How to save the planet (and my wallet) one electron at a time

My last quarterly electricity bill showed that the price of electricity had gone up by 10% fro 1 June, and the price hikes are expected to continue for many years. The $800+ quarterly bill showed that our daily household electricity consumption is around 48 kWh a day - which is much higher than the 'typical' household usage figure - so it is worth looking for areas where we can save power. I made up a list of all the electricity consuming devices in our home that I could think of, and used average hourly 'cost-to-run' figures and our estimated hours of use each day to calculate where our electricity was being consumed:

The grand total was surprisingly close to our actual bill, and it is immediately obvious what the most power-hungry devices are, and which devices get the most use. Some of these are definitely needs rather than wants (for example, turning off the fridge/freezer wouldn't be a smart move), and some of the power-hungry devices are used very little, so there isn't much scope for saving electricity. However, the stand-out items that are ripe for making significant savings are our computers (currently often left running all day and night) and the reverse cycle air-conditioning/heater.

Simply shutting down all our computers at night apparently could save around $50 a month! We could also save a significant amount by running the a/c intermittently, and wearing a jumper indoors, although that might be a tougher sell for DW and the kids. After those items it gets harder to find significant savings, but running the swimming pool filter for a shorter period (especially in winter when it's not being used), turning off the TVs when no-one is watching them during the evenings, and making sure lights are turned off in unoccupied rooms could save another $10 a month (although a cold, dark, silent house would be depressing). All up, we might be able to cut our power consumption by 20% with a few simple changes in our behaviour. Every little bit will help, as our supplier charges $0.1753 per kWh for the first 19 kWh/day, and the price rises to $0.255 per kWh for higher usage.

Another potential way to cut our power bill is to have a photovoltaic (PV) power generation system installed. A typical 1.5 kWh system (six panels) with an inverter costs around $13,000 installed, but, due to government rebates and credits, some providers have such systems advertised as 'from' $1900. However, the fine print adds in a couple of hundred dollars for 'extras' (such as installation on a tiled roof ($300), or a metal frame to install the panels at the correct angle on a flat metal roof, such as my garage ($300)), and for that price you also have to arrange and pay for the 'feed-in' smart meter to be installed by the electricity company (around $500). Our local government council also doesn't class PV systems as an 'exempt' development, so I'd have to put in a development application and have it approved (takes ~4 weeks) before signing a contract for the PV system. Fortunately the DA for a solar power system 'probably' won't cost anything according to the council planning department. So, all up, a 1.5 kWh system should cost me a bit under $3,000.

In Sydney the system should produce 5.85 kWh each day on average (the supplier quotes 7.3 kWh/day but I prefer to believe the official government 'green energy' website), which will earn $0.60 per kWh using a gross feed-in meter. That $3.85 a day adds up to around $1,400 each year, so the pay-back period should only be 2-3 years. The feed-in rate is fixed until the end of 2016 in NSW, so after the system has paid for itself we should 'make' about $1,400 a year for the following four years. After that the situation isn't so clear, as the feed-in tariff is likely to be cut to be closer to the usage cost. Once that happens the PV system output will cut our net electricity consumption by around 15%-20%, so there will be some ongoing benefit. The system has an expected life of 25+ years, although the PV cells lose around 0.5% efficiency each year.

I've also considered buying a 'heat-pump' water heater to replace our current 'off-peak' electric water heater (which is getting close to replacement age anyhow). However, even with the $600 government subsidy on heat-pumps, the new system would cost over $1,000. And apparently installing the 'smart meter' required for the PV system doesn't mean you automatically lose access to off-peak electricity (according to the electricity company rep), so it wouldn't be worthwhile having a heat-pump system (using electricity at $0.17 per kWh) replace the current off-peak system (using electricity at $0.076 per kWh). If it turns out that having the PV system installed does result in the removal of our off-peak electricity supply, I'll have to reconsider getting the heat-pump.

It will be interesting to see how well our energy saving efforts work out, and how convoluted, lengthy and expensive if turns out to be to have a PV system installed. I'll keep you posted on developments.

In a couple of years I'll be able to work out our actual savings - both in dollars and 'black balloons' of carbon dioxide emissions.

Subscribe to Enough Wealth. Copyright 2006-2010

Australian Budget - where does all the money go? (and come from)

The annual budget announcement often highlights the details of specific changes being made, so much so that the overall budget picture often isn't clear. So I had a look at the top-level figures for the 2009-10 budget and divided the amounts by the current Australian population (around 22.5 million) to get a better feel for the amounts involved:

Budget Revenue (2009-10):

Income tax:..................$122,710 million
Other revenue:...............$167,901
TOTAL revenue:...............$290,611

which works out to be $5,454 income tax per person. This level of government impost doesn't seem too onerous, until you how many Australians aren't wage earners (eg. children, elderly, unemployed/not working). And the total government revenue per person ($12,916) is even higher.

So where does this money go each year?

Budget spending (2009-10):

Social security and welfare..$110,994..=..$4,933 pp..=..33% of budget
Community services , culture..$12,188.......$542 pp
Health........................$51,223.....$2,276 pp.....15%
Infrstructure, transport......$13,886.......$617 pp......4%
Defence.......................$20,952.......$931 pp......6%
Education.....................$35,222.....$1,565 pp.....10%
Industry , workforce..........$13,271.......$590 pp
General government services...$80,478.....$3,577 pp
TOTAL........................$338,214....$15,032 pp

Deficit.......................$47,603.....$2,116 pp

What stands out is that most (about half) of government spending goes on caring for the sick (health costs) and elderly / unemployed (social security). And, given increasing health costs and the aging population this will only increase.

It also highlights the massive expense of the planned NBN ($43,000 million) - even though that cost is to be spread out over 5+ years, it is still massive compared to the amount being spent on national infrastructure each year. Although it would be nice to have optical fibre to every suburban house in Australia, I can't see that everyone needs it. NBN seems to be more of a national 'want' than a 'need', especially compared to spending the money on more conventional infrastructure such as roads, rail and port facilities. Many suburban areas already have 'fibre to the node', so running fibre to individual houses should be done privately and at the households expense (user pays). Where there isn't already 'fibre to the node' the government could pay via 'NBN-lite' - for example to rural towns and new suburban land releases.

Defence doesn't seem to be such a huge expense on a per capita basis - although I can't see the value of some big ticket defence items like strike fighters, given the actual tasks our military is involved in (usually ground troops and naval and air transport). The old F-111s, for example, were never used in anger, so a smaller 'deterrent' may have sufficed. In any major conflict I expect we would have to rely on support from our allies - whether we had just a handful of flighters, or a dozen. That will still be true for their planned replacement, the vastly expensive Joint Strike Fighters. So there is probably some room for reallocating funds from defence to infrastructure or education. And, as for the cost-benefit value of our fleet of non-nuclear submarines...

The 2009-10 deficit isn't huge either (as a one-off), but that $2,116 per person translates to about an extra $200 a year revenue required just to service the interest on the debt. No wonder neither party was promising tax cuts in the recent election campaign.

Subscribe to Enough Wealth. Copyright 2006-2010

Coalition to win the Australian Election?

Yesterday online betting agencies were reporting that Labor was still firm favourite to win tomorrow's federal election, with odds around 1.5 compared to 4 for the coalition picking up enough seats to form government. This was despite the coalition being favoured to pick up a large number of marginal seats in NSW and Queensland (where state Labor governments are decidedly unpopular after years of over-promising and under-delivering). So I placed a $10 bet with Betfair for the coalition to win at odds of 4-to-1), although I'm still doubtful that the coalition will be able to get over the line on the day.

Today the odds on a coalition win have shortened to around 3 (glad I placed my bet yesterday), but Labor is still favourite to win the election. By all appearances this election really will be a close one (they say that nearly every election, despite many of them turning out to be a "landslide" in the end), with the coalition (Liberals and Nationals) having a solid primary vote (over 40%) and likely to pick up a handful of marginal seats in both QLD and NSW, but Labor likely to pick up a couple of seats in NSW (due to a recent redistribution) and also gaining some seats in VIC and SA. Labor is suffering a substantial "protest vote" due to many policy implementation snafus under Rudd (you don't see many "Kevin '11" T-shirts these days!), with their primary vote down in the low 30%'s. However, most of that protest vote is disillusioned socialists giving their vote to local independent or green candidates. Under our preferential voting system the second preference votes will mean that most of these green votes flow back to Labor (usually around 60% of Green votes flow to Labor, this time I expect the Green primary vote will be higher, and that Green preferences will flow 70%+ to Labor).

If the coalition does manage to pick up a dozen marginal NSW and QLD seats, and loses a few seats in NSW and a handful in VIC/SA we are quite likely to be staying up late on Saturday night waiting for the early results to flow in from WA. With the housing affordability and mining tax issues having a big impact in WA (and neither Rudd, Gillard or Abbott coming from WA) the final result may hinge on how many seats the coalition can gain in WA.

While Labor still appears to be favourite to remain in power, the coalition may have sufficient momentum to close the gap by election day. Although Green preferences will offset Labor's poor primary vote to a large extent, in the event of a hung parliament the Libs/Nats have better prospects of doing a deal with the 3-4 independent Representative MPs and being able to form a government in that situation.

Subscribe to Enough Wealth. Copyright 2006-2010

Exactly how fast does broadband need to be?

With the Australian federal election campaign in it's final weeks, the focus yesterday turned to the 'National Broadband' plans of the two major parties. The incumbent Labor party has embarked on a $43 billion dollar scheme that aims to provide access to 100 megabits per second to 97% of the Australian population (apparently it's vitally important for everyone to have fast internet - except for the 3% or so of Australians who live in the remote outback where even Labor concedes providing optical fibre would be too expensive). Supposedly we'll all want to sign up for fast internet once it's available (at around $100 per month), and to ensure maximum uptake (so the government can try to sell off the NBN and recoup the cost) it will apparently be 'opt-out' ie. your house will be connected up unless you say no (I wonder how many households will let their homes be connected, at government expense, but then never agree to open an account and pay for using the NBN?)

The coalition (Liberal/National parties) plan is to 'only' pour about $6 billion of government money into fast broadband, leaving it up to the private sector to invest in providing as much fast broadband as people want.

I think both plans have pitfalls - the Labor plan seems awfully expensive (over $2000 per man, woman and child in the country!) and assumes that everyone needs 100 Mbps internet access. I use the internet a lot for my uni studies, online financial transactions, share and CFD trading etc. and the modest speed of 3.6 Mbps download and 0.1 Mbps upload provided by my cable connection is fine. Unless I wanted to download movies every day, I can't see any need to faster access. So the coalitions plan, providing 12 Mbps to 97% of the population (and up to 100 Mbps in some cases) seems more than adequate. However, by just providing limited funding and relying on the private sector, some areas (with lower demand) will end up missing out - so spending the extra $36 billion will undoubtedly help address 'social equity' concerns (but not, for example, aborigines living in remote settlements in central Australia).

A recent poll by the SMH showed less than 20% of people supported the coalition's 'cheap' option - apparently everyone would like fast internet (as long as the government is footing the bill). As usual, there is a disconnect between the voters desire for lower taxes, a balanced budget, and massive government spending to provide 'free' services.
All in all, I'm dubious that it will turn out to be worthwhile spending $44 billion dollars to 'fibre up' Australia - as with most high technology fields, there is likely to be a faster and cheaper option available within a few years, making the current expenditure a) wasteful, and b) unlikely to be recouped by selling off the NBN once it's up and running. I also doubt that more than 10% of the population has any economic/business need for the NBN. Spending about $6,000 of public money per household to provide fast download of movies and video phone calls seems a huge waste.

Many of the critics of the coalition's NBN-lite policy appear to have vested interest in the government spending $44 billion on NBN - for example Optus sees the NBN as a means for the government to strip away a large part of Telstra's residual infrastructure advantage. And some commentators, such as Rod Tucker appear to be both biased (since he is paid as Director of the Institute for a Broadband-Enabled Society (IBES) and Director of the Centre for Ultra-Broadband Information Networks (CUBIN)) and misguided. He wrote that "Building a broadband network will, as the government has pointed out, have the same kind of transformational impact as the railways in the 19th and 20th centuries" - I suggest he reads up on the 'railway bubble' of the late 19th century in the UK. At that time everyone was entranced by the revolutionary technology of the railway line, prompting dozens of schemes to build myriad railway lines to every urban centre in the UK. Vast fortunes were lost when most of the schemes were found to be uneconomic (not enough patronage), although in that fiasco it was mostly private investors who paid for their folly. In any event, the 'revolutionary' technology of railway transport was soon competing against the motor car and later on with air transport.

Subscribe to Enough Wealth. Copyright 2006-2010