savings on the wholesale cost of electricity.

“Peak generators charge well above the normal wholesale rate for power — up to $12,500 per megawatt hour, typically on hot summer afternoons.

“This is just when solar panels, insulation, and efficient modern split-system air-conditioning can work together to save us a packet on both grid upgrades for energy peaks, and the premium price charged for that peak energy.

“Prime Minister Gillard suggested yesterday that solar panels are a thing for the rich. She should know better — her own electorate contains the top postcodes for solar panels in Victoria, but they aren’t affluent suburbs.

“As we have outlined, the Merit Order Effect also means that regardless of whose roof the solar panels are installed on, they benefit all bill payers because they help to keep wholesale prices down.

“If Gillard wants to stop energy utilities’ outrageous price hikes, that’s a good thing. But she needs to look at the proven, clean ways of doing that and ensure that governments provide support to roll out these much-needed technologies.”