Energy Consumption 2018

Around 94% of the energy used in NSW comes from non-renewable sources such as oil, coal and gas.

However, electricity generation has seen a strong increase in the use of renewable, low emissions sources, from around 11% in 2014 to 16% in 2017.

In the three years to June 2016, total NSW and ACT energy consumption declined by almost 6%. Over the same period the NSW economy grew by 9%.

Almost half (45%) of the total energy use in NSW and ACT is by the transport sector, an increase of 6% over the last 12 years. The industrial sector accounts for 36%, with the residential and commercial sectors accounting for 11% and 9% respectively.

Related topics: Economic Activity and the Environment | Population | Greenhouse Gas Emissions | Climate Change

NSW is responsible for approximately one-quarter of Australia’s total energy consumption and possesses large reserves of black coal and natural gas and significant wind, solar and hydro resources. Historically, NSW has used its coal and gas reserves to provide reliable and secure energy to the state, supporting economic stability and growth.

Coal and gas-fired power stations, combined with the petrol, diesel, gas and other fossil fuels used in the transport and industrial sectors, contribute significantly to NSW’s greenhouse gas emissions. These power sources also impact local and regional air pollution (see Greenhouse Gas Emissions, Air Quality and Climate Change topics). To manage pollution and emission levels, and support sustainable economic development, NSW has introduced strong regulations for environmental controls and industry operations. These regulations are managed through mechanisms such as the NSW Protection of the Environment Operations Act 1997.

‘Final energy’ is the energy supplied to the end user. Final energy consumption includes secondary energy, such as electricity, and therefore excludes the coal and gas used to generate electricity.

While the NSW economy has grown by around 9% between 2012–13 and 2015–16, total NSW and ACT energy consumption has declined by almost 6% over the same period. In 2015–16, final energy consumption in NSW and ACT was 1,156 petajoules (PJ), 69PJ less than in 2012–13. Figure 3.1 shows the sectoral trends in final energy consumed for the NSW and ACT economies.

The main reason for the decline in energy consumption is the lower consumption by the NSW industrial sector, particularly the manufacturing industry, since 2012–13. The closure of the Kurnell and Clyde petroleum refineries in October 2014 was the largest single cause of reduced consumption by the manufacturing industry.

The transport sector continues to be the highest user of energy (45% of energy use in 2015–16), compared to the industrial sector (36%), residential sector (11%) and commercial sector (8%). Transport’s share of energy use has been steadily increasing, its share being 39% a decade ago (2005–06).

Figure 3.2 shows final energy consumption by sector and fuel type (petroleum, electricity, gas, coal and renewable fuels) in NSW and the ACT in 2015–16.

Petroleum was the largest component of final energy used in NSW and the ACT (around 55%). The transport sector was the major user of petroleum in 2015–16 (505PJ), followed by the industrial sector (118PJ). Industrial sector use of petroleum has declined, mainly due to the closure of the Kurnell refinery.

Electricity use was 18% of final energy used. Total electricity use has slightly declined (204PJ in 2015–16 compared to 210PJ in 2012–13), due to reduced consumption in the residential and industrial sectors.

Renewable energy use in final consumption decreased from 45PJ in 2013–14 to about 37PJ in 2015–16, due to reduced output from Snowy Hydro. This category predominantly represents the use of biomass (organic matter), solar and hydroelectricity energy.

Coal use accounted for around 11% of final consumption in 2015–16, and gas use 10% (this excludes coal and gas used for electricity generation). The industrial sector is the sole user of coal (other than for electricity generation), which is used to generate heat as part of the manufacturing process. The industrial sector is also the largest user of gas, mostly as a raw material input. Total coal use declined (126PJ in 2015–16 compared to 139PJ in 2012–13), while total use of gas increased slightly (114PJ in 2015–16, compared to 111PJ in 2012–13).

Over the past decade, the population of NSW has increased by almost 13%, or nearly 1 million people. Over that same period, per capita energy consumption has decreased by around 13%. This is largely due to declining energy use in manufacturing and a slight decline in residential energy consumption since 2012–13.

NSW is largely self-sufficient in relation to electricity supply, meeting about 92% of local demand. The remaining electricity is purchased from other states (particularly Victoria and Queensland) through the National Electricity Market (NEM). Electricity imports enable NSW to manage supply at lowest cost to consumers.

In 2017, renewable energy sources provided around 16% of the state’s total electricity generation, which is more than double that provided in 2007 (6%). Of the renewable energy generated in 2017, Snowy Hydro accounted for almost 6% of total NSW electricity. Renewable electricity generation (excluding Snowy Hydro) continues to increase in NSW. This is being driven by an increase in wind and solar photovoltaic (PV) technologies, largely due to the Renewable Energy Target (RET).

Since 2007, wind generation has increased 50-fold, and solar PV generation has increased 170-fold. In 2017, wind plants in NSW generated 1,944GWh of electricity, and solar PV systems generated 3,304GWh. Over 1,052GWh of electricity was generated from bagasse (sugar cane waste), landfill and other bioenergy sources.

Demand for electricity from NSW’s grid is expected to remain flat over the next five years before increasing again (Figure 3.4). Demand resulting from population growth is estimated to be offset by improvements in the energy efficiency of appliances and machinery. Increasing adoption of rooftop solar and battery storage systems will further reduce residential demand from the electricity grid. Beyond the next five years, consumption is forecast to increase as electric vehicle charging begins to have a notable effect on electricity demand.

Most vehicles in NSW are fuelled by either petrol or diesel. Transport is the second largest source of emissions, especially from vehicles, which are a major source of air pollution, particularly in urban areas. Standards for fuel efficiency of vehicles is the responsibility of the Commonwealth Government. As noted in the Transport topic, the demand for transport has increased as population grows. NSW has targets of 6% of the total volume of petrol sold in NSW to be from ethanol, and 2% of diesel to be from biodiesel. In future, the increasing cost-efficiency and take-up of electric vehicles presents opportunities to improve the proportion of renewable energy used by the transport sector.

Stationary energy (which includes coal and gas fired power stations, petroleum refining and combustion of fossil fuels in manufacturing) is the main soure of greenhouse gases in NSW, accounting for 51% of overall emissions. Coal and gas-fired power stations alone account for 39% of overall emissions (see Climate Change, Greenhouse Gas Emissions, and Air Quality topics). Greenhouse gases contribute to climate change, projected to cause higher temperatures, changing rainfall patterns, warming ocean temperatures, rising sea levels and more frequent extreme weather events.

Climate change also places an upwards pressure on energy demand. Increased climate variability and extremes may increase demand for heating and cooling and accelerate the need to replace infrastructure, power and manufacturing plants and other buildings to accommodate greater weather variability and extreme events (AEMO 2018). Climate variability will also increase the amount of electricity lost during transmission and distribution. Extreme weather events also present risks for energy security.

The NSW government’s priority is to ensure NSW energy consumers have access to affordable, reliable and sustainable energy. The government has adopted a technology-neutral approach to achieve this goal, encouraging private sector-led energy investment.

NSW Climate Change Policy Framework

• The NSW Climate Change Policy Framework was released in November 2016. The framework sets two aspirational objectives for NSW to achieve net zero emissions by 2050 and to be more resilient to a changing climate. In the framework, the NSW Government endorses the Paris Agreement and commits to helping to achieve Australia’s Paris Agreement commitments. It identifies boosting energy productivity as a key NSW Government policy direction that will assist in reducing greenhouse gas emissions and put downward pressure on household and business energy bills.

Increasing energy efficiency

• The Greenhouse and Energy Minimum Standards (GEMS) creates a national framework for product energy efficiency in Australia. Established in 2012 under Commonwealth legislation (Greenhouse and Energy Minimum Standards Act 2012), the program stops the importation of poorly performing electrical appliances and gives consumers information to help them choose more efficient appliances at the point of sale. Nationally, this program is expected to save households and businesses an estimated $60 billion between 2012 and 2030.
• The Energy Savings Scheme (ESS) is a statewide program for improving energy efficiency. Established in 2009, the ESS creates financial incentives for businesses and households that improve their energy efficiency by requiring energy retailers to purchase energy savings from accredited energy efficiency service providers. Energy savings are achieved by installing, improving, or replacing energy savings equipment. Since its establishment, the ESS has supported projects that will deliver around 22,000 gigawatt hours of energy savings and over $3 billion in bill savings over the projects’ lifetimes.
• The NSW Climate Change Fund was established in 2007 under Part 6A of the Energy and Utilities Administration Act 1987 to provide funding to reduce greenhouse gas emissions and the impacts of climate change associated with water and energy activities. The CCF has typically funded programs for energy efficiency, renewable energy and climate change adaptation. In September 2017 the NSW Government announced the Climate Change Fund supported Energy Affordability Package. This provided $112.5m in funding over five years to help small businesses and vulnerable households save energy and ease cost-of-living pressures. In August 2018 the NSW Government announced the Energy Efficiency Package, which provides a further $72m funding to support energy efficiency measures for households and businesses.
• The Energy Efficiency Action Plan (EEAP) was released in 2013 and ran to July 2017. Its 30 actions were designed to help NSW households, businesses and government to use energy more efficiently. The EEAP programs delivered electricity and gas savings of 6,310GWh, energy bill reductions of around $1.2 billion and reduced the peak load on the electricity network which helps reduce the need to invest in expanding electricity network infrastructure (OEH 2018).
• The NSW Government Resource Efficiency Policy (GREP), released in July 2014, encourages the NSW Government to lead by example by implementing energy efficiency projects and adopting renewable energy across government facilities. In August 2018 the Government announced a new target to accelerate the roll-out of solar panels on government buildings, such as schools and hospitals. The target is to reach 25,000 megawatt hours of solar energy a year by 2021, increasing to 55,000 megawatt hours a year by 2024.
• In July 2017 the NSW Government increased Building Sustainability Index (BASIX) energy targets for residential developments. The new targets will typically improve the energy performance of new houses by 10%, and of multi-unit dwellings by 5%. The new targets are expected to contribute an additional 12GWh of annual energy savings per year by 2020.
• The National Construction Code (NCC) is a uniform set of technical guidelines for the design, construction and performance of buildings throughout Australia, comprising the Building Code of Australia (BCA) and the Plumbing Code of Australia. The BCA sets out minimum performance standards for buildings including energy efficiency. The BCA is referenced and given effect in NSW through the Environmental Planning and Assessment Act 1979. The NSW Government also sits on the Australian Building Codes Board (ABCB) which oversees the NCC. The ABCB is considering ways to increase the stringency of energy efficiency requirements for commercial buildings.
• The NSW Government's National Australian Built Environment Rating System (NABERS), measures the environmental performance of Australian buildings using a star scale. Buildings that update their NABERS Energy ratings have reduced their energy consumption at some of the fastest rates in the world, saving over $400 million in power bills since 2010.

Diversifying energy supply

• NSW’s Renewable Energy Action Plan (REAP) seeks to encourage the development of renewable energy projects that achieve the lowest possible costs and maximum overall benefits to the state economy. Since 2013, it has succeeded in delivering NSW’s first large-scale solar farms, and doubling the share of renewables in the NSW energy mix.

Supporting renewable energy uptake

In August 2018, the Government announced five clean energy programs to help communities, the private sector and the government sector to develop and accelerate clean energy technology while also enhancing grid security and bill affordability.

• The Emerging Energy Program is a $55 million initiative to encourage private sector investment in new generation technology.
• $30 million Regional Community Energy is to help regional communities build and access the benefits of clean energy.
• Solar for Low Income Households trial is a $15 million initiative to deliver immediate energy savings through the installation of a solar system
• Smart Energy Devices for Households and Businesses is a $50 million program to provide incentives to households and businesses to enable up to 200MW of demand response capability through smart devices and their availability to the grid.
• Smart Batteries for Government Buildings is a $20 million program to install smart batteries in key government sites to optimise solar systems, to deliver electricity savings to Government and to increase security through additional demand response capacity to the grid.

NSW manages the National GreenPower Accreditation Program, which helps to drive investment in new solar and wind plants by enabling households and businesses to purchase renewable energy over and above mandated targets. In 2016, GreenPower sales stood at 759GWh, with over 270,000 customers.

Diversifying energy supply

• The Hydro Energy and Storage Opportunities initiative seeks to leverage WaterNSW’s extensive infrastructure portfolio to improve the state’s electricity grid flexibility and help meet future demand for energy.
• The Coal Innovation NSW Fund (CINSW Fund) supports the research, development, and demonstration of low-emission coal technologies. The Fund has invested directly in a number of initiatives supporting low-emission coal technologies, including the Delta Carbon Capture and Storage Demonstration Project and the NSW CO₂ Storage Assessment Project.

Supporting energy efficiency and demand management

• The NSW Government is partnering with the Australian Renewable Energy Agency (ARENA) in the delivery of the NSW Demand Response Program, using funds from the Climate Change Fund to manage electricity demand during extreme peaks. The program is providing funding of $14 million to four pilot projects. The Australian Energy Market Operator (AEMO) can activate the demand response in times of energy system emergencies. The three-year trial will provide the equivalent energy capacity of 16,000 rooftop solar systems.
• Under the Energy Affordability Package and Energy Efficiency Package, the NSW Government supports low income households in social and private housing to save energy. This includes:
  • the appliance replacement offer, which provides eligible households with the opportunity to replace their existing inefficient fridge or television with a new efficient appliance at a discounted cost
  • upgrades to more than 20,000 rental homes to enable low-income renters to benefit from energy efficient lighting, heating and hot water systems
  • partnering with social housing providers to install energy efficiency measures at social housing properties.
• The Household and Small Business Upgrades program helps households and small businesses to save energy and money by offering discounts on lighting upgrades and energy-efficient appliances. The program is part of the Energy Affordability Package announced in September 2017 and is delivered through contracted suppliers to increase its reach.
• The Manufacturing Efficiency Funding program was announced as part of the Energy Efficiency Package in August 2018. It provides funding assistance for around 250 manufacturing businesses to install energy efficient equipment. These upgrades to items such as boilers, refrigeration and metering technologies will help businesses better manage their energy use.
• Since December 2017, Energy Management Services has provided support for small businesses. This includes free online modules, webinars and tools and guidance designed to help small businesses understand the basics of managing their energy use. From November 2018, this includes blended learning, training, coaching and technical support to businesses of any size to reduce their energy use. From 2019, eligible businesses in target sectors can access specific energy management support, including co-funding towards energy management diagnostics, opportunity analysis, sub-metering and technical support. This program is funded by the Energy Affordability Package and Energy Efficiency Package.

The NSW Government is also looking at the implications of longer-term energy trends and is positioning NSW to take advantage of these opportunities.

• Digital meters: In December 2017, the Australian Energy Market Commission (AEMC) introduced a National Electricity Rule requiring all new electricity meters to be digital. Digital meters will allow consumers to access new services from their retailers, including improved access to energy usage data and easier integration of solar and battery technologies.
• Electric Vehicles: Major changes in technology and fuel sources are required if NSW’s vehicle fleet is to keep pace with global technology trends. There are significant opportunities to reduce fuel consumption by using electric and hydrogen fuel cell vehicles or adopting systems that improve the operational efficiency of passenger and freight transport. In 2016, just 0.1% of new vehicle sales in NSW were electric, but CSIRO forecasts suggest this could increase to up to 50% by 2030 (Campey et al 2017).
• Pumped hydro storage: New pumped hydro storage projects can help ensure that energy supply, security and reliability remain adequate for NSW’s future needs. The Government is supporting private sector investment in complementary pumped hydro projects through actions such as the Hydro Energy and Storage Opportunities initiative.

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