WHO WERE AUSTRALIA’S TOP EMITTERS?

Last Thursday the Clean Energy Regulator (CER) published the latest National Greenhouse and Energy Reporting (NGER) data outlining the largest 400 emitters across Australia.

As expected, Australia’s energy companies ranked highest in the list with AGL leading the list, with greenhouse gas emission reported as 42.2 million tonnes of scope-1 emissions for 2020 financial year. AGLs emitter was more than double that of the second highest emitter Energy Australia, at 17.9 million tonnes.

Other high emitters included:

  • Origin Energy with 16 million tonnes
  • Stanwell Corporation and CS Energy emitting a combined 30.3 million tonnes.

Following the list dominated by thermal generation came the oil and gas producers.

  • Chevron Australia emissions equaling 10.2 million tonnes
  • Woodside Petroleum reported 9.2 million tonnes
  • Santos emitting 7.3 million tonnes

As AGL owns the oldest and dirtiest power stations due to the fuel they burn, it is not surprising they top the list of emitters with 8% of Australian greenhouse gas emissions.

AGLs largest emitting stations was the brown coal fired Loy Yang A coal power station with 16.7 million tonnes and Bayswater Power Station at (14.0 million tonnes), which burns black coal.

With the release of these results, it will put increased pressure on the retailers to clean up their generation by moving towards renewable generation.

 

Emission reductions have changed across various sectors in the 2019-20 year, which was mostly due the impact of COVID-19 however as seen below the electricity generation sector had continued a historic trend of reduced emissions due to the higher penetration of renewables.

Emissions from the electricity sector dropped by 7.5 million tonnes compared to the previous year. Emissions from the oil and gas sector dropped by 3.4 million tonnes as result of reduced venting and flaring of gas.

What is the spot market and the spot price?

Understanding the spot market and spot prices is fundamental to understanding how much you ultimately pay for electricity.

The National Electricity Market (NEM) operates as a ‘spot market’.  This means that supply and demand are matched instantaneously, and generators are paid a spot price for the energy they generate in any given period.

The Australian Energy Market Operator (AEMO) manages the spot market, balancing supply and demand in real time. With the safe delivery of energy the priority, AEMO controls a number of physical aspects of the market which ultimately impacts which generators are dispatched, and what spot price is achieved.

AEMO provides the market information regarding how much demand is expected. Generators compete to supply this energy by providing a bid stack to AEMO that ultimately tells the market operator how much energy they are prepared to generate for a given price. AEMO aggregates all the bid stacks from cheapest to most expensive, manages the physical requirements of the system (which stands to impact some generation with constraints, ancillary services, interconnector flows, etc.), and sets the spot price in a region at the lowest price where actual demand intersects the relevant bid stack. . All supply at and below this level is required to generate and will be paid the spot price.

Supply and demand is physically managed by AEMO varying the market in 5-minute dispatch intervals. For the purpose of financially settling the spot market, it is done in 30-minute trading intervals (an average of the six 5-minute dispatch intervals). This means the spot market currently operates in a way that physical dispatch and financial settlement are determined over different timeframes. The market was designed in this manner to incentivise slow ramping thermal generators and large users to benefit from changes to load up to 25 minutes after the price signal has been sent.

The spot market and the setting of spot prices is highly complex and governed by stringent rules for both bidding and dispatch processes (all of which go well beyond the high-level principles outlined in this article). Despite this, the dispatch and settlement timing mismatch has led to disorderly bidding practices whereby generators have been accused of ‘gaming’ the market. The Australian Energy Market Commission (AEMC) determined that in the long-term, the pricing anomaly may lead to inappropriate investment and higher prices for consumers.

Consequently, in a move to further enhance the market, from 01 July 2021 the market will start to move to 5-minute spot pricing. This means dispatch and financial settlement will be aligned, disorderly bidding will be managed, and fast response technologies such as batteries will be rewarded.

Back to Basics Series – National Metering Identifiers (NMIs)

We’re embarking on a series of posts that go back to basics. As electricity market experts, too often we come across people and / or businesses who lack an understanding of what can and can’t be done in the market. Inevitably we find that it is difficult to educate if the basics aren’t fully understood. 

There is no doubt that energy markets are highly complex. For example, understanding every aspect of the National Electricity Market (NEM) is near impossible. But a solid understanding of the fundamentals is essential if you stand any chance of knowing some of the more complex aspects of it.

National Metering Identifiers

A National Metering Identifier (NMI) is a unique 10 or 11 digit number used to identify every electricity network connection point in Australia. This includes all types of metered and unmetered electricity connections to the physical electricity networks in the National Electricity Market (NEM), Western Australia markets (SWIS and NWIS) and the Northern Territory.

Learning about NMIs and their function is essential. NMIs allow all the relevant players in the market to identify your network connection point and the associated services, costs and service providers associated with it. NMIs and all the data and information associated with them, are recorded in the Australian Energy Market Operator’s (AEMO’s) Market Settlement and Transfer Solutions system (MSATS), which all key service providers have access to. Put simply, MSATS is the IT system operated by AEMO to fulfil its obligations under the National Electricity Rules (NER). We’ll post on this soon.

Via MSATS, retailers become financially responsible for your NMI in the market, and therefore the costs associated with it. The energy and market costs to AEMO, the network use of system (NUOS) costs to your Network Service Provider (NSP), and the metering costs to your metering co-ordinator (MC). Your retailer is responsible for paying these costs to the relevant providers, and then recovers these costs through charges to you in your retail energy invoice.

Meter data is collected and recorded against a NMI. Any connection related works at your premises must be done with reference to a NMI (for example the installation of embedded generation). NMIs are transferred from service provider to service provider as the preferred party for these services changes, such as retailers and metering providers.

You can find your NMI on your electricity invoice. Noting a NMI will only change if there is a change to the physical connection infrastructure (for example, a change to the connection configuration or voltage) or the physical connection is removed and then later re-established.

In terms of industry speak, NMIs are often pronounced “Nim-ees” or “N M I’s”.

In the coming posts we will focus on the installation of generation at a NMI, including small scale solar PV and larger utility scale installations. How the configuration of generation can influence your consumption requirements from the market / grid and associated regulatory impacts.

Any questions, please don’t hesitate to contact us on 1800 334 336 or email save@edgeutilities.com.au or admin@edge2020.com.au

Reliability and Emergency Reserve Trader Scheme

The Morrison Government have again distorted the Electricity market when Angus Taylors office announced it was intervening to pay Victoria’s Portland aluminum smelter in Victoria nearly $80 million to act like a “giant battery” in the Reliability and Emergency Reserve Trader (RERT) scheme.

The announcement surprised the market and means that Portland will be the only provider of RERT services. They will be paid just to be on standby to deliver emergency power reserves.

The intervention was announced on Monday under the veil of securing Victoria’s energy system, while subsidising the Alcoa owned smelter with guaranteed revenue, with up to $76.8 million of RERT revenue over the next 4 years.

The short term solution to Energy security in Victoria will cease in 2025 when new electricity market reforms are expected to be in place.

Under Australian Energy Market Operator’s (AEMO’s) RERT mechanism, RERT participants are paid to reduce demand at times when the supply / demand balance become tight, but only pays if parties participate. In the Portland cases they will get paid to just be on standby.

This year AEMO is seeking 1,600 Megawatt (MW) of RERT, apart from the guaranteed money going to the Portland smelter. RERT will not cause market participants anything unless it is activated.

In the 2020, AEMO published the Electricity Statement of Opportunities (ESOO). AEMO commented that it was highly unlikely that Portland’s services will be called upon this summer, due to the additional generation in the region from wind and solar.

Smelters are well placed to provide long duration outages. Other industrial processes like mineral processing are best suited to short duration outages. It is understood, in return for the guaranteed revenue, the RERT agreement means the Portland smelter will participate to the maximum extent possible. This is likely to include the smelter being shut down for an extended duration,  most likely during the highest stressed times of the year.

The Portland smelter and other smelters in Australia are struggling to remain competitive on the world stage. The Portland smelter has received around $1.1 billion of subsidies from the Victorian Government since 2017 and a $40 million interest free loan from the Federal Government.

Market participants have raised their concerns over the government’s intervention, highlighting that it has distorted the pricing and availability of RERT available to AEMO. Other concerns are that it may encourage other smelters such as Tomago in NSW and Boyne smelter in QLD to seek similar payments.

The Clean Energy Council released it latest renewable investment confidence survey and a key concern named federal government market intervention as one of the turn-offs for prospective large-scale wind and solar developers.

To say 2020 has been a colossal year………… is an understatement!

As the year rounds to an end, we would like to take the time to reflect and give thanks. Our sincere thanks to all those who have supported us during this difficult year. Our thoughts and best wishes go out to the individuals, families, and businesses who too have been adversely impacted by the events of 2020. We wish you well as you pivot and rebuild.

The year that was…

Big picture:

  • Trump does, well Trump things – drones, tweets, fails to manage COVID-19 better than anyone, apparently wins an election that he didn’t actually win.
  • China flexes its military muscles in our backyard, their international trade muscles get a workout too.
  • Oh, China also “seemingly” gifts the world COVID-19.
  • A global pandemic follows – 59.7 million cases worldwide, over 1.4 million deaths.
  • Entire industries and businesses are decimated as governments deliver unprecedented incentives.

Close to home:

  • Australian bushfires rage – 46 million acres burn, 1 billion animals perish, 6,000 buildings go, 34 people die.
  • Australia locks down to the threat of COVID-19 – 27.8k cases, over 900 deaths.
  • State and federal governments start spending, leading us into 2021 with a propped-up economy.
  • The RBA drops the cash rate to 0.10%.
  • Energy prices crash – only recently starting to rebound.
  • Many equity and commodity markets crash – most having firmly recovered.
  • Victorians are banished, for months.
  • The AFL grand final is played in QLD – and during the night! Go Tigers!!!
  • The State of Origin is played in three weeks, with the “worst QLD team ever” winning the series.
  • Northern NSW and QLD property prices soar, as they are deemed the safe space to be by cashed up southerners?!……… along with Chris Hemsworth and his mates.
  • Anna has “kept us safe” so she lives to torment Gladys another day.

 Closer to home:

  • Edge Energy Services turns 13 years young and is rebranded Edge2020.
  • Our team trades over $627 million in energy and environmental products.
  • Over 5.7 TWh  approximately $283 million in energy.
  • Over 800k Large-Scale Generation Certificates (LGCs), 1.2m Small-Scale Technology Certificates (STCs), and 33k Energy Savings Certificates (ESCs), totalling over $77 million in environmental certificates.
  • We facilitate over 775 GWh p.a. of renewable power purchase agreements (PPAs), with terms from 5 to 9 years and a total value of over $267 million.
  • We dive deep into the Safeguard Mechanism and deal in several Australian Carbon Credit Units (ACCUs).
  • We continue to structure competitive renewable deals, and we blend and extend as we knowingly fall on our progressive portfolio management sword.
  • We say a temporary goodbye to a few large clients, as they bed down with fixed term fixed (COVID friendly) prices and + 30% savings.
  • We re-contract a number of larger clients, as they continue to support us as a valued business partner and energy management team.
  • Our team expands, then contracts, as we ride the wave of uncertainty.
  • Edge LIVE gets a welcomed facelift and a few new features, including deal capture.
  • Edge Utilities is reborn, officially launching on 1 July 2020. With a tenacious new National Sales Manager and some valued service providers, we deliver a shiny new website edgeutilities.com.au.
  • We dive into the world of strata / body corporate and all things embedded networks – determined to bring value to a “smaller” large consumer.
  • Our journey in this new world uncovers the good, the bad, and unfortunately, the ugly.
  • New products and business opportunities arise, pipelines grow, new trading partners present, new alliances are formed.

On a more personal note:

  • R U OK? Day coincides with me going public in support of kinder client relations with staff – too many lives lost, too many reasons why.
  • We focus on our people, as individuals that instinctively operate within our core values – with integrity, honesty, trust, loyalty, and respect.
  • With increased working from home arrangements, we become even more focused on cultivating a cohesive, supportive, and collaborate team culture.
  • We watch David Attenborough’s witness statement “A Life on Our Planet” and ask ourselves – How can we use our expertise to contribute to the “road to recovery?

2021 looks busy, but oh so sustainably bright!

  • We will shift our focus even more to renewable solutions, products, and markets.
  • Edge Utilities will move to become a fully renewable backed brokerage service.
  • We will soon be offering physical renewable solutions behind the meter and getting more involved in managing Frequency Control Ancillary Services (FCAS) and Virtual Power Plants (VPPs).
  • Edge2020 will continue to play a key role in assisting our clients to achieve their sustainability objectives and proactively manage energy market risks.

With renewable solutions exponentially gaining momentum, we’ve never been more excited about where our market and products are headed!

We hope you take a well-earned and restful Christmas break with loved ones.

Our team look forward to sharing much more detail with you soon and working with you in 2021.

Stay safe and well.

Stacey Vacher
Managing Director, Edge2020, Edge Utilities

What is a VPP?

Many of you would have seen the acronym VPP floating around the energy industry, in AEMO documents and publications like the Integrated System Plan (ISP). So, what is a VPP? A Virtual Power Plant (VPP) is basically an aggregation of resources. These can be generation, storage and controllable load from decentralised sources.  All being coordinated to deliver services to the power grid including electricity, FCAS and other power system services.

Last week battery manufacturer Sonnen reached the magic threshold of 1MW to operate in the National Electricity Market (NEM) and plans to operate a VPP.

The German based company, Sonnen, now owned by Shell, has built a network of customers to allow their Sonnen branded home batteries to participate in the company’s new virtual power plant.  This has been designed to provide frequency control services. The customers will receive a financial benefit through cash payments. Sonnen’s new program will also provide grid stability services.

The VPP branded, sonnenConnect is Sonnen’s first VPP worldwide.

Each Sonnen battery will not be heavily relied on due to the nature of the VPP aggregating all outputs. To operate in the FCAS market, each household will only be required to supply 4kWh of energy to provide the essential grid stability services.

To be eligible to participate in Sonnen’s VPP and rewards program, households will need to have one of Sonnen’s batteries installed, with at least 4kWh of capacity. No additional equipment will be required to allow batteries to participate in the program as Sonnen batteries incorporate the necessary control systems.

Sonnen has chosen Australia to launch its VPP products as Australia is more open to the establishment of VPPs, along with the high uptake of battery storage system installations compared to other parts of the world.

“With the growing uptake of rooftop solar and home batteries globally, utilities are recognising the importance of home batteries in Frequency Control Ancillary Services (FCAS) or what is known as demand response, to stabilise the grid when there is a surge in the demand for electricity”, Nathan Dunn, Sonnen Australia CEO said.

He also said “through sonnenConnect, we are rewarding customers who are providing us access to their Sonnen Battery when needed for demand response. Not only will they enjoy being energy independent, Sonnen Battery owners are working together as a community to stabilise the energy grid that connects millions of homeowners in the National Electricity Market.”

Sonnen has established a manufacturing facility at the former Holden factory in Adelaide. This allows Sonnen to be branded Australian made. They plan to use the Australian facility to produce other components and software for the energy industry including electric vehicle charging units.

Engie Expands in Australia

The influx of multinational’s into the Australian renewable energy industry is increasing with historic oil and gas producers such as Shell, BP and Total entering the market.

These global energy giants are making large acquisitions to expand their local presence in the clean energy sector. In a world where developers are struggling to bank projects the strong balance sheets of these companies is a welcome addition to the industry.

Engie is the most recent multinational company to expand in Australia with the purchase of development rights to the $750 million Hills of Gold wind project in northern New South Wales.

This project is the foundation development in the newly created Renewable Energy Zones (REZ) in New South Wales’s New England region. This REZ is the first REZ to be created under Australian Energy Market Operator’s (AEMO) vision.

The acquisition of the Hills of Gold Wind Farm will add 420MW into the region. The project was previously developed by Wind Energy Partners.

Engie is one of the world’s largest electricity utilities, with the French multinational operating more than 115GW of generation capacity globally, including a 19GW portfolio of renewable energy projects.

The project will consist of 70 6MW wind turbines and will be connected to the transmission network between Liddell and Tamworth.

Engie has previously owned power assets in Australia, being the operator of the brown-coal Hazelwood power station in Victoria that was closed in 2017. They have ambitious targets for Australia, hoping to develop 2,000MW of Solar and wind projects.

Engie has recently set up the Australian Renewable Energy Trust with Infrastructure Capital Group and Mitsui as a renewable investment vehicle. The trust contains Engie’s 119MW Willogoleche wind farm and it is likely the Hills of Gold project will be added to it.

Electric Vehicle’s to Power the World

Greenpeace have published a report outlining that batteries from Electric Vehicles (EVs) could meet the worlds energy storage requirements. The report highlights the problems emerging from decommissioned lithium-ion batteries out of EVs.

The report also examines the impact of the growing EV sales across the world will have on the supply chain Ore that is mined to produce the minerals to then produce lithium-ion batteries.

There are critical supply chain risks for primarily the lithium and cobalt required for the batteries. Countries like China, South Korea and Japan manufacture 85% of the worlds EV batteries however do not have the large quantities of raw materials available locally.

It is forecast that over the next 10 years the global Lithium battery market will expand at such a rate that 30% of the worlds Cobalt reserves will be exhausted. During the same time 10.35 million tonne of lithium, cobalt, nickel, and manganese will be mined.

EV batteries are replaced once their usable capacity drops below 80%, this normally occurs within 5-8 years from manufacture. Although not useful in EVs, the batteries can be repurposed to meet other needs.

The report finds that repurposed EV batteries could cover all global demand for energy storage in 2030, calculated to be around 368GWh of capacity.

Decommissioned EV batteries could be repurposed and used as backup power systems in telecommunication infrastructure and data centres. They can also be used for energy storage devices across the National Electricity Market (NEM) and remote area power supplies.

 

Written by: Alex Driscoll, Senior Manager, Markets & Trading

AEMO Leads Global Push to Slash Emissions

As seen in recent reports published by Australian Energy Market Operator (AEMO), which include the Electricity Statement of Opportunities (ESOO) and the Integrated System Plan (ISP), the outstanding trend is the rapid growth of renewables and the need to connect the generation and load in a more robust manner.

As coal is retired the replacement technologies are now Solar and Wind.  This is resulting in issues such as, inertia and system strength. The network needs to be redesigned to cope with limitations, due to the lack of inertia provided by non-synchronous generation such as Solar and Wind.

AEMO, in conjunction with various Transmission Network Service Providers (TNSP) is leading the world in solving the issues associated with greater intermittent renewable generation on the network.

AEMO have launched the Global Power System Consortium (G-PST), a consortium of the six largest system operators grappling with high volumes of renewable generation and growth. The group includes:

  • Australian Energy Market Operator (AEMO)
  • The National Grid Electricity System Operator UK
  • California Independent System Operator (CAISO)
  • The Electric Reliability Council of Texas (ERCOT)
  • Ireland’s System Operator (EirGrid)
  • Denmark’s System Operator (Energinet)

The charter for the group is to achieve a 50 per cent cut in emissions by unlocking $10 trillion worth of investment in wind, solar and enabling technologies over the next 10 years.

Along with the lead members, 25 other system operators from around the world will participate in the G-PST. Several large research institutions will take part in the technical work, including:

  • Commonwealth Scientific Industrial Research Organisation (CSIRO)
  • The Fraunhofer Cluster of Excellence for Integrated Energy Systems
  • National Renewable Energy Laboratory (NREL)
  • Latin American Energy Organization (OLADE)
  • Institute of Electrical and Electronics Engineers (IEEE)
  • Electric Power Research Institute (EPRI)
  • The Danish Technical University (DTU)
  • ASEAN Center for Energy (ACE)

During the announcement at London’s Bloomberg New Energy Finance Summit, AEMO Chief Executive Officer, Ms Audrey Zibelman announced that, “Countries around the world are looking to pursue a path to modern low-emissions energy systems, but face significant challenges in acquiring and applying the technical knowledge needed to operate and plan rapidly transforming power systems”.

She went on to say that “The goal of G-PST is bold: to contribute to more than 50% emissions reductions of all pollutants around the world, over the next ten years, by acting as an enabler of new clean energy integration.”

GreenPower Rebranding

 

 

GreenPower, Australia’s accreditation program for renewable electricity is rebranding, to create renewed interest from businesses looking to cut their emissions. The GreenPower brand was launched in 1997 at the start of the renewable energy push towards electricity customers. At the time, most major electricity retailers offered some form of GreenPower as an extra to their electricity products.

The GreenPower program is voluntary for households and businesses to purchase renewable electricity through their retailer. It is a government backed program for verifying that purchases are from Australia’s wind and solar resources and aim to cut emissions. The GreenPower program sits on top of the mandated Renewable Energy Target so customers are voluntarily purchasing above what is legally required and therefore are supporting the increased growth of the Australian renewable energy sector.

To date 110,000 households and 17,500 businesses purchased renewable electricity through the GreenPower program, this comes from 500 accredited projects.

With the reduction in the cost of LGCs, the GreenPower program is encouraging households and businesses to consider participating in the voluntary program. As technologies improve, the cost of production of renewable energy has reduced since its inception in 1997, as a result renewable energy has become cheaper and this has flowed into the GreenPower product.

With the changing housing situation in Australia, many end users now rent and do not have access to roof top PV. The GreenPower program is a way for residential energy users without the ability to install rooftop solar to purchase renewable energy.

There are many benefits to going green with GreenPower. Your purchase supports Australian renewables, reduces your emissions, and contributes to a healthy future.

If you are wanting to protect the environment and support renewables, choosing GreenPower is a powerful way to show that your business is environmentally conscious and supports Australia’s renewable energy sector.

Our utilities retailers offer a range of green generation alternatives to help you meet your sustainability goals, including renewables, onsite solar generation, and energy efficient solutions.

Let Edge Utilities help you procure the best GreenPower deal for you.