Once upon a time in an effort to improve myself I accidentally signed up for a class studying Economics.
In this class I learnt a few things previously unfamiliar to me.
One of these things was the law of supply and demand.
- If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price.
- If demand decreases supply remains unchanged, a surplus occurs, leading to a lower price.
- If demand remains unchanged and supply increases a surplus occurs, leading to a lower price.
- If demand remains unchanged and supply decreases a shortage occurs, leading to a higher price
Then I read this article about electricity companies in Australia and their response to reduced demand.
In response to privatisation, and pending privatisation a massive and apparently unnecessary investment in poles and wires has been undertaken.
It is a massive rort as outlined in this excellent article in The Monthly.
Power companies have lined their pockets and are screwing over their consumers with massive price spikes.
Now this may have worked out splendidly for the bottom line of these company except for one minor thing – Apparently no one told these electricity companies that there was such as thing as solar panels.
Australia is particularly well placed to take advantage of solar.
Firstly because we have a very high levels of home ownership. We are a low rise society and houses with large roof areas are the norm.
Secondly – we have an awful lot of sunshine. I live in the most notroiously unsunny (by Australian standards) city of Melbourne. I only have a 2.5kw system but this provides most of our household power needs.
Households are installing solar panels at an ever increasing rate in Australia and drawing power from the network at an ever decreasing one. This falling demand is causing falling revenue for the electricity providers. They are responding to this by increasing prices further.
Yes, that’s right less people are buying their product because of the prices so they are responding to this by increasing their prices further.
In response solar power becomes more attractive and more people install solar.
Nope doesn’t make sense to me either.
This is called a death spiral.
I would tell the electricity suppliers about laws 2 & 3 but I am content to watch them spiral to their demise.
and for more on the Kodak reference http://www.forbes.com/sites/chunkamui/2012/01/18/how-kodak-failed/