TNEP Energy Transformed - Lecture 4.1

ENERGY TRANSFORMED: SUSTAINABLE ENERGY SOLUTIONS FOR CLIMATE CHANGE MITIGATION MODULE B INTEGRATED SYSTEMS BASED APPROACHES TO REALISING ENERGY EFFICIENCY OPPORTUNITIES FOR INDUSTRIAL/ COMMERCIAL USERS – BY SECTOR This online textbook provides free access to a comprehensive education and training package that brings together the knowledge of how countries, specifically Australia, can achieve at least 60 percent cuts to greenhouse gas emissions by 2050. This resource has been developed in line with the activities of the CSIRO Energy Transformed Flagship research program, which is focused on research that will assist Australia to achieve this target. This training package provides industry, governments, business and households with the knowledge they need to realise at least 30 percent energy efficiency savings in the short term while providing a strong basis for further improvement. It also provides an updated overview of advances in low carbon technologies, renewable energy and sustainable transport to help achieve a sustainable energy future. While this education and training package has an Australian focus, it outlines sustainable energy strategies and provides links to numerous online reports which will assist climate change mitigation efforts globally.

CHAPTER 4: RESPONDING TO INCREASING DEMAND FOR ELECTRICITY LECTURE 4.1: WHAT FACTORS ARE CAUSING RISING PEAK AND BASE LOAD ELECTRICITY DEMAND IN AUSTRALIA?

© 2007 CSIRO and Griffith University Copyright in this material (Work) is owned by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and Griffith University. The Natural Edge Project and The Australian National University have been formally granted the right to use, reproduce, adapt, communicate, publish and modify the Project IP for the purposes of: (a) internal research and development; and (b) teaching, publication and other academic purposes. A grant of licence ‘to the world’ has been formally agreed and the material can be accessed on-line as an open-source resource at www.naturaledgeproject.net/Sustainable_Energy_Solutions_Portfolio.aspx. Users of the material are permitted to use this Work in accordance with the Copyright Act 1968 (Commonwealth) [ref s40(1A) and (1B) of the Copyright Act]. In addition, further consent is provided to: reproduce the Work; communicate the Work to the public; and use the Work for lecturing, or teaching in, or in connection with an approved course of study or research by an enrolled external student of an educational institution. Use under this grant of licence is subject to the following terms: the user does not change any of the material or remove any part of any copyright notice; the user will not use the names or logos of CSIRO or Griffith University without prior written consent except to reproduce any copyright notice; the user acknowledge that information contained in the work is subject to the usual uncertainties of advanced scientific and technical research; that it may not be accurate, current or complete; that it should never be relied on as the basis for doing or failing to do something; and that in using the Work for any business or scientific purpose you agree to accept all risks and responsibility for losses, damages, costs and other consequences resulting directly or indirectly from so using. To the maximum extent permitted by law, CSIRO and Griffith University exclude all liability to any person arising directly or indirectly from using the Work or any other information from this website. The work is to be attributed as: Smith, M., Hargroves, K., Stasinopoulos, P., Stephens, R., Desha, C., and Hargroves, S. (2007) Engineering Sustainable Solutions Program: Sustainable Energy Solutions Portfolio, The Natural Edge Project. Acknowledgements The Work was produced by The Natural Edge Project (hosted by GU and ANU) using funds provided by CSIRO and the National Framework for Energy Efficiency. The development of this publication has been supported by the contribution of non-staff related on-costs and administrative support by the Centre for Environment and Systems Research (CESR) at Griffith University, under the supervision of Professor Bofu Yu, and both the Fenner School of Environment and Society and Engineering Department at the Australian National University, under the supervision of Professor Stephen Dovers. The lead expert reviewers for the overall Work were: Adjunct Professor Alan Pears, Royal Melbourne Institute of Technology; Geoff Andrews, Director, GenesisAuto; and Dr Mike Dennis, Australian National University. Project Leader: Mr Karlson ‘Charlie’ Hargroves, TNEP Director Principle Researcher: Dr Michael Smith, TNEP Research Director, ANU Research Fellow TNEP Researchers: Mr Peter Stasinopoulos, Mrs Renee Stephens and Ms Cheryl Desha. Copy Editor: Mrs Stacey Hargroves, TNEP Professional Editor

Graphics: Where original graphics have been enhanced for inclusion in the document this work has been carried out by Mrs Renee Stephens, Mr Peter Stasinopoulos and Mr Roger Dennis.

Peer Review Principal reviewers for the overall work were Adjunct Professor Alan Pears – RMIT, Geoff Andrews – Director, Genesis Now Pty Ltd, Dr Mike Dennis – ANU, Engineering Department, Victoria Hart – Basset Engineering Consultants, Molly Olsen and Phillip Toyne - EcoFutures Pty Ltd, Glenn Platt – CSIRO, Energy Transformed Flagship, and Francis Barram – Bond University. The following persons provided peer review for specific lectures; Dr Barry Newell – Australian national University, Dr Chris Dunstan - Clean Energy Council, D van den Dool - Manager, Jamieson Foley Traffic & Transport Pty Ltd, Daniel Veryard - Sustainable Transport Expert, Dr David Lindley – Academic Principal, ACS Education, Frank Hubbard – International Hotels Group, Gavin Gilchrist – Director, BigSwitch Projects, Ian Dunlop - President, Australian Association for the Study of Peak Oil, Dr James McGregor – CSIRO, Energy Transformed Flagship, Jill Grant – Department of Industry Training and Resources, Commonwealth Government, Leonardo Ribon– RMIT Global Sustainability, Professor Mark Diesendorf – University of New South Wales, Melinda Watt - CRC for Sustainable Tourism, Dr Paul Compston - ANU AutoCRC, Dr Dominique Hes - University of Melbourne, Penny Prasad - Project Officer, UNEP Working Group for Cleaner Production, University of Queensland, Rob Gell – President, Greening Australia, Dr Tom Worthington -Director of the Professional Development Board, Australian Computer Society . Enquires should be directed to: Mr Karlson ‘Charlie’ Hargroves Co-Founder and Director The Natural Edge Project www.naturaledgeproject.net/Contact.aspx

The Natural Edge Project (TNEP) is an independent non-profit Sustainability ThinkTank based in Australia. TNEP operates as a partnership for education, research and policy development on innovation for sustainable development. TNEP's mission is to contribute to, and succinctly communicate, leading research, case studies, tools, policies and strategies for achieving sustainable development across government, business and civil society. Driven by a team of early career Australians, the Project receives mentoring and support from a range of experts and leading organisations in Australia and internationally, through a generational exchange model.

Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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The International Energy Agency forecasts that if policies remain unchanged, world energy demand is set to increase by over 50 percent between now and 2030.1 In Australia, CSIRO has projected that demand for electricity will double by 2020.2 At the same time, The Intergovernmental Panel on Climate Change (IPCC) has warned since 1988 that nations need to stabilise their concentrations of CO2 equivalent emissions, requiring significant reductions in the order of 60 percent or more by 20503. This portfolio has been developed in line with the activities of the CSIRO Energy Transformed Flagship research program; ‘the goal of Energy Transformed is to facilitate the development and implementation of stationary and transport technologies so as to halve greenhouse gas emissions, double the efficiency of the nation’s new energy generation, supply and end use, and to position Australia for a future hydrogen economy’.4 There is now unprecedented global interest in energy efficiency and low carbon technology approaches to achieve rapid reductions to greenhouse gas emissions while providing better energy services to meet industry and society’s needs. More and more companies and governments around the world are seeing the need to play their part in reducing greenhouse gas emissions and are now committing to progressive targets to reduce greenhouse gas emissions. This portfolio, The Sustainable Energy Solutions Portfolio, provides a base capacity-building training program that is supported by various findings from a number of leading publications and reports to prepare engineers/designers/technicians/facilities managers/architects etc. to assist industry and society rapidly mitigate climate change.

The Portfolio is developed in three modules; Module A: Understanding, Identifying and Implementing Energy Efficiency Opportunities for Industrial/Commercial Users – By Technology Chapter 1: Climate Change Mitigation in Australia’s Energy Sector Lecture 1.1: Achieving a 60 percent Reduction in Greenhouse Gas Emissions by 2050 Lecture 1.2: Carbon Down, Profits Up – Multiple Benefits for Australia of Energy Efficiency Lecture 1.3: Integrated Approaches to Energy Efficiency and Low Carbon Technologies Lecture 1.4: A Whole Systems Approach to Energy Efficiency in New and Existing Systems Chapter 2: Energy Efficiency Opportunities for Commercial Users Lecture 2.1: The Importance and Benefits of a Front-Loaded Design Process Lecture 2.2: Opportunities for Energy Efficiency in Commercial Buildings Lecture 2.3: Opportunities for Improving the Efficiency of HVAC Systems Chapter 3: Energy Efficiency Opportunities for Industrial Users Lecture 3.1: Opportunities for Improving the Efficiency of Motor Systems Lecture 3.2: Opportunities for Improving the Efficiency of Boiler and Steam Distribution Systems Lecture 3.3: Energy Efficiency Improvements available through Co-Generation

1

International Energy Agency (2005) ‘World Energy Outlook 2005’, Press Releases, IEA, UK. Available at http://www.iea.org/Textbase/press/pressdetail.asp?PRESS_REL_ID=163. Accessed 3 March 2007. 2 CSIRO (2006) Energy Technology, CSIRO, Australia. Available at www.det.csiro.au/PDF%20files/CET_Div_Brochure.pdf. Accessed 3 March 2007. 3 The Climate Group (2005) Profits Up, Carbon Down, The Climate Group. Available at www.theclimategroup.org/assets/Carbon_Down_Profit_Up.pdf. Accessed 3 March 2007. 4 Energy Futures Forum (2006) The Heat Is On: The Future of Energy in Australia, CSIRO, Parts 1,2,3. Available at http://www.csiro.au/csiro/content/file/pfnd.html. Accessed 3 March 2007. Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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Module B: Understanding, Identifying and Implementing Energy Efficiency Opportunities for Industrial/Commercial Users – By Sector Chapter 4: Responding to Increasing Demand for Electricity Lecture 4.1: What Factors are Causing Rising Peak and Base Load Electricity Demand in Australia? Lecture 4.2: Demand Management Approaches to Reduce Rising ‘Peak Load’ Electricity Demand Lecture 4.3: Demand Management Approaches to Reduce Rising ‘Base Load’ Electricity Demand Lecture 4.4: Making Energy Efficiency Opportunities a Win-Win for Customers and the Utility: Decoupling Energy Utility Profits from Electricity Sales Chapter 5: Energy Efficiency Opportunities in Large Energy Using Industry Sectors Lecture 5.1: Opportunities for Energy Efficiency in the Aluminium, Steel and Cement Sectors Lecture 5.2: Opportunities for Energy Efficiency in Manufacturing Industries Lecture 5.3: Opportunities for Energy Efficiency in the IT Industry and Services Sector Chapter 6: Energy Efficiency Opportunities in Light Industry/Commercial Sectors Lecture 6.1: Opportunities for Energy Efficiency in the Tourism and Hospitality Sectors Lecture 6.2: Opportunities for Energy Efficiency in the Food Processing and Retail Sector Lecture 6.3: Opportunities for Energy Efficiency in the Fast Food Industry

Module C: Integrated Approaches to Energy Efficiency and Low Emissions Electricity, Transport and Distributed Energy Chapter 7: Integrated Approaches to Energy Efficiency and Low Emissions Electricity Lecture 7.1: Opportunities and Technologies to Produce Low Emission Electricity from Fossil Fuels Lecture 7.2: Can Renewable Energy Supply Peak Electricity Demand? Lecture 7.3: Can Renewable Energy Supply Base Electricity Demand? Lecture 7.4: Hidden Benefits of Distributed Generation to Supply Base Electricity Demand Chapter 8: Integrated Approaches to Energy Efficiency and Transport Lecture 8.1: Designing a Sustainable Transport Future Lecture 8.2: Integrated Approaches to Energy Efficiency and Alternative Transport Fuels – Passenger Vehicles Lecture 8.3: Integrated Approaches to Energy Efficiency and Alternative Transport Fuels - Trucking Chapter 9: Integrated Approaches to Energy Efficiency and Distributed Energy Lecture 9.1: Residential Building Energy Efficiency and Renewable Energy Opportunities: Towards a ClimateNeutral Home Lecture 9.2: Commercial Building Energy Efficiency and Renewable Energy Opportunities: Towards ClimateNeutral Commercial Buildings Lecture 9.3: Beyond Energy Efficiency and Distributed Energy: Options to Offset Emissions


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Responding to Increasing Demand for Electricity Lecture 2.1: What Factors are Causing Rising Peak and Base Load Electricity Demand in Australia?5 Educational Aim In the past many engineers have simply been asked to ensure that our societies can meet rising electricity and energy demand through building more supply infrastructure. Often decision makers have failed to ask the right questions, such as; why is electricity demand increasing so significantly? And can it be better managed? This lecture seeks to provide a base understanding of the related issues, through a consideration of the range of factors driving rising base and peak load electricity demand. Lectures 4.2-4.4 will explore a range of options to strategically respond to such factors of growth and deliver an effective combination of demand management and energy generation.

Essential Reading

5

Reference

Page

1. Hargroves, K., and Smith. M (2005) The Natural Advantage of Nations: Business Opportunities, Innovation and Governance for the 21st Century, Earthscan, London. Available at www.naturaledgeproject.net/NAON1Chapter3.6.aspx. Accessed 10 October 2012.

pp 53-55

2. EMET Consultants Pty Limited (2004) The Impact of Commercial and Residential Sectors’ Energy Efficiency Initiatives on Electricity Demand, Sustainable Energy Authority of Victoria, Australia. Available at www.ret.gov.au/documents/mce/energy-eff/nfee/_documents/consreport_07_.pdf. Accessed 10 October 2012

pp 6-21

3. Wilkenfeld, G. (2007) A National Demand Management Strategy for Small AirConditioners, Prepared for the National Appliance and Equipment Energy Efficiency Committee and The Australian Greenhouse Office. Available at www.energyrating.gov.au/wpcontent/uploads/Energy_Rating_Documents/Library/Cooling/Air_Conditioners/200 422-ac-demandmanagement.pdf. Accessed 10 October 2012.

pp 1-8

4. Pears, A. (2005) Potential for Replacing Hazelwood with Alternatives, Particularly Energy Efficiency, RMIT University, Australia. Available at www.naturaledgeproject.net/Documents/REPLACINGHAZELWOODWITHALTER NATIVESfinal1a.pdf. Accessed 10 October 2012.

pp 4-9

Peer review by Adjunct Professor Alan Pears - RMIT, and Dr Mike Dennis - Australian National University.


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Learning Points Intuitively, one would assume factors such as increasing population, increased use of electrical appliances and equipment and a growing economy would dictate energy use in society and be driving increased energy production. But the main driver to build new power stations in Australia currently, typically comes from the increasing seasonal peak energy demands for cooling and heating poorly insulated and designed commercial and residential buildings. Effectively the entire system is designed to ensure it meets these demand for air-conditioning on those stinking hot 40 degree summer days in Australia. Then the electricity supply sector in Australia carries a redundancy during the predominant non-peak periods… Once these new power stations were built to meet peak energy demand, they made more money for the more energy they sold. Hence there was little incentive for governments to encourage passive cooling design, demand management and energy efficiency About 10 per cent ‘spare’ capacity is required to meet the peak demand generated over 1 per cent of the year.6 …an effective way to reduce electricity consumption is to focus on reducing daily and seasonal peak electricity demand. Hargroves, K. and Smith, M. (2007)7 1. In Australia, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) has projected that demand for electricity will double by 2020.2 Clearly striving to meet such large projected demand will make it very hard to also achieve the required reductions in greenhouse gas emissions to the order of 60 percent or better by 2050. 2. The forecasted increases in electricity demand pose a dilemma for the electricity industry; on the one hand they need to deliver a profitable operation, and on the other they are faced with requirements over the coming decade to ‘Cap and Reduce’ greenhouse gas emissions under an emissions trading scheme. Hence it is important to ask: what is driving rising electricity demand in Australia? And can electricity services be provided to society through a combination of better demand management and low carbon electricity generation infrastructure upgrades? 3. The challenge of meeting Australia’s summer peak period electricity demand is increasingly the major factor driving the need to invest in new power stations. Over the last decade in Australia the summer peak periods of electricity demand have eclipsed the winter peak demand periods. A number of studies show that emissions from air-conditioning (heating and cooling) and lighting from commercial and residential buildings make up the bulk of the summer peak period electricity load. Typically about 30-40 percent of commercial sector demand and 40-50 percent of residential sector demand on system during peak periods in summer is due to air-conditioning.8 4. The use of air-conditioners is growing rapidly in homes and small businesses, and could conceivably double within 10 years. This rate of growth in air-conditioning use in both new and old houses is increasing rapidly, according to Australian residential energy efficiency expert, George Wilkenfeld.9 In addition householders are moving away from less energy intensive evaporative units and towards reverse cycle air-conditioning units that operate during peak 6

IPART (Independent Pricing and Regulatory Tribunal of New South Wales) (1999) Regulation of network service providers: discussion paper DP-34, IPART, Sydney; IPART (2002) Inquiry into the role of demand management and other options in the provision of energy services: interim report, review report no. 02-1, IPART, Sydney. 7 Hargroves, K. and Smith, M. (2006) The Natural Advantage of Nations: Business Opportunities, Innovation and Governance for the 21st Century, Earthscan, London, pp 53-55. Available at www.naturaledgeproject.net/NAON1Chapter3.6.aspx. Accessed 2 June 2007. 8 Wilkenfeld, G. (2004) A National Demand Management Strategy for Small Air-Conditioners, Prepared for the National Appliance and Equipment Energy Efficiency Committee and The Australian Greenhouse Office. Available at www.energyrating.gov.au/library/pubs/200422-ac-demandmanagement.pdf. Accessed 2 June 2007. 9 Ibid. Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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demand periods. In order to meet the demand in peak periods, which only accounts for a small percentage of annual demand, new electricity supply infrastructure is projected to be needed across the country. Put into perspective, about 10 percent ‘spare’ capacity is required to meet the peak demand generated over only 1 percent of the year.10 This 10 percent of energy supply capacity is then redundant during the predominant non-peak periods. Under current regulatory frameworks the utilities are rewarded for finding ways to use this 10 percent and increase consumption of electricity; the more energy they sell the more money the make. 5. In 2004, the Energy Supply Association of Australia estimated that in order to continue to supply electricity to metropolitan Sydney this would require AUD$3.5 billion in network investment over the next five years, and around 80 percent of that investment is needed to meet the peak load demand. Therefore, another problem (both physical and financial) that rising electricity demand from air-conditioning creates is the need for peak grid network augmentation and upgrades. 6. A study in Western Australia11 concluded that, ‘The cost of electricity infrastructure to meet the peak demand from air-conditioners is significant and much larger than the price consumers pay for the air-conditioners themselves... [this cost] is not recovered in the amounts consumers pay for the electricity used by air-conditioners.’ Due to this alone, a household without an airconditioner is in effect cross subsidising an air-conditioned house by approximately AUD$75/yr.12 Other studies concluded that for every AUD$1000 a homeowner spends on an air-conditioner in Sydney, AUD$6000 must be spent on upgrading the network, and a further AUD$600 on additional peak generation. The air-conditioner only consumes AUD$120 of electricity per year but as this adds to demand during the peak period it has far greater impact on the electricity generation costs.13 In economic terms this amounts to a serious negative externality. 7. Since in the past there has been relatively little encouragement to reduce electricity consumption through activities like legislated passive heating and cooling design of buildings, improved insulation, demand management and energy efficiency options, this has created a ‘vicious cycle’. The vicious cycle begins with demand rising and pressure to build new costly infrastructure to meet this demand. All state governments in Australia are planning to build additional electricity supply infrastructure to meet projected rising peak period electricity demand. However, as we have pointed out, this will lead to large excesses in supply during non-peak periods, again reducing political will from the supply industry for governments to invest in energy efficiency programs. 8. This vicious cycle will be exacerbated by the fact that climate change will lead to more days per annum above 35°C in Australia and thus greater demand for air-conditioners. A recent CSIRO study estimated that a temperature rise of 1 degree (relative to 1990) from climate change would increase the number of days above 35°C by 18 percent in South Australia and 25 percent in the Northern Territory.14 The report indicated that an average temperature increase of just 1 degree will also increase peak electricity demand in Adelaide and Brisbane by between 2-5 percent. An average temperature increase of 2-3 degrees could increase peak electricity demand by 3-15 10

IPART (Independent Pricing and Regulatory Tribunal of New South Wales) (1999) Regulation of network service providers, Discussion Paper DP-34, IPART, Sydney; IPART (2002) Inquiry into the role of demand management and other options in the provision of energy services, Interim Report, review report no. 02-1, IPART, Sydney. 11 Office of Energy (2004) Information Paper: The Impact of Residential Air-Conditioning on the Western Australian Electricity System, Office of Energy, WA. Available at http://www.energy.wa.gov.au/cproot/603/2759/Air%20conditioning%20paper.pdf. Accessed 4 September 2007. 12 Ibid. 13 Energy Retailers Association of Australia (2004) Submission to Productivity Commission Inquiry ‘Energy Efficiency’, Energy Retailers Association of Australia. 14 Preston, B. and Jones, R. (2006) Climate change impacts on Australia and benefits of early action to reduce global greenhouse gas emissions, written for the Australian Business Roundtable on Climate Change. Available at http://www.csiro.au/resources/pfbg.html. Accessed 2 June 2007. Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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percent in Adelaide, Brisbane and Melbourne. An increase of 4 or more degrees, at the upper end of forecast IPCC projections, would increase peak electricity demand by up to 25 percent in Adelaide, Brisbane and Melbourne.15 9. Clearly it is vital that we understand in detail what contributes to rising peak load electricity demand in Australia. Studies show that the residential and commercial sectors contribute to summer peak periods not just simply through air-conditioning but also through other aspects such as lighting, cooking, hot water heating, and refrigeration (see Figures 4.1.4, 4.1.6, and 4.1.7). Professor Alan Pears from RMIT University points out that, ‘Figure [4.1.7] shows that as well as air-conditioning, refrigeration is a major summer peak demand issue. The Figure shows that by early evening, even cooking and lighting are beginning to contribute significantly to demand. Even pool pumping shows up as a contribution. So a combination of appliance and equipment energy efficiency improvement, fuel switching away from electricity for cooking and hot water, and load management of pool pumps, hot water services and other equipment (including computers, standby power, etc) can help reduce peak load and address electricity infrastructure costs.’16 10. Behind the steady rise in peak load is also a consistent rise in the base load electricity demand in Australia. Every 20 years Australia’s overall electricity usage tends to double. Figure 4.1.10 shows that industry, the commercial and residential sectors, as well as overnight lighting (public street lighting), are the most significant users of base load electricity. Over the next 20 years demand for base load energy could also rise from increased demand in Australia for desalination plants and for plug-in hybrid vehicles that may be recharged over night in peoples homes.

15

Preston, B.L. and Jones, R.N. (2006) Climate Change Impacts on Australia and the Benefits of Early Action to Reduce Global Greenhouse Gas Emissions, A consultancy report for the Australian Business Roundtable on Climate Change, CSIRO, ACT. Available at http://www.csiro.au/files/files/p6fy.pdf. Accessed 3 March 2007. 16 Pears, A. (2005) Potential for Replacing Hazelwood with Alternatives, Particularly Energy Efficiency, RMIT University, Attachment B Megawatts or Negawatts – Distributed and Demand-Side Alternatives to New Generation Requirements A Strategic Review. Available at www.naturaledgeproject.net/Documents/REPLACINGHAZELWOODWITHALTERNATIVESfinal1a.pdf. Accessed 2 June 2007. Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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Brief Background Information The International Energy Agency forecasts that, ‘if policies remain unchanged, world energy demand is projected to increase by over 50 percent between now and 2030’.17 CSIRO has projected that energy demand will double in Australia by 2020. Clearly striving to meet such large projected demand will make it very hard to also achieve the required reductions in greenhouse gas emissions. Therefore it is important to ask the following question. What is Driving Rising Peak Electricity Demand in Australia? This question was asked in The Natural Edge Project publication The Natural Advantage of Nations: Business Opportunities, Innovation and Governance for the 21st Century, where it stated:18 Intuitively, one would assume factors such as increasing population, increased use of electrical appliances and equipment and a growing economy would dictate energy use in society and be driving increased energy production. But the main driver to build new power stations in Australia currently typically comes from the increasing seasonal peak energy demands for cooling and heating poorly insulated and designed commercial and residential buildings. Effectively the entire system is designed to ensure it meets these peak periods of demand mid afternoon for air-conditioning on those stinking hot 40 degree summer days in Australia19 (and in the morning and evenings on cold days in the winter). Typically about 30-40 percent of commercial sector demand and 40-50 percent of residential sector demand on system peak during summer is now due to air-conditioning, and the two loads are of similar magnitude.20 Air-conditioning use is growing rapidly in homes and small businesses, and could conceivably double within 10 years in Australia. This has created a ‘vicious cycle’ for governments from which they, to-date, have not been able to extricate themselves. All state governments are planning to build additional electricity supply infrastructure to meet projected rising peak load electricity demand, but this will lead to large excesses in supply during non-peak periods, again reducing political will from the supply industry for governments to invest in energy efficiency programs. The ‘vicious cycle’ has become an expensive exercise for both governments and taxpayers around Australia. Much of our electricity supply infrastructure is built to meet daily and seasonal peak loads, which only account for a small percentage of annual demand. About 10 percent ‘spare’ capacity is required to meet the peak demand generated over only 1 percent of the year.21 The latest periodbased demand duration curve for South Australia (representing the total electricity energy delivered annually to the main transmission system) is shown in Figure 4.1.1. This means extra infrastructure costs for governments and tax payers.

17

International Energy Agency (2005) World Energy Outlook 2005: Middle East and North Africa Insights, IEA. Available at http://www.iea.org/Textbase/publications/free_new_Desc.asp?PUBS_ID=1540. Accessed 23 April 2007. 18 Hargroves, K. and Smith. M. (2005) The Natural Advantage of Nations: Business Opportunities, Innovation and Governance for the 21 st Century, Earthscan, London, pp 53-55. 19 Since the 1990s the summer peak load electricity demand has exceeded the winter peak load demand even in states like Victoria due to the steady increase in the percentage of homes using air-conditioning. 20 Wilkenfeld, G. (2007) A National Demand Management Strategy for Small Air-Conditioners, Prepared for the National Appliance and Equipment Energy Efficiency Committee and The Australian Greenhouse Office. Available at www.energyrating.gov.au/library/pubs/200422-ac-demandmanagement.pdf. Accessed 2 June 2007. 21 IPART (Independent Pricing and Regulatory Tribunal of New South Wales) (1999) Regulation of network service providers, Discussion Paper DP-34, IPART, Sydney; IPART (2002) Inquiry into the role of demand management and other options in the provision of energy services, Interim Report, review report no. 02-1, IPART, Sydney. Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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Figure 4.1.1. South Australian annual electricity load duration curve Source: Tothill, K. (2001)22 Air-Conditioning Usage is Rising Rapidly Even in the colder states like Victoria and Tasmania the summer peak load is larger than the winter peak. From the mid 1990’s, rapid increases in the penetration of air-conditioners (see Figure 4.1.2), particularly in the residential sector, has resulted in Victorian peak electricity demands consistently occurring during summer.

Figure 4.1.2. Penetration of residential air-conditioners – Victoria 1966-2015 Source: Tothill, K. (2001)23

22

Tothill, K. (2001) SA Government Task Force Electricity Demand Side Management and Supporting Measures, ElectraNet SA. Available at www.sustainable.energy.sa.gov.au/pdfserve/programs/dsm/elec_dsm/submissions/pdf/21_ElectraNet.pdf. Accessed 2 June 2007. 23 Ibid. Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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Prior to the increase in the use of air-conditioners in summer the highest peak demand consistently occurred in the winter season in Victoria. A 2004 report investigating Electrical Peak Load Analysis for Victoria 1999 – 200324 found that, ‘summer system peaks invariably coincide with severe weather conditions (high temperatures). The ten highest peak demand days between 1999 and 2003 all had maximum daytime temperatures of 35°C or more. While other factors may be playing a part, it seems apparent that these peaks in electricity demand are being driven largely by the use of space conditioning equipment (principally refrigerative air-conditioners in the case of Victoria).’

Figure 4.1.3. Summer electricity load pattern – proportion of major components Source: EMET Consultants (2004)25

In a study commissioned by the Sustainable Energy Authority of Victoria (now Sustainability Victoria) in 2004 by EMET Consultants similar results for NSW were found.26 This study showed that airconditioning in the commercial and residential sector contributes disproportionately to the summer peak load. Figure 4.1.3 shows the electricity demand patterns derived by EMET for the New South Wales electricity grid system for the days of peak demand in the 2003 summer. 27 Each of these has been indexed to represent a generic pattern of consumption for these peak days. The EMET study also provides one of the few breakdowns of residential and commercial building contributions to the summer peak load. Figures 4.1.4 and 4.1.5 both show the remarkable contribution to summer afternoon peak load that air-conditioning makes in both the NSW residential and commercial sectors.

24

Energy Efficient Strategies (2004) Electrical Peak Load Analysis Victoria 1999 – 2003: Executive Summary of Report, VENCORP and the Australian Greenhouse Office, p 1. Available at http://www.energyrating.gov.au/library/pubs/2005-ac-peakloadexecsumm.pdf. Accessed 2 June 2007. 25 Ibid, p 7. 26 EMET Consultants Pty Ltd (2004) The Impact of Commercial and Residential Sectors: Energy Efficiency Initiatives on Electricity Demand, Sustainable Energy Authority of Victoria. Available at www.nfee.gov.au/public/download.jsp?id=193. Accessed 2 June 2007. 27 Ibid, p 7. Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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Figure 4.1.4. NSW residential sector, 2003 – breakdown of peak summer demand pattern by application Source: EMET Consultants (2004)28

Figure 4.1.5. NSW commercial sector, 2003 – breakdown of peak summer demand pattern by application Source: EMET Consultants (2004)29 28

Ibid, p 16.


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These results are consistent with findings in overseas markets which have similar climates to Australia, such as California in the USA, as seen in Figure 4.1.6. Again the contribution of airconditioning to the California summer peak load is remarkable.

Figure 4.1.6. End-use structure of 1999 California summer-peak-day state wide load (LHS) with 1999 California summer peak residential end use structure (RHS) Source: Brown, R.E. et al (2002)30

29

Ibid, p 10. Brown, R.E. and Koomey, J.G. (2002) ‘Electricity Use in California: Past Trends and Present Usage Patterns,’ Energy Policy, LBL47992, cited in Lovins, A. et al (2002) Small Is Profitable: The Hidden Economic Benefits of Making Electrical Resources the Right Size, Rocky Mountain Institute Publications, Colorado. Note that all but the bottom two segments are commercial and residential building loads, plus a breakdown of the 1999 California summer peak residential sector load. ‘Miscellaneous’ includes lights, pools, spas, waterbeds, and small appliances. 30


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The rate of growth in air-conditioning use in both new and old houses is growing rapidly, and according to Australian residential energy efficiency expert, George Wilkenfeld, this is due to the following factors: 31 -

‘A decline in costs of air conditioners due to the rapid growth of manufacture in China and other Asian countries;

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Rising disposable income;

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A masking of the real costs of domestic air conditioner operation through tariff cross subsidies;

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The long-term promotion (including by financing and concessional tariffs) of air-conditioning by some electricity suppliers through the 1990s;

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The increase in the type of housing forms, site densities and urban environmental factors that make reliance on natural ventilation more difficult;

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The lack of significant improvement in building shell efficiency in recent years; and

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Air conditioners were formerly installed some time after construction of new dwellings, but are now being installed in a rising proportion of dwellings at the time of construction.’

Residential air-conditioning energy peak loads and overall consumption during summer could potentially grow further, because of increasing average dwelling size, the tendency to cool the entire house rather than just one or two rooms, and more frequent days of extreme high temperature due to climate change. A recent CSIRO study32 outlined how the IPCC forecasted temperature rises caused by human induced climate change will further exacerbate the number of hot days within each summer in Australia, further increasing air-conditioning loads and peak electricity demand. The study estimated that a temperature rise of 1 degree (relative to 1990) from climate change would increase the number of days above 35°C by 18 percent in South Australia and 25 percent in the Northern Territory.33 The report indicated that an average temperature increase of just 1 degree will also increase peak electricity demand in Adelaide and Brisbane by between 2-5 percent. An average temperature increase of 2-3 degrees could increase peak electricity demand by 3-15 percent in Adelaide, Brisbane and Melbourne. An increase of 4 or more degrees, at the upper end of forecast IPCC projections, would increase peak electricity demand by up to 25 percent in Adelaide, Brisbane and Melbourne.34 Wilkenfeld warns that, ‘Given the combination of high growth rates in ownership and increasing use per air conditioner, it is conceivable that the energy consumption and peak demand of airconditioning in the residential sector could double in the next 10 years.’35 There is no doubt that air-conditioning is a large and rapidly growing component contributing to demand in peak periods, but it is not the only component. As Professor Alan Pears from RMIT University points out; ‘Figure [4.1.7] shows that as well as air-conditioning, refrigeration is a major summer peak demand issue. The Figure shows that by early evening, even cooking and lighting are 31

Wilkenfeld, G. (2004) A National Demand Management Strategy for Small Air-Conditioners, Prepared for the National Appliance and Equipment Energy Efficiency Committee and The Australian Greenhouse Office. Available at www.energyrating.gov.au/library/pubs/200422-ac-demandmanagement.pdf. Accessed 2 June 2007. 32 Preston, B.L. and Jones, R.N. (2006) Climate Change Impacts on Australia and the Benefits of Early Action to Reduce Global Greenhouse Gas Emissions, A consultancy report for the Australian Business Roundtable on Climate Change, CSIRO, Canberra, ACT. Available at http://www.csiro.au/files/files/p6fy.pdf. Accessed 3 March 2007. 33 Ibid. 34 Ibid. 35 Wilkenfeld, G. (2004) A National Demand Management Strategy for Small Air-Conditioners, Prepared for the National Appliance and Equipment Energy Efficiency Committee and The Australian Greenhouse Office. Available at www.energyrating.gov.au/library/pubs/200422-ac-demandmanagement.pdf. Accessed 2 June 2007. Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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beginning to contribute significantly to demand. Even pool pumping shows up as a contribution. So a combination of appliance and equipment energy efficiency improvement, fuel switching away from electricity for cooking and hot water, and load management of pool pumps, hot water services and other equipment (including computers, standby power, etc) can help reduce peak load and address electricity infrastructure costs.’36 Figures 2.1.4 to 2.1.6 also showed that these factors contribute to peak load electricity demand.

Figure 4.1.7. 1994 NSW residential electricity demand on peak summer day at four times compared with average annual demand Source: Pears, A. (2005)37 It is worth noting that as well as significantly contributing to the electricity demand during peak periods in summer, the residential sector also contributes significantly to the morning and evening peak periods in winter through mainly heating loads.

36

Pears, A. (2005) Potential for Replacing Hazelwood with Alternatives, Particularly Energy Efficiency, RMIT University, Attachment B Megawatts or Negawatts – Distributed and Demand-Side Alternatives to New Generation Requirements A Strategic Review. Available at www.naturaledgeproject.net/Documents/REPLACINGHAZELWOODWITHALTERNATIVESfinal1a.pdf. Accessed 2 June 2007. 37 Ibid, p 29. Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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Figure 4.1.8. 2003 NSW winter electricity load pattern - proportion of major components Source: EMET38

Figure 4.1.9. NSW residential sector – breakdown of peak winter demand pattern by application Source: EMET39 38

EMET Consultants Pty Ltd (2004) The Impact of Commercial and Residential Sectors: Energy Efficiency Initiatives on Electricity Demand, Sustainable Energy Authority of Victoria. Available at www.nfee.gov.au/public/download.jsp?id=193. Accessed 2 June 2007. Prepared by The Natural Edge Project 2007 (Hosted by GU and ANU)

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What Contributes to Base Load Electricity Demand in Australia? Base load electricity demand refers to the amount of electricity used overall by an economy 24 hours a day. Over the last century, base load electricity demand has doubled every 20 years or so. Building more supply to meet this trend involves investing large amounts of capital in generation and network assets. To date there has been no study published that provides a detailed analysis of what contributes to base load electricity demand for the whole of Australia. On a state level, Professor Alan Pears analysed Victorian base load electricity demand and the results are shown in Figure 4.1.10, which provides a breakdown of Victorian electricity consumption by end-use sector since 1973.40 The study shows that base load in Victoria is dominated by the residential sector, metal products industry (mainly aluminium), and the commercial sector. It also shows that electricity use by the electricity generation industry itself is also substantial.

Figure 4.1.10. Trends in Victorian electricity usage by end-use sector in Gigawatt-hours per year (GWh), 1973-74 to 2000-01 Source: Pears, A. (2005) with data from ABARE (2004)41 Many experts assume that the residential and commercial sectors contribute little to base load demand as their demand patterns are thought to come is spikes, however a substantial proportion of commercial and residential sector demand is, in fact, base load.42 A study of NSW commercial sector electricity demand in 1996 found that commercial sector electricity base load demand was more than half of its annual average demand.43

39

Ibid, p 16. Pears, A. (2005) Potential for Replacing Hazelwood with Alternatives, Particularly Energy Efficiency, RMIT University, Australia. Available at www.naturaledgeproject.net/Documents/REPLACINGHAZELWOODWITHALTERNATIVESfinal1a.pdf. Accessed 2 June 2007. 41 ABARE (2004) Energy Data, ABARE. Available at www.abare.gov.au. Accessed 2 June 2007. 42 Pears, A. (2005) Potential for Replacing Hazelwood with Alternatives, Particularly Energy Efficiency, RMIT University, Australia. Available at www.naturaledgeproject.net/Documents/REPLACINGHAZELWOODWITHALTERNATIVESfinal1a.pdf. Accessed 2 June 2007. 43 NSW Department of Energy (1996) Energy Use in the NSW Commercial Sector, NSW Department of Energy, Sydney. 40


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Optional Reading 1. APEC Conference – Air-conditioning & energy performance - the next 5 years. This conference was held at the Sydney Convention and Exhibition Centre on 9 June, 2004 with workshops running on 7 & 8 June. Available at www.energyrating.com.au/pubs/2004apec-comminiques.pdf. Assessed10 October 2012. 2. Brown, R. E. and Koomey, J. G. (2002) ‘Electricity Use in California: Past Trends and Present Usage Patterns,’ Energy Policy. 3. Energy Efficient Strategies (2004) Electrical Peak Load Analysis Victoria 1999 – 2003: Executive Summary of Report, VENCORP and the Australian Greenhouse Office, p 1. Available at www.energyrating.com.au/library/pubs/2005-ac-peakload.pdf. Accessed 10 October 2012. 4. Office of Energy (2004) Information Paper: The Impact of Residential Air-Conditioning on the Western Australian Electricity System, Office of Energy, WA. Available at www.docstoc.com/docs/24750932/INFORMATION-PAPER. Accessed 10 October 2012. 5. Pears, A. (2005) Potential for Replacing Hazelwood with Alternatives, Particularly Energy Efficiency, RMIT University, Australia. Available at www.naturaledgeproject.net/Documents/REPLACINGHAZELWOODWITHALTERNATIVESfinal1 a.pdf. Accessed 10 October 2012. 6. Tothill, K. (2001) SA Government Task Force Electricity Demand Side Management and Supporting Measures, ElectraNet SA. Available at http://s3.amazonaws.com/zanran_storage/energy.sa.gov.au/ContentPages/17154375.pdf. Assessed 10 October 2012.

Key Words for Searching Online Peak Load, Peak Electricity Demand, Energy Efficient Air-Conditioning, Energy Efficiency in the Home, Green Building tips, Green Building Council.


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