AEMO: NEM Electricity Demand Declines

Electricity consumption in the National Electricity Market (NEM) is forecast to decline over the next three years.

The 2014 National Electricity Forecasting Report (NEFR) published by the Australian Energy Market Operator (AEMO) shows that excluding liquefied natural gas (LNG) projects in Queensland, there is a 1.1% average annual decrease in overall NEM electricity consumption in the short term to 2016-17, reflecting a 3.0% average annual reduction in large industrial consumption.

The 2014 forecast compares to the average annual decline of 1.8% that occurred between 2009–10 and 2013–14, which was partially driven by sustained retail electricity price rises over the past five years, mainly due to network costs.

“Without Queensland’s LNG projects, in the short term we see electricity consumption continuing to decline,” said AEMO Managing Director and Chief Executive Officer Matt Zema.

“Queensland is the only NEM region with a sizeable forecast rise in consumption, with LNG projects ramping up gradually from next financial year which are contributing to annual average increases of 4.1% overall, and 16.4% for large industrial in that state,” Zema said.

“Without LNG, the otherwise flat outlook reflects the decline in energy-intensive industry—such as the Point Henry aluminium smelter closure in Victoria later this year—and the continuing influence of consumer behaviour on residential and commercial consumption,” he continued.

The 2014 NEFR shows reduced residential and commercial consumption in most NEM regions due to strong growth in rooftop photovoltaic (PV) system installations and ongoing energy efficiency savings in response to high electricity prices over recent years.

In the short term, rooftop PV output is forecast to grow in all regions as PV system installation costs continue to fall while government financial incentives remain static. Across the NEM, annual average growth of 23.6% in rooftop PV drives down overall consumption from the grid. In 2013-14, rooftop PV results in a 2.9% reduction in consumption from the grid.

Year-on-year increases in energy efficiency savings, attributed to increasingly efficient appliances, and building and industry regulations mainly driven by Federal Government initiatives, are also forecast over the outlook period to 2023-24.

Maximum demand forecasts are growing at a marginally higher rate than annual energy consumption in all NEM regions except Queensland. This leads to peakier maximum demands shifting to later in the day due to the impact of rooftop PV, especially in South Australia.

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Press Release, June 16, 2014