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Four actions large users of energy in Australia can take to lower costs

Four actions large users of energy in Australia can take to lower costs

It comes as no news that over the last decade energy prices in Australia have skyrocketed, in fact, they have doubled. Given the large investment in the sector required and with locked-in network costs, it is highly unlikely we will see costs come down any time soon. 

With large consumers of energy feeling the pinch the most, they are now taking matters into their own hands and exploring alternative options to better manage these costs. 

Here are four key actions large consumers of energy can explore to put pressure on their costs:

1. Consider entering into a corporate Power Purchase Agreement (PPA)

Entering a PPA can help reduce costs, at least for a period of time, but it can have its drawbacks in terms of increased complexity and risk exposure. There are many different forms and variants of a PPA, each with their own unique advantages and disadvantages. See the chart below for a summary and the key considerations.

Key considerations for different types of PPAs

2. Explore self-generation behind the meter

In the right location and under the right circumstances, self-generation behind the meter can become one of the most attractive options. However, it also comes with a whole range of complexities that need to be carefully considered before you embark.   

3. Firm variable generation

Given most self-generation options are solar and they can be highly variable in output. The easiest form of ‘firming’ solar is to procure electricity from the market. Firming behind the meter is becoming increasingly feasible by using batteries (that are well suited to short term applications) and reciprocating engines (for larger firming requirements).

4. Systematically capture response opportunities

Where available, firming with demand response opportunities can be the most attractive option, but is highly situation specific. Many possible opportunities exist ranging from better management of buildings to finding sources of variable load such as large pumps or even utilising existing generation options in the form of back-up generators. 

There is no doubt Australia is amidst a major energy transformation which at times will be messy and complex. While I feel Australia is on the right pathway, there are still some tough decisions by Government to be made. In the interim, if large consumers of energy can make small yet smart tweaks, these may at least provide some relief.

About the author

Former Managing Director – Energy, Resources & Manufacturing Dr Alex Wonhas is currently a member of the senior executive team at Australian Energy Market Operator. Prior to Aurecon, Alex was Executive Director for Environment, Energy & Resources at CSIRO and initiated the Future Grid Forum and the Network Transformation Roadmap together with the Energy Networks Association (ENA). 

This article was first published on May 10 2018 on LinkedIn Pulse by Dr Alex Wonhas for Australian Energy Week 2018For further insights, visit 'Tracking Australia's Energy Future' at Aurecon.

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