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COVID-19 electricity demand in Australia falls, but slower than global average

4 min read
3 Aug 2020

Despite the COVID-19 lockdown, Australia’s demand on the National Electricity Market (NEM) was down two per cent in the second quarter of 2020 compared to the same time last year, according to the latest quarterly report from the Australian Energy Market Operator (AEMO).[1]

However, global electricity demand is experiencing an even bigger fall, with the International Energy Agency predicting a global fall in demand of five per cent.[2] The United States of America could see energy demand (including electricity, gas and nuclear sources of energy) plummet by nine per cent, plus EU energy demand is predicted to plunge by 11% for the rest of 2020.[3]

Why has electricity demand decreased during lockdown?

While residential electricity usage has increased, commercial and industrial electricity usage has fallen due to the COVID-19 lockdown.[4] This outweighs any residential increase as the industrial and commercial sectors use far more electricity in comparison.

For example, in Australia residential energy usage increased by 1.4%, while commercial electricity demand dropped 10-20%.[5]

The International Energy Agency notes that the rest of the globe has experienced the same phenomenon, with COVID-19’s lockdown causing a decreased industrial and commercial demand that outweighs any increase in residential electricity consumption.[6]

Is Australia using more electricity than other countries?

Australia isn’t consuming more electricity than other countries, but other countries simply have a much bigger industrial and commercial demand for energy – so COVID-19’s lockdown makes it appear as if Australia’s electricity demand is higher than the demand elsewhere in the globe.

For example, in 2019 industrial and commercial energy consumption in the United States of America made up 47% of the country’s energy usage, while residential usage only accounted for 16%.[7] Transportation use accounted for the remaining 37%.

N.B. The NEM includes New South Wales, the Australian Capital Territory, Victoria, Tasmania, South Australia and parts of Queensland. Other parts of Queensland, the Northern Territory and Western Australia are not a part of the NEM.

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What does this mean for Aussies?

The plus side of the COVID-19 lockdown is that wholesale electricity prices have dropped. This is due to a number of factors, including the reduced demand on the NEM thanks to COVID-19. This has led to Australia’s East-coast seeing the lowest wholesale electricity prices since 2015.[8]

Lower wholesale costs, plus new enforcement powers from the Australian Competition and Consumer Commission (ACCC) that came into affect in June 2020[9] have seen some energy retailers lower their costs to consumers as they’re able to be more competitive.[10]

Financial support across Australia helping keep energy bills down

Beyond lower wholesale costs filtering down to customers, various state and territory governments have provided financial assistance such as grants or vouchers to help pay for electricity bills.

Examples of financial support for energy bills, based on passing eligibility criteria, include:

  • Queensland residents who receive a separate electricity bill (i.e. energy isn’t charged as a part of their rent) will receive a $200 rebate on utilities.[11]
  • New South Wales residents can apply for a number of $50 Energy Accounts Payment Assistance (EAPA) vouchers, subject to eligibility.[12]
  • Tasmania is funding one-off payments to help with utility bills via a range of charitable organisations.[13]
  • Western Australia is providing up to $305 for workers who have become unemployed due to COVID-19.[14]
  • The Australian Capital Territory will add a further $200 rebate to residents receiving the utility concession, plus the creation of a fund to assist households impacted by COVID-19.

If you’ve been impacted by COVID-19, you can contact your energy retailer or state/territory Government to inquire about getting financial assistance with your bills.

Comparing electricity and gas plans could help you save on your household energy bill. Learn more about whether you could save on electricity or gas bills by comparing energy plans.

Sources:

[1] Quarterly Energy Dynamics Q2 2020: Market Insights and WA Market Operations. Australian Energy Market Operator. 2020.

[2] Global energy demand to plunge this year as a result of the biggest shock since the Second World War. International Energy Agency. 2020.

[3] Ibid.

[4] Quarterly Energy Dynamics Q2 2020: Market Insights and WA Market Operations. Australian Energy Market Operator. 2020.

[5] Ibid.

[6] Global Energy Review 2020. International Energy Agency. 2020.

[7] U.S. energy facts explained. U.S. Energy Information Administration, United States Government. 2020.

[8] Demand and price reductions due to COVID-19. Australian Energy Market Operator. 2020.

[9] Guidelines will assist industry to comply with new laws. Australian Competition and Consumer Commission, Australian Government. 2020.

[10] Latest COVID-19 measures drive power reforms and protect market. Australian Energy Market Commission, Australian Government. 2020.

[11] COVID-19 household utility relief. Queensland Government. 2020.

[12] Apply for Energy Account Payment Assistance (EAPA) vouchers. Service NSW, New South Wales Government. 2020.

[13] Emergency relief support. Tasmanian Government. 2020.

[14] $1 billion COVID-19 economic and health relief package unveiled. Government of Western Australia. 2020.

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Written by James McCay

James is a devoted husband, father, animal lover and history buff (particularly medieval history). He studied Creative and Professional Writing at QUT, and is often buried in a book. James also enjoys historical re-enactment, spending time with his dogs, and making furniture out of reclaimed wood. He hopes to make a positive difference for readers through his writing.

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