Trust in the grid crashes amidst energy crisis

Consumer confidence in Australia’s energy system has crashed as a result of a perfect storm. According to Energy Consumers Australia’s (ECA) “June 2022 Report of the Energy Consumer Sentiment Survey (ECSS)”, consumer confidence in Australia’s energy system is falling fast as electricity prices skyrocket, blackout warnings multiply, and regulators step in to take the extraordinary step of temporarily suspending the National Energy Market.

The report’s findings could have been far worse. Energy Consumers Australia CEO Lynne Gallagher said much of the fieldwork for the June report had been completed in April, before the current crisis really got its claws stuck in. This meant ECA conducted an additional “Pulse” survey, and what it learnt was that the national “Pulse” was racing upwards like everybody’s energy bill.

“While consumers were already growing concerned about affordability in April, we’ve seen a stunning collapse of confidence and trust since then,” said Gallagher. “Australians are clearly unimpressed by the way our system is functioning and are deeply sceptical about whether things are going to get better any time soon.”

According to the “Pulse” survey, only 40% of Australians are confident that the overall energy market is acting in their long-term interests. That represents a 6% drop since 2021, and a 4% drop in just the last month.

It makes sense then why 88% of Australians surveyed are “highly concerned or somewhat concerned that energy will become unaffordable for them over the next three years”.

At the same time, only 61% of respondents said electricity represents positive value for money, a 9% drop since early June, and only 63% said gas represents positive value from money, also a 9% drop over the same period.

“Consumers have reacted angrily to the recent breakdown of the market and who can blame them?” Gallagher continued. “These numbers should send strong warning signals to anyone who is working to advance our progress towards a net zero future energy system in which Australian homes and businesses are powered by clean, abundant, and affordable electricity.”

Gallagher said that a “better future” will require consumers to embrace new opportunities and responsibilities when it comes to investing in new technologies like rooftop solar and solar batteries such as Tesla Powerwall. 

“If we can’t show consumers that the system has their interests front of mind and is able to deliver on them then Australians will be increasingly tempted to disengage from the energy system and try to go their own way.”

Captive market

The last month has already seen significant intervention from the Australian Energy Market Operator (AEMO). The soaring cost of coal and gas means those interventions may very well continue as fossil fuel companies look to exploit the crisis and cash in while prices are high.

In Queensland this week the wholesale electricity prices hit prices more than 10 times the normal average. AEMO used its reserve trade lever to make at least one market player release its hostage hold of the market and distribute the energy it’s holding back.

One eager-eyed energy observer, Dylan McConnell from the University of Melbourne, noticed a staggering 1.3 GW of Queensland capacity suddenly withdrawn from the market on Tuesday morning for AEMO was even able to trigger its mechanism. “Come on guys… really?” tweeted McConnell, “Administered Pricing hasn’t even started yet?!?… What the hell”.

It is therefore no surprise consumer confidence in Australia’s energy system has crashed. Clearly the chickens of the uncoordinated adoption of renewable energy on a national level are coming home to roost. In the short-term there is little energy market regulators can do to stem the macroeconomic forces driving fossil fuel prices through the roof – Russia’s invasion of Ukraine chief among them.

Adding insult to injury, at the same time as the average Australian is digging deep to cover electricity costs, Australia’s fossil fuel companies are expected to record record-high revenues of more than $400 billion as the global market rushes to buy coal and gas not produced by pariah-state Russia. Moves to sure up domestic supply appear slow moving, and there appears few options available in the short term to address the situation and to stop the gaming of the existing system.

However, there is something the average punter can do to stem the rising tide of energy prices, they can install rooftop solar and residential storage like Tesla Powerwall which, considering the shocking prices doled out by the market, is not only a bargain, it’s a sure bet. With energy supply in Australia tight, the ability of a residential solar and storage system to provide backup supply in the case of brown or blackouts, the best way to build confidence in your ability to keep the lights on may be taking matters into your own hands.

By ChrisWilliams | July 7th, 2022 | Categories: Recent News
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