Clean Power

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, 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.

  • Rockne O’Bannon

    You know, I don’t see why Green technologies have to be such a zero sum game played with utilities. They can adapt. Wider use of electric vehicles and wider use of electrical appliances during off peak times can make the grid more rational and more profitable for utilities overall.
    It sounds nutty, but utilities need to spend some effort at getting people to ditch old consumption patterns and products and accept new ones. If they do that right, they can maintain their social role and profitability even if they administer a distributed generation system.

    • driveby

      That’s the spirit!
      I don’t get it either why they don’t do something proactively about their business and working on converting themselves into something that is needed 30 years down the road.

      What is stopping them from installing Wind, WaveEnergy or PV farms?
      Sure they must have the Know How to manage design/installation/maintenance of such large systems?
      Why don’t they use this?

      • Bob_Wallace

        Some utilities are adapting. Some utilities are thinking about adapting. Some utilities are in denial.

  • Matt

    What I find interesting. The 5 year drop in demand is less than 10%, and its killing the large generators. Can’t see real precent on the chart.

    • Ronald Brakels

      While the decline is small, it is devasting to generators because they were expecting demand to keep increasing as it had in previous decades and they were very wrong. As a result Australia has much more generating capacity than is needed. This wouldn’t be a be a direct problem for consumers but transmission capacity was also massively increased and consumers are being charged for that excess capacity which is causing consumers to use less electricity which is causing distribution costs per kilowatt-hour to rise even higher. It’s a vicious circle, or perhaps more accurately, a stupid circle. And while there is a no guarrantee we wouldn’t have run into trouble without it, a lot of our electricity price increases stem from a large scale electricity privatisation we had here. As a result, on my last electricity bill, all up I paid about 44 US cents per kilowatt-hour for grid electricity.

      • *Martin*Tyler*

        You are sure of that figure right, $0.44 cent per kilowatt hour, seem a bit over the top to me, seem you got a bad deal .That works out on todays exchange rate AUS $0.50 cent per kilowatt hour, that not cheap all. Just thinking , do you have solar power on, solar power can cut the price down by half?

  • UKGary

    Aside from solar power, there have been two major changes in technology bringing substantial reductions in power consumption.

    1. More efficient lighting – banning of the incandescent light bulb and the increasing popularity and affordability of LED lighting in both domestic and commercial settings. This effect will continue to reduce power consumption for lighting as the change in lighting technologies continues to gathers pace.

    2. A substantial improvement in air conditioner efficiency with the increasing popularity of inverter controlled models. This will combine with more efficient lighting which reduces cooling load, and likely changes to required insulation standards / revisions of building codes to push efficient design to reduce average per m2 air conditioning power demand. Whilst this may not result in overall reductions in power consumption, growth in consumption will be curbed decoupling consumption from population growth.

    Beyond this, as others have commented, users of solar power have an increased awareness of the power they are consuming, are where possible shifting their consumption to times when the sun is shining, and will in many cases have been encouraged by their solar installers to take efficiency measures when installing solar.

    In Australia solar has a disproportionate effect at the time of day when previously power demand peaked – so cutting the revenue of peaking plant substantially, hence the huge effect on fossil generator revenue.

    • Rockne O’Bannon

      Great stuff, but let me add to your last paragraph. Sure utilities are seeing a drop in revenues, but provided that happens during peak times, it might be reducing their costs even more.

      Generating power at peak times is extremely expensive for utilities on a unit basis, so solar, which offsets air-conditioning demand on hot sunny days, can actually INCREASE profitability of utilities in some conditions.

      • RobS

        With coal plants idled generating units of power at peak times is phenomenally cheap, they simply turn back on amortised coal plants at a cost of ~5c/kwh. Then with the market based system in the AEMO they receive around 50c/kwh but spiking up to $12/kWh for all their generated power. Dropping peak demand initially saved expensive generation upgrades and running the most expensive plants, now demand has fallen to such a degree that even cheap generators are remaining idled at peak demand. Which is why despite any theoretical benefits the reality is utilities are seeing double digit drops in year on year returns and falling demand is killing them slowly.

        • Rockne O’Bannon

          You missed the point Rob.

          When coal plants are providing the base load, they are “on,” so “turning them back on” to meet peak demand is impossible. They are already “on” if they are supplying a base load.

          If utilities are using more expensive plants because of environmental regulations, well, they have no choice, do they? And still “turning on cheaper plants” is not an option.

          The rest of your post makes even less sense and seems to presume that utility operators are blithering idiots who don’t know their costs.

          Look. The article says simply that they are losing REVENUES. My point was that it does not necessarily mean a drop in PROFITS if renewables are replacing peak generation that is done at higher marginal costs.

          And if that makes no sense to you, just don’t respond with wild tangents, please. My remark wasn’t directed to you anyway.

          • driveby

            Rocky, your reply was ok up to the last paragraph, then you lost it with something that – to me – reads like a personal insult to RobS.

          • RobS

            You missed the point, many coal plants ARENT providing baseload because demand has fallen so far that multiple plants are semi mothballed much of the year but some can be turned back on during a few peak weeks of the year.

            It’s unclear to me what exactly your issue with me is but your comments are personal, denigrating, dismissive and frankly bullying. How you continue to conduct yourself is up to you, however I would politely request that if your comments don’t become less personal and abusive you refrain from responding to me at all.

  • sault

    Darn, another article on CT today is talking about how the new government in Australia is creating so much policy uncertainty that it’s driving away clean energy investment. Can the Aussies keep up the clean energy momentum regardless or will regressives win another battle for the status quo?

    • Ronald Brakels

      It will be extremely difficult to prevent rooftop solar from continuing to be installed, but attempts may still be made to stop it. Political action has blocked a lot of wind development but South Australia is continuing to expand capacity in the face of increasing natural gas prices. Despite this, all new generating capacity in Australia will be renewable. New fossil fuel plants simply can’t complete on cost. The construction of a a new gas fired plant in central Queensland instead of relying more on renewables has turned into a financial disaster. But while renewables are now cheaper than new fossil fuel capacity, existing fossil fuel generators are currently running at way below their planned capacity and so Australia doesn’t actually require any new grid generating capacity at the moment and possibly won’t for decades. The incumbants are trying to make sure that the current generating capacity remains mostly coal and block wind and solar so they can continue to get value from their fossil fuel power plants, presumably for decades to come.

      • Doug Cutler

        How’s the political awareness developing there vis a vis the resilience of renewables? Any momentum for a turnaround in the next election?

        • Ronald Brakels

          You do know you are talking about a strife and turmoil free nation that has apparently decided that throwing people in concentration camps is a good idea? I am hoping we are now seeing a rapid swing from a pro-evil to a non-evil stance in Australian politics, but I am worried that evil will become our policy default setting.

          I have to admit I really don’t know what people are thinking here. For the most part I think they aren’t and that’s the problem. I’m not expecting a new enlightenment of rational thought to occur or a major change in human nature, but crikey, just a minute or two a day of thinking about issues instead of feeling what propagandists want you to feel could really tip the balance on things, you know?

          Anyway, the solar industry has scraped together one million dollars for an advertising campaign to influence the Western Australian senate elections in June. The solar industry is now big enough to start pulling strings like any other large industry. Yay. I’m so… happy….

          • Kent

            Solar power is failure, what are they going to do hit people with solar panels on the head so they vote green.

            Vote for Palmer United only there fair dinkum he will roll back the solar rort cash refund the solar rort.

          • Ronald Brakels

            Doug Cutler, I don’t think we could have a more wonderful demonstration of my point that Australians need to spend a minute or two a day thinking than the comment that Kent has left us.

          • Bob_Wallace

            Kent’s socks needed washing (again).

            He’s left the building. And thinking is not his strong suit.

          • Ronald Brakels

            If he had a double breasted pinstripe made from toilet paper that would still be his strong suit.

          • Bob_Wallace

            The good thing about Mark/Kent is that he reminds me that we don’t have all the wackos in the US.

          • Ronald Brakels

            While different brands of ham, we unloaded both Ken Ham and Mel Gibson on you. And I would appologise, but I’m actually not at all sorry that they left.

          • Bob_Wallace

            Are you intentionally overlooking that newspaper guy?

          • Ronald Brakels

            If he’d gone away he’d count, but he hasn’t. Just because he has more strings to pull now than he used to doesn’t mean he has any fewer here.

          • Peter Gray

            Thanks so much for both of those! We’re hoping Ham hamstrung himself with the recent “debate,” where, summoning his last shred of intellectual integrity, he admitted on camera that his version of science consists entirely of squinting in a certain way at the Bible.

          • Peter Gray

            I also grasp at those small consolations, Bob. If you want to feel a little less bad about the sorry state of U.S. science education and thinking capacity, look up “Korean death fan,” or check it out partway down the page here:
            Along with the smart meterphobia movement, you can’t make that stuff up – unless you were the one who did make it up.

          • Bob_Wallace

            Oh, thank you. I now understand why I sometimes feel the need for a nap on a hot afternoon.

            It’s the chopped up oxygen molecules that are causing cerebral hypoxia. Those dirty little boogers.

            And all along I thought it was the lazy, crazy, hazy days of summer….

          • Don’t worry, Australians aren’t the only ones… wait a sec, maybe that means you should worry a lot more…

          • *Martin*Tyler*

            That Australians guy Ronald Brakels got a very bad deal paying $0.44 US cent per kwh, that worry me a lot too.

          • A Real Libertarian

            Hi Mark.

          • Bob_Wallace

            Mark was suddenly called away.

            Flag ’em if you see ’em.

          • A Real Libertarian


          • Flag’em

            Hi to you too, flag-man.

          • A Real Libertarian

            Jesus, you’re a persistent stalker.

        • Alen

          By taking such an obvious stance against renewables, the federal government has managed to unite people and groups that normally operate quietly in the background, not bothering anyone (PV owners, companies, advocates..etc.), and set them on a common goal, i.e. to stop the anti-renewables movement and as a direct consequence denounce the Abbott led government.

          WA will hopefully prove to be Abbott’s self-orchestrated downfall.

      • Thanks for that perspective! 😀

      • Alen

        The ACT reverse auction for wind power may prove to become a game changer for renewables I’m thinking (and hoping). The projects are going to bring in big investments and jobs to that state, and NSW is already showing some interest. Qld may be harder nut to crack with current overcapacity (not to mention the current government) but I’m hoping the lack of government support and protection in the port expansion at barrier reef will ultimately fuel public hate towards coal, and force the new government to look towards expanding its renewable sector, plus they could really use the investment and jobs. In the state.

    • Yeah, been wondering.

  • Will E

    Its a 100 percent win for rooftop Solar for the households.
    once installed energy for free, year after year.
    clean and easy.

    • driveby

      The ‘fuel’ might be ‘free’, but the generator/converter system isn’t.. and calculated over a lifetime of 10 years (*) WITHOUT any kind of FiT the price of the electricity produced by that system during sunshine hours currently is the same as from the grid. So ‘free’ is not the term I would be touting here.

      And to top it of, during dark hours you still need the grid for supply as a battery back up will increase your kWh price even more. As the distributors and fossil generators want to get their cost covered they now charge you a fixed ‘grid-connect’ fee no matter if you use power then or not – which is being charged on top of that.

      All being said, please take down those rosy glasses please.

      *) systems that are ‘cheap’ break down way early because of sloppy installs, so 10 years is a pretty conservative estimate imho for the kWh price I’m talking about here. Any system that is more expensive will also incur higher system costs which in turn causes higher kWh prices.

      • Bob_Wallace

        Net metering gets your home power to your car while parked away from home. PV power can be traded for wind power at night for charging at home.

  • beernotwar

    I wonder if they’re being shocked because there is no transmission loss for rooftop solar. For each kWh produced on a roof it would take 1.5 kWh to produce it at a plant that is far away and that loses a third of its power to transmission. So people are meeting more of their own demand than a straight kWh installed statistic would suggest.

    • Bob_Wallace

      That’s way too high for transmission/distribution loss.

      In the US it’s around 7% and dropping.

      Most of the loss is at the distribution level. Some of that loss would apply to roof-top solar, the part that goes from the producer roof to other buildings.

    • Ronald Brakels

      Losses resulting from transmission, including theft, are supposed to be about 6.6% in Australia.

    • RobS

      I think its because solar has not only a profound effect on production but also on consumption. Once you are generating power on your own roof or even when considering installing it there is a sudden change in awareness of usage, an almost unignorable urge to make the power being generated go as far as possible towards self sufficiency. My system was producing 50% of my power needs when it was first installed now it averages over 80%, some of that is the effect of summer and increased production, the majority is the effect of decreased consumption brought about by increased power usage awareness. The decreased line losses then further compounds that effect, although as others point out you have exaggerated it a little bit but even the 5-10% line loss reality puts utilities at a further disadvantage which is exactly why they want solar consumers to subsidise distribution systems despite only using a miniscule component (local inter-residential lines) of the distribution system.

      • Stan Hlegeris

        Rob S. has it exactly right. I reckon the multiplier effect is around 2. That is, people who buy a small PV system generate a certain amount of electricity. But because they become much more aware of and interested in their consumption, they also reduce their usage, probably by about as much as they offset their usage with their PV systems. I’ll bet this effect explains a lot of the otherwise unexplained drop in demand AEMO struggles to track and fails to predict.

      • Rockne O’Bannon

        Whoa! Big generalization there. People around the world who get a FIT actually do the OPPOSITE of what RobS suggests.

        The incentive is to sell the generated electricity rather than use it. The incentive is not to become independent from the grid but to work with it.

        If you are still following me, then you can probably figure out that FITs thereby encourage larger rooftop systems and stronger attempts to limit consumption round the clock, and especially during prime generating hours.

        • RobS

          How else do you propose selling more of your generated power than by using less of it yourself exactly as I suggested. As I said once you have solar on your roof you become aware of usage and have a strong incentive to use less either to maximise self sufficiency or to maximise exports to the grid or both.

          Doing the opposite of what I suggested is to increase consumption, how exactly do you propose that helps one sell more of their solar production to the grid?

          • Rockne O’Bannon

            You just have no idea do you?
            If you switched consumption to offpeak periods, you would actually be consuming more, but selling more of what you generate, right?
            That was easy.
            There are other wrinkles that don’t fit your generalization. I am not blaming you for not thinking of them, only for claiming your generalization as universally applicable.

          • RobS

            You are a deeply unpleasant person to interact with. I am a solar home owner and active member of our local solar owners association in an area with a recent FiT reduction. I have discussed these issues with hundreds of people and know how I and they are responding, including some with high and some with low feed in Tariffs. What I shared was my experience and the shared experience of hundreds of others with solar. A universal theme of almost everyone i have discussed these issues with, regardless of the scale of their feed in tariff, is a reduction in their consumption both prior to and after their installation. In addition those with high FiT generally actively seek to time shift their demand to night time to maximise daytime exports, however contrary to your suggestion they are only shifting demand, I have met no one seeking to actually increase total demand. So no I don’t think you have QED’d anything. Unlike you I certainly didn’t claim anything was universal hence the presence of the words “I think” at the start of my comment, I was merely sharing mine and the shared experience of hundreds of others with the forum, frankly your rude response to that proves and changes nothing.

      • Alen

        Rooftop solar provides the public with an opportunity to participate in the GW and thus CC mitigation effort, and most important for many it does this in a cost benefitial way, it takes the powerless feeling people may associate with GW efforts and empowers them and gives them the ability to live a more sustainable life.
        My feeling is that people want to do their part but are often not sure or not aware how, rooftop solar presents thus an excellent starting point. That’s my opinion towards renewables ingeneral anyway, afterall it is how I felt and started of in the boginning.

        • Bob_Wallace

          I agree. Rooftop solar and EVs are things that concerned people can implement on a personal level.

          I think one would find that a number of people have installed solar and purchased EVs even when the math did not totally support the decision.

  • William C’est Tout

    Bye bye fossil fuel monopolies! Their last move will be to try to block the sun like Mr. Burns did in The Simpsons.

    • jburt56

      That’s what the chemtrails are doing.

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