Today’s column is written by Eshel Lipman, an Israeli Electrical Engineer who has been working at Nulux throughout 2017. Eshel brings us his perspective on the Australian energy market, the immense burden of energy costs to Australian businesses and individuals and most importantly what you can do about reducing it…
Almost anyone today is plagued by one major headache. And I am not talking about the global warming or Donald Trump (maybe we should be … ), but actually the fact that saving money is becoming an almost impossible task. Even if our salaries rise, it seems like our expenses will always rise quicker. Therefore, either as a business owner, factory manager or even just a desperate housewife: all have plenty of good reasons to reduce their expenses. The record breaking expense over the last several years which registered the highest relative growth, is our energy bill – prices have doubled over the last 5 years (see here). It would not be outrageous to assume that even you, who is reading this blog, probably have paid at least one energy bill in the last few months, and have felt the consequences deep in your wallet.
The obvious question to be asked is: what can be done?
Energy wholesale prices as sampled in the years 2012-2017, divided by states. Illustration based on data from energy auction. Website
This is no secret that the Australian energy market is one of the most complicated energy markets in the world, with infinite number of players, regulators and mediators. The complexity of this energy industry is mostly beneficial for the manufacturers and the ancillary services providers, often at our expense. The commercial energy bill is composed by an endless list of confusing charges, unexplained coefficients and multipliers, but one single clear (and very high) grand total. All of this fuzziness is the direct outcome of the market’s complexity – AEMO, AEMC, AER, ARENA, etc., is only a short list of the federal agencies and regulators(not even talking about the state ones!). As someone who has arrived from a different country with an entirely different energy market, it seems like those unavoidable rising energy prices, combined with years of inherit complexity, have put Australia into some kind of frenzy. It is most notably obvious when every newspaper is quoting a different politician with a different ‘breakthrough’ initiative: “There is/is not enough gas”, “there is/is not enough renewables”, “the grid is just not robust enough”, “batteries, batteries and more batteries”. However, it doesn’t feel like anyone is actually doing much to change the situation.
Grid infrastructure, can you believe some people find this beautiful? On the left of the last paragraph you can find out the long list of different charges hiding in your monthly bill.
My suggestion is very simple: don’t wait – change some of your energy related behaviours yourself. Otherwise salvation will arrive probably a little too late. The Australian energy market, as part of the global trend, is slowly embracing new, innovative technologies and more costumer oriented approaches that might be able to help you deal with energy better. The best part is, you don’t need to do any deep research or invest too much effort to get started saving money almost immediately. After this quite long introduction, here is how I believe you address the rising expense over energy.
Three key elements of energy costs saving:
One of the easiest things you can do (especially because it doesn’t require you to leave the chair you are sitting on) is negotiating or even renegotiating the rates of your energy contracts. To do so, you should have general understanding of your quite complicated electricity bill, which is composed by three different types of charges: the energy consumption, network and environmental. All of those charges are calculated based on your energy consumption, but the rates are determined both by the billing plan you signed to (read more However, one important difference between the charges is that while energy charge is supposed to cover the costs of the energy generation (there are many different commercial energy generators in the NEM) – the network and environmental charges created to cover the energy transmission costs (losses, maintenance) and sponsor government incentive programs accordingly. Neither the few grid companies nor the government have anything which resembles competition, thus their rates are scarcely negotiable. Furthermore, those companies have to comply with some strict safety standards of HV network, which is heavily regulated and monitored by the AER. So, unless you have a big factory which consumes several MWh per annum, you would not be able to negotiate your network charges. Instead, try focusing on lowering your energy prices:
By choosing smart pricing programs which comply with your habits of electrical appliances (flat rate/ hourly based, flexible pricing etc.) and simultaneously initiate comparison between few different retailers you can get significant reduction on your energy charge. Lucky for us, such bids became even more simple thanks to the federal government tool and few private initiatives (here is one). They created websites which allow us to get online access to the latest electricity bill offers and compare several key factors. Take the figures you get online, and confront your broker or even others with all the different proposals. Please have in mind:
- In case of upcoming end of energy contract, your bargain margin rises, however if you wish to leave in the middle of a contract, exit fees may apply (still can be more beneficial).
- Plan the contract period wisely, long term contracts can ensure fixed rates for years while wholesale prices rise, but it might also not be as competitive with the current prices offered for short term.
- In case you have sub-meters and tenants in your business, many people are considering the solution of embedded networks (EN). EN cam allow you, as the landlord of a facility, to become also the energy provider (here). The benefit of using EN allow you as a business owner to buy larger scale energy in cheaper rates, and then re-sell it to your tenants. Such a solution does require installation of a NMI approve meter, instead of the existing retailer meter.
- Although the structure of energy retailers who mediate between the end user and the energy companies has been used for years now, some innovative approach is now given by mojo energy. Mojo offer wholesale prices for private costumers. For (not that cheap) fixed monthly payments in advance, they will install smart meter and give live tracking and management systems, and commit to provide wholesale tariffs for your consumption. This approach is innovative because it gives relative small scale business access to wholesale rates which used to be a luxury saved for only very big consumers. It is important to mention that their solution is beneficial mostly if you have high monthly consumption per single meter.
Let’s go through now the second key element, the energy reduction. There is an obvious reason why our electrical bills are swollen during the summer and winter – we use heavy energy consuming elements to cool or heat. Now this connection between the season changes and fluctuations in our power bill sum is something which is easy to grasp. However, it is amazing how sometimes we are not capable of comprehending how the trivial things in our daily routine have a massive influence over the total energy bill as well. For instance, a fridge door left open for the night can result not only with some bad yogurts, but also more than a few extra $ added to your bill. This happens due to the nonstop work of the fridge compressor, desperately trying to reduce the temperature in the whole room instead of much smaller refrigerator interior. Therefore, being aware of the way you use appliances has significant importance – you want to use your devices in a way that will save you the most energy. Moreover, you want to use the most efficient devices that can deliver the same outcome with the least energy consumption. Here are some easy tips (there are plenty):
- Make sure you allow your devices to work in the optimal way (e.g., do not let a fridge work with an open door, or clear your air-conditioning filter once in a while).
- Replace old appliances, which consume more electricity over time due to aging or more technologies: a 20 year old fridge might be working well, but probably still less efficient than a new one. Same thing applies to lighting. When brand new LED light can provide much better results (both in luminance quality and energy consumption) than the old fluorescent. A good practise is to purchase devices with high energy star rankings (here) which resemble more savings. However, not all the appliances are ranked, especially if we are dealing with industrial equipment. This is why, regardless of the rating, always check the power rating (in watts) and compare it to other purchase options.
- Smart scheduling of more heavily consuming appliances during the hours of the day can save you greatly. This applies only if your billing method is hourly based – if you are flexible enough with cooking and doing the laundry in the evenings or during the weekend you will enjoy the off-peak rates which are significantly lower than the peak ones.
Those are all great tips, but sometimes you just must stick with your daily routine (we all know how hard it is to change our habits, especially the bad ones) – so the energy regime/scheduling cannot be changed. Is there a separate way to reduce consumption, without any behavioural change? Yes, and that is a huge focus of the high-tech companies in the energy industry. One good example is the green building trend that started roughly a decade ago. For instance, by building facilities with special heat absorbing material and shaping building according to the sun trajectory we can keep the building cooler in summer or warmer in winter, thus save energy.
But what with existing facilities? Well, many IOT solutions allow you to program your house (BMS systems do it for larger buildings for a long time). Basically, adding some sensors and smart outlets gives the house the capabilities to light up on its own, just because the system got an alert from your smartphone that you are on your way back. Smart houses can also activate some of the house utilities on the perfect timing (hot coffee in the morning?), and will even turn the lights off if you are dreaming in bed and forgot to do it yourself.
Both concepts which I have just mentioned are great, but require both big investment and some behavioural change as well: Some people dislike the idea that their own home is tracking them constantly. Real greenhouses come usually with a grey water system – try to convince your mom there is no problem with that. Here are two interesting and mature technologies which offer energy saving without change of infrastructure or behaviour, might get a bit technical but worth a try:
- PFCU – or power factor correction units: Those are devices capable of changing the characteristics of the entire general load in a certain facility, so it will reduce the KVA consumption. High KVA consumption usually occurs when industrial businesses are operating many motors or other magnetic appliances. The large current which those appliances are consuming, forces the electrical grid company to provide higher current to the customer. The high current increases the conduction losses which need to be compensated, thus higher KVA penalty charge (here is Ergon energy explanation of KVA charge). PFCU are designed to be connected between the meter and the main switchboard, sense and reduce the outgoing current from the business, which reduces that Penalty.
- VO – or Voltage Optimizers: Have you ever wondered what the voltage supplied at this very moment in the socket you are sitting next to? Here is a newsflash – it is not the perfect 220V RMS you studied in physics class at high school. It might be a little complicated to grasp, but many different things influence the voltage level of the socket, and not only the generator in the power plant. Today the voltage of the grid is influenced by the distributed properties of the electricity network: Solar generation, load variations and the amount of many different powerplants on the grid, neither of them is perfect synchronized. Moreover, the methods to compensate the conduction losses (remember the KVA penalties?) increase the chances of higher voltage than the standard. In Australia, it can be extremely higher (245-250 volt instead of 220). End-user equipment manufacturers make sure that their products will work in this massive range of, let say 215-245V. However, the outcome of this excessive voltage is excessive heat losses throughout our appliances.
Therefore, important question is ‘why do we need to consume this excess voltage if we can consume much less, and get the same end results?’ That is where the VO get into the picture: this device can force the incoming voltage to drop, without any substantial losses. This main outcome is an impressive efficiency improvement of more than 15%, but also reduced KVA consumption and extended longevity of equipment lifetime. One of the Nulux energy promising products, is a VO named ‘ComEC’, check it out here (disclaimer, if it wasn’t clear still this very moment – I work for these guys).
Just as extra tool to understand what is VO and if it can work for your facility, The OEH Department of The NSW Government has published this guide.
This is an example for random voltage optimizer, distributed in Australia by another random company
The last (but not least, especially when it comes to energy saving) area I would like to focus on is generation. Many people take electricity as for granted, and that having wide spread available electricity as a power source is an axiom. How obvious it is today, that we have available electricity in the outlets or to power the lamps, chargers, computers or TV screens in the room you are now sitting in? But what happens when it fails?
We are always a bit surprised when we get exaggerated power bills, but really surprised or even frustrated when there is no available power at all. This will always happen exactly when you have to finish and deliver this big submission for university or work. Power shortages emphasise how dependent are we on this power source, just because we have gotten used to our daily life with constant supply. Unfortunately, such situation is not unreasonable, and during the last summer here in Australia we got some bad reminders of how living without energy looks like (SA blackout, for instance).
So here was one good reason to have your own generation abilities – resilience against problems with the electrical grid. I can easily think another one: get ‘free energy’ which also reduce carbon dioxide emissions (as long as you choose renewable such as solar or wind, not diesel). This energy can be sold back to the grid, and in return get the relative amount money in a unique tariff called ‘feed-in’ tariff.
when you install on grid solar system you must add extra meter which measures the amount of accumulated exported power. One must understand that in order to really enjoy the benefits of renewables we must implement big batteries as energy storage. Why? Because by adding a battery:
- You can power up you own facility in case of any grid instability.
- Batteries are an essential part in renewable smoothening, they will be charged regardless the fluctuations of the renewable power source output. The battery functions as a buffer which allow the DC to AC converter to work continuously, without interruptions.
- Years ago it was most beneficial to sell all of the harvested renewable energy directly to the grid and buy it back (Gross usage instead of Net). Today the feed in tariff has dropped to a level which makes selling the energy back to the grid less beneficial. In addition, you rather store the energy and use it, instead of buying power from the grid later (solar for example, store power in day, use it during darkness in the night). This very subject is currently under examination of
of the state governments (ESS for NSW government) recognise the importance of the power efficiency measures. They have initiated programs to encourage those processes by generating rebates equivalent to the amount of savings. I believe this will be more elaborated in the next blog.
This was a very general overview of the main existing (and feasible!) options which will result in saving some money. There are, for sure, more ideas and gadgets. All you need to do is google ‘energy savings’ to get more ideas, but at least you have the basics.
Some of the presented solutions might be simple and quick, and some require installations or adaptation. There is no guarantee there is one right solution for your home or business. Nonetheless, it will be probably a combination of a few of the mentioned above, but you can definitely choose wisely by knowing. In the next blog, I will try to take those ideas (hopefully in a shorter article) and give you some insights on how to prioritise between them and find right choice for you.
Until then, save the energy, save the world (and your money).