Despite pandemic lockdowns and supply chain problems, householders led a record increase in rooftop solar capacity last year. More than 3000MW was installed in 2021 and almost one-third of Australian households have solar panels, the highest rate in the world.

Loading

While reliance on coal has continued to fall, it remains the dominant source of power in the NEM, accounting for 66 per cent of electricity generation, a drop of 4.4 per cent since 2020. Over the past five years, coal’s share of electricity generation has fallen by 15.3 per cent.

Demand on the NEM has been consistent for the past 15 years and did not shift much during the pandemic because although consumers were not using power in offices, they were using it at home, Climate Council senior researcher Tim Baxter said.

“The role for gas in the grid is going to continue to decline over the course of the next 10 years,” Mr Baxter said. “This is where batteries and pumped hydro will help introduce more flexibility.”

Pumped hydro acts like a large battery. When there is excess power in the system, energy is used to pump water up to a storage area. When there is demand for energy, the water is released and used to generate electricity.

Loading

Bruce Mountain, from the Victoria Energy Policy Centre, said the drop in gas use also showed that peaking gas generators – only turned on to supply the grid when demand surges – are being driven out of the market.

“This was well known and forecast by any energy sector specialists,” Professor Mountain said.

The federal government has been criticised for its controversial proposal to build a $600 million gas-powered peaking plant at Kurri Kurri. When it was announced, Energy Security Board chair Kerry Schott said nobody would build it from the private sector because “it doesn’t stack up”.

Federal Energy and Emissions Reduction Minister Angus Taylor has said peaking or fast-start gas plants are needed to provide dispatchable power to fill energy supply gaps.

Victorian Minister for the Environment and Climate Change Lily D’Ambrosio said her government was proud to have achieved the largest ever annual increase in renewable power in Australia last year, attributing this to multiple, legislated renewable energy targets and projects such as the 300-megawatt Victorian Big Battery.

The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.