NSW leads lower demand for electricity: CEDEX

THE latest pitt&sherry Carbon Emissions Index (CEDEX) update indicates that demand for electricity supplied by National Electricity Market generators has continued to decrease.
NSW leads lower demand for electricity: CEDEX NSW leads lower demand for electricity: CEDEX NSW leads lower demand for electricity: CEDEX NSW leads lower demand for electricity: CEDEX NSW leads lower demand for electricity: CEDEX

 

Max Pichon

The latest CEDEX, released in mid-August, indicates that the downward trend continues to be led by lower consumer demand and decreased output predominantly from east coast coal-fired electricity production facilities.

The fall from June 2012 to July 2012 is steeper than that seen in almost all of the past 18 months.

Speaking about the trend, pitt&sherry energy strategies principal consultant Dr Hugh Saddler said, “as in previous months, by far the largest fall in output at the state level was in New South Wales”.

“The previous monthly CEDEX update, released in June, indicated that the NSW generators are being affected by the combination of lower demand and higher fuel costs,” he explained.

According to a 2010 report for the Australian Energy Market Operator by ACIL Tasman, the difference in short-run marginal costs, mainly attributable to fuel costs, between NSW and Victorian generators is in the range $12-15 per megawatt hour generated.

“The recently introduced carbon tax has reduced but not eliminated the operating cost disadvantage faced by the NSW generators," Saddler added.

“Based on ACIL Tasman figures for emission intensity of power stations, we estimate the benefit to black coal generators arising from the carbon tax to be about $14 per MWh relative to the Hazelwood facility and $7 per MWh relative to Loy Yang facility.

“It is easy to see, therefore, that the brown coal generators retain a small operating cost advantage.”

There were also some notable changes at a number of Australia’s black coal power stations, which may well have contributed to the current energy use trends.

The Northern power station in South Australia closed in early July and if it continues to operate in the future, will only do so during summer – SA’s peak period.

On the Eastern seaboard, output from the Gladstone power station in Queensland fell by about 30%, relative to both the previous month and to July 2011.

These are the two most emissions-intensive coal-fired power stations currently operating in Australia.

Overall, output from both black and brown coal fuelled power stations fell and, for the first time, coal-fired generation fell in all four states in the same month.

Coal-fired output drops 1.4TWh

Total coal-fired generation was 1.4 terawatt hours lower in the year ending July 2012 than it was in the year ending a month earlier. This is the amount by which coal-fired generation was lower in July 2012 than it was in July 2011 and is equivalent to a decrease of 10% in coal-fired generation for the month.

It is the largest monthly decrease in coal-fired generation over the whole period covered by CEDEX, with the exception of two months at the end of 2010.

The decrease in coal-fired generation was larger than the decrease in total demand and the difference was made up by increases in both gas and hydro generation.

Saddler noted that the decreases in coal-fired generation could not necessarily be attributed to the impact of the carbon tax.

“We are yet to see if the carbon tax is likely to have a measurable impact on power generation and demand. Those statistics will be more readily available over the next few billing periods,” he added.

“The recent decrease in brown coal generation covered in this CEDEX is mainly attributable to the continuation of reduced output from the Yallourn power station in Victoria’s Latrobe Valley, because of flooding in its associated coal mine.

“Output from Hazelwood also fell slightly, as did output from Morwell but both Loy Yang A and Loy Yang B increased their output.”

“Business consumers (billed monthly) are only now receiving their first bills with a full billing period at the higher prices while residential consumers (billed quarterly) have some weeks still to wait for bills, which will have a majority of consumption at the higher post carbon tax prices.

“A few weeks after this we will be able to monitor any impact from the carbon tax and its effect on both consumer demand and power generation.”

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