Power emissions continue to rise

Australia's electricity emissions rose again last month, bringing the total increase in emissions intensity since the repeal of the carbon price in July to 10%. Meanwhile, RET uncertainty is starting to show in wind generation trends.

For the fourth month in a row, Carbon Emissions Index (Cedex) Update is reporting an increase in annualised emissions from electricity generation while generation itself continues to gently wane (Figure 1).

The driving factors are the same (Figure 2). Annual hydro generation was down as Hydro Tasmania reverts to its long term average levels of output. Gas generation was down everywhere except Queensland, where Origin Energy’s big Darling Downs combined cycle station came back on line, after being off for the whole of September (Figure 3). Wind generation was down as October 2014 continued the trend of recent months to be slightly less windy overall than October 2013 (Figure 4). Demand was also down (Figure 5), but not enough to offset the emissions increase caused by higher rates of coal fired generation.

Figure 1

Figure 2

On a monthly basis, the emissions intensity of NEM electricity was 10% higher in October than it was in June. The majority of this dramatic increase is attributable to reduced hydro generation. As explained in previous Cedex Updates, hydro output was above long term average levels for most of 2013-14, as operators sought to maximise their financial benefit from the carbon price which they feared (correctly) would soon be removed. However, even when this effect is removed, lower gas and wind generation in the month of October alone had the effect of increasing electricity emissions by about 0.5 Mt CO2-e, equivalent to 4% of emissions for the month. Sustained over a year, an increase of this amount would equal more than 1% of Australia’s national emissions – not negligible when set against an official target of 5% reduction. 

Figure 3

Figure 4

The effect of the slowdown in new wind farm construction is very clear to see in Figure 4, particularly for Victoria. On a more positive note, trading interval (half hour) wind generation in the NEM set a new record of just over 2,800 MW on the evening of Monday 6 October, just exceeding the previous maximum, set in June. On the same day, wind generation exceeded demand for most of the day in South Australia, as previously happened on Tuesday, September 30. However, with only one new wind farm, Boco Rock, south of Cooma in NSW, currently nearing completion, it may be some time before a new output record is set.  

Figure 5

The increase in emissions since June would have been about twice as a high as it actually was, were it not for the continued fall in demand for electricity (Figure 5).

The largest fall was in Victoria, as is likely to be the case for the next nine months, as the effect of the closure of the Point Henry aluminium smelter works through the annualised total. Significantly, though, demand also fell in all other NEM states. There was even a very small fall in demand from August to September in Western Australia. This is interesting as electricity prices have fallen since June, although perhaps not as far as some people hoped or claimed.

Continued uptake of rooftop photovoltaics is contributing to the fall, but is not the largest factor. It seems possible that electricity consumers are continuing to act on the realisation that many opportunities to conserve and use electricity more efficiently are easy to identify and are not expensive to implement.  

This is the latest Carbon Emissions Index report on Australia's energy emissions from pitt&sherry. Data analysis, text and graphs: Hugh Saddler, Hannah Meade and Mark Johnston.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles