Energy at Least Cost for Western Australia
Okay, so, uh, let's kick-off.
So welcome, everybody, and thanks for joining us today.
I'm Simon, more business development manager.
Energy action here in Western Australia and today my colleague Sarah Lewis and I are going to talk a little about the energy markets in W.
A.
We will touch on bundled and unbundled rate plans, the transition towards Net zero and how green power can help with reducing emissions.
We'll also look at effective energy management, and we'll aim to leave a bit of time at the end.
For a brief Q and A.
We'll start off with an acknowledgment to country, and both Sarah and I are here in Perth, and we acknowledge the Burramattagal people as the traditional custodians of this land in the spirit of reconciliation.
Energy action acknowledges traditional custodians of the country throughout Australia and their connections to land, sea and community.
We pay our respects to their elders past and present, and we extend that respect to all Aboriginal and Torres Strait Islander peoples.
Today I'll take this opportunity to formally introduce my colleague Sarah, our business service consultant based here in Perth, and she's represented energy action for over three years.
Sarah's got over eight years experience working in the local market, both as a consultant and working directly for energy retailers.
Thanks, Simon and welcome everybody.
It's great to be here today, and I'm looking forward to getting into the content we have planned and provide from some tangible strategies that businesses can utilise to reduce their energy cost, reduce our emissions and better manage their businesses.
Energy supplies, Simon highlighted.
I've had the pleasure of working in the energy market for nearly a decade.
It certainly is a unique market with aspects such as reserve capacity charge and bundled and unbundled rate plans, but cover these in a bit more detail.
We progress.
But first of all, I'd like to take the opportunity to introduce Simon.
Simon is Energy actions business development manager for the marketplace.
There's over 10 years experience in conventional and renewable energies and has worked in the energy markets across the UK and Australia.
Thanks for that, Sarah, and for participants who may not be too familiar, I'll provide a brief overview of energy action, So energy action was founded over 20 years ago, and our vision is to make energy simpler, cleaner and lower cost today with the trusted independent energy partner for over 7000 points.
We look after the energy for over 20,000 sites and where ASX listed and Afzal licenced.
Our customer base encompasses award range everything from small, independent businesses through to large top tier organisations, and it includes some of the biggest and most recognisable brands in the country.
One thing that we're extremely proud of as a socially responsible business operating in the Australian energy industry is that we are on the way to becoming a net zero business, having submitted our documentation for certification by climate active at the end of 21.
And Sarah, I know you join me in celebrating getting all this lodged.
Yes, it was certainly a lot of work involved there, Simon, but I'm a found that the transition to net zero is now on the mindset of almost all the customers that we speak to.
And it's great that we can soon lead from the front in our journey to help for businesses achieve their own net zero certifications, indeed, and we will talk a little bit more about zero as we move through.
But first era, I think you're going to give us a few words around the wh markets in general and talk a bit more about those different rate plans and some of those unique witty's we have here in the local market place.
Thanks, Simon.
So yeah, I'll just start off by outlining Energy action is the national energy consultancy firm, and we operate across all states of Australia.
So, for any participants may have interstate business operations where you want to stop shop for energy.
So for day session on W, we will focus on the area known as a Swiss or the Southwest interconnected system.
This is a geographic area of the state is classed as a contestable network mainly in businesses in this area.
Have access to a choice of energy retailers.
It is important to know that to access a wider market in the Swiss business needs to use over 50,000 kilowatt hours of electricity per year.
So that's equivalent.
You're spending around $25,000.
So you, for those that use less than this threshold, the classes non contestable supply points, meaning the default retailer is synergy, much like the residential market in W.
A.
For eligible customers above the threshold.
There's two types of energy contracts available, and he's been referred to as a bundled on bundled rate plants with bundled rate plans or the costs involved in a generation and transmission of energy a bundle together, along with the cost of energy itself.
In one combined, the right unbundled rate plans are more like itemised billing with the cost of energy and each individual cost of generation and transmission been itemised into their own separate line interests.
As you can see from the bill shown on screen and bundled, users would see individual line entries and costs for aspects of just market charges.
Environmental charges and network charges for clarity will provide a bit of a breakdown of what these charges all relate to and how the UM bundle plans work the costs outside of the energy itself.
On one bundle, plans are referred to as past forecasts.
As the energy retailer, billing you is essentially passing gone for party casting, bold in the supply of energy.
These past podcasts can fluctuate, and while the energy right itself is fixed for the term of the contract on bundled users would like you to take cost movements going either up or down for the past three charge Bundle.
Jesus, however, have a single all incumbents and energy rate for the duration of the contract for unbundled users.
We've broken down the various line items you may see into the four main categories.
So we have market charges for the past four charges from the M O or what is known as the Australian Energy Market Operator.
And these charges cover the cost involved in operating the energy market in W.
A.
After making up to over 10% of the bill, they also cover the cost of W ways reserve capacity mechanism with the AM O Pais energy generators to ensure there is enough capacity to meet demand.
And Simon, I know you've had some clients recently have helped to reduce these costs.
Yes, that's right, Sarah.
So essentially an energy use is individual capacity.
Charge gets calculated based on their energy consumption over set periods on the four hottest days of the year, and these things determines that uses capacity charges for the following year.
For large energy consumers, effectively managing your consumption over the capacity charge calculation period can then result in reduced capacity charges for the following year.
Thanks, Simon.
And if any would like more details on new sides in a strategy, please reach out to us.
So move forward onto environmental charges shown on the bills or line items such as Estee, CS and Rex.
These relate to the cost of state and federal government investments in renewable energy generation, enough to make up to around 10% of the bill when renewable energy generators come online.
It's obviously not feasible to run a power cable straight from the source to the end user.
So the clean energy that's generated gets fed into local power grids and is tracked fruit certificates.
These certificates of Castres rex, which is short for renewable energy certificates and the traded commodities for offsetting emissions REX may be produced from large scale generators in the form of LDCs, or STC, is known as small scale technologies.
Then we have the network charges, often making up the bulk of the bill and a bundle bills.
And these are the costs associated with Western power for the provisions and the maintenance of energy networks.
So Western Power have a suite of different tariffs, which are set by a sites Motrin profile and is eligible for an In your theory, should there be a considerable change in a prior years energy consumption, you may find a review of the sites.
Network charges can then reduce cost on your bills.
You may also see reference to L s or line less factors which relate to electricity lost in transmission between a generator and end users as no transmission network is 100% efficient.
So now we've covered the past three costs around energy billion or look at the market for energy itself.
As we're all likely recall.
W Way was smashed with the late heat wave at the end of 21 a stark contrast to most of our friends in the Eastern states were experienced them.
This meant increased demand for energy, which pushed up the price along with increasing the demand on the network.
I actually personally recall experiencing a rather high amount of outages here in the northern suburbs over recent months.
I don't know about yourself, Simon, but it was certainly sweltering conditions about the air conditioning running well, being a fellow palm Sarah, I can certainly supervise their Yeah, I must admit, I did know this one or two unusual outages south of the river as well.
And these can often be a result of instability in the great caused by a large influx of renewable energy during periods of low demand.
And I think this really demonstrates that need for large scale batteries to become a key component in managing the grids.
Load balance moving forward.
Yes, it's definitely going to be a requirement moving forward and interestingly, when we look at the tables on the right here, we can clearly see that the increase in the levels of renewables in a generation mix and we can actually see increased impact that have been on determining sparked price for energy.
Renewable energy generation actually accounted for almost 40% of the total and demand interview last year, and it's expected this trend will only increase moving forwards.
Now we look at the gas so w a gas.
We've seen a year on year decrease in demand across multiple industry sectors, while reduced demand reduce really mean a lower pricing as we can see from the chance here and has been featured in local media recently.
Gas prices in W.
A have actually almost tripled over the last two years.
This has largely been driven by an increased export of local gas supplies, along with reduced production from existing facilities and project delays with new facilities with gas exports meaning we are now part of the global gas market.
It is also worth noting that the recent gas shortages in Europe and continued uncertainty around the situation in Russia and it's expected that these global gas shortages will continue for some time into the next decade.
And then when we look at the markets for those renewable energy certificates, we also see a distinct upward trend in the spot price in for a lot of certificates.
A 60 US or Australian carbon credit units are another form of traded certificate which work in similar way to the S six or L G six were referenced earlier.
As we see from the tables on the right here.
The prices for the, uh, the use of the L G six increased significantly over quarter free, and this trend is continued into quarter four.
We do, however, see this trend reversing in the rec forward price curve as more and more renewable generators are set to come online and we highly recommend businesses.
Look at forward purchasing RECs out 26 based on a forward price curve.
So so many aspects to consider when we're reviewing your bills and your energy plans.
It's important to have an energy expert involved who can drill down into the details and also provide guidance around other contractual aspects, such as take or pay clause.
Is future rolling roll out or even additional sites? So energy action? We're here to assist w wait businesses and assessing the market and working out which energy plan will provide the best result for your business.
We can also help you navigate renewable energy options and provide strategies for your business transition towards Net zero.
Now, Simon, I believe you're going to talk in a little bit more detail around the whole Let's see, right piece, Yeah, thanks error and great run down there on the W A markets and actually making sense of some of those charges on the bills.
So with net zero, we're on to what is really one of the hot topics today, not just in the energy industry, but in almost all corners of industry with the federal government recently set in some for net zero targets.
The transition is now front and centre for a lot of businesses, and zero can seem a complex concept.
But essentially it simply means we reached a point where the carbon emissions attached to our day to day business activities are effectively reduced or offset to reach a neutral level.
Now.
Business carbon emissions get broken down into three categories, or scopes with scope one.
Emissions being direct business activity that generates greenhouse gases.
So things like burning fuel in boilers or Indies, alleges the scope.
Two emissions are the indirect emissions, and these are attached to a business's energy use as a large portion of the energy that businesses to use in Australia is still produced from burning fossil fuels.
And then they spoke.
Three.
Emissions are often the most tricky category title.
These are indirect emissions attached to a business's supply chain, so aspects such as buying products from suppliers would normally have a greenhouse gas component involved in either the manufacturing or the delivery of the products.
Transition to zero does involve a number of steps.
The first is to be able to measure and understand your existing carbon impact and then look to reduce those carbon emissions as much as possible through measures such as energy efficiency, shift into on site renewable energies and transition into electric vehicles would all have a massive impact.
Overall, as with the procurement of obsolete renewable energy supplied through the existing power grid, the final step would then be to purchase some of those carbon certificates Sara spoke about to offset any remaining balance of admissions.
Now we'll achieving at zero is definitely taking action on the scope.
Two.
Emissions can often make for a great first step in your own net zero transitions.
So the scope two emissions would normally represent a large chunk of the businesses overall footprint and interesting as we can see here from data from governments, Department of Industry The fossil fuels that were used in electricity generation contributed nearly a third of Australia's total emissions.
As such, solving the energy problem will have a massive impact on the overall transition to that net zero future.
The good news with the scope two emissions is that they are actually a very easy sector to take action on, and they can often be the low hanging fruit in the Net.
Zero journey.
So how do we tackle them? Well, there are a number of solutions and which one fits best would depend on your businesses.
Specific energy, low profile and, of course, your own Met zero targets.
One of the best options for negating the use of fossil fuels in your energy supply chain is to instal solar power and generate your unclean energy on site.
And Sarah, I know you mentioned recently seen quite an uptick in the number of enquiries you've been receiving around solar.
Yeah, this definitely seems to be an increased level of interest now.
And I think the fact that it adds tremendous environmental benefits will also be able to cut ongoing costs makes it a no brainer for most businesses.
Indeed, and while the solar markets can sometimes seem confusing with numerous different retailers and various system specifications, Energy Action operates a platform that allows for an apples V apples comparison and has been designed to ensure you can procure solar at the most competitive rates.
So when we look at 40 years, we introduced Australia's first online reverse auction platform for electricity.
We've since expanded this model to incorporate clean energy and solar power.
And we offer 100% transparent process whether the various energy or solar retailers bid against each other in real time to supply your requirements.
So energy action would work with you in engineering the specifications of the best clean energy solution based on your businesses specific requirements.
We then release the specs out to the market, and we invite our panel of retailers to bid against each other through our highly competitive platform.
The retailers are then bidding down the cost of your clean energy solution to help ensure you get the best available market rates.
When the auctions wrap up, we issued full comparison reports detailing all the offers received and these providing easy to understand apples to apples comparison.
And they simplify that traditionally complex and often confusing language of navigating the energy markets.
Now where solar may not be practical or may not make much of a dent in your energy needs.
The energy retailers in wa actually offer a number of avenues to procure renewable energy supply directly through the existing power grid.
And Sarah, I believe you're gonna give us a bit of insight in some of these options.
Thanks, Simon.
So, yeah, as you've highlighted, solar is great wherever possible.
But there's so many instances where it's just not Bible, um this is where clean energy supplied through the grid can assist for businesses who want to take action on their emissions.
There are a number of products available in this space to just carbon neutral energy plans, green power contracts, corporate PPS and progressive purchasing strategies, and will cover some of these key points on these options.
So it's important to consider the details of any option your business looks into for businesses transition Internet zero There were various benchmarks and certification schemes in existence that are essentially used to review businesses actions in a net zero space and certify the results of these initiatives.
As such.
The key is to ensure the steps you take in the gate in your emissions actually meet the requirements of any applicable reporting framework she may use to carbon neutral Energy plans can seem very attractive as they often entail minimal financial premiums compared against standard energy rates.
Different carbon neutral plants negate emissions through various carbon offset schemes, both locally and around the globe.
These schemes may not actually involve renewable energy generation and manage not include a direct links to the measures actually being used for offsetting emissions, meaning carbon neutral plans may not meet the accounting standards for a number of the Net zero benchmarks schemes at the other end of the scale your corporate PPS power purchase agreements.
These allow you to purchase renewable energy directly from a local identify of the source and can also provide marketing opportunities to highlight your partnership.
With a renewable energy generator more cost effective, they are generally suited for more larger energy consumers have they often involved? A long term contract between 70 15 years.
PPS can also involve taking on the percentage of risk associated with the generation source.
Meaning generation.
Issues of source may have financial knock on effects for the end uses of the energy.
Then we've got the large energy.
Consumers can also take on l.
G C progressive purchasing strategies whereby wrecks are strategically purchased through the trading markets and more able to provide some tailored advice around this.
Should any anybody online be interested in this product now, another great options available to the majority of the W energy users, whether you being a bundled or unbundled right plan is the Australian government accredited green power scheme, So green power allows you to source all or part of your business Is group supplied electricity from accredited Australian renewable energy generators like wind, solar, many hydro bioenergy, Green power? You can automatically purchase a wreck certificates from these clean energy generators to offset the emissions attached to the energy use in your business.
There's over 160 accredited generators across Australia, wind turbines and solar generators making up the majority of our green power mix.
One of the benefits of Green Power is that it offers flexibility in the amount that you purchase.
And I know from hearing from you, Simon.
There's been a big draw recently for a lot of our customers.
Yes, there are.
I've definitely found that that flexibility that Green Power offers has been really popular out of the market.
As you know, a lot of businesses are only just starting their own net zero journeys, and many have got plans to incrementally reduce their emissions over a number of years.
The fact that green power allows you to increase the percentages of the clean energy your volume makes it a great fit for aligning with these incremental targets.
Yes, I've seen a lot of customers recently when I have short term got also, say, 50% reduction in emissions.
So I've been able to match the green power percentage in line with the businesses.
Target has been massively effective and green power or simplified your business with a number of marketing opportunities to highlight your clean energy credentials.
Purchasing over 10% Green power allows you to use the green para logo on your website and promotional materials to differentiate yourself from your competitors, purchasing over 50% or purchasing 100%.
Green Power opens up options to also have your business faced on the green Power website.
With more and more consumers having a focus around environmental credentials, the fact that green power allows you to highlight your efforts and being sustainable makes it a great product.
It's now pass you back over to Simon for a little bit of insight into effective energy management.
Thanks for that, Sarah.
Draining for their and yes, I will now spend a few minutes talking about effective energy management and how our metric system can help so metrics is our energy management and reporting sweet.
And it's been designed to streamline that traditionally complex and often time consuming task of managing a business energy portfolio with energy.
Being a crucial backbone to almost all business operations is important to understand how effective energy management business financially, environmentally and in terms of raw man hours spent on energy management.
And Sarah, I know you mentioned before how the conversations that you used to have around energy were always heavily focused around pricing.
But that's actually changed quite a bit out there recently.
That's right, so and see, I just think it's just more focus and understanding how the actual impact energy use has its not only in terms of expenditure.
Also in regards the environmental and even administration Elin facts of energy use in the business.
Yes, and it is great to see increased awareness around these aspects.
And essentially, these are the areas that metrics focuses on.
So by effectively managing your own energy portfolios, your business can then be empowered to reduce, spend, reduce emissions and reduce those overall man hours spent on any energy related.
That meant so we'll briefly dig down into how metrics actually addresses a lot of the challenges that businesses might be facing in these areas.
On the administration, side, metrics provide you with all the data you need to actually understand your energy portfolio on top of the ongoing contract and account management that energy action provides for our customers.
Our online Metrics portal gives you fast and easy access to all of your key energy data across all of your sites.
And it can combine data from multiple retailers across multiple locations into one simple to use dashboard.
The advance started visibility through the metrics portal, then allows you to view key info on areas such as spend usage, load profiles and emissions at over a portfolio or at a single solid level.
Metrics also provides automated reporting, which Sarah I know you have a few customers who absolutely love this aspect of the service.
They do Simon the automated month for reporting on usage, spend an emissions along with the annual budget estimate reports, consolidates key entry data and automatically issues a report to the relevant personnel.
Within a business, this means a lot less internal admin for a number of my clients.
Great stuff, Sara, now environmentally metrics can also be a great tool on that journey towards Net zero.
We spoke earlier how the first step in the transition is to be able to measure and understand your existing emissions profile.
The detailed energy use and emissions monitoring that metrics provides allows you to track your energy usage and the associated carbon emissions across all of your sites.
This not only allows you to monitor your emissions but, more importantly, monitor the impact of any energy or carbon reduction strategies that your business decides to implement.
Now.
Metrics also provides ongoing, actionable insights into reducing energy usage and carbon emissions.
But I actually reviewing your individual patterns of energy usage.
We can then look to recommend some tailored steps that could effectively lower both costs and overall relations.
Now, in regards to costs and the financial side of things for the customers out there on those unbundled rate plans, the network tariff reviews are one of the most powerful tools in the metrics platform.
As Sarah explained earlier, When you enter into the unbundled contract, you're looking in a second unit rate over a set number of years, but it doesn't lock in those network charges as they get updated each year by Western power.
Well, with metrics, we undertake a detailed review of your network tariff charges, and we compare these against the updated network tariffs available in your area.
This then immediately identified any areas for cost reductions.
And in the last six years, we've saved our customer base over $26 million simply through reviewing and switching the network tariffs Bill validations are another powerful financial aspect to the metric service, and it might be surprising to learn.
But on average, around one in 10 energy bills that get issued by retailers contain errors that end up in overcharging or under charging.
But how does a business go about spotting one of these? Well with metrics are built Validation service Cross.
Check the data from your electricity metres against the retailers charges on the bills.
This immediately identifies any areas, and today we have actually recovered in excess of $5 million of retailer overcharges to our customer base.
So essentially metrics is providing you with advanced suite of tools and functions, along with ongoing support from the energy Action team behind the scenes to empower your business to make energy simpler cleaner and lower costs.
Please reach out to us.
If you like some more info metrics.
We do have a range of different plans available for different energy users and anyone that's interested we can happily take through a live demo with the system.
The great thing with metrics is you don't need to be an existing energy action customer to take up the service.
So even if you've recently negotiated and their energy contract, you can still harness the power of the metrics platform.
So we've got a couple of minutes left before we jump into the questions, and I think we've covered a bit of info so far and do hope it's being useful for everyone that's joined.
The key message for all the participants is if you are looking to implement a solution in your own business, be that for an expiring energy contract or on site solar system or even procurement of grid supply.
Clean energy, One of the key drivers in these uncertain economic times is to get peace of mind to know that you are getting the best possible value from the markets now being the most cost effective when procuring energy or solar power essentially boils down to two simple words.
Competitive teacher.
So the various energy and solar retailers that are in the market are all hungry for business, and they're willing to compete for it.
In fact, the Wa energy market was first deregulated to encourage competition in the space that energy action.
We work with numerous local energy retailers and solar installers to harness the competitive tension in the market and drive the best results for your business.
The reverse auction platform has been running for over two decades and is a tried and tested methodology that stimulates maximum competitive tension between retailers.
The process is 100% transparent, with all the retailers bidding on the same specs, and you can actually watch on in real time as they bid down the cost of your clean energy solution and fight to win your business.
So anyone who got more info on this please feel free to reach out what's directly.
Uh, Sarah, did you want to add anything before we jump into the questions? Yeah, I'll just reiterate Simon that we are a national business, and we work with energy retailers all across the country, so I know there are a number of our participants online today who do have business operations in Eastern states.
So please reach out because we can assist in all areas for you.
Great stuff, Sara.
Thanks for that.
Also, for everyone that's joined us today, we will be circulating a copy of our quarterly market update that gets issued to our customer base.
And this contains our key insights into the energy markets all around Australia.
So I think we're jumping and see if we've got any questions there.
Feel free to talk into the Q and A.
You can see one question they're asking, uh, is there much difference between bundled and unbundled plans in pricing? And how do you decide on which plan to go to for prior to tendering? Um, Sarah, did you want to take that one? Um, so I think it's really dependent on your load profile and what industry are in.
So we start with doing a bill validation check assessing the past 12 months of consumption, you spend, um, kind of kind of appetite you've got for looking to manage your energy more efficiently as to which plan would most suited.
So please reach out and I'll be happy to check your bill.
Indeed, yes.
So there's so many variables with individual load profiles that it's very hard to generalise.
But energy action does.
They enable you to have full capture of the market and be able to compare both bundled and unbundled options to see which one would fit best.
Um can also say there's another question there.
Come through enquiring.
What is the current price for the wreck certificates that we spoke about? So with the RECs certificates, question just seems to have jumped out there.
The pricing that we're looking at currently in the market sit around about 4.2 cents per kilowatt hour.
That's for the coming year.
23 22.
Other 2023.
As we highlighted in that forward Rick Price curve, we do start to see the prices dropping for the forward years, so dropping down to about 3.8 cents per kilowatt for 24 then down to about 3.5 for calendar year 25.
So this is where we suggest that anyone who is interested in forward purchasing Rex really looks to take advantage of that slump in the forward price curve and again feel free to reach out to us for small ideas around how you can action that internally.
Okay.
And it looks like we've got another question that came through that, uh, colleague Hannah managed to answer, which was in regard to green power recognising the wrecked compliance percentage.
Um, so looking at that there, it seems to be focused around the green power renewable energy supply agreements and a potential declining green powers popularity over time.
Um, so with green power, there are a number of sort of setups for green power in regards to the percentages you purchase and depending on your percentage components depends on the impact it would have.
Um, in regards to your reporting, Um, and just looking through there, the suggestion from our colleague Hannah, who is our head of corporate services and handles the progressive purchasing strategies, is that looking at rec progressive purchasing options can be another option in place of green power that would meet carbon neutral standards for climate active certifications.
So again, if you did want to look at options or understand wreck, progressive purchasing strategy is a bit more feel free to reach out directly and it looks like that.
So we've got coming from the questions.
We do have a couple of minutes left before we're due to finish up.
If anyone else has any queries that looks far off quiet.
Yeah, well, I think we can.
We can look to potentially wrap up a few minutes early if if there's no more questions coming through and give all of our participants that five or six minutes of their day back.
But yeah, the underlying message guys, for anyone who does want any more info, anyone who does want to discuss any of these strategies first or a bit of info around metrics or just a review of your current setup in comparison to the mask it to the market.
So feel free to reach out to us directly.
We're here, and we're happy to help in any way that we can.
Yeah, and I think we will look to wrap that up there and just to let you know, gods as well, along with the copy of the quarterly market update, we will also be sharing a link to the recording of this session.
So if there was anyone unable to attend or anyone that wanted to revisit any aspects.
You should have that ability once a link comes through.
Fantastic.
Well, thanks ever so much for all the attendees today.
Taking time out your day to listen to us.
And we hope it's been insightful for you all.
And as Simon says, um, if you require any additional information, please reach out to us because we're local in W.
A.
And we're here to help.
Great stuff, Sara.
And thanks again to everyone that joined us.
Thanks.
Bye.
