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Hugh Saddler Research Associate, Centre for Climate Economics and Policy

Markets, regulation and renewables : the Australian National Electricity Market Presentation to Transforming energy initiatives from Australian and Indian perspectives: Access and innovation Alfred Deakin Research Institute. Hugh Saddler

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Hugh Saddler Research Associate, Centre for Climate Economics and Policy

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  1. Markets, regulation and renewables:the Australian National Electricity MarketPresentation toTransforming energy initiatives from Australian and Indian perspectives: Access and innovationAlfred Deakin Research Institute Hugh Saddler Research Associate, Centre for Climate Economics and Policy Managing Director, Sustainability Advice Team Pty Ltd. Principal Consultant, pitt&sherry hugh.saddler@pittsh.com.au

  2. Australian energy supply: primary fuel mix 2011

  3. Trends in Australian greenhouse gas emissions, excluding Land use, Land Use Change and Forestry, 1990-2010

  4. Official projections of Australia’s emissions with carbon priceSource: Australian Treasury

  5. Simplified schematic of energy and financial flows in the NEM Generator Transmission network service provider Financial intermediaries Distribution network service provider Retailer Embedded generator Customer generator Customer/consumer

  6. The economics of bidding in the NEM: a market working well

  7. Effect of $23/tonne price on emissions

  8. What has been happening to electricity generators in the NEM? Available at www.pittsh.com.au/cedex Note: Current Large Renewable Energy Target is 41 TWh in 2020

  9. What has been happening to consumer demand for electrical energy?Source: Calculated from data published by the ESAA

  10. Emissions from electricity generation in the NEM Emissions have fallen by 19 Mt CO2-e or 10.7% since December 2008

  11. What is expected to happen to consumer demand for electrical energy in the NEM in coming years?Source: AEMO National Electricity Forecasting Report, 2012

  12. What is happening? • Effects on NEM generator mix • The Large Renewable Energy Target • Higher fuel costs at some black coal power stations • More rainfall in south east Australia • Distributed (embedded) generation • Residential rooftop solar PV (AEMO forecasts 7.6 TWh ― 3.4% of annual energy ― by 2022) • Gas fuelled co/tri-generation • Other (landfill gas etc.) • Reduced demand for electricity ― regulation • Lighting (the phase-out of incandescent light bulbs) • More efficient residential water heating (solar, heat pumps, instantaneous gas) • Other appliance and equipment Minimum Energy Performance Standards • Energy performance standards for new residential and commercial buildings • Industrial energy efficiency programs (Energy Efficiency Opportunities etc.)

  13. What is happening?, cont. • Reduced demand for electricity ― general economic and behavioural • Changes in the economic outlook. Reduced energy forecasts are consistent with a moderation in gross domestic product (GDP), especially in the short term. • Reduced manufacturing consumption in response to the high Australian dollar. An expected increase in cheaper imports is anticipated to impact domestic manufacturing growth. • Consumer response (commercial and residential) to rising electricity costs and energy efficiency measures. • Increased awareness and understanding of easy behavioural change opportunities to reduce energy consumption

  14. Are higher prices driving reductions in electricity demand?

  15. Is peak demand continuing to increase while energy demand declines?Will exaggerated response to a short term phenomenon contribute to a “death spiral” for electricity network businesses? Source: Calculated from AER dataAEMO now projects very modest growth in both maximum demand and energy, except in Queensland

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