This issue of Cedex® Update continues the trend of increasing emissions from electricity generation (Figure 1), as coal generation begins to grow back, hydro generation retreats, and both gas and wind generation also fall slightly (Figure 2). Total annual emissions from generation in the NEM were 1.3% higher in the month to September 2014 than they were in the month to June 2014.
As explained in the last Update, this change in trend has coincided with, but is not entirely caused by, the removal of the carbon price. Other factors include reduced gas generation in NSW, Victoria and SA, presumably related to higher wholesale gas prices, though it remained high in Queensland where cheap “ramp gas is likely to be available for a little longer.
There was also considerably less wind generation in both August and September this year, compared with the same months in 2013. Black coal generation was 0.5% higher in the year to September 2014 than in the year to June, and brown coal generation was 2.2% higher.
A change in trend may also be emerging on the demand side (Figure 3). Total annual NEM demand has fallen more slowly over the past three months than it did up to last June. Demand is actually increasing in both NSW and Queensland, and is almost completely flat in SA. Demand is falling in Victoria, but if the effect of the Portland aluminium smelter closure is removed from the data, demand is on the rise there also.
It appears that only in Tasmania is demand for electrical energy continuing to fall. Outside the NEM, demand in WA continued to increase in the year to August. While it may be tempting to identify the response of electricity consumers to lower prices, post carbon price, as the reason for the growth in demand, this is by no means certain.
Residential demand in particular, less than a third of total demand, has until recently been falling much faster than demand by other consumers, and has been doing so at a rate which cannot be convincingly explained as solely a response to higher prices. The data suggest that households have been changing their attitudes to electricity consumption, and hence to their consumption behaviour, much as they changed their attitudes and behaviour to water consumption during the drought of a few years ago.
We may now be seeing signs that this attitudinal effect has run its course. –On the other hand, irrespective of clear political uncertainty and possible policy changes, it is certain that installation of small scale rooftop PV will continue to grow, eroding demand for centralised electricity supply through the NEM as it does.