Demand forecasts slashed again as consumers turn to solar

Print Friendly, PDF & Email

Market operator says solar PV and energy efficiency lead to another sharp cut in energy demand. It also says solar PV reducing peak demand, while long term demand growth is slashed by one quarter.

Print Friendly, PDF & Email

Updated: (see below)

The Australian Energy Market Operator has again slashed its demand forecasts for the coming year and over the coming decade, as households and business turn increasingly to rooftop solar PV, and as energy efficiency efforts also take bite.

The latest AEMO National Electricity Forecasting Report – released on Friday – cited rooftop solar and energy efficiency regulations in buildings as the main reasons cutting its forecast demand across the National Electricity Market (which includes all states except WA and Northern Territory) for  2013/14 by 2.4 per cent. Lower than expected industrial demand also played a role.

This comes a year after AEMO slashed its forecasts for 2012/13 by nearly 10 per cent. As it is, demand for 2012/13 looks to have come in 1.1 per cent below event that forecast.

Indeed, as the graph below suggests, the average use per capita has fallen dramatically across the country, from more than 7,000kWh per year to less than 6,000kWh. “Individually, consumers are using less electricity than they used to,” AEMO CEO Matt Zema said.

Across the NEM, residential and commercial electricity use is forecast to be 6.3 per cent below the 2012 forecasts due to a 37.7 per cent increase in energy efficiency savings and a 17.9 per cent increase in rooftop PV output.  Australia has one of the highest penetrations of rooftop solar in the world, and around 2.5GW has been installed so far.

Crucially, and this will play to some of the political rhetoric around rooftop solar,  and the efforts of some state governments (particularly Queensland), to demonise it, AEMO also recognized that solar PV was reducing summer peak demand – and the forecast maximum demand across the NEM for 2013/14 had been cut by 728MW from just last year.

That just happens to coincide with the rate of installation of solar PV in the last 12 months, which is estimated at around 800MW. The 728MW would be the equivalent of a significant coal fired power station, or up to half a dozen smaller gas peaking power plants designed to meet peak demand.

The downgrade on peak demand also suggests that few, if any, network upgrades will be required. Indeed, it also suggests that some of the costly upgrades in the recent past have been superfluous to requirements, supporting arguments that some of those investments should be written down to reduce the burden on consumers.

The other major conclusion for the AEMO report is that the 10-year outlook for electricity demand has been cut dramatically again – by one quarter, from 1.7 per cent annual growth to 1.3 per cent annual growth.

This means that in just the last two years, the medium forecast for total electricity demand in the NEM to 2020 has been slashed from more than 240,000 gigawatt hours to 213,000GWh. Under a low forecast scenario, demand could fall to below 200,000GWh. Even the high scenario – once put at more than 260,000GWh, suggests no more than 220,000GWh.

Queensland, because of the massive LNG plants being built around Gladstone, and because of its higher population grown, is the only state expected to experience strong growth in demand.

This graph below illustrates the revisions between this year and last year. Click here to see the even bigger revisions announced from 2011.

 aemo 2013 forecasts

One of the reasons for the revised estimates is that AEMO has introduced new modeling techniques, including those that better recognize the impact of solar and energy efficiency. Up to two years ago, it relied heavily on forecasts given to it by state-owned network operators, who had a self-interest to give bullish demand forecasts because it would justify greater infrastructure investment and bigger profits for the networks.

Consumers are now paying heavily for those forecasts, and for network assets that may not have been required. But those same network operators, along with other incumbent generators and retailers, are now likely to use the pared down forecasts for their own benefit, this time by resuming their campaign to have the renewable energy target diluted, or even removed.

The RET calls for a minimum 20 per cent sourced from renewables by 2020, and at the current rate it could be heading for up to 24-25 per cent, if the WA and NT grids are included. The pleas by incumbents to dilute the RET to protect their profit margins are likely to fall on deaf ears at the Climate Change Authority, which will conclude once again that having a policy over-achieve in the right direction is probably a good thing.

But the Coalition has vowed to disband the CCA and has indicated it will be sympathetic to the pleas of the generators and network operators. It has insisted on another review of the RET in 2014.

Increased use of solar PV, where consumers generate some, or even a large part of their own energy needs, and increased energy efficiency (which also reduces demand), are two of the central planks of policy measures taken by the US and China to reduce their emissions. It is also part of the central policy recommendations of the International Energy Agency.

(Updated estimated renewable percentage from earlier version to take into account the WA SWIS and NT grids).


Print Friendly, PDF & Email

  1. Michel Syna Rahme 6 years ago

    And if I could just add one thought to that in regards to energy efficiency. As electricity prices have risen, and the broader Australian public has become more aware and conscious of energy saving to reduce power bills, many are probably finding that to save energy to make a difference on their bills has been quite easy and that they have lost nearly nothing off their standard of living. Example: when one walked into people’s homes last decade or looked in from the street, there would be lights and tvs on in rooms that were not being used for hours. Turning off efficient lights, turning off tvs, turning off already efficient appliances at the walls, putting on the dishwasher and washing machine if possible after 10pm, showering just after 10pm etc are all easy habits to change. Nothing lost. Who needs a light on when not in the room? These little changes on top a good size solar system and soon with an SMA battery storage system all goes a long way which is pretty cool.

  2. JohnRD 6 years ago

    About 2 million voters live in households that own rooftop solar. Politicians should be reminded of this from time to time.

  3. RobS 6 years ago

    Almost humorous the way despite significantly overestimateing the forecast last time and a clear downward trend developing they persist in forecasting sharp rises in demand albeit to a lower level then last years forecast. Those who prepare these reports just don’t seem to be able to bring themselves around to the idea that these changes might not be temporary and will soon desist in favor of the old runaway consumption growth business as usual. Its a little like the last government energy white paper from around 2010 where we reached their predicted solar installations for 2030 in 2012. oops.

  4. patb2009 6 years ago

    at the current rate of decline, by 2020, australians will stop consuming electricity.

  5. Louise 6 years ago

    According to Prof. Eicke Weber, the newest PV technology plants would be able to produce solar panels profitably at between 30-40 cents per watt.

    “We need to develop a new generation of photovoltaic plants. These factories have to be very bulky, they must have the capacity to produce several gigawatts, we need the latest technology and the latest generation of solar cells. We have calculated that we could produce solar panels at prices 30-40 cents per watt, so that would be quite competitive.”

  6. Louise 6 years ago

    The next wave a adoption is going to be home energy storage which will be the start of residential houses ultimately going 100% off-grid.

    It will probably start out with something like 20% electricity storage and as electricity storage becomes cheaper, more people will upgrade to 50%, 80% and later 100% electricity home storage.

    Approximately 60 battery manufacturers have announced that they will be entering the electricity home storage market in the next couple of years.

    • Bob_Wallace 6 years ago

      Going 100% off grid is a bigger challenge than you might think. (I’ve been there for over 20 years.)

      There’s no cheap/clean backup solution. Unless you live somewhere that has no more than one or two cloudy days in a row you will need some way to fill in. Storage for more than a couple of days can be very expensive.

      In the long run I expect utility scale storage will be considerably cheaper than end-user storage. If you’re already connected to the grid it’s likely that the grid will be able to provide wind-electricity and storage cheaper than what it would cost you to store your own.

      • Louise 6 years ago

        I live about 1 km from a few electric car charger, and if I were to buy an electric car in future, which I intend to do in a year or two, then I could use the car as additional electricity storage unit for my house.

        The Mitsubishi Outlander Hybrid is equip to allow you to use your car as power source for your house. It has the sockets build in so that you only plug-in the cable.

        Thus, in case that the sun does not rise for 10 days, and Australia is covered in total darkness for ten days continuously, then I do not need to invest in 10 x 100% storage but only in 1 x 100% electricity storage for my house and I could use the car to drive to a car charge point, charge up the car, and drive 1 km back to my house and use the car to power my house.
        My daily driving needs are only 37 km Monday to Friday which means that I could do both, use the cars battery capacity to power my driving as well as to power the house.
        I would install in my house sufficient battery capacity to power the house for at least a full day. Then I would only need the car as emergency back up occasionally. If I would need my car as emergency generator more than once a month, then I would add extra battery capacity.

        To my knowledge there has not been an instant in human history that Australia has experienced ten days of total darkness.

        Now it is easy to point out that I would still be relying on the electricity grid (via an electric car) even if my house where disconnect from the grid.

        I do expect the grid to still be there in ten years time, however I expect the grid to be getting less utilization with every successive year.

        What would happen to the grid if grid utilization, (lets say from currently 100% as a reference point), would drop to 1% by 2050?

        Then people might buy a generator or other type of emergency electricity generation device, such as fuel cell or power-to-gas equipment.

        It would not make sense, at current battery prices, to invest in so much battery storage capacity to cover the, once in a hundred years worst case scenario, and install lets say ten times the storage capacity that would normally be sufficient, hence you would consider having one of the above mentioned equipment on standby.

        Even using a petrol generator as back up could make sense, if your battery system is sized that way, that you would almost never need to fire up the petrol generator.

        If you buy only so much battery storage that would cover an average day’s usage and use your electric car as your emergency generator, then you would only need to invest in 100% average daily storage needs, instead of 1000%, which would be uneconomical.

        I do expect electricity storage to have come down in price significantly by 2050, and that by that time it might make sense to have a 100kW/h battery to power the home when there is no sun, e.g. at night.

        In the mean time, I expect to grid to gradually have less and less traffic (kW/h) while home storage solutions are going to be increasingly be deployed.

        How many electricity company can survive a 90% drop in revenue?
        We are currently at the beginning of a fundamental structural change for electricity utilities. By 2050 most will have ceased to exist, as people will create their own energy.

        • Bob_Wallace 6 years ago

          Yes, using an EV as additional storage would make sense. But it’s not a perfect solution. Given a string of cloudy days and a need to go to work, how do you keep your refrigerator cold?

          Driving your car to fetch a charge to bring home still leaves you dependent on the grid.

          It’s your winter now. Why not keep a daily record of the number of bright sunny days and the number of overcast/cloudy days? You might actually live in a place where there are so few cloudy days in a row that you could go off the grid and be fine.

          That would make your situation unusual on a world-wide basis.

          Then add in all the people who live in apartment buildings, etc. and can’t do rooftop solar or plug into their EV.

          I think the grid will be around long term. I can see a situation in which people pay a monthly fee for only the connection, whether they use it or not.

          A lot of people will continue to use grid power because they just won’t want to set up their own power company and do all the stuff necessary to keep it going.

          Some people will put panels on their roofs. Sell surplus to the grid and take back power during the non-sunny hours.

          Some will add battery storage and use the grid for only deep backup.

          Some utility companies may go bankrupt because they don’t move fast enough. I think it very unlikely that utilities will lose 90% of their business, nor will the transition be extremely fast.

          BTW, do you happen to know how much it costs to store the power you generate with your panels?

          I find this on line – “The electricity cost per kWh in Queensland for domestic uses is 22.759 cents”. Is that typical grid pricing for AU?

          It costs me about that much to store power one/two day basis. And, based on today’s installed solar prices, add on another 10 plus cents to generate that power.

          However much the price of end-user storage comes down, it’s likely that utility companies will be able to purchase storage much cheaper than individuals. They will be buying in much larger quantities and it is quite likely that the cheapest storage will not be appropriate for residential use. (Think liquid metal batteries.)

          • RobS 6 years ago

            Running a grid is fairly cheap, what is expensive is running a grid which is capable of seamlessly supplying power even at times of massive demand spikes which occur in total around 20 hours of the entire year and is capable of supplying very clean interruption free reliable power the rest of the time. Those two requirements add a huge amount to the cost of the grid because generation and distribution infrastructure has to be maintained year round when ~20% is only used a few times per year. Once you have home storage systems the grid becomes a back up system, supplying just enough power to keep battery banks trickle charged particularly at times of low local production, no peaking production is required because peak supply is manged within each household and even fairly prolonged interruptions can be tolerated easily. The other advantage of distributed generation which i’m sure you would be well aware of if you are living off grid is the efficiency and consumption awareness that producing your own power results in, once you become responsible and aware of something it usually inevitably affects your relationship with it, in the case of self produced power this almost inevitably means increased awareness and caution about consumption. The cheapest solar panels are the ones you never need to buy and often the first step of a solar or wind home installation is an energy audit and efficiency measures such as swapping for LED’s lights and improved insulation.
            Also yes average grid prices in Australia are about $0.27c/Kwh and we have fairly high solar insolation meaning we passed socket parity some time ago.

        • Concerned 6 years ago

          Total nonsense

        • Samuel 6 years ago

          Louise continue dreaming my friend!

          10 homes (rural) where taken off grid as a trial to remove high risk bushfire area. Out of 10 (5kw solar, 25kwh battery), 50% weren’t even viable as they relied too much on the generator & the customers pulled out (even though the trial was FREE). Also this setup (genset, battery) required a significant amount of land which isn’t exactly practical in suburbia.

          Future living is going to be high density, thus many people will be living in apartment buildings and sky skyscrapers.

          My 6kw system (max I can fit) produces an average of 8kwh’s daily during the peak of winter (in Melbourne’s SE) yet my usage is an average of 28Kwh.

          How about those people living deep within the Gippsland forest? or snow resorts such as Mt Buller or Falls creek? Or how about that new 108 story tower in Melbourne?

          Think about those who cant go off grid, they will suffer the death spiral. Do we want that?

          What you predict will not happen, I can assure you. The future will consist of solar and storage, but most our energy will be derived from wind, large scale solar, hydro and solar thermal with storage. Ben_Wallace seems to have it spot on, simply the grid wont die.

Comments are closed.

Get up to 3 quotes from pre-vetted solar (and battery) installers.