Australian Energy Market Operator also finds this would push wholesale energy prices up, but reduce consumption
Australia’s coal-fired power stations will face early closure to meet 2030 emissions reduction commitments, according to assumptions made by a government agency that runs the national electricity grid.
The Australian Energy Market Operator (Aemo) also found such closures would push wholesale energy prices up, but that would be offset by reduced energy consumption and greater energy efficiency, leaving consumers’ energy bills relatively unaffected.
The findings come from the Aemo’s annual 20-year forecast for the country’s electricity consumption, released on Thursday.
According to the latest report, the Council of Australian Governments (Coag), which created Aemo, decided the energy sector needed to be consistent with those targets.
But in modelling future energy use, Aemo found the Coalition’s current Direct Action policies would not achieve those reductions, and so made further assumptions about carbon abatement policy required in the electricity sector.
The report said “detailed policy measures are yet to be announced”, and so it “assumed the achievement of this target will be supported by energy efficiency trends, electricity pricing trends, and coal-fired generator retirements”.
Many environmentalists, thinktanks, academics and even energy giant AGL – which operates some of the country’s biggest coal-fired power plants – have been urging the government to design policy that would force the early closure of coal power stations.
Neither the Coalition nor Labor has a policy of early closure, although Labor said it would initiate an “electricity modernisation review” after the election to ensure an orderly transition to renewable energy. The Greens policy is to incrementally close coal power plants, starting with the most polluting ones.
According to AGL and other groups, the constant cheap supply of coal power, in addition to being Australia’s biggest producer of carbon emissions, had created an oversupply of electricity, making it hard for renewable energy to enter the market.
A Climate Institute report from April found the regulated and orderly closure of coal power plants was needed to avoid major economic disruption in 2030, when the country would need to rush to meet its international commitments.
Olivia Kember from the Climate Institute said the assumption was revealing. “It’s a recognition that if you’re going to reduce electricity emissions by that amount, there are only so many ways you can do it,” she said.
Kember said it was interesting the market operator had to make such significant assumptions about future policy. “What this points to is a need for more clarity for what kind of changes in the policies and the regulatory framework are going to be necessary to manage the emissions reduction and growth of clean energy in a way that works for everybody,” she said.
The report also found that partly as a result of carbon abatement commitments, energy use would remain roughly stable for the next 20 years, despite a growing population, a growing economy and increasing use of electrical appliances.
There would be a slight increase to 2020 due to the liquified natural gas boom in Queensland, where vast amounts of electricity would be used to compress and chill gas, but as rooftop solar and energy efficiency improvements accelerate, electricity use would flatten after that.
The Aemo chief executive, Matt Zema, said new and improved appliances were replacing energy-intensive appliances such as halogen lights, plasma televisions, desktop computers and stereos.
“Maximum demand is forecast to remain flat across the outlook period, despite increased use and capacity of heating and air conditioning as growth is offset by energy efficiency and rooftop PV.
“Projected energy efficiency savings by the year 2035–36 are expected to total around 27,000 GWh. This translates to an equivalent of close to 15% of current grid-supplied electricity use.”
