Five Years of Declining Annual Consumption of Grid-Supplied Electricity in Eastern Australia: Causes and Consequences

For decades, consumption of grid-supplied electricity increased in line with a growing economy. In the ﬁve years since 2009, however, annual consumption in eastern Australia declined by 7 percent, even while the Australian economy grew by 13 percent. Declining consumption was not forecast by the planning authority nor by market participants. The authors review reasons for declining consumption, the failure of planning authorities to Mike Sandiford is Director of the Melbourne Energy Institute, based at forecast this structural change, and ongoing the School of Earth Sciences at the consequences. Fuel switching from oil and gas offers one University of Melbourne in Australia. means of partly arresting the rapidly declining use of electricity grid infrastructure. Tim Forcey is an energy advisor to the Melbourne Energy Institute. Mike Sandiford, Tim Forcey, Alan Pears and Dylan McConnell Alan Pears is Senior Lecturer at RMIT University in Melbourne, Australia.

Dylan McConnell is Research I. Introduction economic output) (BP Energy Fellow at the Melbourne Energy Outlook 2035, 2014). In Australia, Institute. Since the oil crises of the 1970s, energy intensity has steadily global economies have been able declined since the 1990s (Energy to reduce their energy intensity in Australia, 2014). Nevertheless (the use of energy per unit of until recently, absolute energy

96 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 The Electricity Journal consumption across all sectors of decades Australian electricity consumption will not exceed the the Australian economy consumption generally increased level seen in FY 2008-09 until continued to grow (Energy in from year to year in line with the sometime beyond 2035. In this Australia, 2014). In the decade growing Australian economy. article, we review some of the preceding the 2008 global The lower-than-average growth reasons for this structural change financial crisis (GFC), grid- in annual electricity consumption including: energy efficiency supplied electricity consumption in FY 2008-09 followed by programs, consumer response to in eastern Australia grew at an declining consumption in FY dramatically rising retail average rate of approximately 2 2009-10 was initially credited to electricity prices, the widespread percent per year (Australian temporary factors such as the deployment of rooftop solar Energy Statistics, 2014). GFC. In August 2011 following photovoltaic (PV) systems, owever, consumption of the post-GFC recovery of the specific facility closures in the H grid-supplied electricity in Australian economy, AEMO larger-industrial sector, and other developed economies globally is factors. We describe some now undergoing unprecedented consequences of declining annual and rapid change. In Australia Consequences of consumption and forecasting and elsewhere (Today in Energy, declining annual failures. These include 2013; UK Department of Energy & consumption and overbuilding of electricity Climate Change, 2014; PLATTS, infrastructure and declining use 2013), electricity markets are forecasting failures of this infrastructure. experiencing sustained declining include overbuilding of Furthermore, overbuilding and consumption. This presents electricity infrastructure declining consumption has challenges to industry and declining use of this driven some industry incumbents incumbents, market operators, to support reversal of energy regulators, and governments. In infrastructure. efficiency, renewable energy, and this article, we describe how in the climate change mitigation Australian financial year (FY) programs. We present a scenario ending Jun. 30, 2009 (FY 2008-09), forecast that annual electricity illustrating to what extent the electricity supplied by the eastern consumption would reach annual consumption of grid- Australian grid (known as the 215 TWh by FY 2013-14 and supplied electricity could National Electricity Market, or 248 TWh by FY 2020-21. continue to decline over the next NEM) reached an all-time high of Experience shows that the 10 years. Finally we describe 195.0 TWh. Then, over the forecast for FY 2013-14 was high opportunities to increase following five years while the by approximately 18 percent. electricity consumption while Australian economy grew by Rather than the consumption decreasing the use of oil and gas. approximately 13 percent, annual decline of FY 2008-09 and 2009-10 electricity consumption in eastern being a temporary aberration, it Australia declined by 7 percent to presaged a fundamental shift in II. Eastern Australia’s reach 181.2 TWh in FY 2013-14. the Australian electricity market. Electricity Supply This ongoing multi-year decline t is now clear that annual System was not anticipated by market I consumption of grid-supplied participants nor by the planning electricity in Australia no longer The eastern Australian authority, the Australian Energy tracks economic growth. In June electricity transmission grid Market Operator (AEMO). In 2014 AEMO forecast that in a serves approximately 21 million part, this was because for many ‘‘medium scenario’’ annual people (90 percent of Australians)

Aug./Sept. 2015, Vol. 28, Issue 7 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 97 in Queensland, New South Wales, state of Tasmania, maximum half-hour for each of the ﬁve the Australian Capital Territory, demand occurs in late afternoon regions of the NEM. AEMO settles the ﬁnancial transactions for all of Victoria, Tasmania, and South and early evening during summer the electricity traded on the NEM Australia. It is one of the longest heat waves that drive the use of on the basis of these spot prices. transmission grids in the world air-conditioners. As a result, the Generators and retailers often stretching across 5,000 kilometers. electricity supply system is sized protect themselves from move- Electricity transmission to meet maximum demand that ments in the spot price by entering into hedge contracts. interconnections – with limited may occur only for a few hours capacity – connect Queensland per year, if at all. Annual electricity consumption with New South Wales, New he National Electricity in eastern Australia can be South Wales with Victoria, T Market has operated across divided into three sectors. AEMO Victoria with Tasmania (via a the eastern Australian states since provides data describing the subsea connection), and Victoria 1998, with Tasmania joining in ‘‘larger-industrial’’ sector (22 with South Australia. Western percent of total consumption) Australia and the Northern based on direct meter readings Territory have no physical Eastern Australia’s (National Electricity Forecast connections to and remain electricity Report, 2014). The subsequent separate from the eastern generation and division of the ‘‘residential’’ Australian system. (This article sector (28 percent of describes activities in eastern transmission consumption) versus the Australia only.) Population and system has been remaining ‘‘smaller-industrial- electricity consumption is one of the most and-commercial’’ sector (SI&C, 50 generally concentrated around reliable in percent of total consumption) the capital city of each eastern must be estimated (Saddler, 2013). Australian state or territory. the world. The wholesale sales value Regional areas in between are (turnover) of grid-supplied much more lightly populated. electricity in eastern astern Australia’s electricity 2005. Australian Energy Market Australia has ranged from $A 6 to E generation and transmission Commission describes the 12 billion in recent years with system has been one of the most operation of the NEM as follows electricity production in the range reliable in the world with (National Electricity Market, of 180 to 195 terawatt-hours performance generally exceeding 2014): (TWh).

the 99.998 percent availability The Australian Energy Market Traditionally, NEM electricity target (corresponding to un- Operator (AEMO) operates the was generated from brown and served energy of 0.002 percent or NEM. The NEM is an energy-only black coal (27 GW of generation approximately 10 minutes per gross pool with mandatory par- capacity now installed), gas year) (Australian Energy ticipation. Generators sell all of (12 GW), and hydroelectricity their electricity through the NEM Regulator, 2013). Maximum where supply and demand are (8 GW). The average age of (instantaneous) demand for matched instantaneously. From Australia’s coal power station electricity is the critical parameter the generators’ offers, the market ﬂeet is over 30 years with some 50- that determines the required size determines the combination of year-old facilities still in service of electricity-supply generation to meet demand in the (Stock, 2014). Over the last most cost-efﬁcient way. AEMO infrastructure. In all eastern then issues dispatch instructions to decade, more than three GW of Australian states with the these generators. The market wind generation was installed. exception of the southern island determines a spot price every Total larger-scale generation

98 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 The Electricity Journal capacity in the NEM now stands consumption of grid-supplied years, increasing numbers of at approximately 50 GW. electricity increased nearly each Australian homes were fitted with Furthermore over the last six year, in step with the growing air-conditioners and other high- years, more than 3.4 GW of small- Australian population and energy-consuming items such as scale rooftop solar photovoltaic economy. From[4_TD$IF] July[5_TD$IF] 1, 1998, to halogen downlights and plasma (PV) has been installed in eastern June[6_TD$IF] 30, 2009, consumption televisions. Modern mass- Australia (‘‘Renewable energy increased at an average rate of produced homes featured little in target, small-scale installations by 3.9 percent/yr (Australian the way of passive-energy design postcode’’), mostly on over 1 Energy Regulator, 2013). In the principles, tending to dispense million homes and more recently industrial sector, Australian with traditional window-shading by 15,000 businesses with governments historically eaves and to favor single-glazed commercial building roof space supported the development of windows and dark-colored heat- (Clean Energy Council, 2014). electricity-intensive industries absorbing external roofing Rooftop PV electricity generation materials. reduces the demand for grid- ue to all of the above supplied electricity and is forecast Any effect of the carbon D factors, Australia’s energy to triple over the next 10 years price on electricity consumption (electricity and (National Electricity Forecast sector emissions was other energy sources) per unit of Report, 2014). Recent wind and production has been higher than solar deployment has been driven short-lived when the the OECD average (ABS, 2012). at least in part by the Renewable carbon price was The onset of the GFC occurred in Energy Target legislation of 2009. repealed in July 2014 September 2008; however, in 2008 Australia legislated a carbon following a change of and the following years, the price of $A 23/tonne CO2- Australian population and equivalent starting July 2012. This government. economy continued to grow. applied to electricity generation Annual consumption of grid- and some other sectors of the supplied electricity also economy. However, any effect of such as aluminum smelting. In continued to grow until it reached the carbon price on electricity the residential and commercial an all-time high of 195.0 TWh in sector emissions was short-lived building sectors, given the FY 2008-09 (Table 1). when the carbon price was historical low cost of energy and Lower-than-forecast annual repealed in July 2014 following a benign climate, energy efficiency consumption of grid-supplied change of government. was not an important design electricity in FY 2008-09 and then feature of Australian buildings declining consumption in FY or equipment. Concepts such as 2009-10 was initially thought to be III. History of Annual roof and wall insulation were temporary and credited to factors Electricity Consumption mostly optional. Low-cost such as the Global Financial in Eastern Australia – electricity competed with low- Crisis. In August 2011, the Actual and Forecasts cost gas to heat water and living relevant planning authority spaces. Consumers were AEMO forecast that consumption Until recent years, eastern incentivized by very low prices to would continue to grow at the Australian retail electricity prices use electricity at ‘‘off-peak’’ times rate of 2.3 percent/yr through to ranked amongst the lowest in the (nighttime and weekends) to 2021, in line with projections for a OECD group of nations (Section smooth demands on baseload continuously growing Australian IV.B). For many decades, the coal-fired generators. In recent economy (AEMO, 2011). With

Aug./Sept. 2015, Vol. 28, Issue 7 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 99 Table 1: Annual Consumption of Grid-Supplied Electricity in Eastern Australia Australian Financial Annual Grid-Supplied Electricity Year (FY) Ending (TWh) (National Electricity % Change vs. 30 June Forecast Report, 2014) Previous Year Note FY 2005-06 The ﬁnal years of 189.6 – FY 2006-07continuously growing 192.5 +1.5% FY 2007-08annual consumption 193.7 +0.6% FY 2008-09 195.0 +0.7% The onset of the Global Financial Crisis, and all-time high for annual grid-supplied electricity in eastern Australia.

FY 2009-10 Period of continuously 194.9 À0.1% AEMO continues to forecast FY 2010-11declining annual 192.8 À1.0% continual growth. FY 2011-12consumption 189.1 À1.9% FY 2012-13 184.6 À2.4% FY 2013-14 181.2 À1.8% Annual consumption now 13.8 TWh less than the all-time high, an overall decline of 7%.

that basis, consumption was Australian economy growing by (Figure 1). However for the years forecast to reach 215 TWh by 13 percent over that time. This after that, AEMO forecasts that FY 2013-14 and 248 TWh by FY decline was not forecast by consumption will continuously 2020-21. AEMO, in part because for many rise,albeitataslowerratethan his annual electricity decades Australian electricity presented in earlier forecasts T consumption forecast and consumption generally increased (National Electricity Forecast related ‘‘maximum’’ demand from year to year in line with the Report, 2014). Nevertheless, in forecasts (Section V) indicated growing Australian economy. its June 2014 forecast, AEMO that 1 to 2 GW of new generation AEMO’s 2011 forecast of does[8_TD$IF] not see annual capacity and associated electricity continuous growth resulted in consumption reaching the all- supply infrastructure would need the forecast for FY 2013-14 time high of FY 2008-09 until to be built each year. However, being high by 14 percent after 2035. AEMO’s forecast would prove to (25 TWh). It is now clear that the annual be inaccurate. After reaching an n June 2014, four years after consumption of grid-supplied all-time high of 195.0 TWh in FY I the onset of declining annual electricity in eastern Australia no 2008-09, consumption declined electricity consumption and for longer tracks economic growth. each year over the following ﬁve the ﬁrst time, AEMO forecast a From FY 2005-06 to FY 2013-14 years to reach 181.2 TWh in FY brief interruption to continuous while the Australian population 2013-14: a decline of 7 percent growth. In its ‘‘medium and gross domestic product overall and an average decline scenario,’’ AEMO forecast that (GDP) grew, the consumption of rate of 1.4 percent/yr (Table 1). consumption in FY 2014-15 grid-supplied electricity declined This occurred despite the would decline to 175.7 TWh (Figure 2).

Figure 1: Annual Consumption of Grid-Supplied Electricity in Eastern Australia, Compared with Forecasts (National Electricity Forecast Report, 2014; AEMO, 2011)

IV. Reasons Why consumption of grid-supplied consumption for grid-supplied Annual Consumption electricity failed to grow at electricity fell short of a typical Stopped Growing and historical rates and instead historical 2.5 percent/yr growth Started Declining declined in each of the last ﬁve rate. By FY 2012-13, consumption ﬁnancial years. Saddler (2013) fell short of the historical trend by This section examines why investigated why, from FY 2005- 36.9 TWh/yr (20 percent, eastern Australia’s annual 06 to FY 2012-13, annual equivalent to the output of 5 GW [(Figure_2)TD$IG]

Figure 2: Australian GDP Growth Compared With Consumption of Grid-Supplied Electricity in Eastern Australia

Aug./Sept. 2015, Vol. 28, Issue 7 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 101 Table 2: Major Reasons Why Consumption Stopped Growing and Started Declining Impact in FY 2012-13 vs. an Historical Growth Trend Program Sector Sector Impacted Factor or Program TWh/yr Subtotal Subtotal Residential Energy efﬁciency programs 7.9 Appliance upgrades (residential) 6.0 Other measures (insulation, building standards, state energy 1.9 efﬁciency programs Other consumer price response to dramatically rising retail 5.2 electricity prices Widespread deployment of rooftop solar PV 2.7 Water heating fuel-switch programs 1.2 17.0 Larger-industrial Reduced growth of larger-industrial energy users vs. rate of 5.0 growth seen in the past Industrial facility closures 3.6 Embedded generation (other than solar PV) 1.5 10.1

Smaller-industrial & Energy efﬁciency programs and embedded generation 4.8 4.8 commercial (SI&C) (other than solar PV)

Various or uncertain Other economic impacts and residual (including the Australian 5.0 5.0 government Energy Efﬁciency Opportunities program that targeted large industry)

Total 36.9 Derived from Saddler (2013).

of generation). Saddler electricity prices (5.2 TWh/yr). significantly impact year-to-year highlighted the limitations of Saddler found that greatest annual electricity consumption available data sources but consumption decline occurred in (Saddler, 2013). nevertheless identified factors or the residential sector, followed by programs that led to declining the larger-industrial sector and A. Residential energy consumption (Table 2). The then the SI&C sector. efficiency and hot water single-largest factor driving Consumption decline in the fuel-switching programs consumption decline was the combined residential and SI&C ‘‘Equipment Energy Efficiency sectors was first observed in FY In the residential sector, (E3) Program’’ (Energy Rating) 2008-09, whereas decline in the Saddler (2013) ranked the responsible for 9.4 TWh/yr of larger-industrial sector was not following energy efficiency consumption decline across the observed until two years later. programs in order of their residential and SI&C sectors. The Extremes of weather affect impact: second-largest factor was electricity consumption; however, 1. Ongoing replacement of consumer response to the weather of recent years was inefficient electrical appliances by dramatically rising retail insufficiently extreme to implementation of energy

102 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 The Electricity Journal efficiency standards and labeling dramatically rising retail during shoulder periods, and programs, with some standards electricity prices (Saddler, 2013). $A 0.11/kWh at other times for refrigerators/freezers and Prior to 2008, the retail price of (Energy Made Easy). electric water heaters electricity in Australia was low Figure 4 breaks the price of commencing in 1999 compared with other OECD electricity available to households (6.0 TWh/yr), nations and tended to rise in line in New South Wales (as an 2. Energy efficiency with the Consumer Price Index example) into components and regulations for new building (CPI). However, since 2008, retail compares the growth of these construction, with some wall- electricity prices have risen components between the financial cavity insulation standards dramatically and have nearly years 2007-08 and 2012-13 commencing in some states in doubled in just six years (a 7 (Australian Government – 1991 and national implementation percent/yr annual growth rate) Productivity Commission, 2013). in 2006 (1.9 TWh/yr), (ABS, 2014)(Figure 3). Today, Overall, the total electricity cost 3. State- and territory-based Australian retail electricity prices more than doubled over five schemes such as the Victorian rank toward the upper end of years. More than half of the costs Energy Efficiency Target, the New prices found in OECD nations are attributed to network costs South Wales Energy Savings (Mountain, 2012). As an example that also increased by more than a Scheme, and the South Australian of current retail prices for factor of two over five years. Residential Energy Efficiency residents in New South Wales, Governments and regulatory Scheme, all commencing in 2009 flat-rate electricity is available at authorities are focusing on ways (0.6 TWh/yr), and $A 0.25/kWh with a daily to limit future retail electricity 4. The Home Insulation supply charge of $A 0.80/day prices rises (Australian Program active from 2009 to 2011 (includes 10 percent Goods and Government Department of (0.4 TWh/yr). Services Tax). Alternatively, a Industry, 2014). According to the n Australia, replacing time-of-use tariff is available Australian Energy Market I resistive-electric water heaters at a cost of $A 0.51/kWh Commission, residential with heat-pump-electric or during peak periods, $A 0.20 electricity price increases are rooftop-solar-with-electric-or- gas-boost has been supported by [(Figure_3)TD$IG]

Australian government programs 2.4 since 2001. There was a strong 2.2 increase in replacements Australian Retail Electricity Price Index between 2008 and 2010, and by 2.0 2013 water heater replacement Australian Consumer Price Index

programs had reduced annual 1.8 electricity consumption by 1.2 TWh/yr, compared with a 1.6 FY 2005-06 baseline (Saddler, 1.4 2013).

1.2 B. Rising retail electricity prices 1.0 3 8 3 004 009 014 003 008 013 00 00 01 2 2 2 2006 2011 -2004 -2009 c- c- g- g- g- an-2 an-2 an-2 un un Jul-2011 Jul-2006 J J J J J Oct-2007 Oct-2012 Apr-2010 Apr-2005 Sep-2005 Sep-2010 Feb-2006 Feb-2011 De De Au Au Au Nov-2009 Nov-2004 Mar-2 Mar-2 Mar-2 May-2007 Residential consumers reduced May-2012 their electricity use because of Figure 3: Australian Retail Electricity Price Compared With CPI (ABS, 2014)

rooftop PV have emerged, electricity-consuming businesses with suitable commercial roof- space are finding it economically attractive to install larger-scale rooftop systems. Some 15,000 Australian businesses had installed rooftop PV by mid-2014 (Clean Energy Council, 2014). For FY 2013-14, AEMO estimated that Figure 4: New South Wales Household Electricity Bill Components (Australian Govern- small-scale solar PV generated ment – Productivity Commission, 2013) approximately 4 TWh of electricity in eastern Australia (National Electricity Forecast expected to moderate over the residential solar systems was Report, 2014), an increase of 36 period 2014 to 2016 (Australian catalyzed by government- percent over the previous year. Energy Market Commission, legislated incentives including This is an amount of energy 2013). rebates, renewable energy equivalent to approximately certificates, and feed-in tariffs. 2 percent of total electricity C. Widespread These incentives have been scaled supplied. deployment of rooftop solar back over time as the cost of solar s shown in Figure 5, in 2014 PV PV systems has declined and A AEMO forecast that the competing business sectors amount of PV-generated In another response to rising voiced concerns. electricity could more than electricity prices and other ore recently as electricity double over the next five years to stimuli, homeowners and M costs have increased and approximately 10 TWh/yr, or businesses[9_TD$IF] reduced their financing arrangements for approximately 4 percent of total consumption of grid-supplied [(Figure_5)TD$IG] electricity by installing rooftop PV systems. (Note that in our analysis as well as in the management of the NEM generally, rooftop solar PV is considered to be ‘‘behind the meter’’ and acts to reduce the consumption of metered grid- supplied electricity.) Starting from a negligible base, PV systems with generation capacity of more than 3.4 GW (‘‘Renewable energy target, small-scale installations by postcode’’) have been installed on over 1 million eastern Australian homes as homeowners invested more than Figure 5: Electricity Generated by Rooftop Solar PV in Eastern Australia (National $8 billion. Initially, this boom in Electricity Forecast Report, 2014)

30 electricity supplied. As described

in Section V.A, solar PV is also nre 25

shifting the time-of-day when e th

ss 20

summer maximum demand o cr W) occurs (Australian Energy Market a (G 15 Operator, 2014; NEFR, 2014). on year

nera 10 ge D. Annual electricity FY 2008-09 FY 2010-11 FY 2013-14

rage 5 consumption decline in the Ave industrial sector 0 0.5 1.52.53.54.55.56.57.58.59.510.5 11.5 12.5 13.5 14.5 15.5 16.5 17.5 18.5 19.5 20.5 21.5 22.5 23.5 30 minute interval of the 24-hour day In the industrial sector, the closures of or reduced operations Figure 6: Comparing Annual Consumption of Grid-Supplied Electricity by 30 Minute Periods of the 24-Hour Day at three facilities in New South Wales between October 2011 and September 2012 reduced annual comparing averaged consumption Consumption decline was consumption of electricity by over the 48 half-hourly periods of greater at around 2 a.m. (see 3.6 TWh/yr: the 24-hour day for different Area 2) than, for example, at 5 Kurri Kurri aluminum financial years. Figure 6 shows a.m. This probably illustrates smelter (2 TWh/yr) consumption data for FY 2008-09, phase-out and/or improved Clyde oil refinery the year with the all-time highest efficiency of resistive-electric Port Kembla steelworks consumption. It then shows how ‘‘off-peak water heaters’’ that (part-closure). much consumption had declined traditionally were activated in Beyond those specific facilities, by FY 2010-11 and by the most the states of Victoria and South Saddler (2013) found no evidence recent FY 2013-14. Australia between 11 p.m. and 6 of declining electricity ased on the data in Figure 6, a.m. For this same reason, we consumption due to reduced or B Figure 7 shows, for each would expect that 1 am results restructured economic activity in half-hourly period, the net decline would be similar to 2 a.m. the industrial sector. There was, in consumption that occurred results. However this is not the however, failure of industrial between the financial years of case: consumption decline at 1 electricity consumption to grow at 2008-09 and 2013-14. At a a.m. is only about half of the 2 the rates seen in past decades. conceptual level and recalling that a.m. result. As the necessary data This failure-to-grow explains this consumption decline has are not readily available, further 5.0 TWh/yr of the difference happened at a time of ongoing analysis of this time period is between actual consumption and population and economic growth beyond the scope of this article. an historical rate of consumption in eastern Australia, we observe: Furthermore, this article does growth. Consumption has declined at notexploretheextenttowhich all hours of the day (Area 1 in consumers in Victoria might be E. Declining annual Figure 7). This reflects factors taking advantage of 2.8 million consumption analyzed by such as energy efficiency recently deployed ‘‘smart’’ half-hourly intervals measures and behavioral change meters to reduce their electricity that apply during all hours of the costsbyshiftingloadfromday This section illustrates year-today, large-scale industrial or evening periods to off-peak year changes in grid-supplied closures, and constantly loaded nighttime hours (11 p.m. to electricity consumption by embedded generation. 7a.m.AEST).

Figure 7: Consumption Decline Between FY 2008-09 and FY 2013-14

Additional consumption cannot be expected to also weekends and holiday periods. decline occurred across all the decline, electricity supply This is because of the need for ‘‘waking hours’’ from 6 a.m. to infrastructure must be kept in living-space cooling (refrigerant- midnight (Area 3). readiness. This may mean that type air conditioners and Remaining consumption average utilization (or evaporative coolers). In 2011, 73 decline that occurred only during productivity) of the system falls. percent of dwellings in Australia daylight hours (Area 4) may be This section examines historical had cooling, up from 59 percent in credited to solar PV and/or other actual and forecast maximum 2005 (AUSSTATS, 2011). factors. demand for grid-supplied Maximum demand in the cooler electricity at the NEM state level. southern island state of Tasmania Interconnections exist between occurs in winter, reﬂecting the use V. Maximum Demand – the states (Section II), but because of electricity for residential space Actual and Forecasts these have limited capacity, state- heating. As shown in Table 3,no level maximum demand maximum demand records have Forecast maximum determines the level of electricity been set in any state since 2011. (instantaneous) demand, which infrastructure required. ince 2011, no new maximum- might occur only for a few hours S demand records have been in a given year, is a critical A. Maximum demand records set in any eastern Australian state parameter that determines the set during heat waves prior to despite increasing population, a size that electricity-supply 2012 growing economy, ongoing heat infrastructure must be in order for waves, and continued penetration consumers to be reliably served. In all eastern states except of residential living-space Regardless of whether annual Tasmania, historical record-high cooling. The summer of 2012-13 consumption of grid-supplied maximum demand occurred on was Australia’s hottest on record. electricity is declining from year weekday afternoons during However, no new maximum to year, if maximum demand summer heat waves, outside of demand records were set. Details

106 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 The Electricity Journal Table 3: Record-High Maximum (Instantaneous) Electricity Demand in Eastern Australian States Capital City Maximum Record-High Date of Record-High Time of Day Temperature on the Maximum Maximum Demand Day of the When Record-High Day of Record-High Demand (GW) (Season) Week Occurred Demand Queensland 8.9 18 January 2010 (summer) Monday 1:15 pm AESTa Brisbane: 38.0 8C New South Wales 14.7 1 February 2011 (summer) Tuesday 4:00 pm AEST Sydney: 33.6 8C (including ACT) 3:00 pm ADST

Victoria 10.6 29 January 2009 (summer) Thursday 4:00 pm AEST Melbourne: 42.7 8C 3:00 pm ADST

South Australia 3.4 31 January 2011 (summer) Monday 5:00 pm AEST Adelaide: 42.9 8C 4:00 pm ADST Tasmania 1.8 21 July 2008 (winter) Monday – – a AEST – Australian Eastern Standard Time; ADST – Australian Daylight Savings Time (does not apply in Queensland).

of certain heat waves that the state with the greatest per- weather conditions and air occurred in 2013 and 2014 are capita penetration of rooftop conditioner use. Therefore, in listed in Table 4. (Maximum PV – experienced record-high order to model a range of weather electricity demand is most likely maximum demand at 5:00 p.m. conditions, AEMO produces to occur in late January and early AEST, whereas in January 2014 probabilistic forecasts. In February when businesses and maximum demand for that AEMO’s ‘‘medium scenario’’ and schools return to full activity summer did not occur until 6:30 considering weather conditions following the summer holiday p.m. AEST (Australian Energy that represent a 10 percent period.) Market Operator, 2014; NEFR, probability of exceedance ne reason why no new 2014). (10 percent POE), AEMO O records have been set since forecasts that maximum demand 2011 is because the deployment of B. Forecasts for maximum will not exceed previous record rooftop solar PV has reduced demand signiﬁcantly reduced highs within the next 10 years in maximum demand for grid- Victoria, South Australia, or supplied electricity during mid- In 2014, AEMO updated its Tasmania. Minor exceedance is day hours. Solar PV has also maximum demand forecasts forecast to occur in New South shifted the time-of-day at which (National Electricity Forecast Wales, but not until FY 2022-23 maximum demand might occur Report, 2014). As described (Table 5). Only for Queensland until later in the day. For example above, maximum demand in most does AEMO forecast that, within in January 2011, South Australia – states depends upon summer the next few years, future

Table 4: Periods of High Temperatures in Eastern Australian States Since Electricity Demand Records Were Set Example Heat Waves Occurring Since 2011 Capital City Ambient Temperature Recorded During This Heat Wave Queensland Early January 2014 Brisbane (Archerﬁeld): 43.5 8C (highest-ever recorded temperature) New South Wales Mid January 2013 Sydney: 45.8 8C (highest-ever recorded temperature) Victoria Mid January 2014 Melbourne: 42.0 8C South Australia Mid January 2014 Adelaide: 43.0 8C

Aug./Sept. 2015, Vol. 28, Issue 7 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 107 Table 5: AEMO Maximum Demand Forecast Published in 2014 (‘‘Medium Scenario’’, 10% POE) Year When Previous Record-High Maximum Forecast Maximum Demand for FY 2023-24 Demand is Forecast to be Exceeded (GW and % of Previous Record-High) Queensland FY 2015-16 10.0 GW (113% of 2010 record-high) New South Wales (including ACT) FY 2022-23 14.9 GW (101% of 2011 record-high) Victoria, South Australia, Previous record-high maximum demand is not Not applicable Tasmania forecast to be exceeded within AEMO’s 10-year planning outlook period

maximum demand might exceed as a comparison year. Using The utilization (or productivity) the previous record-high. This is Queensland as an example, of the electricity supply system because in Queensland, new AEMO’s most recent forecast for will therefore continue to fall, as large-scale gas production and maximum demand is now only 65 described in Section 6. liquefied natural gas (LNG) percent of the forecast published export facilities may opt to three years earlier. purchase approximately 9 TWh/ ver their ten-year forecast VI. The Consequences of yr of grid-supplied electricity in O outlook period, AEMO do Declining Annual FY 2015-16 and beyond instead of not forecast that maximum Consumption and of This generating their own electricity demand in any state will decline Decline Not Being (LNG, 2014). significantly below past record Forecast he maximum demand highs (National Electricity T forecasts published by Forecast Report, 2014). If annual This section describes certain AEMO in 2014 are significantly consumption of grid-supplied consequences of declining annual lower than forecasts published as electricity declines in coming consumption of grid-supplied recently as 2011. Figure 8 years but maximum demand electricity in eastern Australia, compares record-high maximum cannot also be expected to and also the consequences of this demand with these two forecasts decline, supply-infrastructure remarkable change not being [(Figure_8)TD$IG]using the forecasts for FY 2020-21 must nevertheless be maintained. reflected in official forecasts until

Figure 8: AEMO Forecasts for Maximum Demand for FY 2020-21 (‘‘Medium Scenario’’, 10% POE) (National Electricity Forecast Report, 2014; AEMO, 2011)

108 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 The Electricity Journal four years after the decline began. Additional large-scale B. Declining volume- These consequences include: renewables-based generation weighted wholesale electricity Overinvestment in electricity capacity totaling 1.2 GW is prices, price volatility and generation and supply committed to come on line turnover infrastructure, between July 2014 and January Declining wholesale 2016. Over the last five years while electricity prices and sales value his growing ‘‘capacity consumption of grid-supplied (turnover), T overhang,’’ along with electricity declined in eastern Political pressure to scale factorssuchasthecarbonprice Australia, wholesale electricity back or terminate energy that existed in Australia from prices also declined. This reflects efficiency, renewable energy, and July 2012 to July 2014, caused the classic supply-demand climate change mitigation policies more than two GW of excess relationship: where there is excess and programs. fossil-fueled generation capacity supply, the price tends to decline to be taken off line or to operate due to competition among A. Overinvestment in only seasonally over that period suppliers. Figure 10 shows electricity generation and (‘‘Generation Information’’). In nominal and real (2014 $A) supply infrastructure August 2014, AEMO highlighted volume-weighted wholesale that there was potentially 7.7 to electricity prices for the last 15 As a consequence of the 9.0 GW (15 to 18 percent) of financial years. Note that these aggressive growth forecasts excess generation capacity in the prices exclude the impact of the published in 2011 and earlier NEM (AEMO, 2014). Generation carbon price that applied during electricity supply infrastructure utilization has fallen from FY 2012-13 and FY 2013-14. was built in eastern Australia approximately 48 percent in Volume-weighted wholesale with capacity exceeding what is FY 2008-09 to 41 percent in electricity prices peaked at likely be required for some time, if 2013-14 (Figure 9). In light of $A 76/MWh (real) in FY 2006-07. ever. In FY 2008-09, 195.0 TWh of recent consumption forecasts, At that time, severe drought electricity consumption in eastern some planned infrastructure conditions impacted Australia was supplied using has now been deferred hydroelectric generation and also generation capacity of (Australian Energy Regulator, cooling water supplies to some approximately 45 GW. During the 2013). thermal generators. next four years, despite year-to- [(Figure_9)TD$IG] year declining consumption, 4.6 GW of new large-scale generation capacity came into service, raising total large-scale generation capacity to approximately 50 GW. This included 2.9 GW of new fossil- fueled generation capacity (mostly gas-fired) and also the installation of 1.7 GW of large- scale renewables-based generation (mostly wind energy) driven by the Renewable Energy Figure 9: Electricity Generation Utilization in Eastern Australia (‘‘Aggregated Price and Target legislation of 2009. Demand Data Files’’; ‘‘Generation capacity and peak demand’’)

permanently removed from service, this could place upward pressure on wholesale prices, as might the following: Increasing gas prices – as liquefied natural gas (LNG) export facilities are commissioned in Queensland and for the first time eastern Australian gas prices become linked to world prices (Australian Government Department of Industry, 2014), Unplanned generation Figure 10: Volume-Weighted Wholesale Electricity Prices in Eastern Australia (Excludes outages, Carbon Price) Extreme weather conditions, and n the seven years since FY The construction of A return to increasing I 2006-07, rainfall increased, additional low-operating-cost, electricity consumption. additional thermal and renewable renewables-based generation, Figure 11 illustrates how generation capacity (including Expansion of interstate wholesale electricity price rooftop solar PV) came on line, electricity transmission volatility in eastern Australia has certain market-power issues were connections (the expansion of the significantly declined in the last addressed (AER, 2009), and Heywood Interconnector three financial years. Volatility, consumption of grid-supplied between Victoria and South calculated as the log10 of the electricity declined. By FY 2013-14, Australia is underway), and standard deviation of wholesale the volume-weighted wholesale Developments in energy prices for the financial year, has electricity price had fallen by nearly storage (Hearps et al., 2014). declined because of factors such half of the peak to $A 37/MWh. In However, if higher cost, as: real terms, wholesale prices over inefficient, and/or carbon- The presence of excess the last four years have been less intensive generation capacity is generation capacity, than those seen over the period FY [(Figure_1)TD$IG] 1999-00 to FY 2009-10. The operation of the NEM allows wholesalepricestorisetolevels above $10,000/MWh. These high price excursions occurred more frequently in the past than in recent years (Australian Energy Regulator, 2013). ertain factors that may C cause wholesale prices to decline further in[10_TD$IF]the future include: Ongoing grid-supplied electricity consumption decline, Figure 11: Wholesale Electricity Price Volatility

110 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 The Electricity Journal The availability of responsive 2012-13 and in FY 2013-14.) VII. Declining hydroelectricity, Turnover peaked in FY 2006-07 at Electricity-Generation Rooftop solar PV reducing approximately $A 15 billion and Carbon Emissions in the consumption of grid-supplied then fell to 45 percent of that value Eastern Australia electricity during former in the most recent financial year. maximum demand periods, Reasons for this decline are As shown in Figure 13, over the Energy efficiency measures inferred in the discussion (above) five years from FY 2008-09 to FY likewise dampening about wholesale prices. 2013-14, annual carbon emissions consumption at critical times, and from electricity generation in General electricity C. Reduced or terminated eastern Australia declined by 16 consumption decline. efficiency, renewable energy, percent or approximately 31

he consequences of and carbon-reduction million tonnes/yr (CO2 T declining volatility include programs equivalent) (AEMO, 2013). This is reduced wholesale sales value for a result of: generators (turnover, discussed Declining annual consumption The 7 percent decline in below) and reduced incentives for of grid-supplied electricity has annual consumption of grid- energy storage or demand been cited by some industry supplied electricity; response measures. Figure 11 stakeholders as a reason to reduce Gas-fired generation shows that increased wind energy or terminate various energy replacing coal over the period deployment (a variable renewable efficiency, renewable energy, and October 2009 to April 2011 energy resource) has not carbon-reduction programs. (CEDEX, 2014), driven by the increased price volatility. Other factors contributed to the construction of new gas- Figure 12 shows wholesale reduced status of these fired generation prior to electricity sales value (turnover) programs, such as the declining this time; in eastern Australia since FY 2006- cost of solar PV systems The installation of 07 in real 2014 dollars. (Turnover making them affordable with additional wind generation, has been corrected to remove the reduced subsidies. Table 6 driven by the Renewable impact of the carbon price which lists various programs and Energy Target legislation of caused turnover to increase by compares past apex and recent 2009, and approximately $A 3.5 billion in FY status. Greater use of existing [(Figure_12)TD$IG] hydroelectricity facilities, enabled by increased rainfall, and then motivated by the possibility that the carbon price (in place only between July 2012 and July 2014) might be short-lived. (The carbon price enhanced profits from renewable electricity generation by increasing market pool prices.) In the future, carbon emissions from electricity generation in eastern Australia may increase as the use of coal increases Figure 12: Wholesale Electricity Turnover, Corrected to Remove Carbon Price because:

Aug./Sept. 2015, Vol. 28, Issue 7 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 111 Table 6: Comparing Apex and Recent Reduced Status of Programs Program Jurisdiction Past Apex Status Recent Status Renewable energy Australia-wide As at 2013, bi-partisan political party Under review in 2014. Target date may be target commitment to 41,000 GWh/yr of extended and/or the required amount new renewable electricity production of renewables-based electricity by 2020. reduced.

Carbon price Australia-wide $A 23.00/tonne CO2-equivalent in July Repealed in July 2014. 2012 increased to $A 24.14/tonne in July 2013. Applied to electricity generation, gas supply, and other industry. Rooftop PV rebates Australia-wide Rebate for 1 kW or larger PV system Small-scale technology renewable energy raised from $A 4,000 to $A 8,000 in certificates valued at approximately 2007. Ended in 2009 and replaced $2,000 may apply for a 3 kW PV with certificate scheme. system. This rebate is under review in 2014 and may be reduced or terminated. Rooftop PV net feed-in Victoria Net feed-in tariff of $0.60/kWh Net feed-in tariff reduced to a minimum of tariff (state example) commenced in 2009 and remains in $0.08/kWh effective in 2014. place for those eligible homes until 2024. Rooftop PV gross feed-in New South Wales Gross feed-in tariff of $0.60/kWh applied For new PV installations, net feed-in tariff tariff (state example) in 2009. set at $0.053/kWh for FY 2014-15. Victorian Energy Efficiency Victoria Commenced in 2009. Selected energy- Scheme was to be closed at the end of Target (VEET) saving products offered to residents 2015. at reduced cost. Energy Efficiency Australia-wide Commenced in 2006. Required industry Closed 29 June 2014. Opportunities (EEO) using more than 0.5 PJ of energy per year to identify and assess energy efficiency opportunities, with actual implementation being voluntary.

The carbon price was The high hydroelectricity VIII. How Low Might repealed in July 2014, removing a output of recent years is Annual Consumption price disadvantage for coal-fired unsustainable, because it Go, over the Next 10 generation relative to lower- involved depleting water Years? emission alternatives and making storage volumes in order to energy efficiency improvements capture higher profits under In 2014, AEMO published less attractive, the now-repealed carbon ‘‘high,’’ ‘‘medium,’’ and ‘‘low’’ Gas prices have increased price. scenario forecasts for grid- and are increasing, which means arbon emissions might also supplied electricity consumption that it is likely that the role of gas C increase if electricity (National Electricity Forecast in electricity generation will consumption increases Report, 2014)(Figure 14). In decline (Simshauser, 2014), and (Section IX). AEMO’s ‘‘low scenario,’’

percent/yr rate of decline seen over the period FY 2007-08 to FY 2013-14). SI&C sector consumption decline of 2 percent/yr, given that there has been limited consumption decline in the SI&C sector to date. As mentioned in Section IV.C, the increasing deployment of rooftop PV in the commercial sector may have a significant impact in this sector. Impediments to reducing Figure 13: Electricity Sector Greenhouse Gas Emissions in Eastern Australia (AEMO, 2013) electricity use in the SI&C sector include: consumption declines to Further closures of aluminum - businesses not ranking 154 TWh in FY 2023-24 as smelters, bringing forward by 10 electricity reduction as a priority aluminum smelters close and years AEMO’s ‘‘low scenario’’ for the investment of money and other less-significant decline larger-industrial forecasts for management attention, occurs in other sectors of the 2033-34. (Note that the Point - split incentives due to economy. We present an ‘‘even- Henry, Victoria aluminum smelter separation of ownership and lower scenario’’ where which formerly consumed up to occupation, and consumption declines to 3 TWh/yr of electricity - attractive electricity sales 139 TWh in FY 2023-24, a 29 (National Electricity Forecast contracts on offer to some percent decline overall Report, 2014) closed in businesses above a certain (56 TWh) versus the FY 2008-09 July 2014.) size. all-time high of 195 TWh Ongoing residential sector hough not specifically (Figure 14). This ‘‘even-lower electricity consumption decline of T reflected in our ‘‘even-lower scenario’’ involves: 1 percent/yr (less than the 3 scenario,’’ grid-supplied [(Figure_14)TD$IG]

Figure 14: Historical and Future Projections of Annual Electricity Consumption (National Electricity Forecast Report, 2014)

Aug./Sept. 2015, Vol. 28, Issue 7 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 113 electricity consumption in the devices (Section IX) or because of approximately 487 PJ (135 TWh) residential and SI&C sectors might the establishment of new of fossil gas was used in the further decline if homeowners, electricity-intensive industries. industrial and buildings sectors businesses, or some of the (excludes gas used for electricity numerous regional Australian IX. Opportunities to generation) (Gas Statement of communities located at the fringe Switch from Oil and Gas, Opportunities, 2013). As gas of the grid find it attractive to Using Modern Electric prices rise, modern electric supply the bulk of their own Devices appliances such as high electrical energy needs and even to coefficient-of-performance air- disconnect from the main grid In contrast to Section VIII, this source heat pumps and induction (Szatow and Moyse, 2014). section describes opportunities in cooktops are replacing gas-fueled Already 6 percent of Australia’s appliances in Australia (Moyse electricity supply is sourced from et al., 2014). The economic benefit beyond the two largest grids of replacing gas-fueled appliances (Industry, 2011). In fringe-of-the- with electric depends upon the grid areas in Queensland, average efficiency and purchase cost of the customer density is as low as four appliances, the current and customers per kilometer of projected prices of gas and electricity transmission line electricity at peak and off-peak (Australian Government – times, the potential to avoid fixed Productivity Commission, 2013; gas-connection charges if gas use Parkinson, 2014). Scenarios have is completely eliminated at a been modeled where one-third of home or business, and the consumers disconnect from the opportunity for self-generation of grid (CSIRO, 2013). A potential electricity. Other important future feedback response known buildings and transport to factors for appliance purchasers as ‘‘the death spiral’’ (Simshauser, switch from fossil fuel devices to are esthetics, comfort, familiarity, 2014) describes the situation where high-efficiency electrical devices and the possibility of multiple electricity consumers leave the and thereby increase the use of uses (e.g. reverse-cycle heat pump main supply grid, the costs of electricity supply and grid air-conditioners can also be used maintaining and operating the infrastructure. (Note that if for heating). grid are spread over fewer and conversion of eastern Australia’s nstalling and using modern fewer customers, and then these electricity supply-system from I electric appliances may remaining customers see greater coal generation to renewables is require one-third or less energy and greater economic benefit to delayed, switching from oil and input than legacy gas appliances, join those who have already gas to electricity in buildings and either because electric appliances disconnected. transport may not reduce carbon can use renewable heat (i.e. heat his ‘‘even-lower scenario’’ is emissions.) pumps), may be more efficient T intended to stimulate (e.g. induction cook tops or consideration of alternatives and is A. Buildings: switching from furnaces) or because upgrading not intended as a definitive fossil gas to efficient electrical eliminates old, inefficient, or forecast. It ignores the potential for heating devices poorly maintained legacy electricity consumption to increase equipment (Moyse et al., 2014). because of fuel switching from oil According to AEMO, during Were half of the energy services and gas to high-efficiency electric 2012 in eastern Australia provided by fossil gas in the

114 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 The Electricity Journal eastern Australian industrial and conditioners and other equipment (However in the past, aluminum buildings sectors instead at times of maximum demand, smelters and other industry have provided by modern electrical demand-side participation, and been incentivized and able to appliances powered from the other factors. The Australian reduce demand at critical times.) grid, annual electricity population, economy, living Continuous upgrading of air- consumption would increase by standards, and comfort and conditioners, refrigerators, approximately 20 TWh/yr. Fuel- health expectations continue to televisions, computers, and switching on this scale would grow. Global warming is driving lighting will continue to drive more than fully reverse the extreme weather events and new down electricity use during times 13.8 TWh/yr decline in electricity record-high temperatures in when maximum demand might consumption that occurred from Australian capital cities. In future, occur. Homeowners will continue FY 2008-09 to FY 2013-14. to deploy building envelope upgrades (e.g. insulation and B. Transport: switching from window treatments) not only for fossil fuels to plug-in electric economic and/or energy-saving vehicles reasons but also to improve comfort and health. (During the In 2012, fossil fuel-powered February 2009 heat wave, Australian passenger vehicles Melbourne temperature reached traveled approximately 167 an all-time high of 47.2 8C which billion kilometers/yr (Survey of contributed to 374 heat-related Motor Vehicle Use, 2013). To date, deaths (Victorian Government plug-in electric vehicle use has Department of Health, 2012).). been insigniﬁcant in Australia. ptions for time-shifting and Were around half of that historical O demand-side participation travel to be done with plug-in plug-in electric-vehicle charging are becoming more widely electric vehicles, the consumption may present a new challenge for available in eastern Australia. In of grid-supplied electricity would electricity-supply infrastructure Victoria, 2.8 million smart meters increase by approximately (de Hoog et al., 2013). Therefore have been recently deployed. 10 TWh/yr (Sharma et al., 2012). despite ﬁve years of declining Some consumers can opt to time- annual electricity consumption, it shift load to ‘‘off-peak’’ times (11 is not yet possible for AEMO to p.m. to 7 a.m.) in order to reduce X. How Maximum forecast that maximum demand their electricity costs. AEMO Electricity Demand can in any eastern state will stay forecasts greater use of industrial be Reduced in Eastern below levels seen in the past demand-side participation in Australia (National Electricity Forecast years to come (National Report, 2014). Nevertheless, Electricity Forecast Report, 2014). As described in Section V,no below we describe several factors Some eastern Australian new maximum demand records that may work to reduce electricity suppliers are trialing have been set in any eastern maximum demand. Demand Reduction Enablement Australian state since February Industrial closures (such as Devices (DREDs), alternate tariffs, 2011. However, maximum aluminum smelting) may reduce and other methods to reduce peak demand forecasts depend on electricity consumption at all demand. Greater deployment of forecasts of future climate, times, including at times of west-facing rooftop solar PV will weather conditions, the use of air- potential maximum demand. further reduce maximum

Aug./Sept. 2015, Vol. 28, Issue 7 1040-6190/# 2015 Elsevier Inc. All rights reserved., http://dx.doi.org/10.1016/j.tej.2015.07.007 115 demand, shift the time of its Australia was starting from a very v.au/ausstats/[email protected]/Lookup/ bySubject/1301.02012Main occurrence to later in the day, and energy-intensive and inefficient FeaturesInternationalcomparisons benefit homeowners by helping to base. The electricity-supply Internationalcomparisons202 supply their early-evening system, designed to 6401.0 – Consumer Price Index, Australia. 2014. Available from: electricity needs. Battery storage accommodate forecast growth, http://www.abs.gov.au/AUS may become a method by which became underutilized. Wholesale STATS/[email protected]/DetailsPage/ homeowners and businesses electricity prices and turnover 6401.0Mar2014 increase the value of solar PV self- fell. With the support of industry Electricity Statement of Opportunities. 2011. Available from: http:// generation and reduce demand at incumbents, new state and federal www.aemo.com.au/Electricity/ critical times. Electricity tariffs in governments used this time of Planning/Archive-of-previous-Plan eastern Australia have, to date, consumer-electricity-price ning-reports/Electricity-Statement- of-Opportunities-2011 only broadly addressed NEM Historical Market Information maximum demand management, Report. 2013. Available from: if at all. However, governments, http://www.aemo.com.au/Electric ity/Planning/Related-Information/ regulatory authorities, and Historical-Market-Information-Re businesses now see tariff reform port as key to reining in expenditure Electricity Statement of Opportunities. on electricity-supply 2014. Available from: http:// www.aemo.com.au/Electricity/ infrastructure (Australian Planning/Electricity-Statement-of- Government Department of Opportunities Industry, 2014). AGL’s Compliance With the Good Faith Rebidding Provision of the National Electricity Rules on 19 February 2008. 2009. Available from: XI. Conclusion http://www.aer.gov.au/sites/de fault/files/AGL Rebidding Investi concern to wind-back climate gation Report-May2009.pdf For decades in Australia, the change mitigation programs. Aggregated Price and Demand Data Files. Available from: http:// consumption of grid-supplied Now, as eastern Australia’s gas www.aemo.com.au/Electricity/ electricity grew in line with prices become linked to world Data/Price-and-Demand/Aggregat- population and economic growth. parity (for reasons unrelated to ed-Price-and-Demand-Data-Files. Each year, billions of dollars electricity), challenging years lie 4602.0.55.001 – Environmental Issues: would be invested in new Energy Use and Conservation, ahead for Australian energy Mar 2011. 2011. Available from: electricity generation, consumers, suppliers, regulators, http://www.abs.gov. au/AUS transmission, and distribution and policymakers. Future STATS/[email protected]/Lookup/ capacity to ensure reliable supply. 4602.0.55.001ExplanatoryNotes1 electricity consumption will be Mar2011?OpenDocument However in 2009, eastern sensitive to a wide range of Final Report – 2013 Residential Electric- Australia entered a new world factors, many of which can be ity Price Trends. 2013. Australian where the annual consumption of Energy Market Commission. influenced by government Forecasting Methodology Information grid-supplied electricity declined policies, technology change, Paper – National Electricity Fore- even while population and community attitudes, and casting Report 2014. 2014. Austra- lian Energy Market Operator. economic activity continued to electricity pricing.& grow. Consumers saw retail State of the Energy Market 2013. 2013. Australian Energy Regulator. electricity prices become nearly Australian Energy Statistics, 2014. the highest among OECD nations. References Available from: http://www.bree. Energy savings were then readily gov.au/publications/australian- 1301.0 – Year Book Australia 2012. 2012. energy-statistics. achieved because eastern Available from: http://www.abs.go

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