Forecasts for power demand on the slide

Growth in power demand across the national electricity network will hinge on the start-up of the three export gas projects in Queensland with rising energy efficiency, the continued implosion of the manufacturing sector and rooftop solar systems all weighing on underlying demand.

Growth in power demand across the national electricity network will hinge on the start-up of the three export gas projects in Queensland with rising energy efficiency, the continued implosion of the manufacturing sector and rooftop solar systems all weighing on underlying demand.

The Australian Energy Markets Operator, which manages the east coast gas and electricity markets, has forecast electricity demand growth of just 1.3 per cent a year for the next decade.

This is down from the 1.7 per cent forecast a year ago, itself a decline from the 2.3 per cent forecast of 2011.

At the same time, average individual electricity use is expected to continued declining.

"Twelve months ago, we forecast electricity demand would decline, and it is declining faster than we thought," the operator's managing director, Matt Zema, said.

Rooftop (photovoltaic) systems, price rises that have led to increased energy efficiency, and residential, commercial and manufacturing demand dropping off "a fair bit" had all had an impact, he said.

"We had forecast 1.7 per cent growth, which we now see at 1.3 per cent and that is being buoyed by the Queensland gas projects."

The 10-year growth forecast for Victoria has been cut to 1 per cent from 1.3 per cent a year ago, while in NSW it will grow just 0.6 per cent, down from 1.1 per cent forecast last year.

Queensland, by contrast, will have annual growth over the next decade of 3.1 per cent, up from the 2.5 per cent forecast a year ago, thanks to the surge in demand from the start-up of three gas export projects under construction.

"Demand is declining which has led to wholesale [electricity] prices being low," Mr Zema said. "Will retail prices decline as a result? The answer is no, since the wholesale price is only one component."

The other is the network cost, to distribute electricity, where prices will plateau.

"All of the growth [in demand] is driven by population," Mr Zema said. "Manufacturing used to be a driver in the past, but that has dropped."

In the report, released on Friday, the Energy Markets Operator flagged the pending Ford closure in Victoria would weigh on demand, with other factors to include the restart of the Gunns plant in Tasmania and the start-up of the $900 million Hillside mine in South Australia.

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