Unpacking the Impact of AEMO’s Scheduling Error Post Liddell Shutdown: A Peek into the Energy Market Dynamics

Light Bulb - Electricity

The Australian Energy Market Operator (AEMO) recently confirmed a scheduling error involving the Liddell Power Station, which led to considerable disruptions in the National Electricity Market (NEM) and the futures market on May 1, 2023. The closures of the last three units of the Liddell Power Station towards the end of April should have been integrated into the AEO dispatch system. However, a data mismatch within the system kept these units active, leading to market inconsistencies.

This oversight originated from a disparity within the NEM Dispatch Engine (NEMDE) utilized by AEMO. While a portion of the system correctly acknowledged the shutdown of the Liddell units, another part, responsible for handling constraints, continued to count them at their initial 500MW capacity rather than the actual zero. The resultant 1500MW drop in capacity from the system’s balancing equation led to adjustments in the power distribution across states.

To rectify this situation, AEMO reduced power flow from Victoria to New South Wales and moderated power generation by approximately 173MW. The resulting market response was a surge in electricity prices, pushing the daily average price up by around 30%.

In the aftermath of the Liddell shutdown, the market has been on high alert, responding to the smallest of disturbances. This sensitivity was evident as the futures market reacted positively, experiencing a rise in the Q3 2023 close price across QLD, VIC, and NSW, and a notable increase in SA.

In the following weeks, the power market continued to be volatile due to various outages and unexpected factors such as a tube leak at Bayswater 2, outages at Kogan Creek, Eraring 2, and Tarong, the delay of Callide’s return, and unexpected interest rate hikes. This scenario led traders to act on the price differences between states, resulting in a rise in NEM prices. It is suggested that this sensitivity and rapid reaction of the market is likely to continue for some time. Despite the quick adjustments in the spot market, the futures market appears to be retaining its value.

This is a summary article from Edge2020 – read the original article.

The team Edge Utilities are passionate about renewables and sustainability, we are energy brokers with an eye on the planet. We are committed to helping councils and business communities reach their net zero goals through renewable power purchasing agreements (PPAs) and smart portfolio management.
To discuss options and plans for your community contact us at save@edgeutilities.com.au  or call us on 1800 334 336 to discuss. 

Good news regarding the 2023 budget, but does everything that glimmers gold?

A man and woman at a computer

In contrast to last year’s budget in October 2022 which forecasted a deficit $36.9bn for this financial year Hon Dr Jim Chalmers MP announced a surplus of $4bn in the 2023 Federal Budget, which is the first in 15 years.

Under a tightly controlled budget, the industry could be forgiven for worrying that there may have been unexpected shocks. Especially with the closure of Liddell, Baywater trip and extended outages. However, it was good news! But is everything that glimmers actually gold?

Little was mentioned in the 2023 budget regarding the huge windfalls the treasury gained from the commodity industry and that fact that 20 per cent of the surplus came from increased commodity prices.

Overall, the budget was scarce on Energy for large business, with it mainly focusing on infrastructure for Electric Cars, cost of living relief for residential and small businesses and the creation of a National Net Zero Authority.

There was a mention of the new Hydrogen head start program, giving $2bn to the scheme and more investment in green industry, which was expected. And interestingly a mention of the Capacity Investment Scheme “unlocking over $10 billion of investment in firmed-up renewable energy projects up and down the east coast” which we hope to hear more about.

The Gas and Coal caps were mentioned but there has been no talk of the Coal Cap either being extended or removed when it expires in December 2024.

Undoubtably in the commodity space the biggest losers yesterday were the Gas companies, due to the extension of the Gas cap at $12/GJ into 2025, increased taxes due to the extraordinary market conditions, and the Petroleum Rent Resource Tax.

The budget is expected to be picked apart, but overall, there are no major changes to the status quo, and the government is cautious about throwing around too much cash in the face of slowing economic growth.

This is a summary article from Edge2020 – read the original article.

The team Edge Utilities are passionate about renewables and sustainability, we are energy brokers with an eye on the planet. We are committed to helping councils and business communities reach their net zero goals through renewable power purchasing agreements (PPAs) and smart portfolio management.
To discuss options and plans for your community contact us at save@edgeutilities.com.au  or call us on 1800 334 336 to discuss. 

South West Renewable Energy Zone: A Step Towards a Greener Future in New South Wales

Street lights on road at night

The NSW government recently released their draft declaration for the South West Renewable Energy Zone (SW REZ) access scheme to the public as part of the NSW government’s Electricity Infrastructure Roadmap.

The government is paying particular attention to the number of projects that will be granted transmission in the zone looking to generate investment.

REZs are designed to coordinate the connection of new renewable energy projects to the electricity grid within a specific area. The NSW government hopes these zones will attract investment for renewable energy projects, thereby reducing greenhouse gas emissions and providing clean, sustainable energy.

The South West REZ is anticipated to have a transfer capacity of 2.5 gigawatts (GW) and will connect to the existing electricity network via the Dinawan Substation. Due to its location, this zone will primarily focus on solar and wind energy projects, as offshore wind and extensive hydrogen investment opportunities are not as viable.

Several upgrades to the electricity network are planned to support these new projects, including the Project Energy Connect (PEC) interconnector, the HumeLink, and the proposed Victoria-NSW interconnector (VNI West). These enhancements aim to entice investors to fund renewable energy projects in the South West REZ.

To participate in this REZ, companies must meet specific requirements and adhere to the government’s guidelines. They need to demonstrate project feasibility, compliance with certain standards, and the ability to manage potential disruptions to the electricity system. Upon meeting these criteria, they will be granted access to the REZ and the benefits it offers, such as a stable and well-funded electricity network.

Public consultation for the South West Renewable Energy Zone (SW REZ) access scheme will conclude on May 15th, marking another step towards a greener future in New South Wales.

This is a summary article from Edge2020 – read the original article.

The team Edge Utilities are passionate about renewables and sustainability, we are energy brokers with an eye on the planet. We are committed to helping councils and business communities reach their net zero goals through renewable power purchasing agreements (PPAs) and smart portfolio management.
To discuss options and plans for your community contact us at save@edgeutilities.com.au  or call us on 1800 334 336 to discuss. 

Gas Cap Extension: What Small and Medium Business Owners Need to Know

Gas fireplace

The Climate Change and Energy Minister Chris Bowen is considering a gas cap extension to the $12/GJ cap on wholesale gas prices. This cap, set to expire at the end of the year, affects both energy producers and users. If extended, it could provide more certainty for businesses that rely on gas for their operations.

Energy producers are worried about how the cap extension might affect long-term pricing, as it may include a “reasonable pricing” clause. This means gas companies can only charge a price based on production costs plus a reasonable margin, without considering their capital investments during exploration and development. Gas buyers can challenge contract prices through a formal dispute process.

Gas producers are waiting for the government’s decision on the cap extension before finalizing new gas supply contracts for 2024. The federal government is also expected to introduce a Petroleum Rent Tax, potentially increasing tax revenues by $100 billion. This tax may cause concerns among gas producers, leading to fluctuations in energy prices for businesses.

The new regulations may allow for exemptions, especially for new projects that increase domestic gas supply. The Australian Petroleum Production & Exploration Association (APPEA) emphasizes the importance of gas in achieving a cleaner energy future, urging the government to create settings that encourage investment in new supply and put downward pressure on prices.

Australia must keep exploiting its gas resources to meet its net zero emission goals. In the long run, this should benefit the gas and electricity industry’s producers and end customers while assuring their security.

This is a summary article from Edge2020 – read the original article.

The team Edge Utilities are passionate about renewables and sustainability, we are energy brokers with an eye on the planet. We are committed to helping councils and business communities reach their net zero goals through renewable power purchasing agreements (PPAs) and smart portfolio management.
To discuss options and plans for your community contact us at save@edgeutilities.com.au  or call us on 1800 334 336 to discuss. 

Renewable energy storage roadmap released

Edge Utilities Brisbane City

The CSIRO’s Renewable Energy Storage Roadmap underlines the importance of energy storage in Australia’s journey to net zero emissions.

Despite leading in solar power generation and reducing emissions, Australia requires a significant increase in storage capacity to maintain affordable and reliable energy.

Storage is vital to integrating renewables into the grid and reducing coal and gas-fired generation dependency. A combination of various storage technologies, such as electrochemical, mechanical, chemical, and thermal storage, is needed to meet the evolving demands of the National Electricity Market (NEM).

Increasingly, dispatchable generation must come online as coal-fired generation retires between 2023 and 2035. The CSIRO report calls for accelerated development timelines for projects by 2030. Faster development or alternative storage technologies are needed, as pumped hydro typically takes ten years to develop.

CSIRO’s chief executive emphasises the need for a “massive increase” in storage capacity, estimating an additional 11 to 14 gigawatts by 2030. As a result, the focus should shift to storage as the deadline approaches, exploring repurposing old mine pits and retiring thermal power stations.

This is a summary article from Edge2020 – read the original article.

The team Edge Utilities are passionate about renewables and sustainability, we are energy brokers with an eye on the planet. We are committed to helping councils and business communities reach their net zero goals through renewable power purchasing agreements (PPAs) and smart portfolio management.
To discuss options and plans for your community contact us at save@edgeutilities.com.au  or call us on 1800 334 336 to discuss. 

AEMO’s MLF assessment reveals solar and wind farms as big losers

Solar Panel

The Australian Energy Market Operator (AEMO) recently released its final Marginal Loss Factors (MLFs) assessment, highlighting solar and wind farms as the big losers. The MLFs determine how much energy is lost between the generator and the region reference node in each state, and the changes in the new MLF forecasts were primarily driven by 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.

The lower MLFs impact the amount of revenue generators can make, and many of the intermittent generators have been impacted by changes to the grid and the closure of thermal generators. The location of renewable generation is becoming increasingly important for the success of a project, with unfavourable MLFs potentially reducing the revenue for generators and impacting the renewable energy available to the market.

While a 3% drop in solar farm generation may not seem significant, some solar farms in the New England region have experienced drops that are greater than this. These changes can affect the success of a project and reduce the renewable energy available to the market, potentially leaving end-users with less renewable energy than they signed up for. The final MLF assessment from AEMO underscores the importance of carefully considering the location of renewable energy projects for successful implementation and revenue generation.

This is a summary article from Edge2020 – read the original article.

The team Edge Utilities are passionate about renewables and sustainability, we are energy brokers with an eye on the planet. We are committed to helping councils and business communities reach their net zero goals through renewable power purchasing agreements (PPAs) and smart portfolio management.
To discuss options and plans for your community contact us at save@edgeutilities.com.au  or call us on 1800 334 336 to discuss. 

Intergovernmental Panel on Climate Change Warning

plant in landscape suffering drought

The catastrophic impact caused by rising greenhouse gases

The Intergovernmental Panel on Climate Change (IPCC)’s 6th Assessment Report (AR6) has shocked the scientific world and beyond. More than 250 climate scientists worked on this eight-year assessment, which drew an alarming conclusion about the catastrophic impact caused by rising greenhouse gases.

The report highlights that we are already experiencing the effects of 1.1 degrees Celsius warming, including summer arctic ice coverage, ocean acidification, and rising carbon dioxide levels. Moreover, it discusses the irreversible effects that can occur at as low as a 1.5-degree overshoot, including species extinction and loss of life.

The UN’s Secretary-General, Antonio Guterres, has urged nations to abandon the 2050 net-zero target for stronger 2040 packs while calling for developed nations to phase out coal by 2030 and block new oil or gas extraction. This, he believes, could hold us at the 1.5-degree warming cap. The upcoming COP28 in the UAE in November and December will be a true test of the global commitment to tackling climate change. However, with the chair being the CEO of the 12th largest oil business, there are concerns about softening approaches.

The AR6 shows that we are close to the point of no return and that the impacts of climate change require immediate action.

This is a summary article from Edge2020 – read the original article.

The team Edge Utilities are passionate about renewables and sustainability, we are energy brokers with an eye on the planet. We are committed to helping councils and business communities reach their net zero goals through renewable power purchasing agreements (PPAs) and smart portfolio management.
To discuss options and plans for your community contact us at save@edgeutilities.com.au  or call us on 1800 334 336 to discuss. 

 

Forecasted gas supply “gaps” this winter

gas fireplace winter

A report by the Australian Energy Market Operator (AEMO) has warned of a potential gas supply gaps on the country’s east coast this winter unless the LNG exporters in Gladstone divert shipments from export to domestic customers.

The report estimated a supply “gap” of up to 33 petajoules assuming three Queensland LGN ventures exported all their uncontracted gas this year. However, Santos’ GLNG joint venture has spoken out against the forecast, saying that all three Queensland LNG ventures have committed to making all the domestic gas expected to be needed this year available. GLNG said it had already sold more than 15 petajoules of gas to wholesalers, retailers and power generators between May and September to alleviate critical peak winter demand in east coast gas and electricity markets.

Additionally, the other two Queensland LGN ventures had offered more than 20 petajoules of domestic gas for sale, and there had been no spot LNG export from Gladstone in 2023, the company said. Despite this, on April 1st, the Federal Resources Minister is due to decide whether to curb LGN exports from Gladstone on a quarterly basis if required to avoid shortfalls in the domestic market.

Industry gas executives are currently arguing for some relaxation of the rules to allow new projects to go ahead to meet demand and remove barriers to new gas supply investment on the east coast.

This is a summary article from Edge2020 – read the original article here: https://edge2020.com.au/edge-news/dispute-over-forecasted-supply-gap-in-east-coast-gas-market/

Edge Utilities offer market leading services for business and strata energy users. We help you navigate the ever-changing energy landscape, focus on renewables and save on your power bills through our Edge Utilities Power Portfolio. Reach out, we would love to assist you: info@edge2020.com.au or call on:1800 334 336

NSW progress in a bid to replace their last 5 coal-fired generators

NSW Waratah

AEMO Services recently conducted its first round of tenders for Long-Term Energy Service Agreements and Renewable Energy Zone Access Rights to support the transition to renewables in NSW. 16 projects were shortlisted, totaling 4.3 GW of generation and storage in its first auction.

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. AEMO Services will be running two auctions per year until 2030 to source a total of 14 GW. The next auction is likely in July 2023.

Replacing the last five coal generators with renewables and storage should lead to lower energy prices in the long run because:

  1. Renewable energy sources are plentiful in Australia, which should eventually lead to price stability and security of supply.
  2. The use of renewable energy reduces our dependence on fossil fuels, which are subject to price fluctuations and geopolitical tensions.
  3. The deployment of energy storage technologies such as batteries can help aggregate renewable energy sources better, making it easier to mix them to meet NSW’s energy needs.

The 16 selected projects will have to submit their financial bids to AEMO Services by 10th February, with unsuccessful projects able to resubmit in future rounds.

We are looking forward to seeing more projects reach financial close to bring more renewable energy to the grid as this will enable our Edge Utilities Power Portfolio to access renewables at more competitive prices for our customers.

If you would like a strategy to ensure your company procures energy to support sustainability and growth in renewables, please reach out to discuss your options.  To save on electricity spend, you can also join our Edge Utilities Power Portfolio, read more: https://edgeutilities.com.au/edge-utilities-power-portfolio/ or call us on: 1800 334 336 to discuss.  

When will businesses see the recent reduction in wholesale electricity prices?

Although wholesale electricity prices have reduced in recent months, it is unlikely that households and businesses will see these benefits in their electricity bills until 2024.

In late December the Federal government stepped into the energy market and intervened, placing a price cap on wholesale gas and the price of coal, essentially disconnecting the domestic energy market from the international energy market. Moreover, the Federal treasury analysed the wholesale electricity market in November 2022, comparing it with the prices we saw in December. After Federal intervention the price caps on coal and gas have dropped prices in QLD by 44% and 38% for NSW.

Following these caps being put in place, the domestic electricity market corrected and both spot and futures contracts dropped to match an underlying cost of production for electricity based on these new capped fuel prices.

However, does this mean electricity bills are going to drop a similar amount? Well, the bad news is no. Retail bills are normally locked in well in advance so many large users have locked in pricing for 2023. The underlying energy costs are only part of the retail bill as other costs include transmission, distribution and AEMO charges which unfortunately have not decreased and have the potential to increase as the market evolves.

While the underlying cost of electricity will drop with more renewable energy entering the market, the other costs on the electricity bills will now represent a higher proportion and are likely to increase.

Renewable energy requires more transmission lines to connect the generators to the grid, they require specialised services to maintain the security of the grid and will also require a higher cost generation or storage to provide firming for around the clock supply.

Edge Utilities offer market leading services for business and strata energy users. We help you navigate the ever-changing energy landscape, focus on renewables and save on your power bills through our Edge Utilities Power Portfolio (https://edgeutilities.com.au/edge-utilities-power-portfolio/). Reach out, we would love to assist you: info@edge2020.com.au or call on:1800 334 336