There’s a new kid in town

The Federal Government’s controversial decision to commission a 650MW gas peaking power station in NSW was based on the advice of a second new market planner and forecaster. Step aside AEMO. Snowy Hydro is the new kid in town.

Snowy’s new role as the Federal Government’s adviser on system planning was revealed in a presentation by Snowy’s Chief Commercial Officer, Gordon Wymer, at the Australian Energy Week conference in Melbourne yesterday.

Wymer confirmed that Snowy had advised the Morrison Government to commission the gas peaker based on its own projections of potential electricity supply shortages caused by the risk of renewable energy droughts.

This is conventionally the job of the Australian Energy Market Operator (AEMO), which it combines into its Electricity Statement of Opportunities (ESOO) each year, to signal to the market the likelihood of potential supply shortfalls so that investors can position themselves accordingly.

The 2020 ESOO did not identify a breach of the reliability standard in NSW until 2028-29 based upon its modelling, which uses a 10 per cent probability of exceedance test reflecting a 1-in-10 likelihood of an event occurring.

Federal Energy Minister Angus Taylor didn’t get on well with former AEMO CEO Audrey Zibelman, particularly as it appeared that she used the executive summary of major documents like the ESOO to push the organisation’s current political agenda.

As part of its planning around the operation of the new 2000MW Snowy 2.0 pumped hydro project, Wymer revealed Snowy had evolved its own forecasting methodology which eschews the averaging of risk, but takes more seriously smaller but possible events like periods of long, dark and still weather which could drain the electricity system of stored electricity.  In these situations, it argues, the 650MW gas peaker will be critical.

And so with the threat of these renewable droughts, the Federal Government called for 1000MW of firm generation from the market to prevent this risk. When the shortfall was not met by the market, the job was given to Snowy Hydro.

AEMO Chief System Design Officer and a key agent in its planning role, Dr Alex Wonhas, spoke shortly after Wymer at the conference and tried to put a diplomatic face on proceedings. Wonhas observed that the new gas plant could be part of the up to 19 GW of storage or on demand generation needed to support renewable generators, but suggested the new generator would mainly lower wholesale prices.

Wymer also went on to suggest competition should be introduced in transmission to help reduce reliability risk and open up lower cost renewable generation to more customers.

More significantly, Snowy is not just the federal government owned generator and go-to developer when the market won’t or can’t build a project. It is also providing to Government separate planning advice to AEMO. This means different governments are now building to different plans proposed by different agencies. As if the National Electricity Market wasn’t compromised enough already.