Bioenergy and Local Electricity Retailing
The Electricity Market
The link below provides access to a short paper on the Australian Electricity Market, and some current thinking about the establishment of local 'community-minded' electricity retailers. These retailers could be associated with the sale of locally generated renewable energy as a means of providing cheaper energy to households and businesses.
Energy From Biogas
We have been working with a German-based biogas company, and researching the feasibility of producing biogas from waste products and purpose-grown energy crops in our region. The downloadable paper below summarises our findings, however the key issues are:
- Current energy use in our region is largely based around electricity. This is relatively inefficient compared to what could be achieved with biogas. For example, we tend to use electricity for heating which is an inefficient conversion process, compared to using biogas to generate several forms of 'applied energy' simultaneously - electricity, heat, cooling energy and gas.
- Biogas provides an economic use for many waste products (e.g. abattoir wastes, commercial food waste).
- Generating our energy from biogas would help to reverse the flow of dollars and jobs out of our region under a business model where the energy production and retailing systems were owned by local business people and/or the local community (e.g. local councils).
- Biogas is greenhouse-gas friendly. Emissions are offset by the carbon dioxide captured in the feedstock production.
- Biogas would provide another income stream for farmers (energy crops), which could be sold under long-term contracts at stable prices.
- German-based biogas technology has improved significantly over the past decade. We could capitalise on this learning and commence with highly efficient systems.
Despite these positive features of biogas-sourced energy production, there are some hurdles:
- Current fossil-fuel based wholesale electricity prices are very cheap, around 6 cents/kWh in the National Electricity Market (NEM). It is difficult to sell electricity from biogas at that price and make a profit, though as the following chart shows, biogas electricity can be produced at a price which is close to NEM prices:
Biogas Electricity Production Costs (Source: David Thompson RDANI)
- Grid access charges (the charge a renewable energy retailer must pay for the use of the poles and wires) is a major component of the cost of delivering electricity to consumers. Concessionary rates for renewable electricity may assist the business case.
- European countries are likely to have lower grid access charges due to shorter distances and higher population concentrations, unlike Australia where electricity has to be conveyed large distances to a small number of customers.
- Consequently, it is essential that a biogas business has markets for the other forms of energy produced (e.g. heat). When biogas is converted to electricity, only 40% of the energy becomes electricity, the rest is heat.
- Even with sales of the other energy, the biogas to electricity conversion system struggles to return a profit given the parameters used in the chart above. As in Germany, it may require specific legislation to over-come this hurdle, for example higher feed-in prices for the electricity, a higher price on Renewable Energy Certificates (RECs) etc