MELBOURNE, June 30 (Reuters) - Australian demand for power from the grid is expected to be roughly flat over the next 20 years even with a 30 percent rise in population, thanks to a projected rise in rooftop solar and energy efficiency, the nation's market operator said on Friday.
Total power demand from the grid is expected to inch up to about 190,000 gigawatt hours by 2037 from 185,000 GWh in 2016, the Australian Energy Market Operator said in its annual forecasting report.
However there was a 68,000 GWh, or 45 percent, gap between the market operator's low and high forecasts, which led it to warn that the power industry faces big challenges, without having to deal with ongoing uncertainty over climate policy.
"The wide span of possible outcomes makes it challenging for energy sector planners and investors to balance the risks of stranded assets against potential shortage of supply," the report said.
The weakest forecast showed demand for power from the grid dropping 19 percent over the next 20 years if metal smelters in Australia shut down due to soaring power prices, as companies like Rio Tinto RIO.AX RIO.L and Glencore GLEN.L have threatened. has the world's highest uptake of solar panels per capita, and with prices continuing to fall, installed rooftop solar is expected to more than quadruple to around 20,000 megawatts by 2037, the report said.
"We believe this uptake will remain strong through to the late 2020s before levelling off," Australian Energy Market Operator Chief Executive Audrey Zibelman said in a statement.
Improvements in battery technology and falling costs are expected to drive uptake of battery storage in homes and businesses to more than 5,500 MW by 2037.
That 20-year forecast is almost 60 percent higher than the market operator projected last year, as battery prices have fallen faster than expected, the report said.
Electric vehicles are not expected to drive much demand for power from the grid over the coming two decades.
Australia's biggest power retailers are Origin Energy ORG.AX , AGL Energy AGL.AX and EnergyAustralia, owned by Hong Kong's CLP Holdings 0002.HK . Network owners include State Grid Corp of China, Macquarie Group MQG.AX and Cheung Kong Infrastructure.