The growth of rooftop solar and the increased uptake of energy efficiency account for nearly all of the reduced demand in the Australian electricity grid in the last year, according to a new report.
Falling demand has become the Trojan horse of the conventional, fossil-fuel driven electricity industry, with networks, generators, retailers and regulators framing business models and tariff policies in the last five years around the assumption that demand growth was unstoppable.
But the emergence of rooftop solar and energy efficiency has turned those assumptions on their head, explaining why many of the incumbent utilities are fighting so hard to have policies that encourage solar and energy efficiency measures overturned.
Green Energy Markets, in its annual review of the National Electricity Market, says that solar and energy efficiency resulted in 89 per cent of the reduction in demand from the national grid in 2014 – or 1,877GWh of the 2,098GWh fall.
Grid demand has in fact been falling dramatically since 2008 – around the year that networks locked in tens of billions of dollars in network upgrades and extensions, and generators invested in numerous new gas peaking plants.
But it also marked the start of the boom in investment in rooftop solar. Even after most subsidies have been brought to an end, around 700MW of rooftop solar was installed in Australia in each of 2013 and 2014.
According to GEM, this generated an additional 963GWh of electricity in 2014 and accounts for 46 per cent of the reduction in overall consumption recorded during the year.
The energy efficiency schemes operating in NSW, Victoria, South Australia and the ACT accounted for more than 824GWh of demand reduction in 2014. The closure of Pt Henry aluminium smelter in Victoria accounted for 1,210GWh, but this was nearly offset by rises in industrial usage elsewhere (mostly in Queensland).
While demand was being reduced by household solar and energy efficiency, the make-up of Australia’s grid-based generation got dirtier over the year, particularly after the removal of the carbon price, as documented previously by Pitt & Sherry.
GEM says hydro – which benefited dramatically from the carbon price – saw production fall 25 per cent over the year. Black coal fell (mostly through the closure of the large Wallerawang plant in NSW and despite a rebound in the second half of the year), and brown coal also jumped.
The level of renewable generation fell sharply in 2014, from 13.8 per cent share of the market to 11.8 per cent.
Three new wind farms were completed during the year, Snowtown 2 in South Australia and the Boco Rock and Taralga wind farms in NSW. Overall, wind generation increased 6 per cent, despite the fact that average production from wind farms fell 11 per cent due to lower wind conditions and capacity factors.
Five fossil fuel plants also closed – the Redbank and Wallerawang black coal plants in NSW, the Morwell brown coal facility in Victoria and the Tamar Valley (Tasmania) and Swanbank E (Queensland) gas plants.
Despite this greenhouse gas emissions from electricity generation increased by 1 per cent in 2014, notwithstanding the 1.1 per cent reduction in electricity consumption.
The average emission intensity of electricity generation increased by 2.1 per cent rising to 0.809 tonnes/MWh in 2014, mostly due to the significant reduction in hydro generation which was replaced by an increase in brown coal and gas-fired electricity generation after the carbon price was repealed in July.