Australia Weather News

An Australian energy giant has been offering customers discounts on their power bills if they slash their use during peak demand periods such as heatwaves.

AGL, which supplies electricity and gas to more than four million households across the country, said customers who helped ease strain on the grid could earn money in return.

Under a rewards program it was pitching to consumers last week, AGL said households which cut their power use by 10 per cent for an hour during a "peak event" would get a $5 credit on their bills.

Those who slashed their consumption by 30 per cent during a "two-hour event" would receive $10 off their bills, the company said.

Only customers with a smart meter were eligible for the scheme which applied to south-east Queensland, New South Wales, Victoria and South Australia.

The gambit comes amid renewed growth in demand for electricity spurred by a swelling population, electrification and the spread of energy-hungry data centres.

While the extraordinary growth of rooftop solar has helped meet some of the extra demand, industry observers say the grid remains vulnerable during the evening peak when the sun sets.

According to AGL, customers participating in its rewards scheme would not only cut their bills but "contribute to grid stability" during times of strain.

A market pivoting?

Gavin Dufty, the national director of energy policy and research at St Vincent de Paul, said the offers from AGL were a sign of the times.

Mr Dufty said the electricity market was in the early phases of what was likely to be a long-term move towards a services market like telecommunications.

He said this would mark a major shift from the current arrangements in which people primarily pay for electricity based on how much — or how many kilowatt hours — they use.

In a services market he said bills would more closely resemble a streaming service market or an insurance premium calculated on their overall need from the grid.

"It is on between the retailers," Mr Dufty said.

"The next year and a half you will see a whole lot of new products and services.

"We are moving from a kilowatt market to a services market."

Mr Dufty said the ability of energy companies to offer more sophisticated deals to users had been enabled by the adoption of smart meters that can track consumption in near real-time.

A new report from St Vincent de Paul and Alviss Consulting said the national electricity market was now reaching a "pivot point" as the rollout of smart meters accelerated.

In the report Mr Dufty and May Mauseth Johnston found almost two thirds of customers in the national electricity market covering the eastern seaboard now had a smart meter.

Although the take-up was unevenly distributed, with Victoria at 100 per cent and the ACT at 39 per cent, the trend line was clear.

By the end of the decade every household would have a smart meter under a ruling by the Australian Energy Market Commission.

The pain and pay-off

The report's authors said advanced meters had already ushered in significant change.

For example, almost a million homes across the eastern seaboard were on time-of-use tariffs that charged more at peak times rather than traditional flat tariffs.

"Smart meters mean that industry has more information and visibility in terms of when households use energy … and that they can offer time varying prices," they wrote.

"Consumers also have more information about their consumption and are increasingly incentivised to invest in — solar panels, batteries, etc."

The rapid changes in the way consumers deal with the electricity market comes following years of hefty price rises.

Compared to 2009 levels Mr Dufty and Ms Mauseth Johnston said average electricity prices had soared 98 per cent across Australia.

It was even higher in some jurisdictions with prices rocketing 138 per cent in the ACT over the same period.

Similarly, gas prices had also risen precipitously, they found.

Gas prices were now 134 per cent more expensive on average than those of 2009, while they had more than tripled in Victoria.

The report noted that customers with solar panels continued to enjoy significantly lower power bills than those without the technology.

Although the benefit was not as great as previous years, it found the average difference between "solar and non-solar" customers was $800 a year.

This was despite ever diminishing returns to customers through so-called feed-in tariffs which pay householders for their solar exports.

AGL stressed its rewards program was "completely voluntary" and customers could choose to participate in as many events as they liked.

A spokeswoman said the scheme could be a win-win for everybody.

"When heatwaves or other pressures put strain on the system the program encourages households to make small reductions in usage," the spokeswoman said.

"Peak Energy Rewards works to helps avoid outages, reduce pressure on the grid, and lower overall system costs, while giving customers bill credits for participating."