Did you know that New South Wales residents typically use less than 40 hours of peak electricity a year, yet the cost of accommodating this demand drives almost 25 percent of electricity bills?1
So what is peak demand?
The time of the day, day of the week, the seasons, weather extremes and even major public events can all affect electricity demand.
For example, when people get home from work each evening, electricity demand often spikes as everyone turns on the lights and gets dinner started around the same time.
Occasionally, electricity demand peaks at its highest level and it’s these periods that are known as ‘peak demand’.
These periods of peak demand tend to occur when temperatures hit extremes, industry is operating, and millions of households using fans and air-conditioners all at the same time.
Australia’s electricity system is sophisticated but in these times it gets stretched to its limits, and to avoid outages it’s important that our system is able cope with the additional demand.
So why does managing peak demand increase electricity costs?
Even though these peaks don’t happen often, Australia’s current economic growth (with our expectation of having all things reliable year round) and our increasing use of appliances is putting pressure on the networks (many of which are ageing) and the networks must be able to reliably cope with the pressure.
An electricity peak can see electricity use spike to nearly one-and-a-half times more than the daily average.2 At these times, wholesale electricity prices can jump to more than 300 times the average.
While consumers don’t directly experience these costs, they do end up adding to the overall cost of providing safe and reliable power. This might be through building or upgrading the poles and wires to meet times of peak demand.
You can find out more what makes up the costs in your electricity bill here.