Alan Pears: Summertime, and the living ain’t easy
Alan Pears, RMIT University | 28 September 2017
With summer approaching, there’s a flurry of activity to ensure reliable energy generation under peak loads. We also need to look at the way our star-rated buildings cope in the heat.
Those who have watched in bemusement the large numbers of new homes with black roofs and no eaves might be interested in some recent research. This has found that our 6 Star regulations are doing a good job of reducing winter heating energy use. But the way some designers use the rating tools may be making summer performance worse.
Basically, it’s possible in most locations to meet the 6 Star regulations with measures that improve winter performance. But this means homes can still let in summer sun and their improved insulation means they can behave like solar ovens, cooking their occupants. This can be relatively easily fixed by installing effective summer shading and also looking at orientation and areas of glazing.
Summer overheating is not benign. Analysis of outcomes during the very hot week preceding Melbourne’s 2009 Black Saturday fires showed that, just as extreme hot weather drives big peaks in cooling energy demand, it causes other peaks, too. Twice as many people died from the heat in the days leading up to the fires as died in the fires – 374 people died, 62 per cent more than in the same period the year before, many of them elderly.
Pressures on health services peaked. There was a 46 per cent increase in ambulance callouts, with a 34-fold increase in heat-related conditions. Hospital emergency departments saw a 12 per cent increase in demand, with an eight-fold increase in heat-related problems. There was almost a three-fold increase in patients dead on arrival.
RMIT research (a 2016 PhD by Niki Willand based on detailed analysis of a CSIRO field study), found the analysed 5 and 6 Star-rated homes were hotter than 4 Star ones on average, and had higher cooling energy use. This is due to the “solar oven” effect. A 6 Star house can be designed to work well all year round, but winter performance dominates the rating rules.
None of the costs and human impacts of these statistics have been factored into national building code considerations. Indeed, it seems there will be no major changes to the regulations until at least 2022.
There is a glimmer of hope, though. The Victorian government’s new apartment planning guidelines include reasonably strong summer cooling energy limits as well as the annual energy limits. These will force designers of apartment buildings to rethink their approach. Let’s hope this spreads to all new homes.
Energy pricing demands a response
When energy assets were being sold off, many politicians thought that people would blame the industry for any problems, not governments. Sorry guys. Everyone knows you write the rules and supposedly enforce them.
So governments are finally acting, after blackouts, skyrocketing prices and evidence that vulnerable households are worst affected. This is a crisis for neoclassical economics, which has driven energy (and other) reforms based on competition and ‘light-handed’ regulation.
The energy market is basically working the way it was designed to: high prices signal the need to invest in more supply capacity – and energy efficiency has never been on the agenda. Businesses exploit weak regulation and lack of enforcement to capture profit and shift costs onto others. The recent coal power station closures and high gas prices have really been the first test of the market’s design: it has failed.
Business and households both prefer stable, predictable, affordable energy costs and increasingly they simply can’t function without reliable electricity supply. Gas consumers have been lulled into complacency by extremely low prices for decades. They have been stunned by the effects of suddenly opening up gas markets to international prices, combined with exploitation of local shortages by gas suppliers.
There is now a flurry of activity. States are reinforcing supply and adding storage capacity. Rooftop solar and new large-scale renewable energy are both booming.
The Australian Renewable Energy Agency (ARENA) and Australian Energy Market Operator (AEMO) have bypassed the energy market to set up a long-overdue demand response mechanism. Consumers who agree to cut back power usage at critical times will be paid for their efforts. This was first called for by the 2002 Parer Review and energy policymakers have studiously avoided implementing it since then.
ARENA has been swamped by offers. It was looking for 170 megawatts of demand response. Bidders have offered 693?MW by December this year and 1938?MW by December 2018. Why am I not surprised?
So summer power supply now seems secure. Indeed, South Australia may need less emergency generation capacity than expected. We should be using this short-term breather to invest aggressively in energy efficiency, to lock-in lower demand and lower energy costs. No guarantees on that though, given past performance.
Federal and state governments finally seem to have realised that consumer electricity prices have three big components: wholesale energy price, delivery costs (mainly network infrastructure) and retail charges (including fixed charges). All must be addressed, but they require different strategies.
The Victorian government and the Australian Competition and Consumer Commission are running inquiries into retailer charges. There is evidence that consumers who fail to seek out discount deals or can’t meet criteria such as paying on time via direct debit are paying a lot more than ‘engaged’ customers. So vulnerable customers are paying higher prices; so much for social justice.
Prime Minister Turnbull has called energy retailers to Canberra to discuss this and retailers have agreed to some changes. These include attempts to better inform consumers when fixed-term contracts finish. Late payment of a bill will no longer mean a consumer loses access to discounts. What a breakthrough! I’m hopeful that the Victorian government will take stronger action.
Driving prices up
Electricity network operators have over-invested to maximise profit. They have been able to overrule the weak Australian Energy Regulator in the courts, adding billions to consumer costs.
The federal government plans to block the operators’ right to appeal. Over time, that will help to bring network charges down. But it won’t be enough: asset values are way above likely market values in an emerging fair market and only asset write-downs will fix that. Policymakers and governments seem reluctant to unravel this welfare scheme for powerful incumbents.
Wholesale electricity prices have been driven up by a combination of factors, including Tony Abbott’s war on renewables (see my column in ReNew 139), closure of coal power stations, the gas price explosion and failure to drive energy efficiency and demand response. While gas prices seem likely to stay high, their impact on wholesale prices should be reduced by the responses outlined earlier.
But we do need to recognise that, in the past, wholesale electricity prices have been held unsustainably low by excess generation capacity. Regardless of the types of new generation built, it will be a challenge to achieve big price reductions for this cost component unless we manage to engineer oversupply by driving demand down and encouraging new renewables beyond both state and national targets.
Governments and policymakers still seem to be struggling to grasp that it is the total bill, not the unit price, that impacts on consumers’ hip pockets. Greater emphasis on energy efficiency, so we use less and pay less, and reducing outrageously high fixed charges would help.
Energy past, present and future
Sometimes it’s interesting to look back, to understand how things evolve. I was recently asked to look at historical energy use in Australia, which raised some interesting points.
Energy consumption (measured at the meter or fuel bowser) has more than quadrupled since 1961, while carbon emissions have increased by a factor of almost five. Energy-related emissions per person have more than doubled.
Oil has maintained a roughly 50 per cent share, although more of it was used for non-transport purposes like heating in 1961, before the oil crisis and availability of cheap gas. Today around three-quarters is used for transport.
Home and business wood use has fallen from 18 per cent to two per cent of total energy, while direct coal use has crashed from 23 per cent to just three per cent. Gas has been the big winner, increasing from 2 per cent to 20 per cent!
Electricity’s share of energy has doubled from 10 per cent to 20 per cent, with renewables providing only 14 per cent of electricity today compared with 19 per cent in 1961. This reflects the shift towards a services economy that is more reliant on electricity, as well as the trend towards more electric technologies in homes.
It will be interesting to watch how things evolve, as we move towards a zero emission economy, gas prices increase, and efficiency and renewables transform electricity use and emissions.
Alan Pears, AM, is one of A
Alan Pears: Summertime, and the living ain’t easy
ustralia’s best-regarded sustainability experts. He is a Senior Industry Fellow at RMIT University, advises a number of industry and community organisations and works as a consultant. He writes a column in each issue of ReNew: you can buy an e-book of Alan’s columns from 1997 to 2016 at shop.ata.org.au.
This article was first published in ReNew 141.