Why invest in the national grid?

Regulation limiting larger power station ownership can ensure sufficient competition among generators and prevent their ability to charge monopoly prices.

Solar, wind and battery technology is continually improving the way in which electricity is generated and stored. The cost and efficiency with which PVC's convert sunlight to electricity is increasing. Advances in material science are being made, aimed at enabling their wider use, such as spray-on PVC's covering an entire roof area. Work is also being undertaken to increase the efficiency of wind-turbines, improving their operation in light and higher wind conditions and increasing their output.

Advances in technology improving our ability to store electricity are being rapidly made with the result that storage capacity is increasing and the cost of storage is falling. Examples of this are seen in scalable flow batteries and other emerging technologies, already able to store sufficient PVC generated energy to meet 24 hour domestic needs and larger business demand after sunset. Domestic premises will increasingly become self-sufficient and go off-grid. They are already doing so and will be followed by commercial premises, social establishments (hospitals, schools etc) and larger consumers.

As these developments continue and improved technological advances are made, the utility and need for a national grid will diminish to the point where it becomes anachronistic. Growing reliance is likely to be placed on local or regional grids over the next 5-10 years, making the national grid increasingly redundant. We should face the reality that the ambition of households and businesses is already to 'get off the grid' in order to escape the ever increasing price of electricity distributed by it.

There is a view that by increasing the price of electricity, consumers will find ways of using less of it, so that power stations need generate less and so reduce the amount of coal they burn and CO₂ they emit. This is only true if there is no cheaper alternative to generating electricity by burning fossil fuels and in Australia that is no longer the case.

By using improved renewable energy technology, imposing a price on carbon emissions and increasing the price of electricity generated from coal to fund grid renewal, the cost of renewable energy becomes relatively (and in absolute terms) cheaper. In short, raising the cost of electricity to invest in the national grid is pricing retail electricity produced from coal out of the market. It is making electricity generated from renewable sources more profitable and cheaper for the consumer.

Evidence of this is provided by the fact that Australia has a proposed program for construction of 6 coal fired power stations. Five of these are very unlikely to reach, let alone go beyond the planning stage. One is at the planning stage but may not proceed in the light of growing evidence that its output could be met from solar-thermal and, if built, is likely to have a commercial life of less than 20 years. Among the reasons for this is likely international demand for reduction of CO₂ emissions, now at a dangerous level of 400 parts per million and rising.

Given these considerations, just how prudent is it to invest billions on maintenance or extension of a clunky national grid, a carry-over from last century destined to become increasingly unnecessary for electricity distribution?

Perhaps the answer to that question is provided by the fact that the only way this investment can be funded is by levying consumers with a higher price for electricity. No bank, no commercial lender and certainly no individuals are likely to invest their funds in a project with such a doubtful future.

We should be investing in the future by funding research and application of technology which will improve local grid efficiency, improve the ability to store electricity and the efficiency with which solar power stations generate it.

Ad-interim we should invest no more than is necessary to keep the national grid operational and plan for its dismantling as use of renewable energy grows and dependence on coal fired power stations diminishes. Otherwise, are we not in danger of ending up with a very expensive blanched pachyderm?