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18 May Future of Contract Markets and the Baseload Swap

It is no surprise, when I say the National Electricity Market (NEM) is going through a vast transition and transformation, with an ever-increasing penetration of renewable generation, in the form of both utility scale renewable generation and household installations. The world as we know is also battling the global pandemic that is Coronavirus. This has had a significant impact on people and their livelihoods and health.  along with a significant impact on energy markets around the globe. To top it all off, energy markets have had to endure a supply price war recently, between OPEC’s unelected leader, Saudi Arabia and non-OPEC oil producer, Russia. With a rapidly evolving and ever-changing energy landscape, what should our contract markets look like?...

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01 May What’s Oil got to do with it?

There is no doubt that energy markets and the energy industry itself are rapidly evolving and moving away from fossil fuels. The evolution of energy seems to be coming, and only coming faster given this tumultuous time the people and countries across the world have endured. Lets start with oil; Australian’s across the nation are very aware of the recent global oil price crash to new historic levels, particularly when it is reported in the news headlines that Australian’s are seeing almost 15-year lows at the petrol bowser. The impact of the recent oil price crash however does not stop at the bowser, it has and will continue to have...

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21 Apr History making Oil price – what it means for Energy in Australia

Overnight the major oil price index, the West Texas Intermediate (WTI) Crude Oil Index fell from trading at USD$20.97/barrel to enter negative price territory for the first time in history, with May 2020 future prices settling at -USD$37.63/barrel on the 20/04/2020, after reaching a low of -USD$40.32/barrel. The event was sparked off the back of increasing storage concerns given excess supply build-up brought on by suppressed demand as a result of COVID-19. The recent announcement by OPEC + to cut demand by 9.7 million barrels a day in May and June months, and the additional 5 million barrels per day to be cut by other nations outside of OPEC and...

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15 Apr Infigen want an Operating Reserve Market

Infigen have submitted a letter to the Australian Energy Market Commission’s Chairman requesting the introduction of an Operating Reserves and Fast Frequency Response rule change. Infigen state in their letter that this market proposal they have put forward would “relatively simple to implement and would provide added confidence that sufficient resources to respond to unexpected changes in supply or demand would be available”, as stated in their letter. Most importantly, Infigen have stated a rule change such as this would remove the reliance on and provide an alternative to the RERT (Reliability and Emergency Response Trader) procurement and contracts of which cost consumers $34.5 million, and avoid further intervention in...

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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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28 Jan World Economic Forum – EU’s proposed carbon border Tax

The World Economic Forum was held late last week in Davos (Switzerland) with foreign leaders all around the globe coming together to talk about the global economy and hopefully generate some fruitful action. Probably one of the more market shifting proposed schemes put forward at the World Economic Forum was that of European Commission President, Ursula von der Leyen. Von der Leyen’s proposal is a daunting one from Australia’s point of view, as it could have a significant impact on the country’s vast economic dependence on exportation of minerals and goods. The proposed scheme, labelled the ‘carbon border adjustment mechanism,’ would be a tax applied to carbon-intensive good from those...

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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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13 Jan Semi-scheduled and Intermittent Non-scheduled Generators urged to advise of De-ratings

A new market notice within the National Electricity Market (NEM) posted by the Australian Energy Market Operator (AEMO), one we have not see before was issued to all market participants on the 23/12/19. The market notice requested and served as a reminder for all semi-scheduled and intermittent non-scheduled generators to ensure they update their market availability bids, update their SCADA Local Limit or, if unavailable, advise AEMO control room to implement a quick constraint to the reduced available capacity level; and update intermittent generation availability in the EMMS Portal to reflect reduced plant availability as is required under the National Electricity Rules (NER), per NER 3.7B(b).limits. This was an interesting...

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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 Sep Can A Capacity Market Secure Supply

On the 12th September COAG Energy Council met and discussed the approach of the Energy Security Board is proposing to resolve the long-term solution to the NEMs security of supply assumed issues in an increasing variable renewable energy grid. One possible future scenario that has been considered and offered for market feedback was implementing a Capacity Market. Incentivising existing generation to not mothball early and give new assets return certainty encouraging investment. In a standard model it would provide payments to build new, extend the life of generation assets or possibly to those able to reduce their demand, providing they guarantee capacity to the system at periods of stress. The idea behind...

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