AEMO releases demand forecast

AEMO released their Electricity Forecasting Insights which estimates electricity demand out to 2036. The forecast replaces the National Electricity Forecasting Report (NEFR) and shows that the underlying demand for electricity continues to grow. This growth is offset by rooftop solar PV systems and other non-scheduled generation which is considered a reduction in operation demand by AEMO.

Strong, neutral and weak growth scenarios were also analysed to show a range of possible outcomes. All three scenarios end up lower than the 2016 NEFR assumption.

These scenarios will form the basis for most of the analysis conducted by AEMO and feeds into a diverse set of requirements such as emergency planning, regulatory investment tests and national transmission planning reports.

The report also indicates that the difference between minimum and maximum demand will grow. The uptake of renewable generation in South Australia will mean that the minimum operational demand will be negative for the state at times with non-scheduled generation forecast to be 421 MW higher than demand in 2036-37.

The full report and data can be found on AEMO’s website: http://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Planning-and-forecasting/Electricity-Forecasting-Insights

AEMO is expecting a large uptake of customer interaction with the market. If you would like to understand how to position your business to optimise future opportunities, please contact us on 07 3232 1115.

Coopers Gap Wind Farm moving forward

AGL has received a development permit from the Queensland Government to build up to 115 turbines for the Coopers Gap Wind Farm. Located near Cooranga North, between Kingaroy and Dalby, the Coopers Gap Wind Farm (up to 460 MW) will be the second wind project offered to the Powering Australian Renewables Fund (PARF).

On 27 July 2016, AGL announced QIC as its equity partner in the $2-3 billion Powering Australian Renewables Fund (PARF). PARF was created by AGL to develop approximately 1,000 MW of large-scale renewable energy projects.

To date, PARF has reached financial close on two solar plants (Broken Hill 53MW and Nyngan 102MW) and Silverton Wind Farm (200MW).

SA Electricity Prices to be Highest in the World

Electricity retailers will increase their standard pricing from 1 July 2017 for all states in the National Electricity Market (NEM), with South Australia (SA) tipped to have the largest increase.

As part of their annual review of energy tariffs, the three biggest retailers have cited increased wholesale energy costs as the main reason for the significant increases.  The retailers say the increased wholesale costs have been caused by the closure of baseload coal-fired generation and the increased costs of gas.

Residential customers in SA will see an average increase of 19.9 per cent from EnergyAustralia, 18 per cent from AGL, and 16.1 per cent from Origin Energy.  Experts are concerned that household prices in SA are set to be the highest in the world, putting immense pressure on the household budget.

In today’s ever-increasing energy market, it is important to get to know your energy usage.  Edge’s tips for residential and small to medium business customers are:

  • Understand your consumption. E.g. Do you need smart metering?
  • Are you on the right tariff? Changing tariffs could save you hundreds of dollars per year.
  • Shop around. There are a number of retailers offering discounts of varying levels.  It’s important you are comparing apples with apples.

If you’re a small to medium business and want to take a proactive approach to your electricity contracts, contact Edge Utilities here.

Edge Utilities is the online service arm of Edge Energy Services helping SME leverage the strength, experience and influence of our energy experts.

 

QLD GOVT to recommission Swanbank E power station

A joint statement issued by Queensland Treasurer Curtis Pitt and Queensland Energy Minister Mark Bailey in early June announced that the Swanbank E Power Station (385 MW) would be recommissioned in the first quarter of 2018. Bringing the gas-powered station back online is part of a multi-faceted approach by the government to increase supply and reduce volatility in the energy market.

Stanwell Corporation withdrew Swanbank E from operation in late 2014 due to an over-supply of generation. Since then, Stanwell has been selling their gas to LNG exporters and the Brisbane Short Term Trading Market (STTM). Once back in operation Stanwell will no longer do this because the gas will be consumed by the power station. This will reduce the overall volumes sold to LNG exporters and the STTM. It is important to note that the Brisbane STTM is where gas powered generators buy gas from, particularly in periods of high electricity demand.

It will remain to be seen how effective the increased supply of electricity will be, considering the increased competition for gas in the Queensland market. If more gas becomes available from either increased gas production or government -imposed export restrictions, then we are likely to see prices and volatility reduce. Alternatively, the implications are likely to be modest if more gas isn’t made available.

Finkel Review – Impact on LGCs and investment

The recently released Finkel Review is a review into the future of the National Electricity Market conducted by Dr Alan Finkel.

The Finkel Review’s proposed removal of the Large Scale Renewable Target (LRET) scheme by 2020 has created uncertainty for renewable energy generators and electricity consumers.

Summary

From 2020 Large Generation Certificates (LGC) demand will no longer be a driver for new investment into renewable energy. The scheme is likely to be replaced by an alternative scheme being either the Energy Intensity Scheme (EIS) or the Clean Energy Target (CET).

The current LRET scheme allocates certificates to renewable energy generators in a ratio of 1 LGC to 1 MWh of electricity. Electricity retailers are obliged to surrender 1 certificate for every MWh of electricity sold to consumers. Therefore, the demand for these certificates comes from the retailers and their obligations under the LRET scheme.

LGCs are sold through the open large-scale generation certificate market, where the price varies depending on supply and demand along with other market factors.

How does this affect LGC holders?

Since the release of the Finkel review the prices of LGCs have modestly increased as liable parties seek to purchase enough certificates to meet their obligations. In the long run, increased certificate prices are passed on to the consumer through increased electricity costs.

How does this affect existing renewable generators?

The recommendations in the Finkel review have created uncertainty for renewable generators’ future income streams and their requirements for electricity storage (i.e. batteries). Increased uncertainty results in higher operating costs and reduced investment. This uncertainty will continue until the Federal Government implements a clear policy. It is also likely to result in stagnation within the industry.

How does this affect planned renewable generators?

Investors are likely to have one of two perspectives after they read the Finkel review. The first is that Australia will adopt either the EIS or CET scheme and is 100% committed to reducing emissions through the introduction of renewable generation and the phasing out of coal power. This perspective is encouraging for investors and they are likely to rely on the electricity price forecasts and benefits from the Finkel review to support their investment decision. For international investors, who have a limited understanding of the National Electricity Market this is an appealing investment and we have already seen increased enquiry rates.

The second perspective is that the assumptions used in the Finkel review modelling are unlikely to hold and that implementation of either EIS or the CET scheme will not produce the price forecast described in the report. If investors take this perspective they are unlikely to invest anytime soon. This perspective is shared by many existing industry participants.

The period between now and when the Federal Government makes a firm commitment to a scheme is likely to result in volatile LGC pricing and stagnation in investment.

 

 

PM Confirms Gas Export Restrictions

Gas Export Controls

The Prime Minister has this week announced he will take immediate action as part of his commitment to ensure a reliable and affordable energy supply for consumers.

Prime Minister Malcolm Turnbull, unveiled the Australian Domestic Gas Security Mechanism in April which allows the government to implement export controls and pass legislation as required to secure supply and put downward pressure on prices.

Mr Turnbull this week confirmed that gas export restrictions would be put in place from 1 January 2018.

The introduction of the LNG export market to Australia has created a complex situation where domestic gas consumers are paying more for gas than international buyers of the same product. The main driver behind this is the structure of the gas export contracts which are linked to the price of oil.

The specific mechanism that will be put in place by the government is yet to be determined and will need to be done carefully to ensure security of supply and fair treatment to consumers. Implications of intervention include; but won’t be limited to:

  •                 Reduced investment in upstream gas which will bring higher prices long term;
  •                 Uncertainty for domestic and international consumers;
  •                 Reduced gas prices not flowing through to the electricity prices.

The Federal government is currently in consultation with industry to understand how best to implement an export restriction.

Queensland Power Plan to Decrease Wholesale Electricity Prices

A statement released yesterday by the Queensland Government outlines its plan to put downward pressure on energy prices, generate jobs, and invest in renewables infrastructure.

The Queensland Premier, Treasurer, and Energy Minister jointly promoted the “Powering Queensland Plan” which will see the government invest $1.16 billion to ensure affordable, secure and sustainable energy supply for homes and businesses.

The plan shows several ways the government will put downward pressure on electricity prices. In the longer term, this includes:

  • Reverse Auction of 400 MW of renewable energy including 100 MW of energy storage
  • Improve project facilitation, planning, and network connections
  • Implement an action plan on gas including purchasing gas fields
  • Deliver a plan to improve generation in North Queensland

In the short term the plan will:

  • Invest $770m to cover the cost of the Solar Bonus Scheme
  • Restart Swanbank E power station
  • Direct Stanwell to undertake strategies to place downward pressure on wholesale price

Swanbank E is a 385 MW combined cycle gas turbine which was put into long term care-and-maintenance (cold storage) in 2014 due to the market being over-supplied with generation. A previous statement from Stanwell had announced it would be back online at the end of 2018 if Stanwell determined it was required.

In addition to restarting the Swanbank E power station, the government will also direct Stanwell to undertake strategies to place downward pressure on wholesale prices.  Stanwell is a large generation corporation which owns 3,689 MW of mainly baseload generation. This is without the additional capacity that Swanbank E will provide.

With the full details of the ‘Powering Queensland Plan’ delivered yesterday, there was immediate market movement.

The market reacted by reducing prices across the forward periods but particularly in the near term.

Queensland recorded the greatest reduction with a drop of $10.43/MWh followed by New South Wales which reduced $5.19/MWh. Victorian prices also reduced $3.40/MWh showing the importance of baseload generation in the current market.

If your business needs certainty around energy prices, please contact us on 07 3232 1115 to speak to one of our Senior Portfolio Managers.

QCA final determination on regulated retail electricity prices FY2017 – FY 2018

On the 31st May the QCA released its final determination on regulated retail electricity prices for financial year 2017-2018 for regional Queensland. Concerned that the price increases were too high, the Palaszczuk Government has intervened, directing the government-owned corporation Energy Queensland to reduce network charges. In order to do so, Energy Queensland has been directed to remove the costs associated with the Solar Bonus Scheme.  Energy Minister Mark Bailey made it clear in a statement that this change will not impact payments under the state’s solar bonus scheme, as the cost of the scheme will be met by the government instead of consumers over the next three years.  This reduction in network costs is worth approximately $40,000 per site, per year to large (ICC) consumers.  The revised prices will be published on 16th June 2017.

AEMO considers options for better load management in VIC and SA

The Australia Energy Market Operator (AEMO) continues to estimate there could be a lack of reserve in both Victoria and South Australia for the 2017/18 summer. The latest projections show reserve shortfalls above 800 MW for Victoria and up to 330 MW for South Australia.

The reserve shortfalls have been present for long enough that AEMO no longer believes there will be a sufficient market response unless they intervene.

AEMO has used provisions under the Reliability and Emergency Reserve Trader (RERT) rules to ask for expressions of interest for additional generation to be brought on-line, or for a reduction in demand. AEMO is looking for a RERT Panel which can provide short notice (between three hours and seven-day notice) and medium notice (seven days to ten weeks) support. Members of the panel either agree terms upfront (for short notice) or agree to negotiate (for medium notice) should AEMO require their services. The market operator has also started a long notice tender for RERT which is a full tender for the services.

Any facility which can reduce consumption by at least 10 MW either on its own or across multiple sites during summer can participate if they can maintain their reduction for at least 30 minutes. AEMO is willing to consider relaxing some of these requirements. It is also worth noting the scheme is open to participants from other regions if it supports reliability in Victoria or South Australia.

AEMO is offering to provide payment in return for participation in the RERT. Payments can be for availability usage or early termination.

Submissions for the RERT Panel or long notice RERT is due 7 July 2017.

For more information on the RERT, please visit AEMO’s website.

If you’re concerned about your energy needs in Victoria, South Australia, or elsewhere in Australia – contact us to discuss how we can help.

ARENA launches new investment plan

The Australian Renewable Energy Agency (ARENA) has this month launched its new Investment Plan outlining the priorities which will guide funding from their Advanced Renewables Program. Funding is expected to reach $800 million over the next few years.

The Investment Plan is part of ARENA’s commitment to demonstrate how renewable energy can contribute to a reliable, secure, and affordable energy system for Australians.  ARENA will address these and other challenges as Australia moves towards a low emission economy.

“We are looking for new ways to adapt our electricity grid to increase productivity, make the grid more flexible and better integrate renewable energy so it can be stored and shared when and where it is needed,” ARENA CEO Ivor Frischknecht said.

“As part of this focus, we will be looking at a range of flexible capacity technologies and mechanisms from storage to demand response that will allow us to match electricity supply and demand at all times,” Mr Frischknecht said.

ARENA says that big ideas are the key to transforming Australia’s renewable energy future and their job is to bring these ideas to life.  Their funding, knowledge, and network can assist in bringing projects from innovation stage through to commercialisation.

They have unveiled four investment priorities as part of their Innovating Energy plan.

Delivering a secure and reliable electricity system

  • Investment in innovation
  • Deliver affordable low emission solutions
  • Improve grid stability
  • Better integrate renewable energy so it can be stored and shared when needed
  • Real-time detection and response to power issues
  • Show that renewable energy can add value to the electricity system

Accelerating solar PHOTOVOLTAIC (pv) innovation

  • ARENA is seeking new technologies and tools to reduce costs of PV systems, improve reliability and develop materials
  • Solar could produce up to 30 per cent of Australia’s electricity within 20 years
  • Contribute to research and development to make solar PV more efficient and affordable

Improving energy productivity

  • Reduce energy costs and emissions in the transport, building and industry sectors
  • Wants to help Australia meet and exceed national energy productivity plan goal
  • Wants to invest in innovation to improve energy productivity
  • Value chain optimisation

Exporting renewable energy

  • Create new, scalable export value chains in renewable energy
  • Make sure Australia is at the forefront of exporting renewables in the future
  • Will create jobs and contribute to a global transition to low emissions

ARENA is looking for proposals that align with these objectives. All funding applications from 1 May 2017 will be considered with these priorities in mind.

You can find example proposals and more information about ARENA’s investment plan here.

ARENA has outlined the application process and conditions of their Advanced Renewable Program here.

We have helped several companies achieve success with their ARENA applications because of our renewable energy expertise. How can we help you? Call us on 07 3232 1115.