January 2016 was the eleventh successive month to record an increase in total demand for electricity in the National Electricity Market (NEM).

Total annual demand is now 1.7 per cent higher than the minimum level recorded in the year to February 2015 (Figure 3), a sustained rate of increase not seen for nearly seven years.

As has been the case for over a year, Queensland was the main driver of growth, with demand 4.5 per cent higher than in the year to February 2015, mainly driven by use of electric motors to power equipment in the coal seam gas fields.

Demand increases in the other states were much smaller, in both relative and absolute terms. Demand actually fell slightly in Victoria, but was still 1.0 per cent above the post Point Henry smelter closure minimum.

Without Queensland, the other four NEM states combined still recorded an increase in annual demand of 0.6 per cent over the same period.

A significant part of this increase has occurred in the past three months. In the summer months, hot weather is a major driver of demand for electricity, as examined in last month’s Electricity Update. In particular, electricity consumption rises sharply on particularly hot days.

If we define hot days as days with maximum temperatures above 30C, there have so far this summer (November to January) been nearly twice as many as there were over the same period last summer, in both Melbourne and Adelaide.

There were also more in Sydney, though the difference is less marked. It is therefore possible that seasonal weather may be contributing to the increase in electricity demand, but it is very difficult to believe that this is the only factor, apart from Queensland gas industry demand, responsible for the reversal of the previous declining trend of electricity demand.