Solar, efficiency drive demand falls in Australian grid

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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.

GEM NEM Review demand

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).

GEM NEM review demand components

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.

GEM NEm review generation

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.


  • john

    Tone will be happy more electricity being produced by brown coal the worst possible choice for power production.
    Except for the ACT no new RE plants are going to be built Tone is happy.
    I wonder if Tone can reverse the use of LED’s in favour of Incandescent lights that would be back to the 1920’s where we want to be?
    Perhaps rip out all those pink bats in the houses that put them in, this would help the brown coal producers of power.
    Those Councils putting in LED street lights and traffic lights how awful saving all that power!
    Next cab off the rank is storage and this is going to really make a hole in the afternoon demand big time.
    I have just the fix for that, follow the Koch Bros. formula, charge $50 or $100 a month to be connected to the grid if you have solar.
    With the adults in charge do not be surprised if that is the next idea that comes to light.

    • JohnOz

      Wot’s wrong with gas lighting I’d like to know!

      If it was good enough for the Victorian’s its good enough for us now!

      Isn’t that right Tone?

      • john

        Or carbide lights for that matter.
        Or better still whale oil there we go really on message

        • John Silvester

          Maybe he can divert some money from solar research and put it into research to develop synthetic whale oil.

          • john

            Is there any significant money being spent outside of a few uni’s in NSW on solar research?

  • Chris Fraser

    Very pleasing the result for increased efficiencies. It goes to show how wasteful we can be, regardless of the energy source. Through efficiency, we could perhaps, decouple our standard of living issues with ‘growth forever’ problems that are arising.And it’s not hard to see why the Industry Minister would like to roll all of these results, such as solar, hydro and efficiency, into the wished-for Renewable Energy Target fudging so that the Environment Minister has less work to do with the paltry sum set aside for the Emissions Reduction Fund. I detect the makings of an epic numbers and measurement fiddle.

  • The increase in brown coal and gas is rather depressing, as is the continuing absence of any significant solar input to the NEM, other than from behind the meter generation.

    BTW Giles, >>”…the Boco Rock and Taralga wind farms in Victoria.”
    Boco Rock and Taralga are both in NSW.

  • Alen T

    I was at an event late last year where a speaker from the Qld Resource Council attributed the declining electricity demand to the closure of some refineries, and was adamant that it was not solar and efficiency that’s causing this decline in demand. I’m sure most of the listeners were aware that this wasn’t the case (those that can put 2 and 2 together and think for themselves that is), but I still would have loved the opportunity to point him to this report that clearly disproves his (nauseating) speech and point, that coal has a bright future in Oz and around the world. Also, could it just be a coincidence that Minister Cormann blamed the slowdown in the economy for the drop in carbon emissions and refused to acknowledge that it was in fact the ETS, aka ‘carbon tax’, that was the cause in this drop. Seems like pattern to me: “find something/anything else to blame, just don’t ever tell the truth”. He’s at least prepared for his job interview I’d say.

    • Alen

      Ric shares some thoughts on WattClarity here today:

      Keep in mind that this analysis is just for 2014 and that declining demand has been a pattern since at least 2009, as we have been analysing here:

      I’m sure you’ll understand that the factors (& significance of the same) that have contributed to declining demand each year have varied for each year.

      One of the factors that has contributed has been the closure of the 2 smelters (Point Henry and Kurri Kurri) which were point-in-time changes, plus there have been other changes in the commercial & industrial space as well (some due to the EEO scheme, now closed, and some due to responses to high prices etc)


  • coomadoug

    A building in NSW. The company on a 37.5 hr week has been paying more than 1000 dollars a year per employee just for lighting. This is lighting for people working in daylight for 8 hrs a day. The bill was cut by 826 dollars per year per employee with efficiency measures.

    • Ronald Brakels

      Those figures seem a little off. It would really be hard to go through one thousand dollars a year in lighting costs per employee. And if each employee gets three efficient 7 watt LED lights burning 12 hours a day that should only come to about $55 dollars a year per employee for lighting.

  • Einar Wilhelmsen

    What explains the fall in Hydro ? Is it annual variations in rainfall, or is facilities taken of the grid?