Market insights

Research note: NEM power consumption in 2012 reduces by 2.5 percent

07 January 2013

7 January 2013

Electricity consumption in the national electricity market (NEM) states1 has decreased for the fourth consecutive year. In 2012, electricity demand in the NEM decreased 2.5 percent (4,818 GWh), when compared to 2011 consumption, which represents the largest annual reduction since this trend began.

1. Key findings

Electricity consumption in the National Electricity Market (NEM) states  has decreased for the fourth consecutive year.  In 2012, electricity demand in the NEM decreased 2.5 percent (4,818 GWh), when compared to 2011 consumption, which represents the largest annual reduction since this trend began.

With the exemption of one state (Queensland), every state in the NEM experienced lower electricity consumption.  In Queensland, consumption increased slightly on 2011 levels, increasing 0.15 percent or 74.7 GWh. The most marked reduction was seen in New South Wales, where consumption fell 5.2 percent on 2011 levels. Consumption fell in Tasmania, Victoria, and South Australia by 3.7, 0.9 and 0.9 percent respectively.

Overall electricity consumption in 2012 fell by 4,818 GWh. This is a significant reduction and is equivalent to 740,000 homes no longer requiring any electricity (based on average consumption of 6.5 MWh per home).

Coal-fired generation lost market share in 2012 (78.0 percent) compared to 80.9 percent in 2011.  Scheduled gas and renewables increased their market share by 1.0 percent and 1.8 percent respectively.

Excludes Western Australia and the Northern Territory
 

2. Trends in NEM-states electricity consumption

Electricity consumption in the NEM reduced by 4,818 GWh in 2012, with the most significant reduction being in New South Wales, where demand fell by 4,000 GWh (refer to Figure 1).

There are a range of possible explanations for reduced electricity demand in New South Wales. However, a milder winter and the closure of the Kurri Kurri smelter are likely to be significant contributors.


Figure 1. Change in electricity demand from 2011 to 2012

The installation of solar PV, solar hot water and an array of energy efficiency measures has also contributed to demand reduction within the NEM. These activities, supported through government legislated market-based schemes, is estimated to account for 2,000 GWh of the overall demand reduction in the NEM —most of which is can be attributed to solar PV.

Reduced electricity consumption in the NEM is not a recent phenomenon; electricity demand has fallen every year since 2008. Electricity demand in 2012 was 196,000 GWh, 11,400 GWh lower than the peak reached in 2008 (refer to Figure 2).

Figure 2.  Total NEM electricity consumption

 

3. Generation by state over last five years

Since 2005, coal-fired generation, as a proportion of total NEM wide generation, has fallen from 88.1 percent to 78.1 percent (2012). The mothballing of a number of coal generating units has seen an absolute reduction in the level of generation from both black and brown coal-fired generators. Scheduled wind generation has been progressively increasing and amounted to 1.6 percent in 2012.  Wind would account for approximately 3.6 percent if we included non-scheduled generation.

Figure 3.1 NEM Generation by Fuel      

 

Figure 3.2 NEM generation market share by fuel


      
A summary of generation mix by state follows with some key observations being:

  • NSW generation in total has fallen dramatically since 2008 (by 10,000 GWh) and coal generation has fallen further still as gas has increased its market share.
  • Victoria’s generation mix has remained reasonably stable up until 2011 with coal fired generation reducing by 7% in 2012 with the mothballing of units at some brown coal fired generators.
  • Queensland was one of the few states to see an increase in generation in 2012 with gas having increased its market share over the last few years at the expense of coal.
  • South Australia’s generation levels have remained stable over the last few years however scheduled wind has progressively increased its market share at the expense of brown coal and currently accounts for 21 percent of South Australia’s scheduled electricity supply. If we were to also account for non-scheduled wind generation then wind would account for approximately 26 percent.
  • Tasmania increased its scheduled generation by 11 percent in 2012 largely due to a dramatic increase in the level of hydro generation. In addition approximately 440 GWh of non-scheduled wind generation representing 4 percent of total generation also generated electricity.

Figure 4.1 NSW generation by fuel

Figure 4.2 NSW generation market share by fuel

Figure 5.1 Victorian generation by fuel

Figure 5.2 Victorian generation market share by fuel

 

 


Figure 6.1 Queensland generation by fuel


         
Figure 6.2 Queensland generation market share by fuel


Figure 7.1 South Australian generation by fuel


Figure 7.2 South Australian generation market share by fuel



Figure 8.1 Tasmanian generation by fuel


Figure 8.2 Tasmanian generation market share by fuel


Notes:

  • Data has been sourced from AEMO and includes only scheduled generation. As a result non-scheduled renewables is excluded and we estimate that this amounts to approximately 7,600 GWh (3.8 percent of total generation).
  • Solar PV is not included as a generation source and is included as lower electricity consumption
  • Demand in the Snowy Region prior to 2008 has been allocated two-thirds to NSW and one-third to Victoria.