[ The Sydney Morning Herald ]

Carbon tax triggers shifts in electricity generation

Date: November 9 2012

Brian Robins

COAL-FIRED power generation has fallen in the wake of the midyear launch of the carbon tax, which also triggered a lift in hydro-power generation, a detailed analysis by the Australian Energy Market Operator has shown.

On July 1, a $23-a-tonne tax on carbon emissions was introduced, which pushed up wholesale electricity prices sharply, to about $58 per megawatt hour, although the price has since eased to about $50 due primarily to sluggish demand.

The carbon tax lifted hydro-power generation to 10.2 per cent of the total electricity produced in the national electricity market from 8.4 per cent previously, the analysis found.

The share for black coal fell to 51.1 per cent from 53 per cent, and that of brown coal dropped to 23.3 per cent from 24.1 per cent.

"The carbon price saw a shift in spot prices, a change in the mix of generation sources and changes to the flow of power … between states," the managing director of the AEMO, Matt Zema, said.

Part of the shift to hydro capacity could be due to seasonal factors, since the Snowy and Hydro Tasmania networks usually boost generation in winter and spring, when storage levels are high, AEMO noted.

The carbon price was introduced as electricity supply was being disrupted, after flooding cut capacity at the Yallourn power station.