Last week AEMO published its Quarterly Energy Dynamic report. Our Energy Experts are currently analysing the report and will provide a comprehensive summary in the next week.

The last quarter of 2020 saw some interesting trends. We saw the continual increase in wind and solar generation across the National Energy Market (NEM), reaching 20% for the first time. A deepening of the “duck curve” shape of the demand curve and the prolonged periods of negative prices mixed with volatility over the evening peaks.

Wind and solar generators are starting to learn how to operate effectively during the low-price periods, through bidding strategies or clauses in there Power Purchase Agreements (PPAs), while the thermal generators have learnt how to reduce their exposure to low prices whilst having the flexibility to ramp up during the high price period or when volatility occurs.

As expected, the regions with a higher penetration of intermittent generation like wind and solar, experienced a greater share of negative prices. Currently South Australia leads the way in the percentage of renewable generation installations but in the last quarter Victoria installed the most Wind and Solar.

With high prices in some regions and the increased occurrence of negative prices, intermittent generation altered their trading strategies by increasing the offer price to ensure the units were not dispatched at negative prices. The result of these trading strategies is that spot prices increase, and negative prices occur less.

Edge has been expecting this behavior to occur for some time. This behavior was also more prominent in the newer installations, mainly driven by market predictive software used for rebidding and the commercial drivers written into new PPAs to increase the returns from the assets.

While the wind and solar developers have steadily been increasing their presence, the thermal generators have been busy changing their operations to allow the normally inflexible coal fired generators to operate at lower minimum levels and change load rapidly to meet the change in demand and spot price during the ramp up to the evening peak.

AEMO observes that Loy Yang A showed increased flexibility by also shifting marginal capacity to higher price bands from below $10/MWh to $35/MWh so they would not dispatch volumes above their minimum load. This also leads to an increase in the spot price.

Curtailment of wind and solar increased in the quarter to 5.2% which equals an average of 191MW. Most developers should have factored in this reduction in their business models. For the ones that have not, they may be affected commercially.

In the Quarter 4 (Q4) of 2020 overall curtailment remained the same as Q3 however, economic curtailment increased. Curtailment for system strength decreased significantly as a result of fewer periods of low demand in North Queensland and changes made to the connection settings at Mt Emerald Wind Farm. The largest factor resulting in curtailment was transmission issues for system outages, grid congestion and network constraints. Curtailment due to transmission issues resulted in an average of 80MW of the 191MW being constrained in the last quarter.

Some interesting statistics out of the report that we will expand on in the coming weeks are:

• Highest share of NEM renewable energy compared to operational demand – 36% of NEM operational demand at 0930 hours on 3 October 2020.
• Highest grid-solar output– 3,210 MW at 1230 hours on 30 November 2020.
• Quarterly average for grid scale Solar of 1,018MW.
• Quarterly average of grid scale Wind generation was 2,441MW