by Levi J Parsons
SYDNEY, March 10 (Xinhua) -- As electricity prices rise, more and more rural businesses in the Australian state of Queensland are having to turn to heavy polluting diesel generators to power their farms and businesses.
Over the past eight years, electricity prices in Queensland have skyrocketed around 150 percent, forcing many business to go off the grid.
"Back in 2007, our power bill was around 100,000-110,000 Australian dollars (75,000-82,500 U.S. dollars) per year. It's now over 350,000 Australian dollars per year (263,00 U.S.dollars)," auto parts manufacturer Glen Dobinson explained to the Australian Broadcasting Corporation.
"I feel like we are going back to the future, it feels like we're going backwards."
In 2008, the network projected demand to grow rapidly. So providers invested heavily in infrastructure and generation plants.
The decision however, ended up being a huge miscalculation.
"The global recession after 2008 and the significant improvement of energy efficiency in both commercial and residential premises are the two outstanding factors that have contributed to the decline in demand for electricity," energy expert from the University of Technology Sydney Shi Xunpeng told Xinhua.
"Another reason for the sharp decline of electricity demand has been the closing down of some energy intensive users, such as smelters."
In many other instances, lower demand may act to reduce the price of electricity, but in this case the reduction is not able to offset the increase in unit charge for network, causing retail prices for electricity to move much higher.
"This will create a negative loop. The more diesel use, the less the demand, and thus the higher the network charge per unit," Shi said.
At the moment going off the electricity grid is a far more viable option for some businesses, but renewable energy options, such as solar power, are expensive to implement and fail to provide power at a time of no sun light.
"When your back is to the wall you don't have the luxury of thinking about how environmentally friendly diesel is," General Manager Simon Doyle of Bundaberg Sugar, Australia's largest sugarcane farm, told the Australian Broadcasting Corporation.
With diesel around 30 percent less expensive than the grid, the state government has an extremely challenging task as to how to fix the problem, since the network is a mixture of government and private ownership.
The transmission and distribution of the grid is entirely government-owned. However, 27 privately owned retailers provide electricity to the market, including Ergon Energy which is government-owned, yet mostly subsidised.
"It is a complicated issue. The government has a responsibility to the high prices since it owns most of the state's electricity generators and regulates the transmission tariff, but the increasing in network charges can also be blamed on the high retailing prices," Shi said.
To make matters even more confusing, another energy source, liquefied natural gas (LNG), has also contributed to the higher electricity prices.
"The exporting of LNG reduced supply to the domestic market, pushing up gas prices, which in turn has pushed up the price of electricity since Queensland used to produce about one fifth of its power from gas fired generation," he said.
"Liquefaction plants themselves have a high demand for electricity and thus it pushed the electricity prices higher."
"We don't know for sure exactly how much new electricity demand has come from this source, but it's certainly in the hundreds of Megawatts."
Things aren't looking any brighter for regional business operators in Queensland either, with fears that the already high prices could double when regional electricity distributor Ergon Energy will introduce a new range of charges for small businesses.
Some are expecting prices to double by 2020.
