The body that manages Australia’s electricity grid has for the first time forecast a fall in energy use, and predicted it will delay for years the need for investment in new power plants or transmission networks.
The Australian Energy Market Operator says consumption will fall this year due to four factors: a decline in manufacturing, comparatively mild weather, the swift growth in rooftop solar panels and consumers reacting to rapidly rising electricity prices.
It reverses years of the operator projecting soaring growth in energy consumption, and has implications for the shift from coal-fired power to lower-emissions gas under the carbon price scheme.
It could also restrict the pace at which power bills increase. If demand for electricity is down, it will keep the wholesale electricity price paid to power plant owners low.
And if investment in new electricity infrastructure is deferred it could slow the increase in the amount consumers pay for the upgrade of poles and wires - nationally, the biggest contributor to rising electricity bills in recent years.
Matt Zema, the market operator’s chief executive, said the fall in energy use - down 2.4 per cent on last year and 5.7 per cent lower than projected - was the biggest since the creation of the National Electricity Market in 1998.
”For the first time, we’re seeing that GDP is still growing but energy demand is actually decreasing,” he said.
Of the nearly 6 per cent decline on last year’s projections, about half is due to a fall in industrial consumption - mainly due to the high Australian dollar increasing competition for manufacturing from cheap imports.
The other half is split between reduced demand for airconditioning due to a milder summer, the growth of photovoltaic solar panels to a point where they provide 0.9 per cent of energy used, and improved energy efficiency due to the advent of better appliances and light globes and consumers becoming more energy conscious. The market operator expects solar panels to generate 3.4 per of all energy in a decade.
Mr Zema said the fall in energy consumption had combined with other factors - including rising gas prices due to overseas demand for LNG - to hold up investment in gas-fired power plants, which had been expected to be a medium-term replacement for coal.
Tony Wood, an energy expert from the Grattan Institute, said it would make it easier for Australia to reach its greenhouse gas emission reduction target.
Electricity distributors would probably not have to spend as much on network and transmission costs, he said.
