Author: Thomas Dargue

10 Sep AEMO Seeking Feedback on Marginal Loss Factor Calculations

Over the last few years, there has been a drop in the Marginal Loss Factor (MLF) in the North Queensland region. The MLF is applied to generation for the purposes of calculating how much revenue a generator will received for its electricity. A lower MLF means proportionately lower spot electricity revenue. Following the installation of several large solar farms in the North Queensland region, the loss factors have started to drop (as shown in the graph below). As more generation is built further away from where the electricity is used, the loss factor deteriorates. This would have been a surprise to many of the investors as, historically, the MLFs have been stable...

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27 Aug Loss of critical infrastructure leads to loss of power

On Saturday, two critical lines connecting Queensland to the rest of the National Electricity Market (NEM) were lost resulting in load shedding. In total, New South Wales shed 800 MW of load, Victoria 280 MW and 80 MW in Tasmania. This was predominately industrial load which was reconnected within an hour. Lightning is the most likely cause. While farmers in Northern New South Wales and Southern Queensland were celebrating much needed rain, the transmissions lines between Bulli Creek and Dumaresq tripped off. At the same time, the line was lost between Armidale and Tamworth in Northern New South Wales. At the same time, South Australia was separated from Victoria. Refer to image...

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24 Aug AEMO releases the latest Electricity Statement of Opportunity

AEMO released their latest Electricity Statement of Opportunity (ESOO) earlier today. Unlike the previous ESOO and the more recent Integrated System Plan (ISP), AEMO is now expecting a heightened probability of the reliability standard not being met. The ISP was released only two months ago and showed that it was highly improbable that the reliability standard would be breached. The reliability standard is a technical standard which basically mandates that no more than 0.002% of demand in a given region can go unmet in a financial year. The reliability of the system raised two questions: Why did AEMO rush through new legislation which allows it to spend money on the Reliability...

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23 Aug Additional Small Scale Solar Coming to Victoria

The Victorian Government has announced that it will offer half priced solar panels to 650,000 households over the next 10 years. This scheme, known as The Solar Home scheme, is currently valued at $1.24 billion and is open to owner-occupied homes with: A combined household income of less than $180,000 per year; andA home value of up to $3 million. Households who are unable to install solar panels can instead choose to get a $1,000 rebate by changing their current hot water system to a solar hot water system. The solar hot water rebate is open to up to 60,000 homes. How will this impact the market? 2017 had the highest rate of installation...

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21 Aug Changes to the National Energy Guarantee

The Prime Minister Malcolm Turnbull has, once again, made last minute changes to the National Energy Guarantee (NEG). When the states threatened to walk away from the NEG, Mr Turnbull responded by making the emissions target regulated rather than legislated. This means that a minister is able to change the target without the support of the parliament. Over the weekend, Mr Turnbull came under pressure internally with several backbenchers, led by former Prime Minister Tony Abbott, wanting to get rid of the targets all together. A number of changes to the NEG were announced on Monday 20 August, 2018. These changes include providing additional controversial powers to the ACCC where they will...

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16 Aug National Energy Guarantee Update

Yesterday the COAG Energy Council released a draft of the proposed changes to the National Electricity Law that would implement the National Energy Guarantee (NEG). The draft Bill sets out: Who is liable under the emissions reduction and reliability requirements; The key aspects of the emissions and reliability requirements; The compliance and penalty framework; The additional functions and powers of the Australian Energy Market Commission (AEMC), the Australian Energy Regulator (AER), and the Australian Energy Market Operator (AEMO) to support the implementation of the Guarantee; and A new emissions objective, applicable to the emissions requirement, to guide rule-making by the AEMC and the exercise of related functions and powers by the AEMC,...

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10 Aug Price of Utility Scale Solar Being Questioned

The engineering company, RCR Tomlinson, went into trading halt on July 30, 2018 and its CEO, Paul Dalgleish, has stepped down. The trading halt is due to an investigation into cost blowouts for unspecified projects, which will hurt the FY18 annual profit. The deputy state secretary of the Queensland and NT Electrical Trades Union, Peter Ong, has stated that RCR has been undercutting other bids by as much as $30 million when bidding for utility scale solar project. Peter Ong's major concern is the use of cheaper labour to try and make up the difference. For the broader market, if RCR have been under-pricing the engineering cost of installing utility scale solar, there...

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10 Aug NEG Moves To Next Stage

The Council of Australian Governments (COAG) meeting has ended and the Federal Energy Minister Josh Frydenberg will be able to move the National Energy Guarantee (NEG) to the next stage.  The next stage will involve taking the legislation to the Coalition party room on Tuesday. If the party room agrees with the draft legislation, there will be a teleconference with COAG and the draft legislation will be released for public consultation.  Minister Frydenberg still believes that legislation will pass in 2018 for a 2020 start. Federal Labor, the two Labor held states (Victoria and Queensland) as well as the Australian Capital Territory are still sceptical.  Particularly, Victoria has concerns that the NEG doesn’t seem...

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25 Jul Electricity cost forecasting – is it really that simple?

As the Australian generation fleet transition to lower carbon emissions we are seeing the regulatory framework catching up. The regulatory framework is not the only aspect which is changing. We are experiencing an increasing amount of direct power purchase agreements being written between large users and renewable developers. Economic models are also struggling to catch up. Almost every month a new forecast is published showing that if we just implement the latest proposed change to the market, we will see a return to the good old days of lower electricity prices. Part of this fallacy comes from outdated forecasting models which still look at cost of production as the main input...

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24 Jul Have you exceeded your baseline under the Safeguard Mechanism?

Following the close of the financial year 2018 NGER reporting period, responsible entities will need to determine if they have exceeded their baseline under the Safeguard Mechanism. The safeguard applies to around 140 large businesses that have facilities with direct emissions of more than 100,000 tonnes of carbon dioxide equivalence (t CO2-e) per year. This covers around half of Australia's emissions. The entity with operational control of a facility will be responsible for meeting safeguard requirements, including that the facility must keep net emissions at or below baseline emissions levels. There are various methods for a facility to meet its safeguard requirement depending on its emissions, how it operated during the financial...

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