Motorists could save power suppliers from shock

It was Intel's founder, Gordon E. Moore, who observed in 1965 that there was a doubling in the power of computer chips every two years.

Moore predicted this trend would persist for another 10 years and his prognostication has proven eerily correct.

Even extrapolating Moore's Law, as it became known, beyond the realms of semiconductors into digital technology and elsewhere, technology tends to double in power every couple of years. And as the performance increases, the price drops in sync.

It is to this phenomenon upon which electricity consumers can pin their hopes in coming years as they grapple with rising power bills. The technology to deliver cheaper energy is here. The question is: can industry and government deliver?

Already, solar power has hit a "tipping point" at which it is economic without government subsidies. This was one finding in a recent draft report by Robert Rollinson, an engineer, on the electricity industry on the NSW mid-north coast.

Professor Mike Sandiford of the Melbourne Energy Institute says solar PV (photovoltaic) is close to "grid parity". "PV [pricing] has been trending down, with a 20 to 25 per cent cost reduction for every doubling of capacity globally."

This is no guarantee of relief from surging prices, however. The electricity industry needs a return on its massive spending of recent years, spending that has been the impetus behind nosebleed power bills.

Thanks to the high fixed costs of the electricity network, even if consumers were to flee the grid in their droves for wind and solar power, many would still use it for a portion of their power needs. Less savvy consumers - read, the most needy - will still be stuck on the grid.

For the industry, the unpleasant consequence of falling demand and the incursion of solar power is the prospect of large write-downs at a time when the NSW and Queensland governments are keen to privatise their transmission and distribution assets.

There is a little ray of sunshine, though. Electric cars may take up the grid's surplus capacity in off-peak hours because you recharge them at night.

Like television sets, digital cameras and DVD players, electric cars have rapidly improved in performance and fallen in price.

The Australian Energy Market Commission (AEMC) estimates electric cars will comprise 20 per cent of all new vehicle sales in Australia by the end of this decade, and 45 per cent by 2030.

If motorists recharge their cars overnight, electricity demand will rise by only 4 per cent by 2030, the AEMC says.

The running cost of an electric car that is recharged overnight is about 1¢ a kilometre compared with about 10¢ a kilometre for a petrol-run car.

This means lower costs for consumers and higher demand for the networks at their times of highest spare capacity, and therefore no need for capital expenditure (nor operating expenditure, for that matter).

It's a win-win. The incremental off-peak revenue flows to industry (the five-year regulatory periods allow for significant capture; then it's fingers-crossed that the regulators don't roll the same opportunities for "gold-plating", or unnecessary expenditure, into the next period).

Off-peak prices are lower but this is incremental revenue nonetheless, and revenue gained without offsetting capital or operating costs.

Are electric cars at a tipping point, too?

In January Nissan unveiled the US pricing for its entry level LEAF electric vehicle at $US28,800 ($28,000) - that's 18 per cent cheaper than the most basic 2012 model and presents a robust challenge to GM's dominant offering, the Volt.

Applying the US federal incentive, the price of the new LEAF is an aggressive $US21,300, or as low as $US18,800 in California once the state rebate has been applied.

The tumbling Japanese yen will make imported electric cars far cheaper in Australia, too, or at least for as long as the Aussie dollar remains high.

Here, though, if high power prices persist, particularly in off-peak hours, they may act as an impediment to the take-up of electric cars.

As an interesting aside, one corollary of the carbon tax is that it will also act as an impediment to electric car take-up as it is a very large component of off-peak costs but not so much for on-peak. As well, the carbon tax is not levied on its competitor, petrol.

While electric cars may prove to be a happy, if unintended, consequence of technology for the electricity networks, industry is still in denial mode when it comes to solar PV.

Research by Professor Sandiford last year estimated that, thanks to the spectacular take-up of solar panels, there would be more than 2 gigawatts of solar PV capacity installed by now, enough to produce about 8 per cent of the average daytime electricity demand.

Rather than being hard to measure, Sandiford says the solar PV signature is "blindingly obvious", denting electricity consumption figures in the places where PV use is highest.

"In South Australia, midday to early afternoon demand was down over the financial year 2011-12 by about 8 per cent on the average for the period spanning mid-2007 through [to] mid-2009. That contrasted with a negligible change in demand outside daylight hours," Professor Sandiford said.

If his estimates are even roughly correct, the electricity industry is in for a shock.

Revenues were down by 35 per cent, or by $3.3 billion across the national electricity market in 2011-12 compared with a $9.6 billion turnover for the two years before mid-2009.

If PV deployment continues at its current pace, it would take only 18 months to reduce midday demand to present midnight levels.