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Published on March 12th, 2014 | by Giles Parkinson


Solar’s Impact & Energy Demand Reductions Continuously Shock Australian Energy Experts

March 12th, 2014 by  

Originally published on RenewEconomy.

The rapid transformation of the electricity market – and the crucial role of household and commercial consumers – continue to confound the experts, including the energy market operator, which has announced yet another downgrade of its forecasts.

AEMO (Australian Energy Market Operator) last week quietly released its latest “Supply Demand” snapshot for February, with the biggest takeout being that demand continues to fall way below forecast, despite big revisions in the last few years.

In June, AEMO slashed its forecasts for the current fiscal year by 2.4 per cent. That came after a 10 per cent downgrade for 2012/13, which still overshot the result by 1.1 per cent.

In November, it noted that consumption in the first quarter of 2013/14 was 3.5 per cent lower than it had forecast in June – leading it to cut its overall forecast for the financial year by a further 1.3 per cent.

Now, it says, consumption in the October to January period was 1.5 per cent lower than even the November revision. It blamed this mostly on “variances in commercial and residential consumption” in November 2013, likely to have been caused by the increase in rooftop solar in the past year.

aemo feb update

AEMO noted that 500MW of rooftop solar had been installed in the first 9 months of 2013 – although this was 30 per cent lower than a year earlier. But is seems – from this and other reports – that the combination of solar, energy-efficient devices and bill awareness is causing a fundamental change in the consumption profile of residential and commercial users.

The South Australian network distributor recently reported, for instance, that household consumption had fallen 5.7 per cent in the latest year, despite an increase in population. EnergyAustralia reported an “unprecedented” fall in demand as it reported massive losses and the write downs in the valuations of several key generation assets.

“There has been a downward trend in consumption from the grid over the last five years, and current forecasts indicate that this decline will continue for the remainder of 2013–14,” AEMO writes.

“On a year-to-date basis, 2013–14 consumption to January 2014 is 2.3% lower than the same period in 2012–13. The recent announcement that Alcoa Australia’s Point Henry aluminium smelter will close in August 2014 will further reduce industrial consumption in Victoria by approximately 360 MW.

The AEMO data shows that 2,400MW of baseload power – nearly 10 per cent of Australia’s baseload capacity (coal and gas) has been withdrawn from service – either temporarily or permanently.

The latest was the Swanbank baseload gas generator in Queensland, although as RenewEconomy reported last week, the Darling Downs baseload generator is now likely to be used only as a peaking plant in future, EnergyAustralia has written down the value of its Tallawarra baseload gas generator,and black coal generators – particularly in NSW – are operating at vastly reduced capacity factors.

The AEMO report is likely to be used as further grist to the mill from the appeal by generators to bring the renewable energy target to a stop, or at least to reduce it dramatically. But the focus on costs to consumers highlights the point that these appeals are entirely framed as an appeal to generators to protect their own investment.

The RET was designed to hasten the transition to clean energy, but no-one anticipated it would be quite so successful. That’s because no-one anticipated the rapid uptake of rooftop solar and the impact it would have on demand.

Here is the latest AEMO graph chronicling the decline in demand since 2008 – when assumptions of high demand growth were used as the launch-pad for much of the $45 billion investment in networks across the National Electricity Market. (This graph does not include the WA grid or other isolated grids in WA, NT, and Queensland).

aemo 6 year forecast

Even Queensland, which is anticipating a 1GW rebound in demand when the massive LNG plants start to come online later this year, will not need any new capacity as early as thought.

AEMO said previously the state might need new capacity by 2019/20, but that is likely to be pushed out beyond at least another year. No other state has any new demand requirements within the 10-year modelling horizon.

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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.

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