People living in the shadow of a group of wind turbines in Summerside, P.E.I., are complaining about the flickering light caused by the energy producers.
Emmett Curley has enjoyed living in the area for 15 years, but says things have become unbearable since the wind turbines arrived a year ago.
"Last summer when it started, I left my house. I just couldn't stand it. I've had friends over that left during the situation, saying, 'I'm starting to get a headache,'" Curley said.
The problem comes when the sun sets and its light passes through the turbines, creating a flickering effect of shadow and light. It lasts for about an hour.
"I'm lined up with two turbines that give me a double flicker. You can't watch TV, you can't read a book, a newspaper, you can't work on a computer because your eyes are constantly adjusting to light and dark," he said. "Green energy is a great thing, but when it interferes with life, health — no, something has to be done."
Other neighbours also said they were annoyed by the flickering. One told CBC News that her daughter feels sick to her stomach when it happens and the family has to spend part of their summer evenings in the basement.
Most want the city to shut the turbines off for the hour at sunset when the flicker happens, but the city said that is unlikely.
Greg Gaudet of Summerside Municipal Services said the city could provide options such as shutters or awnings for area residents.
He said shutting down the turbines for an hour each day would cost about $100,000 in lost energy over the course of a year.
"Obviously the city doesn't want to invest a large amount of money to create renewable energy, which is good for the environment, and then have to reduce those energies," he said.
"Obviously that's one of the last solutions the city would look at."
Scottish Renewable Grid Upgrades address outdated infrastructure, expanding transmission lines, pylons, and substations to move clean energy, meet rising electricity demand, and integrate onshore wind, offshore wind, and battery storage across Scotland.
Key Points
Planned transmission upgrades in Scotland to move clean power via new lines and substations for a low-carbon grid.
✅ Fivefold expansion of transmission lines by 2030
✅ Enables onshore and offshore wind integration
✅ New pylons, substations, and routes face local opposition
Renewable energy in Scotland is being held back by outdated grid infrastructure, industry leaders said, with projects stuck on hold underscoring their warning that new pylons and power lines are needed to "ensure our lights stay on".
Scottish Renewables said new infrastructure is required to transmit the electricity generated by green power sources and help develop "a clean energy future" informed by a broader green recovery agenda.
A new report from the organisation - which represents companies working across the renewables sector - makes the case for electricity infrastructure to be updated, aligning with global network priorities identified elsewhere.
But it comes as electricity firms looking to build new lines or pylons face protests, with groups such as the Strathpeffer and Contin Better Cable Route challenging power giant SSEN over the route chosen for a network of pylons that will run for about 100 miles from Spittal in Caithness to Beauly, near Inverness.
Scottish Renewables said it is "time to be upfront and honest" about the need for updated infrastructure.
It said previous work by the UK National Grid estimated "five times more transmission lines need to be built by 2030 than have been built in the past 30 years, at a cost of more than £50bn".
The Scottish Renewables report said: "Scotland is the UK's renewable energy powerhouse. Our winds, tides, rainfall and longer daylight hours already provide tens of thousands of jobs and billions of pounds of economic activity.
"But we're being held back from doing more by an electricity grid designed for fossil fuels almost a century ago, a challenge also seen in the Pacific Northwest today."
Investment in the UK transmission network has "remained flat, and even decreased since 2017", echoing stalled grid spending trends elsewhere, the report said.
It added: "We must build more power lines, pylons and substations to carry that cheap power to the people who need it - including to people in Scotland.
"Electricity demand is set to increase by 50% in the next decade and double by mid-century, so it's therefore wrong to say that Scottish households don't need more power lines, pylons and substations.
Renewable energy in Scotland is being held back by outdated grid infrastructure, industry leaders said, as they warned new pylons and power lines are needed to "ensure our lights stay on".
Scottish Renewables said new infrastructure is required to transmit the electricity generated by green power sources and help develop "a clean energy future".
A new report from the organisation - which represents companies working across the renewables sector - makes the case for electricity infrastructure to be updated.
But it comes as electricity firms looking to build new lines or pylons face protests, with groups such as the Strathpeffer and Contin Better Cable Route challenging power giant SSEN over the route chosen for a network of pylons that will run for about 100 miles from Spittal in Caithness to Beauly, near Inverness.
Scottish Renewables said it is "time to be upfront and honest" about the need for updated infrastructure.
It said previous work by the UK National Grid estimated "five times more transmission lines need to be built by 2030 than have been built in the past 30 years, at a cost of more than £50bn".
The Scottish Renewables report said: "Scotland is the UK's renewable energy powerhouse. Our winds, tides, rainfall and longer daylight hours already provide tens of thousands of jobs and billions of pounds of economic activity.
"But we're being held back from doing more by an electricity grid designed for fossil fuels almost a century ago."
Investment in the UK transmission network has "remained flat, and even decreased since 2017", the report said.
It added: "We must build more power lines, pylons and substations to carry that cheap power to the people who need it - including to people in Scotland.
"Electricity demand is set to increase by 50% in the next decade and double by mid-century, so it's therefore wrong to say that Scottish households don't need more power lines, pylons and substations.
"We need them to ensure our lights stay on, as excess solar can strain networks in the same way consumers elsewhere in the UK need them.
"With abundant natural resources, Scotland's home-grown renewables can be at the heart of delivering the clean energy needed to end our reliance on imported, expensive fossil fuel.
"To do this, we need a national electricity grid capable of transmitting more electricity where and when it is needed, echoing New Zealand's electricity debate as well."
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Nick Sharpe, director of communications and strategy at Scottish Renewables, said the current electricity network is "not fit for purpose".
He added: "Groups and individuals who object to the construction of power lines, pylons and substations largely do so because they do not like the way they look.
"By the end of this year, there will be just over 70 months left to achieve our targets of 11 gigawatts (GW) offshore and 12 GW onshore wind.
"To ensure we maximise the enormous socioeconomic benefits this will bring to local communities, we will need a grid fit for the 21st century."
Australia's greenhouse gas emissions rose in Q2 as electricity and transport pollution increased, despite renewable energy growth. Net zero targets, carbon dioxide equivalent metrics, and land use changes underscore mixed trends in decarbonisation.
Key Points
About 499-500 Mt CO2-e annually, with a 2% quarterly rise led by electricity and transport.
✅ Q2 emissions rose to 127 Mt from 124.4 Mt seasonally adjusted
✅ Electricity sector up to 41.6 Mt; transport added nearly 1 Mt
✅ Land use remains a net sink; renewables expanded capacity
Australia’s greenhouse gas emissions rose in the June quarter by about 2% as pollution from the electricity sector and transport increased.
Figures released on Tuesday by the Morrison government showed that on a year to year basis, emissions for the 12 months to last June totalled 498.9m tonnes of carbon dioxide equivalent. That tally was down 2.1%, or 10.8m tonnes compared with the same period a year earlier.
However, on a seasonally adjusted quarterly basis, emissions increased to 127m tonnes, or just over 2%, from the 124.4m tonnes reported in the March quarter. For the year to March, emissions totalled 494.2m tonnes, underscoring the pickup in pollution in the more recent quarter even as global coal power declines worldwide.
A stable pollution rate, if not a rising one, is also implied by the government’s release of preliminary figures for the September quarter. They point to 125m tonnes of emissions in trend terms for the July-September months, bringing the year to September total to about 500m tonnes, the latest report said.
The government has made much of Australia “meeting and beating” climate targets. However, the latest statistics show mostly emissions are not in decline despite its pledge ahead of the Glasgow climate summit that the country would hit net zero by 2050, and AEMO says supply can remain uninterrupted as coal phases out over the next three decades.
“Nothing’s happening except for the electricity sector,” said Hugh Saddler, an honorary associate professor at the Australian National University. Once Covid curbs on the economy eased, such as during the current quarter, emission sources such as from transport will show a rise, he predicted.
Falling costs for new wind and solar farms, with the IEA naming solar the cheapest in history worldwide, are pushing coal and gas out of electricity generation, as well as pushing down power prices. In seasonally adjusted terms, though, emissions for that sector rose from 39.7m tonnes the March quarter to 41.6m in the June one.
Most other sectors were steady, with pollution from transport adding almost 1m tonnes in the June quarter.
On an annual basis, a 500m tonnes tally is the lowest since records began in the 1990s, and IEA reported global emissions flatlined in 2019 for context. That lower trajectory, though, is lower due much to the land sector remaining a net sink even as some experts raise questions about the true trends when it comes to land clearing.
According to the government, this sector – known as land use, land-use change and forestry – amounted to a net reduction of emissions of 24.4m tonnes, or almost negative 5% of the national total, in the year to June.
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“The magnitude of this net sink has decreased by 0.6% (0.2 Mt CO2-e) on the previous 12 months due to an increase in emissions from agricultural soils, partially offset by a continuing decline in land clearing emissions,” the latest report said.
For its part, the government also touted the increase of renewable energy, as seen in Canada's electricity progress too, as central to driving emissions lower.
“Since 2017, Australia’s consumption of renewable energy has grown at a compound annual rate of 4.6%, with more than $40bn invested in Australia’s renewable energy sector,” Angus Taylor, the federal energy minister said, while UK net zero policy changes show a different approach. “Last year, Australia deployed new solar and wind at eight times the global per capita average.”
ANU’s Saddler said the main driver had been the 2020 Renewable Energy Target that the Coalition government had cut, and had anyway been implemented “a very considerable time ago”.
Tim Baxter, the Climate Council’s senior researcher, said “the time for leaning on the achievements of others is long since past”.
“We need a federal government willing to step up on emissions reductions and take charge with real policy, not wishlists,” he said, referring to the government’s net zero plan to rely on technologies to cut pollution in pursuit of a sustainable electric planet in practice, some of which don’t exist now.
Ontario Peak Perks Program boosts energy efficiency with smart thermostats, demand response, and incentives, reducing peak demand, electricity costs, and emissions while supporting grid reliability and Save on Energy initiatives across Ontario businesses and homes.
Key Points
A demand response initiative offering incentives via smart thermostats to cut peak electricity use and lower costs
✅ $75 sign-up, $20 yearly enrollment incentive
✅ Up to 10 summer temperature events; opt-out anytime
The Ontario government is launching the new Peak Perks program to help families save money by conserving energy, building on bill support during COVID-19 initiatives as part of the government’s $342 million expansion of Ontario’s energy-efficiency programs that will reduce demands on the provincial grid. The government is also launching three new and enhanced programs for businesses, municipalities, and other institutions, including targeted support for greenhouse growers in Southwest Ontario.
“Our government is giving families more ways to lower their energy bills with new energy-efficiency programs like Peak Perks and ultra-low overnight rates available to consumers, which will provide families a $75 financial incentive this year in exchange for lowering their energy use at peak times during the summer,” said Todd Smith, Minister of Energy. “The new programs launched today will also help meet the province’s emerging electricity system needs by providing annual electricity savings equivalent to powering approximately 130,000 homes every year and, alongside electricity cost allocation discussions, reduce costs for consumers by over $650 million by 2025.”
The new Peak Perks program provides a financial incentive for residential customers who are willing to conserve energy and reduce their air conditioning at peak times and have an eligible smart thermostat connected to a central air conditioning system or heat pump unit. Participants will receive $75 for enrolling this year, as well as $20 for each year they stay enrolled in the program starting in 2024.
Residential customers can participate in Peak Perks by enrolling and giving their thermostat manufacturer secure access to their thermostat. Participants will be notified when one of the maximum 10 annual temperature change events occurs directly by their thermostat manufacturer on their mobile app and on their thermostat. Peak Perks has been designed to ensure participants are always in control and customers can opt-out of any temperature change event without impacting their incentive.
The Peak Perks program will be available starting in June. Interested customers can visit SaveOnEnergy.ca/PeakPerks today to sign-up for the program waitlist and receive an email notice with information on how to enroll.
In addition to the financial incentive provided by Peak Perks, reducing electricity use during peak demand hours in the summer months helps customers to lower their monthly electricity bills, and measures such as a temporary off-peak rate freeze have complemented these efforts, as these periods tend to be associated with the highest costs for power. Lowering demand during peak periods also allows the province to reduce electricity sector emissions, by reducing the need for electricity generation facilities that only run at times of peak demand such as natural gas.
Ontario has also launched three new and enhanced programs, including an expanded custom Retrofit program for business, municipalities and other institutions, and industrial electricity rate relief initiatives, targeted support for greenhouse growers in Southwest Ontario, as well enhancements to the existing Local Initiatives Program. The expanded Retrofit program alone will feature over $200 million in dedicated funding to support the new custom energy-efficiency retrofit project stream, that will cover up to 50 percent of the cost of approved projects.
These new and expanded energy-efficiency programs are expected to have a strong impact in Southwest Ontario, with regional peak demand savings of 225 megawatts (MW). This, together with the Ontario-Quebec energy swap agreement, will provide additional capacity for the region and support growing economic development. The overall savings from this energy-efficiency programming will result in an estimated three million tonnes of greenhouse gas emission reductions over its lifetime - the equivalent to taking more than 600,000 vehicles off the road for one year.
“Thanks to energy efficiency efforts over the past 15 years, demand for electricity is today about 12 per cent lower than it otherwise would be,” said Lesley Gallinger, President and CEO, of the Independent Electricity System Operator, Ontario’s grid operator and provider of Save on Energy programs to home and business consumers. “Conservation is a valuable and cost-effective resource that supports system reliability and helps drive economic development as we strive towards compliance with clean electricity regulations for a decarbonized electricity grid.”
Fort Frances Microgrid aims to boost reliability in Ontario with grid-connected and island modes, Siemens feasibility study, renewable energy integration, EV charging expansion, and resilience modeled after First Nations projects and regional biomass initiatives.
Key Points
A community microgrid in Fort Frances enabling grid and island modes to improve reliability and integrate renewables.
✅ Siemens-led feasibility via FedNor funding
✅ Grid-connected or islanded for outage resilience
✅ Integrates renewables, EV charging, and industry growth
When the power goes out in Fort Frances, Ont., the community may be left in the dark for hours.
The hydro system's unreliability — caused by its location on the provincial power grid — has prompted the town to seek a creative solution: its own self-contained electricity grid with its own source of power, known as a microgrid.
Located more than 340 kilometres west of Thunder Bay, Ont., on the border of Minnesota, near the Great Northern Transmission Line corridor, Fort Frances gets its power from a single supply point on Ontario's grid.
"Sometimes, it's inevitable that we have to have like a six- to eight-hour power outage while equipment is being worked on, and that is no longer acceptable to many of our customers," said Joerg Ruppenstein, president and chief executive officer of Fort Frances Power Corporation.
While Ontario's electrical grid serves the entire province, and national efforts explore macrogrids, a microgrid is contained within a community. Fort Frances hopes to develop an integrated, community-based electric microgrid system that can operate in two modes:
Grid-connected mode, which means it's connected to the provincial grid and informed by western grid planning approaches
Island mode, which means it's disconnected from the provincial grid and operates independently
The ability to switch between modes allows flexibility. If a storm knocks down a line, the community will still have power.
The town has been given grant funding from the Federal Economic Development Agency for Northern Ontario (FedNor), echoing smart grid funding in Sault Ste. Marie initiatives, for the project. On Monday night, council voted to grant a request for proposal to Siemens Canada Limited to conduct a feasibility study into a microgrid system.
The study, anticipated to be completed by the end of 2023 or early 2024, will assess what an integrated community-based microgrid system could look like in the town of just over 7,000 people, said Faisal Anwar, chief administrative officer of Fort Frances. A timeline for construction will be determined after that.
The community is still reeling from the closure of the Resolute Forest Products pulp and paper mill in 2014 and faces a declining population, said Ruppenstein. It's hoped the microgrid system will help attract new industry to replace those lost workers and jobs, drawing on Manitoba's hydro experience as a model.
This gives the town a competitive advantage.
"If we were conceivably to attract a larger industrial player that would consume a considerable amount of energy, it would result in reduced rates for everyone…we're the only utility really in Ontario that can offer that model," Ruppenstein said.
The project can also incorporate renewable energy like solar or wind power, as seen in B.C.'s clean energy shift efforts, into the microgrid system, and support the growth of electric vehicles, he said. Many residents fill their gas tanks in Minnesota because it's cheaper, but Fort Frances has the potential to become a hub for electric vehicle charging.
A few remote First Nations have recently switched to microgrid systems fuelled by green energy, including Gull Bay First Nation and Fort Severn First Nation. These are communities that have historically relied on diesel fuel either flown in, which is incredibly expensive, or transported via ice roads, which are seeing shorter seasons each year.
Natural Resources Minister Jonathan Wilkinson was in Thunder Bay, Ont., to announce $35 million for a biomass generation facility in Whitesand First Nation, complementing federal funding for the Manitoba-Saskatchewan transmission line elsewhere in the region.
ITER Nuclear Fusion advances tokamak magnetic confinement, heating deuterium-tritium plasma with superconducting magnets, targeting net energy gain, tritium breeding, and steam-turbine power, while complementing laser inertial confinement milestones for grid-scale electricity and 2025 startup goals.
Key Points
ITER Nuclear Fusion is a tokamak project confining D-T plasma with magnets to achieve net energy gain and clean power.
✅ Tokamak magnetic confinement with high-temp superconducting coils
✅ Deuterium-tritium fuel cycle with on-site tritium breeding
✅ Targets net energy gain and grid-scale, low-carbon electricity
It sounds like the stuff of dreams: a virtually limitless source of energy that doesn’t produce greenhouse gases or radioactive waste. That’s the promise of nuclear fusion, often described as the holy grail of clean energy by proponents, which for decades has been nothing more than a fantasy due to insurmountable technical challenges. But things are heating up in what has turned into a race to create what amounts to an artificial sun here on Earth, one that can provide power for our kettles, cars and light bulbs.
Today’s nuclear power plants create electricity through nuclear fission, in which atoms are split, with next-gen nuclear power exploring smaller, cheaper, safer designs that remain distinct from fusion. Nuclear fusion however, involves combining atomic nuclei to release energy. It’s the same reaction that’s taking place at the Sun’s core. But overcoming the natural repulsion between atomic nuclei and maintaining the right conditions for fusion to occur isn’t straightforward. And doing so in a way that produces more energy than the reaction consumes has been beyond the grasp of the finest minds in physics for decades.
But perhaps not for much longer. Some major technical challenges have been overcome in the past few years and governments around the world have been pouring money into fusion power research as part of a broader green industrial revolution under way in several regions. There are also over 20 private ventures in the UK, US, Europe, China and Australia vying to be the first to make fusion energy production a reality.
“People are saying, ‘If it really is the ultimate solution, let’s find out whether it works or not,’” says Dr Tim Luce, head of science and operation at the International Thermonuclear Experimental Reactor (ITER), being built in southeast France. ITER is the biggest throw of the fusion dice yet.
Its $22bn (£15.9bn) build cost is being met by the governments of two-thirds of the world’s population, including the EU, the US, China and Russia, at a time when Europe is losing nuclear power and needs energy, and when it’s fired up in 2025 it’ll be the world’s largest fusion reactor. If it works, ITER will transform fusion power from being the stuff of dreams into a viable energy source.
Constructing a nuclear fusion reactor ITER will be a tokamak reactor – thought to be the best hope for fusion power. Inside a tokamak, a gas, often a hydrogen isotope called deuterium, is subjected to intense heat and pressure, forcing electrons out of the atoms. This creates a plasma – a superheated, ionised gas – that has to be contained by intense magnetic fields.
The containment is vital, as no material on Earth could withstand the intense heat (100,000,000°C and above) that the plasma has to reach so that fusion can begin. It’s close to 10 times the heat at the Sun’s core, and temperatures like that are needed in a tokamak because the gravitational pressure within the Sun can’t be recreated.
When atomic nuclei do start to fuse, vast amounts of energy are released. While the experimental reactors currently in operation release that energy as heat, in a fusion reactor power plant, the heat would be used to produce steam that would drive turbines to generate electricity, even as some envision nuclear beyond electricity for industrial heat and fuels.
Tokamaks aren’t the only fusion reactors being tried. Another type of reactor uses lasers to heat and compress a hydrogen fuel to initiate fusion. In August 2021, one such device at the National Ignition Facility, at the Lawrence Livermore National Laboratory in California, generated 1.35 megajoules of energy. This record-breaking figure brings fusion power a step closer to net energy gain, but most hopes are still pinned on tokamak reactors rather than lasers.
In June 2021, China’s Experimental Advanced Superconducting Tokamak (EAST) reactor maintained a plasma for 101 seconds at 120,000,000°C. Before that, the record was 20 seconds. Ultimately, a fusion reactor would need to sustain the plasma indefinitely – or at least for eight-hour ‘pulses’ during periods of peak electricity demand.
A real game-changer for tokamaks has been the magnets used to produce the magnetic field. “We know how to make magnets that generate a very high magnetic field from copper or other kinds of metal, but you would pay a fortune for the electricity. It wouldn’t be a net energy gain from the plant,” says Luce.
One route for nuclear fusion is to use atoms of deuterium and tritium, both isotopes of hydrogen. They fuse under incredible heat and pressure, and the resulting products release energy as heat
The solution is to use high-temperature, superconducting magnets made from superconducting wire, or ‘tape’, that has no electrical resistance. These magnets can create intense magnetic fields and don’t lose energy as heat.
“High temperature superconductivity has been known about for 35 years. But the manufacturing capability to make tape in the lengths that would be required to make a reasonable fusion coil has just recently been developed,” says Luce. One of ITER’s magnets, the central solenoid, will produce a field of 13 tesla – 280,000 times Earth’s magnetic field.
The inner walls of ITER’s vacuum vessel, where the fusion will occur, will be lined with beryllium, a metal that won’t contaminate the plasma much if they touch. At the bottom is the divertor that will keep the temperature inside the reactor under control.
“The heat load on the divertor can be as large as in a rocket nozzle,” says Luce. “Rocket nozzles work because you can get into orbit within minutes and in space it’s really cold.” In a fusion reactor, a divertor would need to withstand this heat indefinitely and at ITER they’ll be testing one made out of tungsten.
Meanwhile, in the US, the National Spherical Torus Experiment – Upgrade (NSTX-U) fusion reactor will be fired up in the autumn of 2022, while efforts in advanced fission such as a mini-reactor design are also progressing. One of its priorities will be to see whether lining the reactor with lithium helps to keep the plasma stable.
Choosing a fuel Instead of just using deuterium as the fusion fuel, ITER will use deuterium mixed with tritium, another hydrogen isotope. The deuterium-tritium blend offers the best chance of getting significantly more power out than is put in. Proponents of fusion power say one reason the technology is safe is that the fuel needs to be constantly fed into the reactor to keep fusion happening, making a runaway reaction impossible.
Deuterium can be extracted from seawater, so there’s a virtually limitless supply of it. But only 20kg of tritium are thought to exist worldwide, so fusion power plants will have to produce it (ITER will develop technology to ‘breed’ tritium). While some radioactive waste will be produced in a fusion plant, it’ll have a lifetime of around 100 years, rather than the thousands of years from fission.
At the time of writing in September, researchers at the Joint European Torus (JET) fusion reactor in Oxfordshire were due to start their deuterium-tritium fusion reactions. “JET will help ITER prepare a choice of machine parameters to optimise the fusion power,” says Dr Joelle Mailloux, one of the scientific programme leaders at JET. These parameters will include finding the best combination of deuterium and tritium, and establishing how the current is increased in the magnets before fusion starts.
The groundwork laid down at JET should accelerate ITER’s efforts to accomplish net energy gain. ITER will produce ‘first plasma’ in December 2025 and be cranked up to full power over the following decade. Its plasma temperature will reach 150,000,000°C and its target is to produce 500 megawatts of fusion power for every 50 megawatts of input heating power.
“If ITER is successful, it’ll eliminate most, if not all, doubts about the science and liberate money for technology development,” says Luce. That technology development will be demonstration fusion power plants that actually produce electricity, where advanced reactors can build on decades of expertise. “ITER is opening the door and saying, yeah, this works – the science is there.”
Israel Electricity Reform Competition opens the supply segment to private suppliers, challenges IEC price controls, and promises consumer choice, marginal discounts, and market liberalization amid natural gas generation and infrastructure remaining with IEC.
Key Points
Policy opening 40% of supply to private vendors, enabling consumer choice and small discounts while IEC retains the grid.
✅ 40% of retail supply opened to private electricity suppliers
✅ IEC keeps meters, lines; tariffs still regulated by the authority
✅ Expected discounts near 7%, not dramatic price cuts initially
"See the pseudo-reform in the electricity sector: no lower prices, no opening the market to competition, and no choice of electricity suppliers, with a high rate for consumers despite natural gas." This is an advertisement by the Private Power Producers Forum that is appearing everywhere: Facebook, the Internet, billboards, and the press.
Is it possible that the biggest reform in the economy with a cost estimated by Israel Electric Corporation (IEC) (TASE: ELEC.B22) at NIS 7 billion is really a pseudo-reform? In contrast to the assertions by the private electricity producers, who are supposedly worried about our wallets and want to bring down the cost of electricity for us, the reform will open a segment of electricity supply to competition, as agreed in the final discussions about the reform. No less than 40% of this segment will be removed from IEC's exclusive responsibility and pass to private hands.
This means that in the not-too-distant future, one million households in Israel will be able to choose between different electricity suppliers. IEC will retain the infrastructure, with its meter and power lines, but for the first time, the supplier who sends the monthly bill to our home can be a private concern.
Up until now, the only regulatory agency determining the electricity rate in Israel was the Public Utilities Authority (electricity), i.e. the state. Now, in the framework of the reform, as a result of opening the supply segment to competition, private electricity producers will be able to offer a lower rate than IEC's, with mechanisms like electricity auctions shown to cut costs in some markets, while IEC's rate will still be controlled by the Public Utilities Authority (electricity).
This situation differs from the situation in almost all European countries, where the electricity market is fully open to competition and the EU is pursuing an electricity market revamp to address pricing challenges, with no electricity price controls and free switching by consumers between electricity producers, just as in the mobile phone market. This measure has not lowered electricity prices in Europe, where rates are higher than in Israel, which is in the bottom third of OECD countries in its electricity rate.
Regardless of reports, supply will be opened to competition and we will be able to choose between electricity suppliers in the future. Are the private electricity producers nevertheless right when they say that the electricity sector will not be opened to "real competition"?
What is obviously necessary is for the private producers to offer a substantially lower rate than IEC in order to attract as many new customers as possible and win their trust. Can the private producers offer a significantly lower rate than IEC? The answer is no, at least not in the near future. The teams handling the negotiations are aware of this. "The private supplier's price will not be significantly cheaper than IEC's controlled price; there will be marginal discounts," a senior government source explains. "What is involved here is another electricity intermediary, so it will not contribute to competition and lowering the price," he added.
There are already private electricity producers supplying electricity to large business customers - factories, shopping malls, and so forth - at a 7% discount. The rest of the electricity that they produce is sold to the system manager. When supply is opened to competition, it can be assumed that the private suppliers will also be able to offer a similar discount to private consumers.
Will a 7% discount cause a home consumer to leave reliable and familiar IEC for a private producer, given evidence from retail electricity competition in other markets? This is hard to know.
#google#
Why cannot private electricity producers offer a larger discount that will really break the monopoly, as their advertisement says they want to do? Chen Herzog, chief economist and partner at BDO Consulting, which is advising the Private Power Producers Forum, says, "Competition in supply requires the construction of competitive power plants that can compete and offer cheaper electricity.
"The power plants that IEC will sell in the reform, which will go on selling electricity to IEC, are outmoded, inefficient, and non-competitive. In addition, the producer will have to continue employing IEC workers in the purchased plants for at least five years. The producer will generate electricity in IEC power stations with IEC employees and additional overhead of a private producer, with factors such as cost allocation further shaping end-user rates. This amounts to being an IEC subcontractor in production. There is no saving on costs, so there will be no surplus to deduct from the consumer price," he adds.
The idea of opening supply to electricity market competition on such a large scale sounds promising, but saving on electricity for consumers still looks a long way off.
