Reports and Working Papers

200525 Working Paper 2006 PV in whose in

Rooftop photovoltaics and electricity distributors: who wins and who loses? 

 

A Working Paper by Bruce Mountain, Director, VEPC, Steven Percy, Senior Research Fellow, VEPC, and Kelly Burns, Senior Research Fellow, VEPC.

We analyse 48,677 residential electricity bills of which 7,212 have installed rooftop photovoltaics (PV) to determine the impact of rooftop PV on network charges and on wholesale market prices. We find rooftop PV pushes down prices in wholesale markets far more than it raises prices for the provision of network services. This was somewhat unexpected and might be explained by Victoria’s extraordinarily high wholesale market prices and also by the fact that despite the high penetration of rooftop solar, the amount of grid-supplied electricity that is displaced by rooftop supply is not large. 

Download the working paper (239kbs) by clicking on the image (left).

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Loyalty taxes in retail electricity markets: not as they seem? 

 

A Working Paper by Bruce Mountain, Director, VEPC, and Kelly Burns, Senior Research Fellow, VEPC

A common view in retail electricity markets is that retailers discriminate based on consumers’ loyalty: loyal consumers pay more. The premium is colloquially known as a “loyalty tax” or “loyalty premium”. Reflecting this understanding Australia’s governments, regulators and consumer advocates have encouraged consumers to switch electricity retailers. Our findings suggest the loyalty tax is (typically) smaller than widely considered, that it varies across tiers of retailers and that even engaged consumers typically do not select the lowest priced offers. This raises the question of whether switchers are motivated by other factors as well as lower bills or whether the main challenge is difficulties in search. 

Download the working paper (523kbs) by clicking on the image (left).

A model for the estimation of residentia

A model for the estimation of residential rooftop photovoltaic capacity

 

A Working Paper by Bruce Mountain, Director, VEPC, Amine Gassem, AG-Study, Kelly Burns, Senior Research Fellow, VEPC, and Steven Percy, Senior Research Fellow, VEPC

Estimates of rooftop photovoltaic (PV) capacity, by region and postcode, is publicly available in Australia. However, data on individual households’ rooftop PV capacity is not publicly available. This is valuable in price comparison and research, for example analysing the impact of rooftop solar in wholesale markets and on networks. We develop a model to estimate an individual household’s rooftop PV capacity, using data on the household’s estimated annual rooftop PV exports to the grid and its volume of annual grid electricity purchases. The model relies on simulated data of hypothetical rooftop PV systems, which are then used to estimate relationships between the variables.

Download the working paper (577kbs) by clicking on the image (left).

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Do Victoria’s households leave less money on the table when they switch electricity retailers?

 

A Working Paper by Bruce Mountain, Director, VEPC, and Stephanie Rizio, Research Officer, VEPC

Governments, regulators and customer groups in Australia have urged customers to switch retailers to get better deals. Customers have responded and switching rates are high. A common view is that over almost a decade of unregulated competition a twotier market has evolved, in which “switchers” avoid the “loyalty tax” paid by “remainers”. We analyse a little over 48,000 Victorian household electricity bills to compare outcomes for switchers and remainers.

Download the Working Paper (1mb) by clicking on the image (left).

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Ensuring reliable electricity supply in Victoria to 2028: suggested policy changes

 

A report by VEPC Director, Bruce Mountain, Director, VEPC, and Dr Steven Percy, Research Fellow, VEPC

 

Ensuring reliable electricity supply in Victoria to 2028: suggested policy changes looks at whether markets and regulations will ensure reliable electricity in Victoria over the coming decade, and examines the power system to understand the effect of renewable electricity expansion, and the possible closure of Alcoa's Portland smelter. The report recommends that the Victorian Government ask the Australian Energy Market Operator (AEMO) to develop an appropriate reliability standard and strategic reserve and that the Government prepares the administrative arrangements to implement this.

Download the report (2.3mb) by clicking on the image (left).

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The exercise of market power in Australia’s National Electricity Market following the closure of the Hazelwood Power Station

 

A Working Paper by Bruce Mountain, Director, VEPC, and Dr Steven Percy, Research Fellow, VEPC

The National Electricity Market, a wholesale market covering Australia’s southern and eastern states, commenced operation in 1998. Though the market has long been considered a successful part of Australia’s energy market reforms, econometric analysis finds that coal generation closure in 2017 delivered an unexpected price shock in wholesale markets. Further analysis finds that average prices received by
the coal-fired generators when coal generators set the clearing prices, more than doubled in the year after closure compared to the previous year. The conclusions raise concerns about supply-side market concentration, and also about the design, operation and oversight of the wholesale market. This merits serious consideration not least in the context of future coal generation closure.

Download the Working Paper (5.8mb) by clicking on the image (left).

Renewable Electricity Generation Report

Does renewable electricity generation reduce electricity prices?

 

A report by VEPC Director, Associate Professor Bruce Mountain, Dr Steven Percy, Dr Asli Kars, Adjunct Associate Professor Hugh Saddler and Farhad Billimoria

 

In Australia the contribution of “base load” coal-fired electricity generation and variable renewable generation in explaining high wholesale and retail prices is actively discussed. But modelling commissioned by governments and interest groups is contested. In this context the VEPC has examined the relationship between renewable electricity generation and electricity prices, and has released its research report “Does renewable electricity reduce electricity prices?”.

Commenting on the report’s findings, VEPC Director, Bruce Mountain said, “Dr Alan Finkel’s excellent review popularised the concept of a “trilemma”, suggesting that electricity policy needed to address trade-offs between decarbonisation, higher prices and power system reliability. But our research finds that renewable electricity generation brought prices down and is likely to continue to do so. In electricity there is no dilemma between decarbonisation and lower wholesale prices. System reliability and security must be prioritised in the transition to cleaner sources of power. But whether there is a dilemma between reliability and a cleaner power system remains to be seen. Policy makers of all persuasions need to take this evidence into account.”

Download the report (6mb) by clicking on the image (left).

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The National Energy Guarantee: decide in haste, repent at leisure

A critical assessment of the proposed National Energy Guarantee

 

A report by VEPC Director, Associate Professor Bruce Mountain

 

In October 2017, the Australian Government announced that it would not accept the recommendation of the Finkel Review to establish a Clean Energy Target. In its place, it proposed the National Energy Guarantee (NEG). The initial proposals were subsequently substantially revised in a “High Level Design” published in April 2018, followed by Issues Papers in May, Technical Working Papers in June and Final Design in July. This report examines the “High Level Design” and its subsequent elaborations. The two “arms” of the NEG – the Emissions Guarantee and the Reliability Guarantee – address very different issues, and each is examined separately.

Download the report (1.7mb) by clicking on the image (left).

© 2020. Victoria Energy Policy Centre, The Institute for Sustainable Industries and Liveable Cities (ISILC), Victoria University, Melbourne, Australia.