Victoria faces electricity woes

The Age
Wednesday 31/8/2011

VICTORIA and South Australia will need new electricity generation capacity earlier than previously forecast as a result of continued stronger than expected demand. The latest forecasts, to be released today by the Australian Energy Market Operator in its annual Statement of Opportunities, brings forward by 12 months to 2014-15 the need for new generation capacity in the two states, from last year's forecast.

And buoyant demand from the resource sector, with new coalmine developments coupled with export liquefied natural gas projects, will result in Queensland also needing more power stations in the national electricity market. Western Australia and the Northern Territory are not in the market because they are not connected to the grid linking the eastern states.

Queensland will need an estimated 341 MWs of new baseload capacity by 2013-14, based on steady economic growth. But if growth is slower, this could push out to 2015-16. Alternately, faster growth would bring that forward to 2012-13. Victoria needs a further 96 MW by 2014-15, with South Australia needing another 46 MW. Victoria has 2650 MW of gas-fired electricity capacity under planning, with a further 4815 MW of wind power, according to AEMO.

"The [national electricity] market is still growing at 1000 MW per annum, roughly", AEMO managing director Matt Zema said. "We still need investment in generation in all the regions, at different times. "Queensland is first cab off the rank at 2013-14, then Victoria/South Australia in 2014-15and then New South Wales 2018-19. "Demand is still growing in most of the regions. Queensland is growing a lot faster than the rest and that's basically driven by both the mining and LNG [sectors]".

Mr Zema said the forecasts were finalised before the government released details of the S23-a-tonne carbon tax, but they do incorporate a $10-$12 carbon price. "The [proposed carbon price] doesn't have a big impact in the first five years of the [forecast]", Mr Zema said, as any closure of generation capacity that might follow the carbon tax would not be until the second half of the decade.