I recently travelled to the United States to attend some meetings with Californian energy utilities and Distributech, a whopping great energy industry conference that dwarfs anything in Australia, in Dallas Texas. This note makes a few observations from that trip and adds a few reflections on the recent election outcome in Australia for good measure.  

One of the great pleasures of travel is that you learn as much about your own country as you do about the place you’re visiting. A few that stuck out for me were:  

• while our cities look similar at a glance, a closer look at low-voltage electrical infrastructure in the US shows they are facing some unique challenges caused by lower voltages, and  

• the cost of electricity in California in particular highlights the impact to customers of recovering policy costs from their electricity bills. 

The networks 

The low voltage network in the US runs at 120 volts, which is half the voltage level of most other countries. One practical implication driven by the physics of a very low voltage network is that to step the voltage down you can only use quite a small transformer (20 kVA), and this can only support five or six ordinary household loads.  

As a result of this, you can see little garbage can sized transformers hanging from poles all around the US. In fact, there are some 80 million of them in the country – each serving several small loads.  

This is fine in an environment where load is constant, with little long-term growth. The challenge for the US, however, is that these transformers need to accommodate a rapidly transforming (excuse the pun) energy system. With so few loads hanging off each transformer, you only need to have a few EVs charging at the same time in addition to an ordinary peak load event and the transformer will deteriorate more rapidly due to heat stress.  

On an individual basis, this means a transformer’s life-span will be reduced, and it will need to be replaced more often. On a broader scale, this could add significantly to cost. Anecdotally, and Chat GPT has been unable to back this up with hard data so take it with a grain of salt, the failure rates of transformers in some areas have increased from around 2% per year (say once every 50 years) to around 5% per year (or once every 20 years).  

This has led to US utilities considering improving visibility and more active management of small loads. Australian utilities, on the other hand, are today more actively working on the coordination of small-scale generation to protect the network and power system.  

With our low-voltage network operating at 240 volts, and larger transformers (200-315 kVA) serving 40 or more households, we are unlikely to see the same load driven asset failures emerging in Australia this early in long term journey towards the electrification of household liquid and gas fuelled appliances. This should give us time to learn from our US colleagues, just as they are today learning from us on the management of excessive solar output into grids.  

The prices 

When I asked the taxi driver from the airport in San Francisco what the price of electricity was, my jaw hit the floor and my eyebrows hit the roof. An average of around 43 US cents per kWh. That’s around 66 Australian cents!  

Over the next few days meeting with utilities and regulators it became clear that while there were quite a few common factors driving up prices (cost of gas, supply chain constraints etc.) there were also several factors that seem to be outsized in California compared to Australia. The common thread is that these costs appear mostly to be imposed to meet policy goals.  

Firstly, there are decarbonisation policies, such as renewable portfolio standards, a carbon cap and trading scheme, and the costs of decommissioning nuclear and gas plants while the wholesale market for energy is somewhat constrained. Depending on the utility, these costs range from 15 to 30 per cent of the electricity price. While we have many similar costs in Australia, they make up a much smaller component of the electricity price, at around eight to ten per cent.  

Secondly, there are policies to reduce wildfires, insure against wildfire damage caused by electricity infrastructure, and make electricity infrastructure more resilient to climate change. This includes massive programs to avoid network caused ignitions and to underground low voltage infrastructure to avoid impact during fires. Around 20 to 30 per cent of the Californian electricity price is driven by these costs.  

On my day off in San Francisco I got chatting to a few people in the Botanic Gardens from a migrant family that had lived in the area for over a decade. While we started out discussing just how high the Gymea Lilly in the Australian section would grow, we very quickly moved onto the energy sector. What struck me was a clear sense of anger and being let down by the local energy utilities, as well as a deep lack of trust that utilities have energy customers’ interests at heart when they make decisions. This interaction shows the views of only a very few data points of ‘non-energy insider’ perspectives from my trip. Regardless, it highlights that the lived experience of customers felt in their wallets and the reliability of their service is critical to consumer trust in the grid, and a lesson we shouldn’t forget here in Australia.  

With a resounding political outcome in Australia the month, the temptation might be to dig deeper into the barrel of policies that have been put aside as too difficult to get through the parliamentary process. The lessons from a short stay in the US are that resisting that temptation in favour of a laser focus on policies that will make a meaningful difference to the outcomes that matter for customers will set us all up well to maintain consumer trust in the energy system for the next political cycle and beyond.