JAKE'S VIEW
Jake's View
by

Government power demand forecast much too high

Environment Bureau's projections based on the latest trend but with no data to back them

PUBLISHED : Tuesday, 25 March, 2014, 12:55am
UPDATED : Tuesday, 25 March, 2014, 3:07pm

The proposals come against a background of surging power demand, tipped to grow from 43 billion kilowatt-hours in 2012 to 50 billion in 2023.

SCMP, March 20

Iask you first to observe my chart of a typical seismograph record during an earthquake. As you can see, this earthquake was actually quite severe and almost sent the tracing pen flying off the paper.

But fear not. I lie. There was no earthquake. This chart actually shows you a year-over-year percentage change record of monthly electricity consumption in Hong Kong. It tells you only that if you want to know anything about trends in electricity, then ignore short-term thinking.

Thus let us try the long-term thought. The second chart shows you a 10-year average of year-on-year demand growth and the obvious trend stands out immediately. There has been a steady decline in growth on this basis from almost 10 per cent 30 years ago to barely 1 per cent now.

What the chart also tells you is that a historically close correspondence between electricity use and economic growth no longer applies. For the past 10 years, there has been a steadily enlarged gap between the two. Growth of electricity use is increasingly less than growth of gross domestic product.

And Hong Kong is not alone in this trend. It is the established pattern for developed economies everywhere. In western Europe and the United States, electricity usage is in absolute decline while economic growth still remains positive.

What we are probably seeing here at last is efficiency gain. Our air conditioners, the big Hong Kong consideration, do a constantly better job of cooling us for the same amount of power. In fact, almost all our appliances now use less electricity.

It is almost certainly a continuing trend and it says that the Environment Bureau is almost certainly wrong when forecasting in its just published consultation paper on electricity planning that electricity demand will rise at an average annual rate of 1.38 per cent to 50 billion kilowatt-hours in 2023.

The forecast is much too high. Already for 2013, just one year from the 2012 start of the consultation study, the bureau's projections are in excess of the actual turnout by more than 1 billion kWh.

It is particularly noteworthy that this consultation paper provides no supporting arguments, no documents and no data for this guess of 50 billion kWh in 2023. There is just an assertion of "based on the latest trend" and a mention of "our latest estimation".

That's all there is, absolutely nothing more. Someone licked his thumb, stuck it in the air and said, "Let's call it 50, Joe."

It makes the consultation a pointless exercise. Demand growth, taken either as overall or peak consumption, is the cornerstone of any planning exercise on investment in generating capacity and our planners just haven't done their homework.

But I wonder if what I smell here is a political rat that favours sourcing power from the mainland and knows that high demand growth projections might tip the balance that way.

jake.vanderkamp@scmp.com