Schemes encouraging people to install solar panels and save energy have cut household power consumption and will restrict the pace at which electricity bills increase in coming years, a new analysis has found.
While solar incentive schemes have been criticised as an expensive way to reduce greenhouse gas emissions, an industry analysis has found they have led to a reduction in the amount of fossil fuel electricity drawn from the national power grid.
It suggests it is likely no new baseload power plants will be needed over the next decade.
Electricity consumption fell 3.2 per cent over the three years to 2011, ending years of dramatic increases and bucking projections that it would continue to soar due to economic and population growth.
The analysis, released by the Renewable Energy Certificate Agents Association, found more than half the cut in power use was due to photovoltaic solar panels, solar hot water systems and energy savings programs in Victoria and New South Wales that encourage use of more efficient lightbulbs and appliances.
The rest is likely to be due to reduced demand from manufacturing industries, milder weather over the past two years and personal energy savings made to limit the impact of escalating bills.
Ric Brazzale, of consultants Green Energy Markets, said the cost of solar energy and energy-efficiency schemes was modest compared with other factors pushing up electricity prices.
The Australian Energy Market Commission last year estimated nationally there would be a 37 per cent increase in household electricity prices over three years to 2013-14. It found more than a third of the rise would be due to network costs – upgrading poles and wires. A fifth would be due to the carbon price, and a tenth to other green schemes including solar.
But Mr Brazzale said green energy schemes would also help lower the wholesale price of electricity from generators by reducing the demand for power from the grid. ''In the next few years the savings on wholesale prices are expected to be greater than the cost of the small-scale green schemes,'' he said.
Mr Brazzale said the cost of wholesale electricity was at its lowest level in 10 years, but the cost of transporting electricity and meeting peak summer demand due to inefficient use of airconditioners was ''out of control''.
The report follows Energy Minister Martin Ferguson this week acknowledging reduced electricity demand meant it would take longer for the grid to switch from coal-fired power to lower-emissions gas.
Environment Victoria campaigns director Mark Wakeham said the report had ramifications for the government's ''contract for closure'' program to pay to shut up to 2000 megawatts of coal-power generation. He said the declining wholesale electricity price meant the asset value of coal generators such as Hazelwood in the Latrobe Valley had reduced. ''It should make it cheaper for the government to secure closure of our dirtiest brown coal power stations,'' he said.
Energy Supply Association of Australia chief executive Matthew Warren welcomed the report, but doubted solar panels would reduce wholesale prices to the extent suggested.