27/04/2025
The cost of purchasing electrical energy from the grid in Dorrigo currently varies from 8 cents to 54 cents per kWh.
Dorrigo is a rural community in NSW, Australia. It is the home of Pelena Energy.
There is currently a very large focus (debate) on the types of generation (wind, solar, hydro, nuclear, coal, gas etc), and little debate about the delivered electrical energy to the people and businesses of Dorrigo.
For Dorrigo, most of the large generators are many hundreds of miles away. A big part of most people's electricity bill is delivering this electrical energy through the 'poles & wires' to their premises, not the cost of generating that electrical energy at the 'power station'.
The poles and wires have limited capacity to deliver electricity, so the operators encourage consumers to use electricity at different times when there is less load on the 'poles and wires'.
For those connected to the grid, there are basically 3 types of billing systems in place:
1. Fixed rate. This is where you pay a daily connection fee and a fixed rate for electrical energy. Electrical energy is measured, and sold, in kilowatt-hours, or 'kWh'. Because it is fixed 24/7, the rate is usually, but not always, higher than other rates.
2. Time of Use Tariff. This is where you pay a daily connection fee, and the rate for electrical energy (kWh) varies throughout the day in Peak, Off-Peak, and Shoulder times.
3. Demand Tariff: This is where your bill is split up into multiple, and often confusing, different charges. It's usually the only type of billing available to large consumers. In Dorrigo these are large businesses in town and many farms with large electrical irrigation pumps. Usually, you pay a very low price for the electrical energy (kWh), but then you pay additional charges for getting the electricity delivered to your premises, and large costs for the special metering equipment needed at your premises.
Here's some real examples from Dorrigo for the cost of electrical energy (kWh):
1. Fixed rate: At my home we have two such meters. One runs 24/7 and the energy cost is $0.38 per kWh. The other meter is a Controlled Load meter, meaning it supplies electricity during certain Off-peak periods only, like midnight to 7am. It costs only $0.08 per kWh.
2. Time of use: Peak Usage (5pm-8pm on Weekdays) $0.54 per kWh. Shoulder Usage (7am-5pm and 8pm-10pm on Weekdays) $0.47 per kWh. Off-Peak Usage - All Other Times $0.33 per kWh.
3. Demand Tariff: Off-peak and Shoulder periods: $0.19 per kWh. Peak times: $0.21 per kWh.
So, the above costs vary a significant amount: From 8 cents to 54 cents per kWh. These are real costs that I know of in Dorrigo from bills I have seen.
I know of some businesses in Dorrigo where they are on a Demand Tariff and their costs for electrical energy (kWh) has actually dropped by 15% between 2020 and 2024, but the 'poles and wires' costs have gone up. Those on a Demand Tariff also get charged an extra 'demand charge' each month. This 'demand charge' is calculated on the maximum electrical demand of that business during the past month. Basically, if a business turns on all its electrical appliances at the one time, then there is a big electrical power demand from the grid, and the 'poles & wires' people charge accordingly. It can cost, for example, over $25 just to boil the kettle! This isn't energy cost, it's the 'poles and wires demand' cost of supplying that 'extra' electrical power to your premises for those few minutes, whilst at the same time of supplying large amounts of electrical energy to other appliances at your premises.
So, my recommendations are as follows:
1. If you have a solar PV system, try to shift your electrical loads to the time it's producing electricity and store it in things such as hot water, thermal mass (for winter heating or summer cooling), or by processes such as milling grains during these cheap electricity times.
2. Replace fluorescent and incandescent lights with LED lights. For the tubed fluorescent lights, get the tubes replaced with LED tubes as in my experience they are very reliable and cost less than $15 a tube. Don't get the whole fitting replaced as too $$ otherwise and many are not reliable! I've found many LED lights extremely unreliable, but I've found the replacement LED tubes very reliable with all still operating, some after 11 years.
3. If your business is on a Demand Tariff, be particularly aware of the 'kVA demand charge' and try to limit the electrical demand of your business. For example, if you’re a farmer with an irrigation pump, the act of testing that pump for 5 minutes could cost you a few thousand dollars in 'demand charges'. Consider using large electrical items in the same billing period of your contract, usually on monthly basis. That is, if you're planning to irrigate for 5 days, avoid starting the pump on the last day of the month because you'll get 2 demand charges - one for each month.
4. Consider other energy storage options as well as batteries. For example, pump water to dams and tanks when electricity is cheap or when sun is shining if you have a solar PV system. Or, if a dairy farmer, consider installing a large cold-water storage tank which is chilled through cheap electricity (using heat pumps), then use this chilled water (through heat exchangers) to chill the milk during milking. The dairy industry, in particular, has a challenge in that the times when milking occurs corresponds with the Peak times for electricity costs. So, shift the demand!
Would I install a battery in my home? At this stage, not yet for my whole house, because the cost of storing and retrieving the electrical energy from the battery, over the life of the battery (important!), exceeds what it costs for me to just buy electricity from the grid. Instead, I have a back-up diesel generator for the few periods a year when we have a blackout. This is a rapidly changing situation as battery prices fall.
I urge people to become more 'energy aware', not just 'energy generation aware'. A focus on coal/nuclear/wind/solar/hydro/gas etc is only part of the cost. There are enormous opportunities for embedded generation, especially if the electrical energy generated can be used locally.
Peter Lynch
