11 July 2013
Marcus Priest – Australian Financial Review
Falling demand and an increased supply of renewable energy have wiped 40 per cent from the value of Australia's energy market during just four years.
A new annual review of the energy sector by the Energy Supply Association of Australia (ESAA) has found the value of the wholesale energy market was more than $4 billion lower in 2011-12 than in 2008-09, even though this has not yet flowed through to retail prices. The ESAA report underscores the tough business outlook for traditional power companies, which has led to the mothballing of new projects as demand falls.
In 2011-12 alone, energy demand fell 1.9 per cent. While industrial consumption was down in Tasmania and NSW, residential demand declined across the board as the rapid growth in household solar reduced the call on grid power. The average Australian household used 10 per cent less power in 2011-12 than it did two years earlier.
At the same time, more renewable energy projects have come online as a result of the federal government's 2020 renewable energy target. Wind farms, which have low operational costs, now account for half of all new large-scale generation investment, compared with 11 per cent 10 years ago. And despite concerns about the intermittency of renewable energy sources, the ESAA review shows electricity supply became significantly more reliable in 2011-12.