John Blakeley: Using less power is cheaper than building generators

COMMENT

Bryan Leyland forecast in a recent Dialogue article that electricity load growth would continue at a rate similar to the 2.34 per cent it has averaged over the past four years.

This growth figure is higher than the historical rate of about 1.8 per cent a year since 1990, but Mr Leyland pointed out that since then, comprehensive statistics on electricity generation have not been collected.

He believes that recent forecasts have not taken fully into account an increasing number of "off-grid" generators that feed into local distribution systems. Perhaps this has lulled forecasters into making low predictions.

Can it, therefore, be assumed that the rate of growth in electricity consumption is now actually increasing, rather than decreasing, despite the best efforts of the Energy Efficiency and Conservation Authority?

Mr Leyland suggests that as much as 300MW to 600MW of additional generating capacity over the next 20 years could be avoided by accelerating improvements in efficient use of electricity.

But we can do much better than that if a determined effort is made by all electricity consumers, generators and retailers, and by the Government, to make it happen.

The Minister of Energy, Pete Hodgson, has said on many occasions that there is much potential for savings in electricity use.

Figures of 10 per cent for the average domestic consumer, and 5 per cent to 40 per cent for the average commercial/industrial user, have been quoted as being possible with only a minimal amount of effort and spending, as long as the commitment is there.

The winter shortages in 2001 and 2003 showed that, after an initial time lag in reacting to the situation, it was possible for consumers to use 10 per cent less electricity overall, with relative ease, for a month or two.

Interestingly, on both occasions, as soon as the hydro lake storage situation began to improve, the savings campaigns were quickly dropped, before they were scheduled to end.

If every consumer could use electricity 2.5 per cent more efficiently each year than the year before, we might be largely able to avoid increasing demand and, therefore, the need to build new power stations, except to replace ageing plants and to cover economic growth - if it is not possible to fully "decouple" this from rising electricity consumption.

This goal is obviously achievable with modern technology. There will be clear benefits to us all of lessening impacts on the environment, minimising increases in greenhouse gas emissions, and reducing the future electricity price rises that would be necessary to help meet the rising costs of new generation plants.

An active and sustained campaign will be needed if we are to use electricity more efficiently - and not just during times of shortage. But the problem is that the motivation is not there.

Individual consumers will benefit from reduced costs. And they will benefit even more if fixed line charges can be removed from monthly accounts. The electricity generators will benefit from less pressure to find new sources of generation, at extra cost, to meet increasing consumption.

The whole country will benefit from less capital being required for future electricity infrastructure, which could then perhaps be diverted to other urgent infrastructure needs.

Also the cost of meeting our international obligations to cover increasing greenhouse gas emissions from thermal electricity generation from 2008 onwards will be lessened.

The problem is that the Government benefits from revenue from increased generation because it still owns more than half the total generating capacity. The more product the generators and retailers sell, the more profit they make.

Unless that fundamental problem of lack of incentive to take firm action is dealt with, it is unlikely we will make much progress towards using electricity more efficiently.

Another alternative would be for the Government to tell all consumers that, both economically and environmentally, the country cannot afford the cost of continually increasing electricity generation capacity to meet the needs Mr Leyland predicts over the next 20 years.

Unless we all knuckle down and start to use electricity more efficiently, times of shortage will be inevitable, so all consumers have a duty to try to achieve this efficiency.

But from a political point of view this is rather unlikely, even though it would make economic and environmental sense, because the savings are there for the taking.

* John Blakeley, the convenor of the Sustainable Energy Forum, is a research fellow at Unitec. He is responding to the view of power industry consultant Bryan Leyland that the country's future electricity needs have been underestimated, thereby heightening the prospect of a power crisis.