Reduced annual energy use produces higher reserve conditions

The changing economic landscape, a more energy-conscious public, the impact of rooftop solar photovoltaic installations and milder weather have all contributed to lower-than-forecast electricity demand across eastern and south eastern Australia, according to the Australian Energy Market Operator (AEMO).

Since the publication of AEMO’s 2011 Electricity Statement of Opportunities (ESOO) in August 2011, both annual energy and the forecast maximum demand have decreased.

Economic forecasts from March 2011 (a key input into the 2011 ESOO forecasts) predicted stronger economic growth than what has occurred and a stronger Australian dollar has also put pressure on the local manufacturing sector.

“The drivers behind this change vary from state to state, however, it is becoming apparent that electricity consumers are changing their energy use in response to rising electricity prices, adopting energy-efficiency programs and the installation of rooftop solar photovoltaic systems,” AEMO managing director and chief executive officer Matt Zema said.

The projected reductions in forecast maximum demand has resulted in higher reserve conditions across all regions of the National Electricity Market (NEM) except for Tasmania.

“In Victoria, a lower forecast maximum demand is likely to result in a deferred Low Reserve Condition (LRC) – theoretically postponing the need for further investment in generation to maintain electricity supply reliability by a full year,” Mr Zema said.

In addition, the August 2011 ESOO document had forecast growth in annual energy for all five regions in the NEM, however the updated figures show a reduction.

“In light of what has been observed in the last seven months, the estimated annual figure has been revised down from 202.6TWh to 192TWh for 2011-12 – a 5 per cent reduction in forecast annual energy across the NEM,” Mr Zema said.