The Australian Energy Market Operator (AEMO) produces yearly demand forecasts where they predict how much power the National Energy Market will use. Graphs of their predicted demand versus the actual energy usage are quite interesting. Where by ‘interesting’ we mean they bear no relationship to each other whatsoever.
For example, AEMO predicted that in 2013 – 2014 energy usage would hit around 220,000 gigawatt hours. Actual usage was closer to 181,000 gigawatt hours. That’s a discrepancy of around 17%.
The entire industry relies on AEMO’s forecasts to determine how much infrastructure should be built to meet demand. Higher demand predictions lead to more money being spent by power companies on infrastructure. We’ve already seen how much infrastructure spends impact power prices.
Take a look at the graphs below and tell us what you think. What could AEMO possibly be using as inputs into their data that tells them demand is going to rise, even in the face of direct evidence it’s falling?
How should demand forecasts be collated in future? One suggestion is that AEMO’s forecasting responsibilities be transferred to a research institution like a university with no direct links to the power industry.
AEMO’s electricity demand forecasts from 2010 – 2014 graphed with the actual usage across the National Electricity Market (NEM). [Data © Bruce Robertson, 2015]
AEMO forecast electricity usage versus actual electricity usage in the National Electricity Market (NEM). [Data © Bruce Roberston, 2015]
Huge thanks to Bruce Robertson who collated this data and kindly allowed us to use it.