Declining electricity use – will this continue?

Electricity consumption in Australia’s national electricity market continues to decline in 2014. As graphed below for New South Wale and Victoria centralised generation for the first six months of 2014 is 11% and 8% down respectively against the peak’s of 2009 and 2008.

Decline in NSW electricity generation

Half year electricity generation, NSW, 2004 to 2014. Based on data from the Australian Energy Market Operator

Decline in Victoria's electricity generation

Half year electricity generation, Victoria, 2004 to 2014. Based on data from the Australian Energy Market Operator

This decline has come despite the turmoil regarding carbon policy in Australia. Victoria had ditched its Greener Government Building’s program, and the Victorian Energy Efficiency Target (VEET) Scheme (a Utility Energy Efficiency Obligation or White Certificate scheme) will be closing shortly. Yet electricity consumption and greenhouse emissions continue to decline. There are a wide range of reasons for this, encompassing both energy efficiency and distributed solar PV generation.

But with the carbon pricing mechanism now abolished, uncertainty about whether there will continue to be support for renewable energy via the Renewable Energy Target RET, and in Victoria the shutting of the VEET scheme, will this decline continue?

Population growth is putting upwards pressure on electricity consumption. The Energy Efficiency Opportunities Program, which helped the very largest energy users identify cost-effective ways of reducing their energy consumption, has been axed. The government’s commitment to lower electricity prices will increase the payback on renewable energy and energy efficiency. The electricity retailers have withdrawn their support for the state energy saver schemes, possibly concerned about revenue loss as electricity consumption drops. Electric cars still haven’t taken off, but with a great deal of money now moving into energy storage research and development, as battery prices drop demand for electric cars – and electricity – will increase.

Yet downward pressure will continue to come from Australia’s appliance and equipment standards and labeling program. Solar installations will continue even without a RET, although at a slower rate. The NSW Energy Saver Scheme (ESS) continues to grow from strength to strength. Manufacturing decline will likely continue, with the shut down of Australian car manufacturing by 2018. The Building Code of Australia is likely to continue to tighten up its energy efficiency provisions. Lighting technology, representative of many energy using technologies, will continue to get more efficient and efficient technology more affordable. Solar PV pricing will drop further by the end of the decade. Many major corporations now have sustainability well embedded into their operations and decision making processes. And the number of engineers and tradespeople with skills in renewable energy and energy efficiency is much higher than it was at the peak of consumption six years ago.

The Australian Energy Market Operator (AEMO) forecasts that consumption will be largely flat through to 2020, with savings offset by increased electricity use in the liquification of LNG for export. But in the recent past AEMO has consistently overestimated growth in consumption, although it may now have better tuned its forecasting model.s

To the best of my knowledge never before has Australia seen six year of decline in electricity demand. But the policy environment has supported this. Now some of the key policy drivers are disappearing. On the other hand, there is now an industry, particularly the solar PV industry, that is a force in its own right, and technological progress is now strongly geared towards efficiency. Perhaps we are approaching a point where policy is not the deciding factor. That would be very exciting, a major transition, and one that provides hope for a low carbon future. If the downward trend continues, we may look back at this decade as being pivotal. The decade, where, in Australia at least, emissions abatement wasn’t totally dependent on a strong supportive EE and RE policy environment. Where GDP growth clearly decoupled from energy use, and where energy savings began to decouple from policy.