Altus Energy Insights
This post is taken from Chapter 3 of my new book Power Profits – A Comprehensive 9-Step Framework For Reducing Electricity costs and Boosting Profits.
A framework provides structure, logic, and a sequential process that can be followed by anyone. This 9-Step Electricity Cost Reduction Framework has been used successfully in businesses in which I have had the responsibility for managing the operations, as well as in client businesses where I have assisted in helping reduce electricity costs. It has been developed by combining an operations perspective with knowledge of how the electricity market operates, and by applying quantitative analysis and financial risk techniques.
The context for the framework is the Eastern Australian National Electricity Market (NEM), but the principles can be applied in other international electricity jurisdictions and even in Western Australia.
The term “energy” is […]
This is the last of an initial series of articles about the opportunities for end users in the mainland regions of the National Electricity Market to save costs by purchasing electricity at pool prices and adopting a Demand Response strategy to save more. The previous articles can be found through the following links for South Australia, Queensland and New South Wales. This week we have a look at the opportunity in Victoria.
Table 1 shows that VIC along with NSW have been the two regions that have consistently had the benefit of relatively low and stable prices over the last, almost two, decades.
Table 1 – Financial Year Average Annual Spot Prices by Region
Victorian spot prices are far less volatile than in South Australia and Queensland as shown below in Figure […]
In my previous articles on electricity pool pass-through and Demand Response (see articles for SA,QLD, NSW and VIC) I presented historical pool price data over the last two years and compared that with indicative retail pricing to indicate the size of the cost saving opportunity.
In this article I present how a pool pass-through plus demand response strategy would have performed for different load profiles in the first quarter of 2016 for the mainland States. I have excluded Tasmania due to the interconnector failure but that case does highlight that sometimes the worst-case scenarios can manifest themselves.
Different load profiles will result in substantially different electricity costs for different businesses. A business that runs predominantly during peak periods will obviously incur a higher average unit cost than one that runs through both peak and off peak periods. […]
Last month I wrote about what happened with pool prices over 2014-15 in South Australia and Queensland and the opportunity for savings with pool price pass-through strategy and DSM. This week we will have a look at the opportunity in NSW based on 2014-15 historical data.
Table 1 shows that NSW and VIC have been the two regions that have consistently had the benefit of relatively low and stable prices over the last, almost two, decades.
Table 1 – Financial Year Average Annual Spot Prices by Region
The relatively lower NSW pricing is explained by the fact that there is a larger market, more generator competition, a large supply of lower short-run marginal cost black coal generation and a less “peaky” market demand than SA all culminating in less price spikes driving the […]
In early February I wrote this article about the electricity cost tsunami hitting SA businesses and what they could do to avoid the enormous price increases. I followed this up this month with a review of what January and February would have delivered a spot-exposed business in SA, in terms of benefits.
I received a lot of feedback about these articles including questions as to what the minimum load threshold for this strategy to be effective is and would it be possible to make similar savings in other states.
In terms of threshold, a business with a total annual consumption of 3GWh or more would certainly benefit from this strategy. This may include businesses with a peak demand of around 500 kW or more. Smaller loads would also benefit but the returns might not be large enough to generate strong interest.
In this article […]
I have written previously about the coming energy cost tsunami in WattClarity http://www.wattclarity.com.au/2014/10/when-the-levee-breaks/ Well, the electricity levee in South Australia has finally broken after severe cracking and the resultant tsunami is now swamping business consumers coming out of contract in 2016. Prices have almost doubled from the already high level they had been previously and customers weren’t expecting it.
Figure 1 shows the Calendar Year 2016 base futures price history up until 31 October 2015. Businesses that negotiated with retailers and locked in an agreement in the first half of 2015 received pricing not too dissimilar to the previous year. Those businesses in negotiations in the last quarter of 2015 were subject to pricing offers 180% – 200% higher and were forced to make a hard call on what term they locked in. Some customers were able […]
What would the benefits have been, with spot exposure and Demand Response, in SA for January and February 2016
1 January 2016 was the start date for the new “high price” contracts for SA business consumers that renewed their retail supply contracts in the second half of 2015. Quite a few consumers decided not to lock in the high fixed retail pricing but instead adopt a pool price pass-through arrangement with an accommodating retailer.
So how would have those consumers fared over the first two months of the year?
Figure 1 – Time Series Plot of SA Half-hourly pricing 1 Jan – 28 Feb 2016 (Data source: NEM-Review)
Figure 1 shows a time series plot for every half hour interval for the first two months of the year (excluding 29th February – the day of writing this article). It can clearly be seen that there was one “scary” spike above $5,000/MWh in mid January and […]
Recently there have been many news stories and conference papers calling for the Government to save businesses from rising electricity and gas costs otherwise they will “go under”. In fact, all sectors of the Australian economy are starting to feel the effects of an energy cost tsunami coming towards them. The Eastern States are starting to see up a twofold increase in natural gas prices as a result of the burgeoning LNG export industry buying up domestic gas combined with a lack of competition (WA has already gone through a threefold increase). “Gold Plating” of electricity networks and the so-called Solar PV induced “Death Spiral” are conspiring to push electricity supply charges up. Overlaying all this is the policy objective of achieving reductions in CO2 emissions through the renewable energy scheme putting additional short to […]