Australia’s commitment to climate change – we won’t make it to Paris

Show your stripes Climate change

Are the government realising what we have known all along – we won’t make it to Paris?

Almost a month after the world’s 6th #ShowYourStripesDay, the day made to spread awareness of climate change using the global Warming stripes https://showyourstripes.info/ the government have continued to apportion blame rather than invest in the industry to help them meet the targets they have set.

This was further evident in the Renew Economy podcast Chris Bowen undertook last week where he stuck to the governments line of “ambitious but possible.” However, leaks out of his office and the concerns that upcoming auctions will not produce the renewable investment results in time for the expect August 2025 closure of Eraring have led to industry starting to move away from the spin and into the reality of the 2025/2026 market, even before the release of the August ESOO.

The well-publicised article in the AFR added further faces and voices to those who are not standing behind the government’s naïve reality. Amongst them Kerry Schott, former chairwoman of the ESB, and Paul Broad the former Snowy Hydro CEO, who have been added to the growing chorus of dissenters who are adamant that Australia will miss its 2030 climate targets. This is in addition to the comments by the AEMO chief Daniel Westermann who cited a lack of investment as the reason Australia will fall short.

However, one question still looms large, if we don’t get there will we need to extend the life of existing coal plants, specifically Eraring whose closure in August 2025 will remove 25% of generation from the NSW grid?

It now looks like we have that answer. The industry at the end of last week was awash with rumours that the long-anticipated announcement around Eraring was starting to gain some certainty. According to an article in the Daily Telegraph on Friday, citing “industry sources,” at least half of the stations generation will indeed stay on post the August 2025 shutdown.

These targets moved further into the horizon when Delta run Vales Point announced they would have the ability to remain on until 2033, four years more than they originally anticipated and securing another 1.3GW on the NSW system into the 2030’s.

Whilst this is good politics, no one is getting re-elected with rolling blackouts on their record, just look at SA. What this does to Australia’s position on the Global stage is a different story. With COP28 coming up in November and December it is likely that we will have a target on our backs before we even mention extension of life.

At Edge2020 our focus is energy savings with an eye on the planet, we are energy brokers, advisory & sustainability consultants. If you would like to ensure your PPA comes from green sources please reach out for support from our Climate Active registered consultants on 1800 334 336 or info@edge2020.com.au. 

Government Boosts Firming Power Generation: Blueprint or Cautionary Tale?

Edge2020_Power Generation

In a bold stride towards energy security and sustainability, the Australian Federal Government, led by Chris Bowen, unveiled plans on Thursday to augment its support for an additional 550 megawatts (MW) of firming power generation in New South Wales (NSW). This amplification propels the existing plan of the state to nearly a gigawatt of firming capacity, a robust move geared to maintain grid reliability and security.

The comprehensive scheme, anchored in sustainability, is anticipated to attract nearly AUD 10 billion in investment and stimulate the power generation of an impressive 6 gigawatts (GW) to support the national grid’s dependability.

To date, proposals exceeding 3.3GW have been tendered, these initiatives target the void left by the looming shutdown of fossil fuel generators across the National Electricity Market (NEM). The government’s ambitious plan aims to offset the forecasted power deficits in the CAL28/29 periods following the discontinuation of Eraring and Vales Point power stations, operated by Origin and Delta respectively.

Chris Bowen hailed the announcement as a substantial enhancement to energy security, attributing this positive shift to the deployment of large-scale batteries and other zero-emission technologies. These avant-garde technologies promise to swiftly dispatch cleaner, more affordable renewable energy on-demand, such as during intervals of calm weather and diminished sunlight.

However, the ambitious plan is not devoid of challenges. It remains uncertain whether the proposed measures will adequately address the power shortage anticipated from the phasing out of fossil fuel generators. The firming capacity earmarked for support is predominantly anchored in large-scale battery and pumped hydro storage.

Recent delays to the Snowy 2.0 project have sparked fresh apprehensions about the NEM’s ability to maintain a stable electricity supply and avert a surge in power prices. Furthermore, while storage options such as pumped hydro and batteries seemingly complement renewable sources, uncertainties linger about the reliability of renewable energy during periods of calm weather and low sunshine. These concerns will be crucial in determining whether the shutdown of existing coal generation is postponed or accelerated.

The Federal Government’s bid to enhance firming generation capacity in NSW, although ambitious, is riddled with uncertainties. Striking a fine balance between maintaining grid reliability, mitigating price surges, and ensuring project completions will be a delicate act.

As Australia stands on the precipice of a renewable energy revolution, it begs the question: will this be the blueprint for the future, or will it serve as a cautionary tale? The success or failure of this grand scheme will undeniably cast a long shadow over the future of renewable energy not only in Australia but globally.

Australian Manufacturing: Is it time to bring it home?

Australian Manufacturing - Wind Turbine

The English love their football (soccer) and no more so than Baddiel and Skinner who sang “It’s coming home” for the 1996 Euro’s. But with another wind project either being delayed or scrapped is it really time to consider if the Chief Operating Officer of AGL, Markus Brokhof is right “The manufacturing industry has to come back to Australia.”

The latest announcement from CleanCo last week which stated the company is pulling the pin in their investment in the Karara Wind Farm in the Southern Downs in Queensland, citing delays, not in connections or transmission but in turbine parts and rising costs, only acts to further strengthen Brokhof’s argument. This investment was part of the wider MacIntyre precinct and would or may still be, the largest wind precinct in Australia. However, this could be a blow to Queensland’s target of owning 50% of new renewable generation within the state.

This is just the latest in a string of windfarms to hit delays, the Clarke Creek wind farm has been hit with numerous delays between change in ownership from Goldwind to Andrew Forest’s Squadron energy, through to shutdowns for worker safety as well as project management changes causing equipment to be removed from site. With the offtake from the first stage of the project mostly going to another Government Owned Corporation, Stanwell could this be a further blow to the state’s advanced renewable targets, 80 per cent by 2035, and the existing 50% by 2030.

Another one of Andrew Forests wide array of companies is Windlab, whose own windfarm the Upper Burdekin project has not only lost its inaugural customer Apple, but has had to significantly downsize the output of the site from the proposed 193 Wind turbines to a reduced 136 and is now likely to only have 80 following significant opposition from wildlife conservationists who stated that the project was threatening already endangered species.

To further stoke the flames, AEMO has now come into the forefront of media, stating that not only do we not have enough investment in renewable electricity to compensate for the expected closure dates of coal generation, but the firming technology to support this renewable grid has not been fully funded or addressed, this year’s ESOO will certainly paint a bleak picture for the medium term in Australia. This sentiment is only exacerbated by the Australian former chief scientist and first Victoria State Electricity Commission CEO, Andrew Finkel, who last week quit his role at the SEC stating; not only was the capital investment not in place but investment has dried up and the “country is unlikely to reach its emission reduction targets.” I’m sure not a sentiment which was welcome news for the Andrew’s government whose election campaign was built on the premise the SEC would be both decarbonising the Victorian grid whilst reducing the cost for Victorians.

With the COP 28 due in November and Australia looking like it will miss it’s, late to the party but thanks for coming, 2030 targets, increasing international pressure will be placed upon Australia to ask how we will try and achieve some meaningful reductions? Rik De Buyserie, Engie Australia’s CEO implied to even get close to the 2030 climate targets Australia would need 10,000km of new transmission, 44GW of new renewables and 15GW of firming capacity. With components scarce, increasing costs and logistical issues of port slots to physically ship the parts to Australia, maybe it is time to turn our attention inwards and start upskilling and creating our own industry to de-carbonise ourselves?

NSW South West Renewable Energy Zone

Street lights at night

Last Friday, the NSW government released their draft declaration for the South West Renewable Energy Zone (SW REZ) access scheme to the public. This is one of five REZs which have been identified within NSW as part of the NSW governments Electricity Infrastructure Roadmap. The schemes are overseeing the volume of projects which will be granted to the transmission within these zones and co-ordinate the network and generation investments into the areas.

The SW zone is based towards the Victorian border and the proposed connection point would be in the Dinawan Substation. The access standards are very similar to those already proposed in April for the states Central-West Orana (CWO) region.

With the CWO attracting more than $35billion worth of proposed projects the SW REZ is hoping to attract significant investment for its 2.5GW transfer capacity, noting the location will not allow for offshore wind and as much Hydrogen investment as that seen in the CWO.

The NSW government has stated that the aim of the declaration is that “An access scheme provides an opportunity to control the connection of projects to the REZ. In the case of the South West, the proposed access scheme triggers the application of modifications to the National Electricity Rules (NER) open access arrangements as they apply to the access right network.”

The access granted projects will benefit from significant network upgrades including potential upgrades to the Project Energy Connect (PEC) interconnector which is being developed at the moment and is to run between SA (Robertstown) and NSW (Wagga Wagga), upgrades to the HumeLink which would connect that Wagga Wagga substation with Snowy Hydro and its increasing capacity and further strengthen the investment case for the proposed Victoria-NSW interconnector (VNI West). The latter is currently within the RIT-T (Regulatory Investment Test for Transmission) process.

These proposals will surely give investors’ confidence in providing the required project certification to be granted the access to that zone. They must not only show feasibility and prepare to sign onto the standards set out in this proposition, but must ensure they can manage voltage, frequency especially which there are potential disruptions within the system. However, the rewards of participating in a well-funded, transmission rich environment which has certainty of curtailment risk for the access rights holders, are surely going to outweigh the paper-work process of being accepted and given the over subscription of the CWO, you can imagine a similar uptake in this round.

The consultation for the South West Renewable Energy Zone (SW REZ) access scheme is closing on the 15th May 2023.

Renewable energy storage road map released

Edge 2020 Brisbane City

The CSIRO released its Renewable Energy Storage Roadmap at the end of March 2023.

Their modelling suggested that while Australia leads the world in solar generation, and we have reduced emissions significantly, there is still a big task ahead of the country if we are to meet net zero emission targets and maintain affordable and reliable energy to end users. The CSIRO Renewable Energy Storage Roadmap report showed Australia will need significant amounts of storage to meet the transition to renewables.

Storage is the key to integrating renewable energy into the grid and reducing the dependency on coal and gas fired generation. Currently the electricity produced from renewable sources such as wind and solar is intermittent and is not easily dispatched into the grid when it is most needed. Storage allows the renewable energy to be generated when the natural resources are high and dispatching it into the grid when the electricity is needed.

Dispatchable storage is currently available in the grid in the form of pump storage hydro, such as Wivenhoe power station in Queensland and Tumut 3 in NSW. There are also various battery installations located across the NEM.

The dispatch of renewable energy may require different storage technologies to best suit an evolving NEM. Storage comes in various forms from electrochemical storage such as batteries, mechanical storage such as hydro, chemical storage and thermal storage. Each technology has its pros and cons, but a combination of technologies is likely to be required to meet the real time storage volumes and timings of the NEM.

For many years pumped hydro has been seen by governments as the solution to Australia’s energy storage needs, but timing is the limiting factor in this solution.

To enable the transition from coal and gas fired generation to renewables, storage is required now. On a typical day we have excess solar generation resulting in negative spot prices, however over the evening peak as demand increases the supply of renewable drops of coal and gas provide the generation to meet demand. Thermal generation is normally dispatched at prices higher than the cost of renewables resulting in higher spot prices. If storage could be used efficiently the solar energy produced during daylight hours could be used over the evening peak and into the evening resulting in lower electricity prices.

As coal fired generation retires between 2023 and 2035, new dispatchable generation needs to be brought online, the CSIRO report states, development timelines need to be accelerated to bring more projects online by 2030.

Pump storage hydro typically has a lead time of 10 years so either development timelines need to be accelerated or different storage technologies need to be employed in the meantime.

CSIRO chief executive said “there was a need for a “massive increase” in storage capacity to achieve the transition to net zero, with estimates of 11 to 14 gigawatts of additional storage capacity by 2030 alone.

2030 is not far away, to meet the transition targets should industry be focusing on storage rather than generation? Is storage an opportunity to utilise existing infrastructure like old mine pits for pump storage hydro or repurpose retiring thermal power station sites as storage hubs?

Solar and wind are the big losers in latest AEMO MLF forecasts

woman on a windy day

As the electricity market evolves the Australian Energy Market Operator (AEMO) makes assessments of the changing landscape from a transmission and security of supply perspective.

Recently AEMO released its final assessment of Marginal Loss Factors (MLFs). MLF determine how much energy is lost between the generator and the region reference node in each state.

In this next round of MLFs many of the big losers are the intermittent generators. Changes to the grid and the closure of thermal generators have had a detrimental impact on wind and solar farms. Lower MLF’s impact the amount of revenue generators can make.

The final MLF numbers are not as bad as what was published in AEMO draft report providing some positive news for wind and solar developers. Since the draft report new modelling has included the delayed return to service of the Callide C units.

The primary driver for changes in the new MLF forecasts has been changes in availability due to the closure of Liddell, revised return to service dates for Callide C, revised demand forecasts and the increased penetration of solar and wind generation into the grid.

Recent transmission line work has resulted in an increased capacity between Queensland and NSW which means increased flows from Queensland which results in wind and solar projects located in the north of NSW being constrained.

MLF generally gets worse for generators at the end of a long transmission lines, this has resulted in generation in northern NSW being the big loser this year. Some solar farms in the New England region have dropped by over 3%.

While a 3% fall sounds bad, it is not as bad as the MLF for Moree, a 57MW solar farm in western NSW which loses over 20% of its generation by the time it gets to the regional reference node. Previously Moree solar farm had an MLF of 0.8275, this year it is 0.7977.

The return to service of Callide C significantly impacted solar farms in central Queensland, however the delayed return to service has lessened the impact. Daydream, Collinsville, Kidston, and Moura are some of the solar farms most impacted by the new MLFs.

So what does the mean to end users? While we are seeing a rapid increase in renewable generation, the location of this generation is important to the success of a project. If we use the example of Moree where over 20% of the renewable generation does not reach the market then the question has to be, was it built in the correct part of the grid. Many people focus on the size of the project while the volume of electricity produced needs to be of greater importance. Unfavourable MLF will impact the success of the project, will reduce the renewable energy available to the market and potential can leave end users with less renewable energy than what they had signed up for.

Energy Market Update – East Coast

Energy market prices

Edge 2020 round up of the last week

Week ending Friday 17th March

QLD

  • QLD prices ranged between -$315.80/MWh and $15,500/MWh for the week ending 17th March 2023, averaging $191.36/MWh.
  • Hot humid weather at the back end of the week resulted in demand increasing and spot prices spiking. Over the evening peak on Thursday spot prices hit the $15,500/MWh market cap while on Friday’s evening peak the price reached $14,500/MWh. Outside these spikes the maximum daily price remained below $400/MWh.
  • Solar output increased across the week as cloud cover reduced. Solar output peaked on Friday at 2,002MW, however there was limited solar available over the evening peaks on Thursday and Friday to suppress spot prices.
  • Wind generation was low during the high spot price events. High spot prices on Thursday and Friday occurred just prior to the evening ramp up of wind. Part of the week saw no wind generation across the state, however output peaked in the early hours of Saturday morning at 443MW. Typical of load swings on intermittent generation by 14:15 the same day wind generation had dropped to less than 2MW.
  • Gas fired generators continue to increase their output. Darling downs hava moved from an intermittent profile to a baseload / peaking hybrid by ramping up generation over the evening peak. Swanbank E continues to operate after midday through until the following morning as seen in previous weeks. Yarwun operated around the clock. During the high price events on Thursday and Friday, Townsville was joined by Roma and Oakey to cover the price spikes.
  • While Wivenhoe continues to operate every evening, the duration is reducing as spot prices decline. Kareeya has joined Barron Gorge in operating throughout the week at 86MW and 66MW respectively. Output from Barron gorge was reduced to zero prior to the evening peak on Thursday due to river safety but had returned to full load by the time the high prices occurred.
  • Coal fired availability remains high despite some reliability issues. During the high price events some generator reduced output, but most remained unchanged. The reason for the sustained high prices on Thursday was a chain conveyor issue at Kogan Creek that took 250MW out of the market. Tarong North was taken out of service during the week and the until returned to service over the weekend.

NSW

  • NSW prices ranged between -$47.00/MWh and $14,506/MWh for the week ending 17th March 2023, increasing the average to $169.43/MWh thanks to several price spikes on Thursday and Friday.
  • Solar output continues to drop again this week, peaking slightly lower than last week at 2,357MW. Similarly, to Queensland there was minimal solar output during the spot price spike on Thursday and Friday.
  • Wind generation was also low across NSW during the high spot price events. High spot prices on Thursday and Friday occurred just after wind output dropped by ~800MW. Output peaked in the early hours of Monday morning at 1,492MW. Prior to the high prices on Thursday output was also high reaching 1,440MW only hours before the spot price spikes.
  • Tallawarra returned to base load operation this week with Colongra, Smithfield and Uranquinity providing the occasional evening peak generation. All gas units ran over the evening peaks on Thursday and Friday when the high spot prices occurred.
  • Coal fired availability remains high this week with no unplanned unit outages. All coal fired units are now cycling their units across the day to reduce exposure to negative prices but are increasing output over the evening peak and into the night when spot prices are higher. The price spike was partially caused by Vales Point 5 being out of service.

SA

  • SA prices ranged between -$982.42/MWh and $1,004.70/MWh for the week ending 17th March 2023, averaging $67.97/MWh.
  • Solar generation was heavily constrained again this week due to negatives prices and system security concerns, solar peaked at 414MW with output ranging between 360MW and 410MW for the back end of the week.
  • High levels of wind generation during solar hours resulted in solar being constrained. Wind output peaked at the end of the working week at 1,173MW significantly lower than previous weeks. Wind output also dropped below 20MW for part of the week, but this was when solar output was high. High spot prices continue to occur when wind generation is low.
  • Torrens Island B and Pelican point continued to share the synchronous generation across the week. Dry creek, Quarantine and Osbourne also ran over the higher priced intervals throughout the week.

VIC

  • VIC prices ranged between -$995.78/MWh and $357.49/MWh for the week ending 17th March 2023, averaging $57.54/MWh.
  • Solar generation was heavily constrained due to negative spot prices but still managed to peak at 803MW and ranged between 700MW and 760MW across most of the week apart from over the weekend when output was constrained to 450MW.
  • Wind generation in Victoria was sporadic peaking at 2,763MW but dropping to less than 5MW at some parts of the week. Similar to South Australia, higher spot prices continue to occur when wind generation is low.
  • Hydro generation remained unchanged to last week with across the week with Murray, Eildon and Dartmouth only operating during the higher priced parts of the day.
  • Availability of coal fired generation in Victoria remains unchanged with no outages.

Retrofitting old power station sites with renewable generation

wind turbine

As coal fired generation retires the logical solution would be for renwable generation developers to use the existing connection points to install either new generation or energy storage. Generally, these locations have the best transmission infrastructure close by and have favourable loss factors.

Increasingly renewable developers are finding it hard to obtain favourable locations to build new projects particularly for solar and wind. Most developers prefer sites next to transmission infrastructure, but more and more renewable developers are struggling to find sites with good solar or wind potential. The wind sector is most influenced by site selection with the majority of the high wind yielding sites already developed.

The question is, do developers now look at redeveloping existing generation sites rather than start with a greenfield site? While there are benefits of a brownfield site, the registration and connection process of a new project is as arduous as developing a whole new new site. Additional connection studies would need to be undertaken and new projects would need to meet more stringent approval processes.

As developers are forced to develop low yielding sites the output of the projects drops and costs increase, so developing an older site may be beneficial if yield is significantly better.

The earlier wind farms were built in the late 1990’s and are now entering the final years of their life. Are these locations ideal for the next generation of wind farms or will developers opt for new sites?

Overseas data suggests repowering an existing site with new more efficient and larger wind turbines has its benefits. At this stage no Australian wind farms have been repowered.

The Australian Energy Market Commission (AEMC) estimates the average wind farm is 15 years old however some are close to 30 years old. The early wind farms are located where the wind resource was seen to be the best.

With offshore wind the next big thing in the industry will we also see the development of larger more efficient wind farms on the same ground as the industry pioneers?

At Edge 2020 keeping our customers informed on the energy market is a top priority for us. As the world shifts towards a more sustainable future, we are committed to playing our part by procuring from renewable energy sources, whilst continuing to secure cost-effective energy solutions for our customers. If your business is interested in wholesale or retail renewable PPAs we’d love to help you. Contact us on: 1800 334 336 or email: info@edge2020.com.au

Future investment in the grid not the cheapest option

At the end of February, Energy Ministers agreed to go down the path of a voluntary congestion relief market with priority access. Most developers and advocates of renewable energy have supported the energy minister’s decision to proceed with planning for a congestion relief market, but Australian Energy Market Operator (AEMO) have released initial costings showed it could cost more than $300M.

Previously the Energy Security Board (ESB) proposed a connection fee model, the voluntary congestion relief model has been estimated to cost up to 30 times more than the connection fee model.

The new ESB boss and current chair of the rule maker, the Australian Energy Market Commission (AEMC), recently said “the more expensive voluntary model chosen to help fix transmission congestion on the grid from the influx of renewables will ultimately deliver more benefits for consumers and result in fewer carbon emissions”.

The NEM is controlled by the National Electricity Market’s dispatch engine (NEMDE), this computer system dispatches all the scheduled units across the NEM and optimises across all inputs including bid prices, constraints, supply, and demand. This is an aging system and would require replacement to operate the ESB’s proposed connection fee model.

The Australian Financial Review revealed the congestion model would cost $76M, much higher than the $19M congestion model initially preferred by the ESB, however there are cost savings in not replacing NEMDE.

The ESB’s cost-benefit analysis of the capacity relief market would result in a net benefit of between $2.1B and $5.9B over 20 years. Apart from the economic benefits the model would reduce emissions by 23Mt over the 20 years.

Transmission congestion has increased over the last 5 to 10 years as more renewable and storage projects connect to the existing network. The market operator AEMO has been highlighting the need for new network capacity to accommodate the 127GW of renewable energy expected to enter the grid by 2050 in various planning publications. While renewable energy will displace the majority of coal and gas generation an extra 63GW of transmission capacity are still needed to facilitate the 127GW of renewables and storage likely to connect to the grid.

Under the current market rules generation from new projects can curtail the output of existing power station resulting in existing projects exporting less power. While this model works well for system security it does not work well for developing an industry and providing certainty for developers.

The ESB’s preferred option of voluntary congestion would allow developers to trade congestion relief with priority given to existing projects over new projects when accessing the grid during times congestion.

The final model will be delivered to the energy ministers by mid-2023 and is likely to be in place in 2027.

Despite being the best solution over the long-term existing energy users will pay the cost in the short term.

 Edge2020 have an eye on the energy market, enabling us to support price  benefits as well as customer supply and demand agreements. Our clients rely on our experts to ensure they are informed, equipped, and ideally positioned to make the right decisions at the right time. If you could benefit from an expert eye on your energy portfolio, we’d love to meet you. Contact us on: 1800 334 336 or email: info@edge2020.com.au

 

AEMO Services shortlisted 4.3GW of renewables in NSW

AEMO Services recently ran a tender process for Long-Term Energy Service Agreements (LTESA’s) and Renewable Energy Zone (REZ) Access Rights to support investment, construction and operation of renewable energy generation and long duration storage infrastructure in NSW.

AEMO Services shortlisted 16 projects totalling 4.3 GW of generation and storage in its first auction. AEMO Services is expected to go to tender for more supply and storage in the future as NSW undergoes the transition from coal fired generation to renewables.

To enable the transition from coal to renewables, investment in NSW is likely to be over $32B to allow renewables to fill the gap as the last 5 coal fired generators in the state retire over the next 10 years.

With 16 projects being selected from the first round, AEMO Services will continue to run 2 auctions per year until the end of 2030 to source 12GW of renewables and 2GW of storage to fill the shortfall.

While the generation and storage mix has not been released, it is likely it will be a mix of solar, wind for the generation and batteries and pump hydro will be selected to meet the eight hour storage solution.

Under the auction scheme the successful projects will essentially be underpinned by a long term energy service agreement to ensure the projects receive a minimum return on investment to allow them to get project finance.

The 16 projects have until the 10th February to submit the financial part of the bids to AEMO Services when they will be assessing each project against a set of criteria including technical capability, delivery timeline, cost and social licence. Unsuccessful projects can update their submissions and submit offers in future rounds. The next auction is likely to be in July 2023.

With companies striving to meet future sustainability targets the supply of projects has been tight. Hopefully following the close of the first auction and another round in 6 months we will start to see projects reaching financial close, construction and finally delivering renewable energy to the grid.

At Edge 2020 keeping our customers informed on the energy market is a top priority for us. As the world shifts towards a more sustainable future, we are committed to playing our part by procuring from renewable energy sources, whilst continuing to secure cost-effective energy solutions for our customers. If your business is interested in wholesale or retail renewable PPAs we’d love to help you. Contact us on: 1800 334 336 or email: info@edge2020.com.au