Author: Nick Clark

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...

Read More

23 Nov A lesson from RCR Tomlinson: corporate PPA’s and the sharing of risk

RCR Tomlinson entering voluntary administration this week has been a major eye-opener in the renewable energy world. The engineering firm had shown signs of stress earlier in the year, particularly when it was forced to record a $57 million write-down on the value of it’s Daydream and Hayman solar farms in Queensland. Following this, the company successfully went to market and raised an additional $100 million in capital. Now after incurring liquidated damages as a result of running late on solar projects, directors had no choice but to put the company into administration. In the renewable energy space, these events particularly emphasise the potential risk of entering into a PPA with...

Read More

14 Nov STATE OF THE ELECTRICITY MARKET – WINTER MARKET OVERVIEW

The electricity spot prices were generally higher for the winter period (June to August) than the preceding three months. The largest contributing factors were higher gas prices and increased demand for most of the regions. This excludes Tasmania where average prices fell from $80.26/MWh in autumn to $47.55/MWh in winter. Demand was still higher in the Tasmanian region, however additional rain meant that many of the hydro plants were running, as opposed to spilling water without generating. This put downwards pressure on the local prices. The lower Tasmanian prices didn’t result in lower prices for the rest of the National Electricity Market (NEM). Across all regions, the prices during the 2018...

Read More

14 Nov National Energy Guarantee: it’s over

In late 2017, the Energy Security Board (ESB) developed a scheme to provide investment certainty in the electricity market, which would address Australia’s commitments under the Paris Agreement. The Coalition had ruled out a carbon tax, other cap-and-trade schemes and virtually any other scheme which had been attempted in the past. This left very few options for the ESB to appropriately address investment certainty in the electricity market. The ESB eventually developed an innovative scheme called the National Energy Guarantee (NEG). The basis of the NEG was essentially a cap-and-trade scheme for environmental certificates and, as a sweetener, it also had a reliability obligation. Essentially, the scheme was linked to contracts...

Read More

14 Nov Gas Market Update

Domestic gas prices have increased again as Queensland continues to export most domestic gas overseas in the form of Liquefied Natural Gas (LNG). Outages in early 2018 had limited output from the LNG facilities, however all trains are now available. The increase in total gas extracted on the East Coast of Australia is the largest contributor to the increase in gas prices. Before LNG demand, domestic gas could be extracted from cheap resources. However, as more gas is extracted from Roma, Queensland, the price of extraction has increased, which is then passed onto consumers. With the ability to sell gas overseas, producers are also looking to obtain a similar price domestically...

Read More

11 Sep Victorian Renewable Energy Auction Scheme

The Victorian Renewable Energy Auction Scheme has come to a close and successfully underwritten six new renewable projects with a combined generation capacity of 928 MW. The target strike price in the contract has been known since the auction was announced in November 2018. These prices are: $56.52/MWh for wind $53.06/MWh for fixed plate solar $56.85/MWh for single axis tracking solar It is understood that prices achieved came in around the target prices. These are some of the most competitively priced agreements in the market. The VIC Government has committed to a 15 year CFD for each of the projects with a price floor of $0.00/MWh. The successful projects are: Berrybank wind...

Read More

31 Aug CleanCo moving ahead

In a media statement released 30 August, the Queensland Government confirmed their intention to establish CleanCo, Queensland’s third publicly owned electricity generator. CleanCo will have a strategic portfolio of low and no emission power generations assets, and will build, own and operate new renewable generation. It is understood that CleanCo will take control of assets including Wivenhoe, Barron Gorge and Kareeya hydro power stations and the Swanbank E gas power station, courtesy of a restructure of the two current publicly-owned electricity generators – CS Energy and Stanwell Corporation. CleanCo is expected to be trading by mid-2019....

Read More

07 Aug NEG decision to be placed on hold until next week

According to the Australian Financial Review, the Queensland, Victoria and Australian Capital Territory leaders have stated that they will not sign off on the National Energy Guarantee (NEG) at this Fridays COAG Energy Council Meeting. They have provided their support in principle however are waiting until after the NEG has been through the Coalitions party room on Tuesday next week before providing agreement. Premier Palaszczuk claimed that as of yesterday, the states had not seen the legislation that they would be asked to support on Friday. Tuesday next week has been indicated as the earliest that a decision will be made by the Labor state and territory leaders. Another debate is...

Read More

25 Jul Dramatic decline in electricity prices predicted as a result of the NEG

The AFR published an article last night which refers to the final design of the National Energy Guarantee (NEG) which was provided to the state and territory leaders on Monday. Within the article is a graph containing forecast NEM wholesale prices (real 2018 $/MWh) from FY18 to FY30, as seen below. The forecast comes from Acil Allen Consulting. Unfortunately, the graph is all that is provided and is therefore impossible for the market to understand what the assumptions are behind the modelling. When releasing forecasts that show dramatic changes in energy prices it should be explained in detail so that stakeholders can understand the key drivers behind the decline. By...

Read More

17 Jul AEMO Release Inaugural System Plan

This morning AEMO released their inaugural Integrated System Plan (ISP). The plan is an evaluation of the likely changes that will be occurring over the next 20 years across the NEM. The ISP builds on the work of AEMO’s annual National Transmission Network Development Plan, and has been developed in response to the COAG Energy Council’s decision in 2017 to adopt the recommendations made in the Independent Review into the Future Security of the National Electricity Market, specifically pertaining to the need for a strategic national plan. AEMO have used probabilistic scenario based analysis and system optimisation to project the reliability and security needs of the power system while simultaneously...

Read More