Tasmanian Energy Market Update
Hi Folks, Welcome to our February 2022 Edition.
2022 Time to Press Firmly on the Strategy Pedal:
Whether its in our personal or professional lives, most of us have had a pretty solid reminder of what risk looks like over the past couple of years. So it's time to put this lesson to good use and take a fresh look at what our personal and business goals for 2022 and beyond are.
Before pushing that Pedal to the Metal, let's have a quick check in the Rear View Mirror. When Tracy and I arrived in Tasmania in 2005, we struggled for months to find the right house. After 6 months I mentioned this to my leadership mentor, Bob Owens, who gave me one of life's great gifts. Bob said something along the lines of, "I'd suggest you arrange for some child care and take Tracy out for dinner. At dinner discuss and agree on the answers to these three questions":
- What's important to us for the next 5 years?
- What is the House's role in supporting our plan/what does the house need to deliver for us?
- How are we going to achieve this?
Bob said, "I put it to you that after you've had this discussion, things will fall into place".
It's pretty simple right, Dr Stephen Covey would say, "Put First Things First" or "Put the Big Rocks in your Jar First". So here's my interpretation of Bob's gift, "Unless your team is engaged in exploring, assessing and agreeing on the goals and therefore has developed a shared clarity on what constitutes success, nothing is going to fit". Despite being a pretty simple process, making the time and space to have the "Shared Goals and Strategy discussion" is the hard part, probably because each dawn seems to bring a new fire to fight, or storm damage to repair!
So what's the relevance of Bob's Gift in the context of Business and Energy? Well, as shown in the graph below, the last two years have allowed our clients to lock into some very economical energy rates and it would be terribly easy to simply rest on these until the end of 2025.
Graph courtesy of our analytics partners SavvyBI SavvyBI
But we shouldn't forget that we didn't do anything special to earn these savings, they have been delivered to us by a COVID impacted market and as such should be treated as a windfall gain. One thing 39 years in this industry has taught me, is that the truly canny operators will recognise this and act by putting plans into place to reinvest some of that windfall to reduce future costs, or simply to de-risk the business model and achieve their goals sooner!
Oh and by the way, having executed our family plan, we are looking forward to celebrating 16 years in our Tassie home this April.
What assistance does Goanna provide to businesses wanting to develop their own Energy Plan?
If it's time to heed Bob's advice and "Press Firmly on the Strategy Pedal", here are some examples of what we have been doing with our clients over the past 12 months.
- We've been developing 5 - 10 Year "Business as Usual" (BaU) Energy Budgets and Cost Outlooks, so our clients are clear on what BaU looks like;
- We've been asking the question, "Is this BaU Outlook and the associated emissions acceptable to your business"?
- Where the answer has been a resounding "No", we've been developing Options;
- We've been assessing and costing renewable energy alternatives, including Solar, BioGas Generation, Batteries, Wind Farms and High Voltage versus Low Voltage network connection options;
- We've been assessing the business cases, RoI's and payback periods for these alternatives and sorting them into "Yes", "Maybe" and "Not Yet" buckets, based on risks and rewards. With optimising the size of the system, critical, as Feed into Grid rates continue to decline, relative to Buy prices.
- We've been assisting with developing solar tenders and assessing responses for renewable energy investments from $100K to several $M.
- Finally, we have conducted some interesting "Post Implementation Reviews", looking at the facts, to identify what worked well, what hasn't and why, what can be done to improve system performance and to help cement the business learnings.
Electricity Metering as the Enabler of Your Energy Strategy.
This issue we welcome Goanna Energy, Affiliate Energy Consultant, Roman Meister. Roman has over 30 years-experience within the Electricity, Petroleum, Forestry & Primary Industries. Until December 2021, Roman was the National Manager Customer, Product and Business Development at Metering Dynamics (now Yurika). Roman specialises in Metering, Microgrid's, Embedded Networks and Tenant billing.
We asked Roman, what our clients need to know about metering and here's what he had to say:
The energy ecosystem in Australia is changing at pace. In the past the ecosystem was predominantly one-way energy flow, mainly from large coal fired Generators, to meet the Customers load. Customers were generally billed on data recorded from basic accumulation meters. Energy flows are now metered every 5 minutes for thousands of businesses, and are often bi-directional, with customer owned renewable generation and onsite storage options significantly disrupting the traditional electricity supply chain.
Clearly customers are at the heart of this increasingly complex energy ecosystem and advanced smart metering deployment is increasingly being recognised as the enabler, allowing customers to leverage their energy investments for profit. Increasingly the customers’ challenges in the new ecosystem are to understand and devise strategies for renewable energy, battery storage and demand response options, with some also dealing with cost allocation to tenants or the increasing pace of evolution in electric vehicle charging and Vehicle to Grid (V2G) discharging.
Source https://www.clubalfa.it/144223-vehicle-to-grid-pubblicato-decreto-gazzetta-ufficiale
With Network costs continuing to rise, there is also an increasing trend towards creation of Community Microgrids that can take advantage of new technologies, (incorporating distributed renewable generation) to simplify the energy ecosystem, achieve decarbonisation, reduce risk and costs. This accelerating trend has been facilitated by smart digital metering, already deployed to large market customers and now increasingly into small businesses and residential consumers.
If you are looking at your energy ecosystem challenges and considering future alternatives and strategies, we are ready to assist you with independent advice to support your energy journey, please contact us on (03) 6223 7253.
TSBC Submission: The Future of Natural Gas in Tasmania:
Over the past two decades around 1,000 Tasmanian Businesses have connected to the Natural Gas System. Throughout this time they have generally faced higher costs than most of their interstate peers. The road ahead to Net Zero will be technically complex and potentially costly for many.
The Tasmanian Government is developing a Future Gas Strategy which will set the direction for the Tasmanian gas market for the next 20 to 30 years, including the issue of ‘decarbonising’ gas in Tasmania. A discussion paper was released late last year, which called for submissions by 21 January. Goanna Energy was engaged by the Tasmanian Small Business Council (TSBC) to help it develop a submission.
The TSBC submission sets out the future needs of small business and commercial gas users in Tasmania. It draws on directions from our 2016 major study (Building the Pipeline to Opportunities) of the Tasmanian gas market for the TSBC, highlighting the small scale of the market, limited reach of natural gas, and very high gas prices, including transportation charges. A major finding was that the Tasmanian gas market is a wasted resource for the State, potentially at risk of spiralling into failure or (at best) continuing to stagnate. Not much has changed since. Goanna and the TSBC also contacted and interviewed a number of Tasmania’s commercial gas users and their collective views were included in the TSBC submission.
Decarbonisation options under consideration include switching gas users to electricity, developing hydrogen gas, biogas and renewable methane. Whilst recognising the pressures to reduce gas market emissions, the TSBC submission raised numerous practical issues with each, including their high costs, technical issues to be resolved, switching difficulties, the need for scale and competing developments.
The Government will next release a draft strategy (first half of 2022) with a final due later this year.
A copy of the TSBC submission can be found here. If you’re looking for more information about the Tasmanian gas strategy or want to get involved go to
https://recfit.tas.gov.au/consultation_and_community/tasmanian_future_gas_strategy_-_discussion_paper
Our sincere thanks to Roman Domanski, who has now notched up around 30 public energy user advocacy reports and submissions with Goanna in just under 10 years!
Large Generation Certificates (LGC's).
If you needed any more convincing about the volatility of the Energy and Renewable Energy Certificate Market to prove the need for an energy strategy and procurement planning, check out the current LGC pricing and two year trading history below. Whilst it's great news for our clients who own their very own Micro-Hydro Generators and sell the LGC's, for the majority of our Energy User clients who have to buy 18.5% of them, not so much.
Data Source Mercari Graph courtesy of our analytics partners SavvyBI SavvyBI
Noting that Calendar 2024 LGC's, which have traded as low as $5.13/Certificate, are now trading at $32/Cert! The Demand side question, "Just how big is the Voluntary Acquittal Market" remains unanswered, whilst Supply side uncertainties will likely add to market volatility.
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Want to know more? Call Marc now on 0418 596 162.
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