Wind energy at record output, but brown coal rebounds

Since the low point reached in the year to June 2014, Cedex® Update has been reporting a steady increase in annualised emissions from electricity generation in the NEM. Until recently that trend in emissions was accompanied by a continuing fall in demand for electricity, but it now appears that the demand trend may be flattening out.

April 2015 was the second successive month in which annualised demand (and generation) have increased (Figure 1).  Annualised emissions in the year to April 2015 were 4.6 Mt CO2-e, equivalent to about 3.1%, higher than in the year to June 2014.  Because the higher emissions were driven in part by increased demand, the annualised emissions intensity of NEM electricity increased only slightly.

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As noted in last month’s of Cedex® Update, the two largest changes in demand at the individual state level are the decrease in Victoria, as the effect of the Point Henry aluminium smelter closure works through the annual totals, and the off-setting increase in Queensland, much of which is apparently attributable to a major new load which came on-line in late October last year (Figure 2).

The changes in the other three state regions are roughly an order of magnitude smaller and much the same as seen in the three previous months:  increases in NSW and Tasmania and a decrease in SA.  Annualised demand also fell in WA (the South West Interconnected System) in the year to March 2015 and is now 0.9% below the peak annualised level reached in the year to August 2014.

As time goes by it is becoming increasingly clear that WA is not an exception to the trend of flat or falling demand for electricity in developed economies, but much like the rest of Australia and, indeed, the USA and most countries of western Europe, all of which are experiencing flat or falling electricity demand.

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Separate analysis by pitt&sherry has shown that the absolute fall in demand for electricity, experienced in the NEM since the end of 2010, has largely been driven by residential consumers. From 2006 to 2010, total residential demand increased slightly (by just over 2%), but from 2010 to 2014 it fell by 13%, and demand per customer (or per person) fell even more steeply.

By contrast, demand by large industrial consumers increased quite significantly from 2006 to 2010, and the fall caused by major industrial consumers since then still left total demand in 2013-14 well above the level of 2005-06. Demand for electricity by the third and largest (in terms of total electricity demand) of consumers – general business – has remained almost unchanged in total for the eight years from 2006 to 2014.

Seen within this context, it is likely that the apparent end to falling total demand is mainly being caused by the end of falling residential demand.

Trends in the mix of generation in the NEM In the year to April 2015 show little change from the pattern established over recent months (Figure 3). Brown coal generation in Victoria increased, while black coal generation stayed roughly constant, but this consisted of a continuing fall in supply from the five NSW power stations and almost identical increase in output from the six Queensland power stations. The contrasting fortunes of the coal generators in the three states can be seen in the respective capacity factors and relationship to total state demand.

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Apart from the increase in greenhouse gas emissions, the main effect of these changes has been an increase in the quantities of electricity flowing through the interconnectors between states, particularly those linking NSW to Queensland and Victoria.

In the year to April 2015, 15.6% of the electricity consumed in NSW was supplied from the other two states, the highest ever annual share. Victorian brown coal generators also exported significant volumes of electricity to SA and Tasmania. The share of combined black and brown coal generation in the NEM again increased slightly in the year to April 2015, and has now almost reached 75 per cent.

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Trends in gas generation continued the pattern of recent months: falls in the NEM as a whole and in every state except Queensland, where there was a small increase. Hydro generation also continues to fall, driven be continuing reduction in annualised generation in Tasmania, but Snowy output is now beginning to increase, albeit from a low level.

Wind generation again increased in the year to April 2015 reaching a new record of 9.18 TWh, equal to 5.25% of NEM generation.  While output stagnated in Victoria and NSW, where there has been no new capacity commissioned for well over a year, more recent projects in SA and NSW will drive continued growth in output for a few more months (Figure 4).  In SA, wind supplied a record 33.5% of total state electricity demand in the year to April, but this figure will soon level off, as will the corresponding ratio for the NEM as a whole, as the effect on new construction of the policy freeze on the RET flows through to output.

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Looking to the future, if the days of steadily falling demand for electricity in the NEM are coming to an end, falling gas generation and stagnant wind generation can only lead to an acceleration of the increase in coal generation, and of the associated emissions.

This Cedex report was originally published by pitt&sherry. Reproduced here with permission

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