AGE July 31, 2003
Business pg1
Cool air
an ill wind for power
Date: July 31 2003
By Rod Myer
The boom in the use of air-conditioning will push the whole of eastern
Australia into a power supply crisis by the summer of 2005-06, according to the
National Electricity Market Management Company's latest demand and supply
assessment.
Victoria will face a reserve capacity deficit in 2004-05 and would have
faced one this summer except for a last-minute decision by Loy Yang Power to
push forward an 80-megawatt capacity boost into the current calendar year.
To avoid the looming shortage of generation capacity, billions of
dollars of new investment must be committed to the nation's generation system,
radical new demand-dampening measures must be taken or a combination of both
options adopted.
A NEMMCo spokesman said the use of air-conditioning by households and
business had taken off in NSW and Queensland. As a result, peak-power demand in
those states was now growing at higher rates than in Victoria and South Australia
where the air-conditioning phenomenon had been apparent for some time.
This would turn surpluses of summer power reserves into deficits in the
northern states by 2005-06. With all states in reserve deficit, boosting
interstate interconnection lines would not resolve the problem.
The NEMMCo figures do not mean there will be insufficient capacity to
meet national peak demand by 2005.
Rather, there will be insufficient capacity to meet demand and the
safety reserve that the regulator sets to cover for mechanical failure in times
of extreme heat. When these safety-reserve levels are breached, generator
failure can mean blackouts and prices can spike to as much as $10,000 a
megawatt-hour.
The looming crisis comes despite the installation of 850 megawatts of
peak capacity and interconnection in Victoria for a cost of about $650 million
in the past two years.
Victorian Energy Minister Theo Theophanous said the boost in capacity
at Loy Yang would ensure adequate power supplies for this summer and his Government
was working to get the right regulatory framework in place to ensure there was
adequate investment in the power system to cover rising demand.
Victoria has already implemented agreements with industry to turn off
power. The Government is running a trial program with big energy users to
expand this measure.
However, demand growth is so strong that even the planned commissioning
of the Basslink power connection with Tasmania in 2005 will not cover the
looming shortfall in Victoria's power reserve. Basslink will provide an extra
500 to 600 megawatts of power, the equivalent of adding a new unit to the giant
Loy Yang complex.
Consumer watchdog the Energy Action Group said that the blow-out in
summer peak demand was putting unacceptable strains on the power system and
that consumers needed to be charged the real price of providing peak power
through the installation of smart meters.
EAG president Andrea Sharam said the present pricing system meant
households without air-conditioning were subsidising those with
air-conditioners for as much as $1000 a year.
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