Energy Markets

24 Aug AEMO releases the latest Electricity Statement of Opportunity

Posted at 16:14h in Energy Markets, News by Alex Driscoll

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...

23 Aug Additional Small Scale Solar Coming to Victoria

Posted at 12:05h in Energy Markets, News, Renewables, Solar by Alex Driscoll

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...

21 Aug Changes to the National Energy Guarantee

Posted at 11:34h in Electricity, Energy Markets, News by Alex Driscoll

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...

16 Aug National Energy Guarantee Update

Posted at 11:31h in Electricity, Energy Markets, News by Alex Driscoll

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,...

10 Aug Price of Utility Scale Solar Being Questioned

Posted at 14:41h in Energy Markets, News, Renewables, Solar by Alex Driscoll

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...

10 Aug NEG Moves To Next Stage

Posted at 13:01h in Electricity, Energy Markets, News by Alex Driscoll

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...

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

Posted at 09:42h in Electricity, Energy Markets, News by Alex Driscoll

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...

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

Posted at 16:18h in Electricity, Energy Markets, News by Alex Driscoll

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...

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

Posted at 15:47h in Electricity, Energy Markets, News by Alex Driscoll

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...

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

Posted at 12:46h in Electricity, Energy Markets, News by Alex Driscoll

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...