Electricity Demand Falling – Bad News for Electricity Utilities

Electricity consumption in Australia has been steadily increasing up until 2010. For more than a century, through the Great Depression and two world wars, Australians have increased their use of electricity year by year.

However, in the three years since 2010, statistics show the electricity demand falling. In other words, starting in 2010, the consumption of electricity in Australia was less than the year before. And the thing is: it appears that the trend will not reverse itself in the near future.

National Electricity Demand Falling

The electricity demand falling trend is particularly large in the NEM or National Electricity Market. This area covers the ACT and the five eastern states in Australia. But the reduction in electricity consumption is also being experienced in WA.

The financial year leading to 2013 was approximately eight terawatt hours (TWh) lower in consumption than in the peak year of 2009. This shows around 4.3 percent reduction in electricity consumption.

Potential Threat to AGL

One of the hardest hit in this situation is AGL along with other electric utility providers. Since these companies are banking on increasing electricity demand to maintain their operations and pursue their commercial objectives, they would be losing huge revenues and would eventually stop their development of more power plants if there is no great demand for their products.

Since AGL and other electric utilities generate electricity from power stations that use natural gas, hydroelectricity, thermal power, coal seam gas, wind power and so forth, the electricity demand falling trend endangers the existence of AGL and similar facilities – important cogs in the progress of Australia’s economy.

AGL claims that it has more than 3.8 million residential and business customer accounts distributed in places such as Queensland, Victoria, New South Wales and South Australia. If the trend persists, their revenues in these places will drastically go down.

Many have assumed that the consumption of electricity will steadily increase. As the population grows, and more Australians getting prosperous each year, it is only natural that the consumers will be using more electricity. In fact, the electricity industry was built on that premise.

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But this trend in reduced electricity consumption for the past four years cannot be ignored. This situation has really taken the industry by surprise. Naturally, it took the electricity industry two or three years to accept this trend.

If electricity consumption has continued to increase from 2005 up to this time, at the rate it has increased during the previous twenty years, the total consumption of electricity in Australia would have been 37 TWh by 2013.

But alas, it was not so. Some industry insiders have commented that the entire decline in consumption has been at the expense of coal-fired generators. The result is that many of these plants are now barely profitable.

The question that some industry insiders are asking is why this situation came about. They believe that there is a large combination of factors involved, and that Tony Abbott’s recent action against the carbon tax takes a large chunk of the blame.

Modern Solar is one of the largest home improvement companies in Australia. Modern works to provide Australian’s with solar energy products to minimise the cost of living and create a sustainable future. Read more about Modern Solar on their website.

The Author

I took an interest in the Australian energy sector close to ten years ago and since then have monitored the trends, technologies and direction of the Australian Energy Market. I was drawn to the Australian solar market in 2008 and since then have worked heavily in the field. I am partnered with national and international solar energy companies, from manufacturers of solar panel and inverter technology, online software developers that introduce tools to quote, monitor and manage solar power systems and media organisations who like myself, closely monitor the solar and renewable energy sector.

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