Monday, February 15, 2016


Container transport results in a lot of containers ending up in places where shipping them empty to somewhere where they will be needed costs too much to be worthwhile.  One result has been the development of "container houses".  (Google “Container Houses Australia” and you can come up with something like 2 million hits."

Monday, January 11, 2016


This started off as a note about reducing public transport fares. However, once I started to put together the data needed to estimate what some of the proposals were going to cost the picture became more complex. Up till then I thought that, because about 65% of commutes used cars as their main method of travel to work there was plenty of scope for reducing transport emissions and congestion by getting most of these commuters to switch to public or active transport.

Tuesday, December 22, 2015

Tuesday, November 24, 2015

Using Market-Based Approaches to Set Roof Top Solar Feed in Tariff Contract Prices

In the past rooftop solar feed in tariffs have been set by governments, government bodies such as productivity commissions and sometimes power retailers.  These FIT's have ranged from obscenely profitable down to unfair rip-off's.
Governments have also tried to use FIT price as a crude mechanism for controlling the rate of installation.  The result has been a rooftop solar business that has gone through a number of boom/bust cycles.

Thursday, May 22, 2014


Government services at both federal and state level have suffered for years because of a shortage of cash and an unwillingness on both sides of politics to increase taxes. Funny thing is that it is OK to do things like increase government charges but not to do anything that can be labelled a tax. Even funnier, successfully, labelling something as a levy may be OK while the same thing labelled as a tax is not. (Perhaps Gillard would have survived if she had talked about a carbon levy to pay for certain climate action instead of a carbon tax.)

Monday, February 3, 2014


This note compares the use of gross Vs net Feed In Tariffs (FIT) in rooftop solar (RTS) contracts. 
The objective of this note was to choose a form of FIT that:
    1. Encourages investment in RTS.
    2. Helps minimize the power bills of those who don't have RTS while giving investors a reasonable return on their investment after taking account of the risks involved.
    3. Avoid forcing householders who don't have RTS into subsidising those who do. 
For simplicity it has been assumed that the FIT will be less than what a householder pays for power.

It was concluded that:

  1. Gross feed in tariffs will be better at driving investment in RTS while reducing the cost per kWh renewable power to consumers in general.
  2. Qld should replace net FIT with gross FIT for all new FIT contracts.
  3. Gross feed in tariffs should also be used where solar and storage are combined and connected to the grid.  

Sunday, December 29, 2013


Australia's successful RET emission trading scheme is an Offset Credit Trading Scheme (OCTS) that has been quietly driving investment in utility scale renewable energy since 2001.  Best of all, it has been doing this without causing any dramatic increase in power prices or political pain.  This quiet success  means that few Australian's have heard of the RET scheme let alone understand what offset credit trading is.
The main aim of this post is to explain what offset credit trading is and how it can be used.  In addition, the post compares OCTS with cap and trade schemes, as well as systems based on long term contracts. (Ex: Feed in Tariff (FIT) based schemes.)
All of these schemes can be used to drive a variety of changes. For convenience, most of the examples used are government run schemes aimed at emission reduction.
A: Offset Credit Trading Schemes (OCTS)
OCTS can be used to drive investment in desirable alternatives (Ex: Renewable energy) or to drive changes in the mix of desirable and less desirable products.  (Ex: Reduce the average emissions per km of new cars )
OCTS use market forces to set a levy on an undesirable alternative(s).  The money from the levy is then used to subsidize desirable alternatives.  Market forces drive the levy/subsidy to the point where desirables can compete with undesirables.  Details of offset credit trading schemes may vary.  The key features of a basic offset credit trading scheme are: 
  1. OCTS  controls averages.  To do this it needs working targets expressed as averages.  (Ex: "average emissions per kWh").  
  2. OCTS cannot be used directly to control things like "total power emissions" because this target is not an average.  However, it will often be possible to convert "primary targets" in an unacceptable form to "working targets" expressed as averages. (Ex: A "total power emissions" primary target could be converted to an "average emissions per kWh" working target by first working out what "average emissions per kWh" would have to be for the total emission target to be met.)
  3. Better than target performance is rewarded by the award of free credits by the government.  (Ex: One credit per mWh renewable power.)  These credits can be held for future use, sold to others directly or sold via a credit trading market. 
  4. Worse than target performance has to be offset by the surrender of credits to the government by "liable parties".  If necessary, credits will be purchased from others to meet this requirement.  (NOTE: Only credits that have been awarded for better than target performance can be purchased.) 
  5. The number of credits that have to be surrendered will depend on the target.  (Ex: If the target is 25% renewable power, one credit would have to be surrendered for very three units of dirty power.)
Key points to note here are:
  1. OCTS is not a tax.  The government does not get any money for the credits awarded for better than target performance. 
  2. As the target rises from zero to 100% desirable, the average price will ramp up slowly from the price of undesirable (without any levy) to the price of desirable (without subsidy) - When the target is low it only takes a small levy on undesirable to make the price of desirable competitive.
  3. The system ensures that the target will at least be met provided there is enough desirable product available.  
  4. A single OCTS can be expanded by adding to the number of actions that generate credits or require the surrender of credits.  For example, the original RET scheme awarded credits for both renewable power and rooftop solar.  The risk here is that expansion can cause confusion and make the market for different types of action less predictable.  The RET scheme was split into separate large and small scale schemes because the growth in rooftop solar was disrupting the market for large scale renewables.  
NOTE: The RET OCTS scheme:

 "The  RET scheme was first introduced in Australia in 2001. It imposes legal liability to support electricity generated from renewable sources on retailers and large wholesale purchasers of electricity. These 'liable parties' are required to meet a share of the renewable energy target in proportion to their share of the national wholesale electricity market. Liable parties must prove that they have purchased the relevant proportion of renewable energy by surrendering renewable energy certificates (RECs) or paying the shortfall charge, which is a penalty for non-compliance....."  
The option of paying a shortfall charge protects the scheme from causing blackouts when there isn't enough renewable power available to allow the renewable target to be met.