Coal hits new low as NEM demand continues to fall

The total amount of electricity supplied by Australia’s coal-fired generators has hit its lowest ever level since 1998 – the year the National Electricity Market began operating – according to the latest Carbon Emissions Index (Cedex) report by pitt&sherry.

The report, released today, finds that coal power plants are now supplying less than 75 per cent of NEM electricity, compared with more than 90 per cent back in 1998, and suggests this could be the new status quo for the industry, with operators of coal-fired power stations changing their modus operandi to match the changing outlook.

According to the report, overall demand for electricity from NEM generators, and associated emissions from the electricity sector, continued to fall in the year to April 2013, with annualised total electricity sent out by NEM generators coming in at 10.3 TWh (or 5.2 per cent) below the mid-2010 peak.

“Operators of coal fired power stations appear to have accepted that reduced demand will last for some time and are changing the way they operate their power stations,” the report says.

By way of example, it points to Macquarie Generation, operator of the Bayswater and Liddell power stations in the Hunter Valley, NSW. Having operated all four units at both stations over the summer, it says, Macquarie has shut down three of the four units at Liddell over the past two months – the older and less efficient of the two stations.

In SA, meanwhile, the anticipated complete shut down of Northern, the only coal-fired power station in the state, occurred with the first unit in late March and the second in mid April.

The news was not much better for gas, with the annualised output from gas-fired generators falling for the first time in nearly two years, with Queensland and SA – the two states known for largest gas generation – both recording lower generation rates.

Wind and hydro, meanwhile, have continued to grow – “very strongly in the case of hydro,” says the report, with annualised generation increasing for eleven months in a row; a 31 per cent, 3.95TWh rise that kicked off just before the commencement of carbon pricing.

In the case of falling electricity demand, however, the impact of the carbon price appears to be negligible, with the report noting a 3.1TWh fall since June 2012 – “i.e. since the introduction of a price on emissions, but, as can clearly be seen in Figure 1, there has been no change in the rate of fall of demand, established well before July 2012,” it says.

But the data tells a different story on annualised emissions, with the decrease since last June accelerating to a total fall of more than 10 million tonnes – equivalent to over 6 per cent of NEM emissions for the year to June 2012 (and nearly 2 per cent of Australia’s recent total annual emissions). This indicates “there can be little doubt that the carbon price is strongly affecting the supply side of the electricity market,” says the report.