Electricity emissions jump as carbon price dumped, coal rebounds

If the government adopts the recommendations of its RET Review Panel, it is likely that there will be very little growth in renewable generation beyond the capacity currently in the process of being commissioned or under construction. At present, according to August 2014 figures from AEMO, total renewable generation capacity under construction in the NEM consists of about 370 MW of wind, in NSW and Victoria, and about 170 MW of solar, in Queensland, NSW and the ACT.

Of this capacity, one wind farm (Boco Rock in NSW) and one solar farm (Royalla in the ACT), totalling 133 MW, will start generating this month. At the extreme, there could be no more new renewable generation for the foreseeable future, other than the limited capacity contracted by the ACT government to meet its ambitious local emissions reduction target of 90 per cent renewable electricity by 2020.

On the demand side, an annual reduction of roughly 3 TWh will occur in Victoria as a result of the closure of the Point Henry aluminium smelter at the end of July. The first indication of this effect, which will work its way through the annualised data over the next year, can be seen in Figure 7. Other data on the future of demand, contained in AEMO’s most recent forecasting report and also in data available from the Australian Energy Regulator, show that residential electricity demand has fallen much faster than demand by business, other than the large falls caused by aluminium smelter closures. It is quite uncertain, however, whether, and for how long, this trend will continue.

The upswing in demand for electricity shown in Figure 7 suggests that it may now be coming to an end. These recent trends suggest that there could be a need for new policy initiatives to support increased energy efficiency, particularly in the commercial and services sectors of the economy, where electricity demand is growing fastest. This means initiatives affecting the energy efficiency of commercial and public buildings, and of the air conditioning, lighting and other equipment used in buildings.

In the absence of any such new initiatives, and with the likely cutbacks to the RET, it is highly likely that the trend directions of electricity demand, generation and emissions seen in the last two months will become set in place. Future versions of Figure 5 will show — for the first time since CEDEX®began — emissions growing faster than electricity generation and the emissions intensity of Australian electricity generation steadily increasing, after six years of reductions.