Author: Nick Clark

09 Jul Gas Market Update

The Queensland State Government increased the petroleum royalty rate by 2.5% to 12.5% in the 2019/2020 budget, claiming that it will increase revenue by $467 million over the four years ending 2022/2023. The increase received condemnation from LNG producers and their investors. In the announcement, Queensland Treasury drew comparison to royalties in the USA and Canada. The resources sector at large has claimed that the higher tariffs put future investment and jobs at risk. AGL announced during the week that it anticipates first gas to be delivered from its proposed LNG import terminal in the second half of FY22. Originally, AGL indicated that gas would be delivered during FY21, however it...

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06 Jun Retailer Reliability Obligation Final Rules Package

Yesterday the Energy Security Board (ESB) provided an overview of the final package of proposed amendments to the National Electricity Rules (NER) (final Rules) to implement the Retailer Reliability Obligation (RRO or the Obligation) and takes into account stakeholder feedback. It should be noted that South Australia is undertaking a separate process in relation to how the national framework may have to be amended or altered to take into account the framework that will apply in South Australia (including that the South Australian Minister may trigger the RRO sooner than under the national framework). The RRO originated from the National Energy Guarantee. As outlined in the ESB's Final Rules Package, the RRO...

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20 May LNP Inertia Continues

In a surprise outcome the LNP maintained leadership over the weekend noting that it remains unknown whether or not the LNP will form a majority government. Energy and climate were at the heart of this election with Labor putting forward material initiatives that would increase investment in renewable energy generation (increased funding to the CEFC) and reduce emissions through the extension of the safeguard mechanism, amongst a number of other initiatives. The LNP are less ambitious and maintain the emissions reduction target of 26-28% below 2005 levels by 2030. The LNP will extend the Climate Solutions Fund by providing additional funding to the Emissions Reduction Fund which is the reverse...

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15 Apr Queensland spot prices – March vs April to date

In Queensland, we have observed lower daytime spot prices since the beginning of April, relative to March averages. Taking a closer look at half hourly average spot prices seen so far in April, we can see that between 8am and 4pm spot prices have been softer than the same periods in March. Following this, spot prices are higher in the evening peak periods. Whilst it is a very small data set, this is the relationship that many in the market expect to evolve. Softer spot prices in the day will motivate generators to price more aggressively (price higher) in the evening peak to increase earnings which have been lost during the day. Should...

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09 Apr Gas Market Update

Capacity Trading As of 1 March, the new Capacity Trading Platform (CTP) and Day Ahead Auction (DAA) came online. This market arose after the Council of Australian Governments (COAG) Energy Council agreed to implement the legal and regulatory framework required to give effect to the capacity trading reform package, as recommended by the Australian Energy Market Commission (AEMC) as part of its Easter Australian Wholesale Gas Market and Pipelines Framework Review. The reforms apply to the operators of transmission pipelines and compression facilities operating under the contract carriage model (collectively referred to as “transportation services”). The objective of the reforms is to encourage and facilitate trading of unutilised capacity on non-exempt transportation...

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08 Mar AEMO releases draft Marginal Loss Factors

The Australian Energy Market Operator (AEMO) released its draft marginal loss factors (MLFs) today. As generally expected, solar and wind farms that are a long distance from the regional reference point have been hurt. The most notable example of this is the Broken Hill solar farm, which has a draft MLF for FY20 of 0.7254. This is 0.2535 below the current MLF. If the draft MLF is confirmed in the final report (due 1 April 2019), this will reduce the volume of electricity sold by the solar farm by 25%. A number of other solar and wind farms had material reductions in MLF and are facing a challenging situation. Most...

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14 Feb Queensland Reaches Record Demand

Queensland (QLD) operational demand (see definition in image below) reached a new all-time record of 10,052 MW at 4.55pm yesterday (13th February 2019) largely as a result of temperature driven demand. Despite record demand, spot prices remained steady with QLD generators ramping up generation and conservative bidding from key generators. Image sourced from AEMO In terms of what type of generation was keeping the lights on, black coal and gas were the two largest contributing fuel sources (as shown in the image below). At the time of peak demand, 6,458 MW of generation was coming from coal and 2,253 MW from gas (natural gas and coal seam gas). Should demand have crept...

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25 Jan HIGH TEMPERATURES AND HIGH PRICES IN SOUTHERN STATES

Edge Energy Services recently published an article on the 16th of January outlining what happens in the market when high prices and a lack of reserves are published in pre-dispatch. On the 24th January, it was a different story, where extreme temperatures and high demand in South Australia (SA) lead to load shedding, activation of RERT and operation of the emergency generators in SA. This resulted in the maximum price reaching $14,500/MWh with an average of $3,388/MW. At the start of the week the Bureau of Meteorology forecast high temperatures across SA and Victoria (VIC) for the coming week. On the morning of the 23rd January, AEMO flagged extreme temperatures for SA...

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16 Jan High temperatures forecast for southern states

At the end of the last week, AEMO flagged the possibility of extreme temperatures for the following week in South Australia, Victoria and New South Wales. Weather forecasts were showing a large uncertainty in the predicted temperatures. Predictions ranged from mid to high 30s for Victoria, low to mid 40s for South Australia and high 30s for New South Wales. The key risk in these forecasts was the possibility of temperatures exceeding 40 degrees in two or more regions simultaneously. On 11 January, AEMO published a market notice highlighting the forecast extreme temperatures in South Australia and elevated temperatures in Victoria and New South Wales. In this notice, AEMO provided forecast temperatures...

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19 Dec Update from COAG Energy Council meeting

The COAG Energy Council met today for their 21st meeting. On the agenda was AEMO addressing their work in preparing the grid for summer, bringing down electricity costs and ensuring long term grid reliability and security. AEMO highlighted the priority of work being undertaken to ensure that there is enough dispatchable generation in the NEM and integration of renewable and distributed energy resources. The Ministers agreed to a work program for the ESB to develop advice on a long term, fit for purpose market framework to support reliability that could apply from the mid-2020s. There was very little detail on this framework, however Edge will look to discover more. Reliability Ministers agreed...

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