Author: Alex Driscoll

04 Jun Federal Government King Review

Recently the Australian Government released findings of the King Review, accepting 21 of 26 recommendations to incentivise greenhouse gas (GHG) emissions abatement from industry. The focus of the Expert Panel review was the development of rules to credit emissions reductions below Safeguard Mechanism baselines. Credits created under the proposed mechanism could be used to meet compliance obligations under the Safeguard Mechanism. The panel recommended producing new credits generated under the scheme, known as Safeguard Mechanism Credits (SMCs). The SMCs would be different to the Australian Carbon Credit Unit (ACCU) offsets. SMCs would be for transformative abatement projects based on changes in emissions intensity rather than absolute emissions. The proposed crediting mechanism would be...

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27 Mar COVID-19 / NEM Impact Statement

COVID-19 has impacted us all in recent weeks. At Edge we have put plans in place that have allowed us to provide all services our clients require without disruption. We are working diligently to understand the impacts COVID-19 could have on the energy markets in the short and longer term. As more information comes to light, we will provide further updates on the impacts to the market and our clients. As we are only a few weeks into this pandemic we will try and provide an understanding of the impact COVID-19 could have on the market. Oxford economics, a team of 250 economists, has recently published a paper providing a high-level update on the impact of the pandemic on the world...

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20 Jan Water – a top priority for Tarong Power Station

Current weather conditions are placing an increased reliance on the diminishing water catchments across Australia. These water catchments store water for use by various parts of the local community including drinking water for residents, irrigation and Electricity generation. Stanwell recently announced water sustainability is a top priority for its Tarong Power stations located within the South Burnett region. Water is an essential necessity for thermal power stations to make electricity. The water is used for steam production and cooling. Tarong power station consisting of 4 X 350MW thermal units and a 443MW supercritical unit. These units obtain their water from two sources, the primary source is Lake Boondooma and secondary from a pipeline using water from Lake Wivenhoe or...

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23 Dec Gas power stations for Victoria and Queensland

The federal government recently announced an agreement to underwrite new gas turbines in Victoria and Queensland to provide relief from expected high peak prices. The operation of these assets, below the usual short run marginal cost of current open cycle gas turbines (QLD - $106 / MWh – AEMO 2019) will potentially limit the likelihood of high prices or price volatility over the morning and evening peaks resulting in reduced average spot outcomes. Under the new generation underwriting plan, which was proposed by the ACCC, the government will assure an amount of the electricity generated will be purchased for a set period into the future. The Victorian generator will be located at Dandenong,...

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13 Nov Predicted Shortfall of LGCs for 2019

LGC’s remain relatively elevated at ~$50/certificate. Volumes are being traded whilst liquidity is still being indicated as reasoning for increased prices for CAL19 certificates market. The Clean Energy Regulator came out on Thursday 31 October and announced based on forecasts and certificates created thus far this year, there is likely to be a shortfall in CAL19 certificate creation by 2 million certificates which has resulted in an uplift in prices. Despite this, we are seeing continued strong wind and solar generation around the NEM which will continue to have a positive impact on creation levels, with fewer interconnector constraints and transmission constraints intra-regionally impacting energy flows. Tas Hydro’s fleet of run-of-river hydro...

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23 Aug 2019 Electricity Statement of Opportunities

Yesterday the Australian Energy Market Operator (AEMO) released its 2019 Electricity Statement of Opportunities (ESOO), which forecasts electricity supply reliability in the National Electricity Market for the next 10 years. An important change in this year’s ESOO is the inclusion of forecasting of reliability shortfalls that form part of the Retailer Reliability Obligation framework. AEMO continues to forecast a fine margin between supply and demand in several regions. Although most margins are tight, Victoria is forecast to not meet the reliability standard for unserved energy. AEMO has flagged Victoria as a significant risk of insufficient supply to meet demand that could result in load shedding. The key driver for this is the...

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30 Jul Queensland Government direction to Stanwell lifted

The CEO of Stanwell was quoted yesterday in Reneweconomy.com.au stating that "bidding direction ended on 30 June 2019” in reference to the direction given to Stanwell form the Queensland Government in May 2017 to lower wholesale prices. Spot prices have been soft since 1 July 2019 across the NEM and there is currently no evidence to suggest that Stanwell (and CS Energy) have immediately reacted to the lift of the direction. When the direction was first given by the Queensland Government in 2017 to Stanwell, energy prices materially came down and generally speaking have been less volatile. Key assets such as Swanbank E and Wivenhoe have been utilised by Stanwell and CS...

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09 Jul Enhancements to RERT

The Reliability and Emergency Reserve Trader (RERT) is an existing intervention mechanism that allows the Australian Energy Market Operator (AEMO) to contract for additional reserves such as generation or demand response that is not otherwise available in the market. AEMO uses RERT as a safety net at times when a supply shortfall is forecast or where practicable for power system security. RERT is classified as an emergency reserve or strategic reserve as it may only be used as a last resort to avoid unnecessary load shedding. This is typically required when the market is under pressure from extreme weather or during unexpected generation failure. RERT can be additional generation or load curtailment...

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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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09 Jul STATE OF THE ELECTRICITY MARKET – AUTUMN MARKET OVERVIEW

The electricity spot prices in Q219 (April to June) were unsurprisingly lower than the preceding 3 months of Q119 (January to March). Although Q219 experienced some volatility, this was far from the extremes we saw in Q119 with VIC and SA hitting the market price cap in February. Prices during Q219 were higher than Q218 in QLD, VIC and TAS, however lower in NSW and SA. Looking back across the last 10 years, prices have been higher for all regions. Figure 1: Historical prices for autumn (Source: AEMO) It should be noted that prices in both 2012 and 2013 were affected by a carbon tax, which was subsequently repealed in 2014. Since 2015 there...

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