Demand for power falls

WEAK electricity demand will delay for several years the need to build new power stations and, when building resumes, renewable power and peaking power plants using gas will be the main new sources of energy.

The latest annual forecast by the Australian Energy Market Operator estimates the next new power station will not be needed until 2018-19 in Victoria, a four-year delay from the forecast drawn up just a year ago.

The longest delay will be in Queensland, where no new capacity will now be needed until 2020-21, rather than as soon as 2013-14 expected a year ago, the AEMO said in the Electricity Statement of Opportunities, its annual forecast, to be released today.

In New South Wales, additions to capacity will not be needed until 2021-22, a three-year delay from that forecast of a year ago.

In all cases, sluggish power demand due to the soft economy, the strong dollar and a large rise in electricity prices, is the main factor in the projected delays, along with the increase in rooftop solar systems, although in Queensland, the extended deferral also reflects a change in the forecasting methodology.

''We haven't had maximum demand across the national electricity market since 2009,'' Matt Zema, the head of AEMO, said.

Since 2009-10, annual energy in the national electricity market has been falling about 1.7 per cent annually, AEMO said, with average wholesale power prices falling since about 2006-07.

Along with the economic slowdown, seasonally cooler summer weather has also cut demand during the mid-summer peak, with the rising number of wind farms also helping to drive down wholesale prices.

The forecast does not take account of the federal government program to idle 2000 megawatts of heavily polluting generation capacity by 2020 under the Contracts for Closure program, which is yet to be finalised. This program has the potential to bring forward the need for extra capacity, AEMO noted in the forecast.

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