Electricity consumption from the grid to flatline for 20 years, AEMO report says

Article from : ABC

Summary:

Electricity consumption from the grid is forecast to flatline for the next 20 years, according to new research from the industry’s key regulator, the Australian Energy Market Operator (AEMO).

“The transformation underway within the energy sector has some way to go yet and will continue to change the demand profiles in the NEM beyond the outlook horizon,” Mr Zema said.

“Maximum demand is forecast to remain flat across the outlook period, despite increased use and capacity of heating and air conditioning as growth is offset by energy efficiency and rooftop PV.

“In particular, rooftop PV is changing power flows so the maximum electricity demand of the system is projected to occur later in the day when the sunshine is less intense.

Morgan Stanley analyst Rob Koh said the forecasts may prove to be conservative, given efficiency, solar and batteries could drive outcomes towards AEMO’s “low” case scenario.

Article:

Electricity consumption from the grid to flatline for 20 years, AEMO report says

Updated

June 17, 2016 16:45:20

Electricity consumption from the grid is forecast to flatline for the next 20 years, according to new research from the industry’s key regulator, the Australian Energy Market Operator (AEMO).

AEMO’s National Electricity Forecasting report found despite an expected population growth of 30 per cent, operational consumption across the national electricity market (NEM) is forecast to remain flat over the 20-year outlook period.

The flat forecasts are due to advancing energy technology and more consumers producing their own electricity from rooftop solar photovoltaic (PV), offsetting demand for electricity supplied from the grid, rather than a reduction in use of electric appliances.

The trend is already noticeable with aggregate NEM demand forecast to fall 6 per cent between 2010 and 2016.

The report also found while PV installation is due to slow after 2030, electricity generated from rooftop solar PV is expected to increase around 350 per cent from 5,600 GWh (gigawatt hours) today to 25,000 GWh by 2035-36 — or about 11 per cent of the current consumption off the grid.

Increased efficiency is also having an impact, with a saving of around 27,000 GWh forecast to be delivered by 2036.

That is despite the fact that by 2036, the average solar panel will be 13 years old and operating at reduced efficiency.

AEMO chief executive Matt Zema said while households today use more lighting, have larger televisions, more web-connected devices, larger capacity whitegoods, and more heating and cooling capacity, the growth in these services has not resulted in more electricity being consumed from the grid.

“The transformation underway within the energy sector has some way to go yet and will continue to change the demand profiles in the NEM beyond the outlook horizon,” Mr Zema said.

“Maximum demand is forecast to remain flat across the outlook period, despite increased use and capacity of heating and air conditioning as growth is offset by energy efficiency and rooftop PV.

“In particular, rooftop PV is changing power flows so the maximum electricity demand of the system is projected to occur later in the day when the sunshine is less intense.

“However, minimum demand for electricity is forecast to remain flat for 5 years and then reduce rapidly with forecast increases in rooftop PV, starting to shift minimum demand from overnight to near midday when the sun is strongest and overhead. This is already the case for South Australia,” Mr Zema noted.

Caution on investment in utilities: Morgan Stanley

Morgan Stanley analyst Rob Koh said the forecasts may prove to be conservative, given efficiency, solar and batteries could drive outcomes towards AEMO’s “low” case scenario.

AEMO forecast battery storage would reach an effective capacity of around 5.9 GWh by 2036, which is worrying news for the big generators.

“Storage of that magnitude — conceptually equivalent to an increase in peak generation capacity — is likely to dampen peak and average prices in our view,” Mr Koh said.

Mr Koh reiterated his cautious view of investment in the Australian utilities sector.

“Lower demand for the core product, and lower capacity utilisation of existing plant and infrastructure are headwinds to earnings growth,” he said.

Mr Koh said the big utilities had three main options to protect their earnings.

“Defence strategies such as diversification — such as overseas expansion, consolidation, which we think has just about run its course in Australia — and ‘new energy’ technologies, which are riskier,” he said.

Topics:

business-economics-and-finance,

solar-energy,

electricity-energy-and-utilities

First posted

June 17, 2016 16:41:18