$25bn plan to crank up power

AUSTRALIA'S power generators are planning a $25 billion investment program to meet electricity consumption that is expected to increase by 50 per cent over the next 25 years.
The generators' plans are revealed in the latest national electricity and gas data released this week by the Energy Supply Association of Australia.
ESAA reports that power plants with 2200 megawatts capacity are already under construction across Australia, with another 2250MW of capacity under advanced planning.
It also lists proposals to build new plants and expand existing ones by 15,000MW.
These plans are aimed at increasing the nation's power generation capacity by almost 40 per cent. It stands at just under 45,000MW at present, 17 per cent up on five years ago.
Plant construction costs, depending on the type and fuel used, range from $1 million to $1.5 million a megawatt.
Development cost to build these plants would be double the initial bill for constructing the giant North West Shelf gas system in Western Australia.
The rush for power generation is being driven by continuing strong growth in demand and by projections by the Australian Bureau of Agricultural and Resource Economics that the increase will average 2.1 per cent annually up to 2030.
ESAA predicts in its 2006 report that the demand load major stations have to meet across Australia will increase by more than 20 per cent between 2004-05 and 2013-14, with biggest growth coming in Queensland followed by NSW (and the ACT) and Victoria.
Those three states and the ACT between them already account for nearly 81 per cent of the electricity produced nationally, and the ESAA projections see this rising to almost 82 per cent of the market by 2013-14.
While Victoria had the largest increase in consumption (up 8 per cent) in 2004-05, ESAA data show that Queensland has now passed it as the second-largest demand area.
At present, coal-fired power stations are providing 84 per cent of generation output, but ESAA reports that the anticipated "dash for gas" is starting to take shape, with gas-fired plants lifting their share of output by nearly 2 per cent to 9 per cent.
More than 11,200MW of the generation capacity reportedly under construction or under consideration is gas-fired.
ESAA estimates that the natural gas suppliers' share of the electricity generation market will double between now and 2030.
The change has important implications for Australia's greenhouse gas profile because gas-fueled plants emit about 40 per cent of the greenhouse gases sent out by coal-fired power stations.
One of the big question marks hanging over the massive development plans is whether the wholesale electricity marketplace will deliver prices that will make the proposals viable.
ESAA says in its report: "Despite a turnaround in the significant spot price decreases of recent years, electricity prices remain low and there is a question about whether prices are sufficient to signal investment in new baseload power."
The issue is critical for the economy because the bulk of power is used by business. ESAA's latest data show that, while the power market share of residential demand has increased by 1.8 per cent to 28 per cent, business customers consume 70 per cent of the output.