Sunday, December 23, 2012

Emissions sink as consumers turn off coal

Interesting article in the fairfax papers a couple of days ago about how falling demand for electricity across the eastern seaboard is causing a drop in electricity generated from coal.

"Weak demand for electricity across eastern mainland states has sparked a “dramatic fall” in greenhouse gas emissions from Australia's power stations, the latest review of data by consultants Pitt & Sherry has found.
While demand for base-load electricity from black coal-fired power stations has been in retreat for about three years, the decline has extended in recent months to two of Victoria's emissions-intensive brown coal-fired plants, Hazelwood and Yallourn"
You can read the whole article here.

We have mentioned the squeeze that is being put on a lot of coal plants previously. The electricity sector is complex but several things seem to be happening at the moment.

1. Demand for (and use of) electricity is dropping and has been for several years. This is likely a response to higher prices causing people and businesses to use less electricity and, at the residential level, has been helped by the widespread uptake of solar panels and solar hotwater. This fall in demand then squeezes out the least competitive generators, which are often coal plants.

2. As the amount of renewable energy available increases but demand does not then the generators who can sell their power for the least cost have an advantage. The renewable energy target means that much of this renewable energy must be used and because their electricity costs so little to generate many renewable energy generators can undercut fossil fuel plant prices anyway. This phenomenon, known as the merit order effect, again squeezes the least competitive generators, often coal plants.

3. The carbon price, which makes makes more polluting electricity more expensive to generate then amplifies points 1&2, making the dirtiest generators even less competitive.

The net effect of all this: C02 emissions from the electricity sector are falling, which is a very good thing.

Update: Giles Parkinson at Renew Economy wrote about this as well, and his article also contains graphs showing the change in the generation mix and energy use in each state.

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