Electricity demand's speedy descent

Electricity consumption in the NEM states has softened for the fourth straight year and is now 5.5 per cent off the peak. The installation of solar PV, solar hot water, energy efficiency measures and a milder winter all played their part.

Electricity consumption in the National Electricity Market (NEM) states has decreased for the fourth consecutive year. In 2012, electricity demand in the NEM decreased 2.5 per cent (4,818 GWh), when compared to 2011 consumption, which represents the largest annual reduction since this trend began.

With the exemption of one state (Queensland), every state in the NEM experienced lower electricity consumption. In Queensland, consumption increased slightly on 2011 levels, increasing 0.15 per cent or 74.7 GWh. The most marked reduction was seen in New South Wales, where consumption fell 5.2 per cent on 2011 levels.

Consumption fell in Tasmania, Victoria, and South Australia by 3.7, 0.9 and 0.9 per cent respectively.

Overall electricity consumption in 2012 fell by 4,818 GWh. This is a significant reduction and is equivalent to 740,000 homes no longer requiring any electricity (based on average consumption of 6.5 MWh per home).

Coal‐fired generation lost market share in 2012 (78.0 per cent) compared to 80.9 per cent in 2011. Scheduled gas and renewables increased their market share by 1.0 per cent and 1.8 per cent, respectively.

Trends in NEM states electricity consumption

Electricity consumption in the NEM reduced by 4,818 GWh in 2012, with the most significant reduction being in New South Wales, where demand fell by 4,000 GWh (refer to Figure 1).

There are a range of possible explanations for reduced electricity demand in New South Wales. However, a milder winter and the closure of the Kurri Kurri smelter are likely to be significant contributors.

The installation of solar PV, solar hot water and an array of energy efficiency measures has also contributed to demand reduction within the NEM. These activities, supported through government legislated market-based schemes, is estimated to account for 2,000 GWh of the overall demand reduction in the NEM – most of which can be attributed to solar PV.

Reduced electricity consumption in the NEM is not a recent phenomenon; electricity demand has fallen every year since 2008. Electricity demand in 2012 was 196,000 GWh, 11,400 GWh lower than the peak reached in 2008 (refer to figure 2).

Generation by state over last five years

Since 2005, coal-fired generation, as a proportion of total NEM-wide generation, has fallen from 88.1 per cent to 78.1 per cent (2012). The mothballing of a number of coal generating units has seen an absolute reduction in the level of generation from both black and brown coal-fired generators.

Scheduled wind generation has been progressively increasing and amounted to 1.6 per cent in 2012. Wind would account for approximately 3.6 per cent if we included non-scheduled generation.

Key stats in each state are:

-- NSW generation in total has fallen dramatically since 2008 (by 10,000 GWh) and coal generation has fallen further still as gas has increased its market share.

-- Victoria’s generation mix has remained reasonably stable up until 2011 with coal-fired generation reducing by 7 per cent in 2012 with the mothballing of units at some brown coal-fired generators.

-- Queensland was one of the few states to see an increase in generation in 2012 with gas having increased its market share over the last few years at the expense of coal.

-- South Australia’s generation levels have remained stable over the last few years however scheduled wind has progressively increased its market share at the expense of brown coal and currently accounts for 21 per cent of South Australia’s scheduled electricity supply. If we were to also account for nonscheduled wind generation then wind would account for approximately 26 per cent.

-- Tasmania increased its scheduled generation by 11 per cent in 2012 largely due to a dramatic increase in the level of hydro generation. In addition approximately 440 GWh of non‐scheduled wind generation representing 4 per cent of total generation also generated electricity.

Ric Brazzale is the Director of Green Energy Markets and has more than 25 years experience in the energy sector.

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