Planning Assessment Commission (PAC) to determine Springvale Mine future

The NSW Government Planning Assessment Commission (PAC) met yesterday to discuss licence conditions for EnergyAustralia and Centennial Coal’s Springvale Water Treatment Project. The Water Treatment Project was proposed to meet conditions as part of a 2015 approval for the expansion of Springvale Mine.

The approval condition requires the mine to reduce its release water salinity from 1,200 microSiemens per centimetre (µS/cm) to 1,000 µS/cm by June 2017, and 500 µS/cm by 2019. Failure to meet the condition could result in a loss of licence for the Springvale Mine. This closure would mean there is no coal available for EnergyAustralia’s Mount Piper Power Station which could result in a shut down.

The proposed Water Treatment Project is for waste water to be pumped to Mount Piper Power Station for treatment and then reused. The companies say this will eliminate any need to release water into the catchment. Environmental groups are concerned that excess water not used by the station would still be released.

EnergyAustralia is hopeful that an amended plan which includes storage of excess water in Thompsons Creek Reservoir will be acceptable.

EnergyAustralia and Centennial Coal are also asking to suspend water quality consent conditions until the Water Treatment Project is complete.

The outcome of the PAC meeting is not yet known.

The Fair Work Commission (FWC) today ruled to terminate proposed industrial action at Loy Yang A power station and associated mine.

The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) had voted to take strike action due to a dispute with AGL over pay and conditions for its members.

AGL determined that the mine and power station couldn’t be operated safely if the strike went ahead and notified the union it would conduct a lock out.

The market operator (AEMO) was informed of AGL’s decision and determined that the loss of the power station and mine would present difficulties for the market. AEMO is concerned a reduction in generation could result in a period of involuntary load shedding.

The Victorian Government made a submission to the FWC to have the industrial action overturned. FWC found it likely that the lockout would be necessary, and the power station and mine shutdown would have a severe economic impact and could put health at risk. It ordered both the union and AGL to terminate industrial action.

The market reacted with prices reducing in Victoria. Other regions are also generally trading lower.

There is still no solution to the two-year standoff between AGL and the union, however the immediate crisis has been averted.

FWC order can be found on its website: https://www.fwc.gov.au/documents/decisionssigned/html/pdf/2017fwc2533.pdf

You can read our previous news on this action here 

Updates have been received following yesterday’s announcement about proposed industrial action at the Loy Yang A power station and associated mine. The market operator (AEMO) has received updated information on the availability of Loy Yang A and the capacity of Engie’s Loy Yang B which takes coal from the mine.

Prior to the announcement and these further updates,  the supply / demand balance was already tight particularly during summer.

Figure 1: Medium term outlook 4 May 2017

Source: AEMO

The updates received from the Loy Yang A and Loy Yang B power stations show reserve shortfalls increasing and a lack of reserve almost every day starting May 10, 2017.

Figure 2: Medium term outlook 5 May 2017

Source: AEMO

The lack of reserves have not flowed into other regions but trading will be affected by the loss of supply in Victoria. At this stage, AEMO is still seeking a market solution to the reserve shortfall which could happen as early as next week. It has said in a statement that it is working with AGL, Engie and the Victorian Government to find a solution.

The Victorian Government has also released a statement advising they will make an application to the Fair Work Commission to seek termination of the industrial action. The negotiations between AGL and the unions have been running for two years and the Victorian Government is urging both parties to resolve outstanding issues.

It is expected that trading across all regions will be affected. The risk of power shortages is likely to increase prices until the dispute is finalised. The last time industrial action was announced, it was called off the next day. It is hoped that the parties can resolve their issues as soon as possible so that normal operation of the market can continue.

Earlier today, AGL announced their intention to take industrial action against the workers at the Loy Yang A power station and associated mine.

AGL informed workers they would be locked out from May 15, 2017. The lock out is in response to the Electricity Trades Union (ETU) announcing industrial action. The disagreement stems from an ongoing dispute over pay and conditions at the Loy Yang A facility.

This is not the first time that AGL has threatened to lock out workers over this dispute. A similar announcement was made in December 2016. However, the union decided to cancel its industrial action at that time, and AGL didn’t go ahead with the lock out.

A closure of Loy Yang A would be devastating to the market at a time when Hazelwood has just been closed. Loy Yang A has a capacity of 2,300 MW and is often operating near its capacity.

Victoria’s total coal generation fleet is 5,055 MW and the market would struggle to cope with the loss of Loy Yang A. The medium term supply / demand outlook from the market operator (AEMO) shows that there is insufficient reserves to meet demand if Loy Yang A comes offline. There is roughly 1,000 MW of spare capacity on May 15 when the lock out is proposed.

Figure 1: Medium Term Outlook for Victoria

Source: AEMO

At this stage AEMO is seeking advice from AGL on the duration of the outage and will update the outlook as soon as they get more information.

The Clean Energy Regulator last month released their report into the current status of renewable energy in Australia. The report titled ‘Tracking towards 2020: Encouraging renewable energy in Australia’, reviews operations in 2016 and presents information regarding progress towards the Federal Government’s renewable energy target.

2016 was always going to be a key year in meeting the Government’s target of 33,000 GWh of new renewable generation by 2020. Although there was insufficient renewable generation built during 2014 and 2015, this report maintains an optimistic view that the target can be reached on the current trajectory.

Its fact sheet declares there were more than double the number of new renewable power stations accredited in 2016 than in 2015 and there was five times the amount of ‘committed and probable’ capacity.

These numbers, although correct, fail to deal with the actual needs of the scheme. Despite having twice as many power stations, capacity only increased by 65 per cent (from 300 to 494 MW). This represents an impressive increase but will still need to ramped up. With more than 20,000 MW of potential projects currently listed, there is plenty of potential new generation. It is converting these potential projects into actual projects that is going to be the challenge.

Financiers are generally risk adverse and use highly pessimistic curves to mark the revenue of projects. Until recently, it has been difficult to fund merchant projects. In these instances, it has meant a power purchase agreement for most of the project has been needed before the project could be developed. Retailers can pass on costs to customers so their motivation to take on risk to bring down prices is questionable. Large customers are still not used to signing long-term (10+ year) contracts which make them an unlikely source of funding. But, there is a growing acceptance of merchant risk among international financiers, however, it is still emerging in Australia.

The report considers that 3,000 MW of new renewable generation will have to be committed to during 2017. There are more than enough projects available to meet this target but the question is how many new projects can be supported by the grid?

There are several changes to legislation on the way to support fast response frequency services which will support the integration of renewable generation. There is also federally supported investigations underway to explore pump-storage hydro in South Australia and expansion of current pump-storage hydro schemes in New South Wales and Tasmania. These storage facilities are considered renewable enabling technologies. Both the proposed change in legislation and the pump-storage hydros will have a positive impact on the future of renewable technologies. Neither is likely to have a significant impact in 2017 (or even before 2020). It is also important to consider if the industry can add this amount of new renewable generation without upgrades to the notoriously slow transmission network.

In the short term, the optimism from the Clean Energy Regulator has helped bring down the price of LGCs and even caused a reduction in the energy prices. In the medium and long term, it will depend on the ‘poles and wires’ to see if the interest in new renewable generation can be converted to action in reducing carbon pollution in Australia.

The full report from the Clean Energy Regulator can be found here: https://goo.gl/1LpcWU

The Federal Government has announced plans to explore adding 2,500 MW of pump storage hydro to Hydro Tasmania’s portfolio. ARENA will contribute $2.5 million towards a study which will explore a replacement of a Central Highlands power station and redeveloping Gordon power station. The study will also examine 13 potential sites for new pumped storage hydro.

The additional pumped storage hydro plant could assist with energy security in times of peak demand. Tasmania currently imports power from Victoria, though with the closure of Hazelwood Power Station prices have increased over the last month. Having additional storage capacity will also allow development of further renewable opportunities in the state.

The Clean Energy Regulator has released the 2017 environmental certificate requirements. The number of Large-scale Generation Certificates (LGCs) which must be surrendered each year is fixed. However, the surrender percentage depends on the expected consumption of electricity across Australia less any applicable exemptions for energy intensive trade exposed industries.

The surrender percentage for LGCs in 2017 is set at 14.22%. This is higher than the 2016 surrender percentage of 12.75%, but lower than what was widely expected in the market.

The STC percentage was set at 7.01% which is lower than the 2016 target of 9.68%. Each year, the Clean Energy Regulator must determine how many STCs will be created during the year and divide this number by the amount of power expected to be consumed. With the rate of installation of solar PV in decline and electricity demand increasing, the STC percentage is lower. It was widely expected that the percentage would be lower in 2017 than in 2016, though not to this level. Earlier in the week we saw the price of STCs fall from the clearing house price of $40.00/certificate to $39.90/certificate. This is the first time since April 2016 that the price has fallen below $40.00/certificate.

All consumers who has been accruing STCs and LGCs should be checking with their retailer on how they are going to recover their accrued amounts.

If you wish to discuss your energy needs with Edge or learn more about how we can validate your bills from first principle please feel free to email us at admin@edgeenergyservices.com.au

The Australian Energy Market Operator (AEMO) has released its final report on the South Australia (SA) region black system event on 28 September 2016 (Black System). During the event some 850,000 SA customers lost electricity supply, affecting households, businesses, transport and community services, and major industries.

In the report, AEMO notes that with less synchronous generation online, the electricity system is experiencing more periods with low inertia and low available fault levels. This is making it increasingly difficult to keep the system secure. It is no longer appropriate to rely solely on synchronous generators to provide essential non-energy system services (such as voltage control, frequency control, inertia, and system strength). Instead, additional means of procuring these services must be considered; from non-synchronous generators (where it is technically feasible) or from network or non-network services such as demand response and synchronous condensers.

AEMO has already released three preliminary reports describing the events on 28 September 2016 and the immediate actions undertaken.

AEMO’s final report has 19 recommendations, 3 of which have already been implemented.

System Event

On Wednesday 28 September 2016 tornadoes with wind speeds in the range of 190–260 km/h occurred in areas of South Australia. Two tornadoes almost simultaneously damaged a single circuit 275 kilovolt (kV) transmission line and a double circuit 275 kV transmission line, some 170 km apart. The damage to these three transmission lines caused them to trip, and at 4.16pm a sequence of faults in quick succession resulted in six voltage dips on the SA grid over a two-minute period. As the number of faults on the transmission network grew, nine wind farms in SA exhibited a sustained reduction in power as a protection feature activated. For eight of these wind farms the protection settings of their wind turbines allowed them to withstand a pre-set number of voltage dips within a two-minute period. Activation of this protection feature resulted in a significant sustained power reduction for these wind farms. A sustained generation reduction of 456 megawatts (MW) occurred over a period of less than 7 seconds.

The reduction in wind farm output caused a significant increase in imported power flowing through the Heywood Interconnector. Approximately 700 milliseconds after the reduction of output from the last of the wind farms, the flow on the Heywood Interconnector reached such a level that it activated a special protection scheme that tripped the interconnector causing it to go offline. The SA power system then became separated (“islanded”) from the rest of the National Electricity Market. Without any substantial load shedding following the system separation, the remaining generation was significantly less than the connected load and unable to maintain the islanded system frequency. As a result, all supply to the SA region was lost at 4.18 pm, resulting in a ‘Black System’.

The first round of customers had power restored by 7.00 pm the same day. Approximately 90% of load in SA had been restored by midnight. The remaining load was gradually restored as fallen transmission lines were bypassed, and all customers had supply restored by 11 October 2016.

Findings of the investigation

AEMO published a number of findings from the investigation. Critically it found that the wind farms were able to continue operation throughout the grid disturbances, and it was only the control system setting which caused them to turn off. Changes made to the turbine control settings shortly after the event has removed the risk of recurrence given the same number of disturbances. AEMO was not aware of these settings and they note that access to correct technical information is critical for system security.

The investigation found that if the wind turbines hadn’t switched off the Black System would have been avoided. AEMO cannot rule out the possibility that later events may have caused a black system, despite not being aware of any system damage that would have led to this.

In order to maintain a secure system, AEMO must have sufficient inertia in the system as well as frequency control and voltage stability.

AEMO recommendations

Following the Black System event, AEMO has come up with 19 recommendations to minimise the risk of SA being islanded and if so, can continue to operate if this occurs. These recommendations are in addition to operational changes which have already occurred. As mentioned, the windfarms have already changed their control setting to allow many more ride-throughs before switching off. They are also working to keep AEMO informed of any changes to control settings. The Heywood Interconnector is not running to as high capacity as previously operated to allow for more contingency. AEMO also require a minimum number of on-line synchronous generators in SA.

AEMO’s recommendations are summarised below. Of the 19 recommendations the following are likely to have the largest impact to the National Electricity Market.

• Stricter licensing of new generation
• AEMO to assess options for improved forecasting of wind speeds which can cause windfarms to cut out (not a feature of the blackout event)
• AEMO to modify operational procedures for SA island operations
• AEMO to support ElectraNet in reassessing control strategies to achieve very rapid switching of reactive plant to manage the risk of severe over voltages in SA that might occur due to large levels of under frequency load shedding following separation.
• AEMO to put in place more rigorous processes to monitor weather warnings for changes to forecasts, to trigger reassessment of reclassification decisions where relevant
• AEMO to review and implement, following consultation, a more structured process for reclassification decisions when faced with power system risks due to extreme wind speeds.
• AEMO to investigate a better approach to ensuring that the minimum stable operating levels of generating units are taken into account in the dispatch process
• AEMO to review market processes and systems, in collaboration with participants, to identify improvements and any associated National Electricity Rules or procedural changes that may be necessary to implement those improvements

AEMO plans to complete its recommendations by December 2017 but note that this may not be achievable subject to consultation time.
The full report can be downloaded here