Recent events particularly involving energy have caused enormous price rises in Europe for all forms of energy including electricity. With colder months coming shortages of wind and solar, the lack of coal fired power and shortages in gas supply look to engulf most of Europe in a dim, dark winter.
Houses are not allowed to be warmed above 19 degrees C in Switzerland and the fines are draconian for those caught with second offenders potentially facing jail time.
In England a power bill provided to one solar dealer showed the utility provider was charging their client 125p per kWh. The equivalent in Australian dollars is approx. $2:16 cents per kWh roughly equivalent to 9 times the current average Australian household price. Given the average household bill for electricity in Australia last year was $1645 this would equate to an average Australian household getting an annual electricity bill of $19,740 annually or $1,645 per month! Little wonder the new British Government is moving to try to curb energy price rises.
In Places like Belgium the price of power has increased exponentially and is currently approximately 53 Euro cents per kWh, while in Germany prices continue to soar.
One German news source says “In August, September and October, Verivox counted 123 price increases from electricity suppliers, with an average increase of 25 percent. For a three-person household with a consumption of 4,000 kilowatt hours, this means an average annual increase of €311.Previously, competitor Check24 had reported average price increases of 47.4 percent in September.” (The Local, Oct 2022)
France is also experiencing price hikes as are Spain and Portugal. No EU country is immune and indeed most if not, all countries are experiencing price rises due to energy price rises around the globe.
This is feeding inflation and rising cost increases feeds into manufacturing, transport and indeed every industry and business. This cost increase is passed onto consumers, including Governments adding to household, business and government cost pressures. Inevitably it is the consumer and the tax payer who have to pay. Given rising interest rates, rising prices across food and every day consumer goods this burden is harder and harder to bear and inevitably hits those in lowest economic groups the hardest. Power is an essential commodity and in in many cases the poor have paid power bills before eating!
It’s easy to blame Putin for this and no doubt his war on the Ukraine has been a major factor in causing price rises. Governments prematurely turning of fossil fuelled power stations has also contributed whilst the slow implementation of a more West/East grid interconnection solar and wind and batteries had also played a part. A great deal has been talked about new sources of energy and no doubt these will be available at scale at some point in the future but no matter what the fuel source it takes time, money and the overcoming of inertia to get power to where it is needed.
So, what does this all mean for individual consumers. The current price of power is likely to remain high and indeed in many countries has the potential to rise further. Many are seeking to insulate themselves from this and have already installed their own energy producing systems predominantly solar systems. Indeed, the take up of solar and wind energy but particularly solar, has been steady if not spectacular. And there is very significant pushback from energy companies who are generating less revenue from these households.
Australia is one country where solar can be seen on many rooftops and claims 20% of houses have some amount of solar power. It is however not yet mandated on new houses mainly because the power is produced during the day whist the major demand for power is in the evening when the sun has gone. Batteries have not been taken up as fast as solar because they have not been either subsidies at the same level or in the case of most batteries simply don’t last long enough to give a real economic return.
Things are rapidly changing as Governments reduce subsidies on solar whilst at that the same time reduce the mandatory minimum rates power companies pay residential customers for their excess power. They are doing this because the economics of having solar are compelling without Government funding. Further, given the low price of energy paid by the electricity providers more and more people are looking to store their own power and use it when needed. This is to say the case for batteries is becoming stronger.
But caution is advised when buying batteries. They are important but must be safe and provide a long-term solution. Too many cases are now arising where batteries were installed at significant cost and have caused fires or have to be replaced much too early to be economically effective. Most informed residential buyers look for long term battery solutions that are safe and will, over time, give them energy security plus a really great economic return. Indeed 20-year warranties are being offered by the better end of the battery market.
The opportunity for Australian companies is large indeed. With a reputation of innovation and quality Australian companies can compete in the world market and the demand is extremely high. Not only can we help the EU and world community generate and store more energy whilst lowering their costs we can help make the push towards a carbon neutral world that much quicker.
By Dawson Johns
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