National Electricity Forecasting Report
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NATIONAL ELECTRICITY FORECASTING REPORT For the National Electricity Market (NEM) 2012 NATIONAL ELECTRICITY FORECASTING REPORT Disclaimer This document is subject to an important disclaimer that limits or excludes AEMO’s liability. Please read the full disclaimer on page D1. Published by AEMO Australian Energy Market Operator ABN 94 072 010 327 Copyright © 2012 AEMO ii © AEMO 2012 FOREWORD This is the first edition of AEMO’s National Electricity Forecasting Report (NEFR), which represents the first time AEMO has developed independent electricity demand forecasts on a consistent basis for the five National Electricity Market (NEM) regions, namely New South Wales (including the Australian Capital Territory), Queensland, South Australia, Tasmania, and Victoria. National Electricity Forecasting represents a package of information papers and reports that document the input data, assumptions, and methodology used to develop a set of annual energy and maximum demand forecasts for the NEM, ensuring an open and transparent process. This will then allow AEMO to engage and work collaboratively with stakeholders to ensure continued efficiency in terms of NEM operations. In the past, AEMO has published demand forecasts via a series of AEMO planning publications, namely the Electricity Statement of Opportunities (ESOO), the Victorian Annual Planning Report (VAPR), and the South Australian Supply and Demand Outlook (SASDO). From 2012, the NEFR will be the only AEMO publication presenting electricity demand forecasts for the NEM. Robust independent forecasting is needed to assist AEMO with planning efficient future investment in electricity infrastructure to service the long-term needs of energy consumers. These forecasts are used for both operational purposes, including the calculation of marginal loss factors, and as a key input into AEMO’s national transmission planning role. Significant factors currently influencing changes in demand involve the penetration of rooftop photovoltaic systems, changing consumption patterns in the industrial sector (particularly in mining and manufacturing), consumer responses to rising electricity prices and energy efficiency initiatives, and changes in domestic and international economics. In the second half of 2012, AEMO will be holding regional forums that will promote further dialogue with stakeholders, with an aim to discuss the forecasts and assumptions related to National Electricity Forecasting. This will also provide an opportunity for stakeholders to be involved in discussions about the future direction of NEM forecasting. I look forward to working more closely with our stakeholders to ensure this forecasting process is a success. Matt Zema Managing Director and Chief Executive Officer © AEMO 2012 Foreword iii NATIONAL ELECTRICITY FORECASTING REPORT [This page is left blank intentionally] iv Foreword © AEMO 2012 EXECUTIVE SUMMARY Annual energy and maximum demand forecasts are significantly lower than those contained in the 2011 ESOO, signalling an expected delay for new generation and network investment. To benefit the long-term needs of energy consumers, robust independent forecasting of electricity supply and consumption is needed to assist with planning future efficient investment. For the first time AEMO has developed an independent set of electricity forecasts for each region of the National Electricity Market (NEM) to capture and assess the notable changes taking place. AEMO will be using the National Electricity Forecasting Report as a basis for further collaboration with our stakeholders to maintain the quality and value of this work. Key observations for the 2012 National Electricity Forecasts detailed in this report are as follows: • Across the NEM, annual energy for 2011-12 is projected to be 2.4 per cent lower than 2010-11 and 5.7 per cent lower than forecast in the 2011 ESOO under a “medium” economic growth scenario. • Forecast annual energy for 2012-13 is projected to remain flat (0.0% growth), which represents an 8.8 per cent reduction from the 2011 ESOO forecast. • Average growth in annual energy for the 10-year period is now forecast to be 1.7 per cent, down from the 2.3 per cent forecast in the 2011 ESOO. • Growth in annual energy consumption is strongly linked to large industrial projects in Queensland, most notably coal seam gas developments. • Maximum demand forecasts across the five regions are much lower than in previous years, but are expected to continue to grow into the future. The main factors influencing these changes are as follows: • Changes in the economic outlook. Reduced energy forecasts are consistent with a moderation in gross domestic product (GDP), especially in the short term. • Reduced manufacturing consumption in response to the high Australian dollar. An expected increase in cheaper imports is anticipated to impact domestic manufacturing growth. • Significant penetration of rooftop PV systems (South Australia has the highest penetration of rooftop PV of all the NEM states). The impact of rooftop PV installations is expected to partially offset the need for increased electricity generation. By 2021-22, this is forecast to increase to 7,558 GWh or 3.4% of annual energy. • Consumer response (commercial and residential) to rising electricity costs and energy efficiency measures. Future implications Structural change in the Australian economy – acceleration in the mining sector in the northern states together with a decline in manufacturing in Victoria, South Australia and Tasmania – is having disparate impacts across the NEM states, particularly in the wake of the global financial crisis. Across the NEM, lower than forecast annual energy for 2011-12 under a “medium” economic growth scenario points to a likely delay in the need for new generation investment including the potential for a reduction in significant large-scale investment. © AEMO 2012 Executive summary v NATIONAL ELECTRICITY FORECASTING REPORT Figure 1 — Revised annual energy growth rates 4.5% 4.0% 3.5% Annual Annual energy (GWh) - 3.0% 22 - 2.5% 2.0% 1.5% 1.0% Annual Annual average growth rate to 2021 0.5% 0.0% NSW QLD SA TAS VIC NEM 2011 ESOO 1.6% 4.1% 1.5% 0.9% 1.6% 2.3% 2012 NEFR 1.2% 2.9% 0.9% 0.9% 1.4% 1.7% vi Executive summary © AEMO 2012 Figure 2 — Revised maximum demand growth rates 4.5% 4.0% 3.5% Maximum (MW) demand Maximum - 3.0% 22 - 2.5% 2.0% 1.5% 1.0% Annual Annual average growth rate to 2021 0.5% 0.0% NSW QLD SA TAS VIC 2011 ESOO 1.9% 4.2% 1.7% 1.4% 2.1% 2012 NEFR 1.2% 2.5% 1.0% 1.1% 1.6% © AEMO 2012 Executive summary vii NATIONAL ELECTRICITY FORECASTING REPORT [This page is left blank intentionally] viii Executive summary © AEMO 2012 CONTENTS FOREWORD III EXECUTIVE SUMMARY V CHAPTER 1 - INTRODUCTION 1-1 1.1 National Electricity Forecasting 1-1 1.2 The NEFR and AEMO’s other planning publications 1-2 1.3 Content and structure of the NEFR 1-3 CHAPTER 2 - DEFINITIONS, PROCESS AND METHODOLOGY 2-1 2.1 Key definitions of energy and maximum demand 2-1 2.1.1 Energy and maximum demand definitions 2-1 2.1.2 The components of energy and maximum demand in NEM forecasting 2-3 2.2 Process and methodology 2-5 2.2.1 Overview of the AEMO forecasting process 2-5 2.2.2 NTNDP scenarios 2-7 2.2.3 Mapping the NTNDP scenarios 2-8 2.3 Changes since the 2011 ESOO 2-9 CHAPTER 3 - NEM-WIDE FORECASTS 3-1 Summary 3-1 3.1 Annual energy forecasts 3-2 3.1.1 Annual energy forecasts 3-2 3.1.2 Mass market forecasts 3-6 3.1.3 Large industrial forecasts 3-7 3.1.4 Annual electrical energy requirement breakdown 3-8 3.2 Maximum demand forecasts 3-8 3.3 Small non-scheduled generation forecasts 3-9 CHAPTER 4 - NEW SOUTH WALES (INCLUDING ACT) FORECASTS 4-1 Summary 4-1 4.1 Annual energy forecasts 4-2 4.1.1 Annual energy forecasts 4-2 4.1.2 Mass market forecasts 4-6 4.1.3 Large industrial forecasts 4-7 4.1.4 Annual electrical energy requirement breakdown 4-8 4.2 Maximum demand forecasts 4-9 4.2.1 Summer maximum demand forecasts 4-9 4.2.2 Winter maximum demand forecasts 4-12 4.3 Small non-scheduled generation forecasts 4-14 © AEMO 2012 Contents ix NATIONAL ELECTRICITY FORECASTING REPORT CHAPTER 5 - QUEENSLAND FORECASTS 5-1 Summary 5-1 5.1 Annual energy forecasts 5-2 5.1.1 Annual energy forecasts 5-2 5.1.2 Mass market forecasts 5-6 5.1.3 Large industrial forecasts 5-7 5.1.4 Annual electrical energy requirement breakdown 5-9 5.2 Maximum demand forecasts 5-10 5.2.1 Summer maximum demand forecasts 5-10 5.2.2 Winter maximum demand forecasts 5-13 5.3 Small non-scheduled generation forecasts 5-16 CHAPTER 6 - SOUTH AUSTRALIA FORECASTS 6-1 Summary 6-1 6.1 Annual energy forecasts 6-2 6.1.1 Annual energy forecasts 6-2 6.1.2 Mass market forecasts 6-6 6.1.3 Large industrial forecasts 6-7 6.1.4 Annual electrical energy requirement breakdown 6-8 6.2 Maximum demand forecasts 6-9 6.2.1 Summer maximum demand forecasts 6-9 6.2.2 Winter maximum demand forecasts 6-12 6.3 Small non-scheduled generation forecasts 6-14 CHAPTER 7 - TASMANIA FORECASTS 7-1 Summary 7-1 7.1 Annual energy forecasts 7-2 7.1.1 Annual energy forecasts 7-2 7.1.2 Mass market forecasts 7-6 7.1.3 Large industrial forecasts 7-7 7.1.4 Annual electrical energy requirement breakdown 7-8 7.2 Maximum demand forecasts 7-9 7.2.1 Summer maximum demand forecasts 7-9 7.2.2 Winter maximum demand forecasts 7-12 7.3 Small non-scheduled generation forecasts 7-14 CHAPTER 8 - VICTORIA FORECASTS 8-1 Summary 8-1 8.1 Annual energy forecasts 8-2 8.1.1 Annual energy forecasts 8-2 8.1.2 Mass market forecasts 8-6 8.1.3 Large industrial forecasts 8-7 8.1.4 Annual electrical energy requirement breakdown