Cutting peak energy demand could ease pressure on rising electricity costs  

The SMH has an article noting that most of our rising electricity prices are caused by the infrastructure costs of supporting ever-increasing summer demand peaks - Cutting peak energy demand could ease pressure on rising electricity costs.

SURGING demand for electricity, especially consumption surges in mid-winter and mid-summer, has prompted a review of the power industry in an effort to ease the pressure on rising electricity prices.

The Australian Energy Market Commission is to examine ways of cutting peak power demand, either by substituting other energy sources or boosting energy efficiency measures.

Demand for so-called peak electricity is forcing electricity generators and distributors to spend billions of dollars on equipment that is used for only very brief periods a year. This is pushing up electricity prices charged to households and businesses, some of which could be avoided.

Demand for electricity in periods of extremely hot or cold weather has risen by 3.5 per cent a year since 2005 - almost three times the rise in overall electricity demand.

The review is to look at ways in which demand for electricity can be cut during peak periods, with the intention of stemming the continuing rise in electricity prices.

As much as $38 billion will be spent on upgrading electricity networks in the next five years, and up to $37 billion by 2020 on new electricity generation equipment.

''As [electricity] prices continue to rise … consumers may consider more innovative ways to either reduce or manage electricity consumption more efficiency,'' the commission said. Effective management of peak demand may not only help ease pressure on rising power prices but help reduce greenhouse gas emissions, it said.

Measures to reduce peak electricity demand through demand-side measures, which are aimed at cutting demand, have had a limited effect and account for only a small portion of the electricity market.

A survey by the Australian Energy Market Operator found there could be as much as 719 megawatts of electricity generation capacity available in demand-side management but only 131mW is used in this way.

Big electricity supply contracts, such as to aluminium smelters in the Hunter Valley, allow supply to be interrupted for periods of time in return for lower power prices - one example of the measures to be studied. Aluminium smelters account for an estimated 11 per cent of all electricity demand, ranking as the fourth-largest user after mining.