RAJ REPORT

DEATH SPIRAL—-ELECTRICITY PRIVATISATION must happen before it is too late–The possible long-term result is a ‘death spiral’. The ‘death spiral’ is a term used to describe the situation where declining demand, technology changes and rising prices may interact in a way that induces large numbers of consumers to 37 Garnaut (2011) disconnect from the network. In that case the whole funding model of Australia’s regulated power networks is under threat. 38 In this scenario, falling demand keeps pushing up power prices. At the same time, new technologies provide consumers with alternatives to using power from the networks. For example, customers could install larger rooftop solar systems and battery storage systems that allow them to disconnect entirely from the power network. As growing numbers of users disconnect, consumption would fall and prices rise further, and the vicious circle this creates would increase the incentive for other users to leave the network. Networks could be left with billions worth of unuse

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The possible long-term result is a ‘death spiral’. The ‘death spiral’ is a term used to describe the situation where declining demand, technology changes and rising prices may interact in a way that induces large numbers of consumers to 37 Garnaut (2011) disconnect from the network. In that case the whole funding model of Australia’s regulated power networks is under threat. 38 In this scenario, falling demand keeps pushing up power prices. At the same time, new technologies provide consumers with alternatives to using power from the networks. For example, customers could install larger rooftop solar systems and battery storage systems that allow them to disconnect entirely from the power network. As growing numbers of users disconnect, consumption would fall and prices rise further, and the vicious circle this creates would increase the incentive for other users to leave the network. Networks could be left with billions worth of unused assets. Governments would face intense pressure to help bear the cost and consumers would face the cost and inconvenience of managing a ‘stand-alone’ power system in their

 

 

 

grattan.edu.au/wp-content/uploads/2014/03/804-shock-to-the-system.pdf.

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