AEMO demand forecasts versus actual usage

  • Jen Dainer
    Keymaster
    Jen Dainer on #219

    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.

    This is a graph showing the energy usage demand forecasts as they were released by AEMO from 2010 to 2014. They are largely inconsistent (i.e., way above) actual usage, which is also plotted on the same graph. For example, in 2010 AEMO predicted that by the year 2014 the NEM would need to produce 220,000 GWh's of power to meet demand. The actual usage at that time across the NEM was just over 181,000 GWh's. That's a difference of over 20% in demand versus forecast. The graph also shows that AEMO have consistently over estimated the demand required across the NEM, and are still predicting a rise in energy demand, even though it has been falling sharply and consistently since 2009-2010.

    AEMO’s electricity demand forecasts from 2010 – 2014 graphed with the actual usage across the National Electricity Market (NEM). [Data © Bruce Robertson, 2015]

    Graph showing the AEMO forecast for electricity demand is rising when there is no sign that the demand for energy is going to rise. Somehow the AEMO forecasters believe there is going to be some input to the energy industry that will make demand rise. The line representing actual energy usage as was consumed in the NEM is in steep decline, and has been since 2009-2010. The line representing the AEMO forecast shows that from 2014-2015 the demand for energy will be consistently rising. This is in direct contradiction to actual usage data. It is difficult to see what inputs AEMO could possibly be using for their forecast data that would predict a rise in energy demand.

    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.

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