Demand tariffs could save Aussie consumers over 10% per year on electricity: Report

The introduction of demand-based network tariffs could save Australian consumers more than 10 per cent a year on their electricity bills and achieve broader economic benefits of $1.8 billion, a new report has found.

The report, by energy consultancy Energeia, also found that if networks were to tap distributed energy resources (DER) customers, buying grid services from them, it replace the need for $16.2 billion in network investment by 2050, avoid $18.6 billion in cross subsidies, and lower average network bills by around 30 per cent compared to today.

Energeia’s Network Pricing and Incentives Reform report – prepared for the Energy Networks Association and CSIRO as part of the Electricity Network Transformation Roadmap – confirms the recent findings of the Institute of Sustainable Futures, that better rewarding local energy generators for their contributions to the grid would unlock savings north of $1 billion in avoided network costs; in Energeia’s case, $1.4 billion by 2026.

The report, released last Tuesday at the All-Energy Australia conference in Melbourne, says that that proposed demand-based network tariffs will perform better than the legacy volume-based tariffs by integrating distributed generation like rooftop solar more fairly and efficiently.

Without changes to prices and incentives, however, customers would be exposed to the risk of unnecessary investment in network infrastructure and DER, leading to higher average electricity bills and unfair cross-subsidies.

“Customers, not utilities, will make more than $224 billion – or more than a quarter – of all energy system investment decisions between now and 2050,” said Energy Networks Association chief John Bradley in a statement on Tuesday.

“Energy networks can unlock the full value of these distributed resources, like solar, storage and demand  management, with smart incentives for grid-support services.

“These benefits rely on distributed resources providing the grid support needed in the right place at the right time,” Bradley said.

On timing, the report warns that without actively assigning customers to demand-tariffs, 60 per cent of forecast smart meters would remain unused for cost-reflective tariffs in 2050, resulting in $2.4 billion in under-utilised investment.

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