The year in review

Year in review In 2021 global energy markets reminded us of the brutal reality of how inelastic they are in the face of short term change. Just as the pandemic cratered demand and collapsed prices in early 2020, so covid-recovery revived energy prices in 2021. Australian motorists noticed this, as did American motorists, prompting the …

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Hydrogen is GO!

The clean energy transition is being driven as much by brand as policy. Some businesses are voluntarily reducing their own emissions to protect their reputations and make good with stakeholders and investors. Companies eyeing off green hydrogen as a possible future zero emissions fuel want to make sure that they’re getting the good stuff. Where …

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Up, up and away…

Spot gas prices in the Victorian DTS system hit an eyewatering $58.44/GJ briefly on Friday. This is around 10 times the average price. What caused this price spike and what does it mean for gas users large and small? The price spike was due to a perfect storm of incidents and conditions. On the demand …

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How many of Australia’s Rich List built their fortune on energy?

The AFR’s annual Rich List was published late last week. Essential reading for the nosy amongst us who want to know how much resource magnates Gina (Reinhardt) or Twiggy (Forrest) is worth these days, it also tells a story of the industries in which Australians build their wealth. Many industries that are fundamental to the …

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Is the Energy Security Board proposing to introduce a coal subsidy?

Controversy has reigned over the Energy Security Board’s recent suggestion that the best way to ensure reliability in the NEM is via a physically-backed version of the existing Retailer Reliability Obligation (RRO). Many of the opponents of the proposal have sought to portray it as a subsidy to coal plants. Is this a fair description? …

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The cutting edge: Victoria’s emissions reduction strategy

With great fanfare the Victorian government has launched its Climate Change Strategy, a year later than required by legislation (the government granted itself a sick-note as a result of the COVID-19 pandemic last year). The strategy confirmed Victoria’s interim targets for 2025 (28-33 per cent below 2005 levels) and 2030 (45-50 per cent) on the …

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A deal sealed?

The Morrison government has announced another of its signature energy deal packages with a Coalition-run state, this time South Australia. Following on from last year’s NSW deal, the package is a similar mix of funding announcements for electricity infrastructure, hydrogen pilots and aspirational gas production targets. The so-called Energy and Emissions Reduction Agreement is worth …

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Slow burn – eastern Australia gas projections

The latest Gas Statement of Opportunities (GSOO)  for eastern Australia indicates sufficient gas to meet demand provided LNG imports can commence by winter of 2023. This is when existing production from Longford in Victoria (which takes gas from several offshore fields) takes a nosedive. Even then shortages will emerge by around 2026 unless there is additional …

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Remote control

New rules allow the market operator AEMO to remotely disconnect rooftop solar systems when they deem it necessary to preserve system security. AEMO wielded this power for the first time last weekend, when a sunny day coupled with moderate demand drove SA demand to a dangerously low level. Low demand is a problem because it …

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South Australia: take a ride on the electricity price roller coaster

Observers of Australia’s National Electricity Market (NEM) would be forgiven for thinking the era of high prices has left us for the time being (at least until the next coal plant closes). A minor dampening of demand from COVID and a more significant one from a mild summer has coincided with growing renewables on our …

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Mirror, mirror on the wall, who is the greenest of them all?

The WA Liberals’ bold energy and climate policy platform has enlivened what was looking to be a fairly run-of-the-mill state election. Given we are still in the middle of the COVID crisis, voters are expected to stick with what they know and re-elect the McGowan Labor government. In its four years, the McGowan government has …

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Superpower – is there such a thing as too much wind and solar?

Some people get really excited about the future of renewables. One example is a US think tank called Rethink X who are forecasting an era of super cheap and superabundant power (hence “superpower”) based on expected declines in the cost of solar, wind and batteries (“SWB” for short). Another is the Australian based “Science party” …

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October CER roundup

The renewable energy sector continues to demonstrate it is largely COVID-proof with continuing growth in the pipeline of projects, based on the latest data from the Clean Energy Regulator (CER). In the longer term the recently launched NSW electricity infrastructure roadmap will stimulate many more projects, but the newest utility-scale plants are in Victoria and …

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Turning off the gas?

Grattan’s latest energy analysis has provoked much debate in the media including pushback on some of its conclusions from the federal government and the gas network sector, amongst others. Grattan’s main thesis is that the idea of a gas-led recovery is a mirage and would require massive government subsidies. They go further and say that …

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Where are they now?

The energy transition brings with it big and bold plans for megaprojects, futuristic technologies and radical new business models. As a cautionary tale we consider some of the spectacular failures of the last decade. Remember when a Perth based company was going to build the world’s tallest structure in the mid-west of WA? The solar …

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Renewables gathering pace

The Clean Energy Regulator has provided its monthly update on renewables progress in Australia. An anaemic 3MW of new accredited projects in September appears to be a temporary lull likely affected by COVID constraints on construction and similar activities. In the two prospective categories of “committed and “probable”. Committed projects are defined as those that …

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Capital punishment

One of the key reforms arising from the Finkel review was the introduction of the integrated system plan (ISP). By mapping out some plausible scenarios for changes in electricity use and the generation mix over the next few decades, the market operator (AEMO) was able to identify a business case for several large scale transmission …

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A tale of two coal plants

This morning’s news showed the contrasting fortunes of two of the NEM’s coal plant owners. While Trevor St Baker’s Delta was celebrating the Morrison government’s largesse in supporting an upgrade of his Vales Point coal plant in NSW, the AGL Board was nursing a black eye from a shareholder resolution to accelerate the closure of …

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It’s a gas gas gas

The latest in a series of reports from Australia’s peak gas industry bodies makes the case for low and zero carbon gas playing a key role in decarbonising the Australian energy sector. The gas collective commissioned Frontier Economics to model three ways to decarbonise: full electrification; renewable fuels (hydrogen and biogas) and zero-carbon fuels (as …

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Carbon capture update

https://www.iea-coal.org/blogs/mothballed-petra-nova-has-already-proved-its-worth/The IEA’s latest report on carbon capture, use and storage (CCUS) is timely for Australia with the technology being announced last week as one of the five priorities under the Morrison government’s Technology Roadmap. The report shows that CCUS is glass-half-empty or glass-half-full depending on your perspective. On the positive side, new projects are being …

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Roadmap to nowhere?

The Coalition continues to walk the tightrope of looking like it doesn’t care about emissions reduction to parts of its base while looking like it does to the rest of the country. The latest iteration of this two-faced policy is the technology investment roadmap. This document does the usual dance that governments do when they …

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Green paper Groundhog Day

While last week’s headlines were on the Federal government’s grandstanding around the replacement of Liddell, the NSW productivity commission has been quietly putting together a set of recommendations for the state’s energy sector. Its green paper looks at productivity opportunities right across the economy, and includes an energy section alongside education, transport, water, transport and …

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A Cleanish Energy Finance Corporation and an Australian Something Energy Agency?

In a busy energy policy week for the federal government, the  Prime Minister today announced several new “buckets” of funding for a range of potentially emissions-reducing initiatives. These include a handful of funds targeted at specific activity, such as Technology Co-Investment Fund ($95m), Carbon Capture Use and Storage Development Fund ($50m), Future Fuels Fund ($74m), …

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Promise or threat? PM’s intervention in NSW electricity market

Prime Minister Morrison is today expected to unveil a new set of policies aimed at improving energy security and centred around natural gas. These include ambitions to supersize an existing gas hub at Wallumbilla in Queensland in order to facilitate greater liquidity in gas trading, with hopes that Wallumbilla can emulate the US’s Henry Hub …

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Stat attack

The International Energy Agency’s (IEA) key world energy statistics have just been released. The long-term global trends of rising energy use continues, as figure 1 below shows. Figure 1: Global energy use by region Source: IEA As can be seen, the OECD’s energy use peaked around 2007, but this trend is overwhelmed by China’s continuing …

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Spotlight on Neoen

The Adelaide advertiser reported today on a giant hybrid wind/solar/battery project at Goyder in SA’s mid north. The proponent is French renewables developer Neoen. This is far from Neoen’s first Australian project and today we take a closer look at these Gallic go-getters. Like many of the renewable developers that are elbowing aside incumbents, Neoen …

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Inflationary expectations

“One cannot escape how frighteningly Orwellian the regulatory approach has become in Australia in the year 2020”. This eye-catching quote is from consultants Fairbane’s submission to the Australian Energy Regulator (AER) in respect of its review of the regulatory treatment of inflation. The rhetorical flourishes of Fairbane’s paper are a welcome contrast to the often …

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Up, up and away…

Electricity consumers have unfortunately had to get used to different components of their bills shooting up in cost. Early in the last decade it was network charges, in 2017-18 it was wholesale energy costs as Hazelwood closed. While these and environmental charges appear more stable or even declining, there is still one rapidly rising component. …

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Retail price round up

July 1 is the traditional date of new prices in the NEM (except Victoria, see below). With the introduction of the default market offer (DMO), all parts of the NEM are again subject to some form of price regulation for small customers. This time, the decisions of the regulators are bolstered by the introduction of …

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I like the way you FERC it

Two landmark decisions in recent days have gone some way to resolving uncertainty for key energy transition technologies such as storage and rooftop solar PV in the US. Much of the US’s energy policy and regulation takes place at state level or multi-state market level. However, the US constitution provides for federal government oversight of …

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Reflected glory

The latest electricity generation technology du jour got a run in the press today, with reports of a $600m solar thermal hybrid plant being planned for Mt Isa. As is often the case there is currently less than meets the eye – the developer, Vast Solar – appears to be merely in talks with large …

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Dreckonomics

The dismal science just got a little more dismal with the latest release of figures from the Energy Policy Tracker project. Newspaper headlines bemoan the report’s conclusion that “G20 countries aim their pandemic bailout spending at fossil fuel industries”, based on figures that suggest G20 governments have pledged US$151bn to fossil fuels during the pandemic …

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Unblocking the pipes

The AER’s annual state of the energy market, released yesterday, is one of the most comprehensive overviews of Eastern Australia’s gas and electricity systems going. Covering two energy vectors and all aspects of the supply chain, it is hard to boil down to a few key messages. The most obvious one is change, as the …

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Keeping the lights on – and the solar panels off?

South Australia’s accidental experiment is taking it up a notch. A report commissioned by the state government from the market operator sets out the dire consequences if uncontrollable rooftop PV installations continue to grow at current rates. These are keeping pace with AEMO’s highest forecasts as shown in the graph below. Source: AEMO Solar supporters …

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Class of 2020

In an Australian first, law firm Piper Alderman has announced it is launching a class action against the two largest generation businesses in Queensland. Intriguingly these are the government owned businesses Stanwell and CS energy. The case will only proceed if enough claimants sign up, but since every home and business in Queensland is a …

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Dunkelflaute

I was surprised to get email and an SMS from my electricity provider* this week warning me about price spikes (I am on a wholesale pass-through arrangement). This is normally a summer phenomenon. Fortunately, the spikes were not as bad as predicted, but I thought I’d better see what was happening. It turns out that …

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COVID-19 no speed bump for renewables

The government agency responsible for overseeing the national renewable energy remains bullish on the clean energy sector. The Clean Energy Regulator’s (CER) Quarterly report covers activities in three certificate markets: the large-scale and small-scale renewable energy targets (LRET, SRES) and the carbon offsets market (ACCUs) that is propped up by the federal government’s Climate Solutions …

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Deferring the problem

The latest action by the energy market bodies to help the energy sector and its customers through the COVID-19 crisis is the AER’s proposal to allow struggling retailers to defer paying network charges for up to six months. While this could be a useful lifeline for such retailers, they will still need to find the …

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The EU cometh

The EU’s climate strategies are a classic glass half empty/glass half full. Germany’s Energiewende is either the poster child for renewables development or a cautionary tale depending on your point of view. While there is always plenty of devil in the detail, Germany has almost doubled the size of its economy over the last 30 …

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7 minutes more per year

This is the average gain in reliability that consumers can expect from the COAG Energy Council’s March decision to increase the reliability standard from 0.002% unserved energy per region per year (10 minutes) to 0.0006% (3 minutes). Unserved energy is the technical name for when the electricity system just runs out of supply. Since demand …

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Speak softly…

…and carry a big stick. The federal government have taken Teddy Roosevelt’s foreign policy dictum to heart (well the second part of it anyway) with last year’s “Big stick” legislation aimed at curbing abuse of market power by electricity companies. Now the ACCC have published their guidelines setting out how they will enforce the legislation, …

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Never waste a good crisis

The Clean Energy Council have come out early with their bid for a share of the expected post-lockdown fiscal stimulus, set out in their document A Clean Recovery. The document is a masterpiece of contemporary lobbying, replete with buzzwords such as “empowerment”, “leverage”, “world-class” and “smart”. Inevitably there is a lack of detail and limited …

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Two sides to every story

As flagged in last Tuesday’s article on day ahead markets, today we look at the ESB’s other discussion paper, on two sided markets. Most markets for goods and services are naturally two-sided, with demand and supply both dynamically adjusting to changes in prices. The characteristics of electricity, or rather how we use it, has meant …

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How lockdown may accelerate innovation in grid maintenance

The impact of protracted lockdown is forcing US network and transmission businesses to think differently about how the maintain the grid. They are turning increasingly to using drones instead of helicopters and vehicles to conduct routine inspections of thousands of kilometres of power lines. Drones are already being successfully deployed by oil and gas producers …

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Income distribution

Every 5 years, the Australian energy regulator (AER) has to fix the amount of revenue income that network businesses can charge their customers (via the retailers). The AER has just released an issues paper on how it will fix the revenue for the five Victorian electricity distribution businesses. The businesses have already submitted an initial …

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Working the numbers

The latest Australian Bureau of Statistics (ABS) figures for employment in renewable energy have revealed a 27 per cent increase in total employment from 2017-18 to 2018-19. The ABS estimates 26,850 Australians now work in renewable energy, with almost half of these in the more labour intensive rooftop solar sector as it steams past 2.2 …

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Home alone

During the COVID-19 crisis, there have been periodic reports (including this blog) on the way that electricity demand has changed. While the focus has been on lower demand overall due to lower economic activity, there are also signs of a changing load shape, as working from home, or distributed working, leads to different patterns of …

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Marginal Gains

AEMO has released its final marginal loss factor (MLF) calculations for 2020/21. MLFs are the way the NEM accounts for the physical losses across the system. Generators with an MLF less than 1 receive a discount on their revenue, while those with an MLF greater than 1 get an uplift. Similar rules apply to large …

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What else happened at last Friday’s virtual energy ministers’ meeting?

COAG Energy Council met by teleconference last Friday. This meeting of Australia’s energy and resource ministers typically takes place twice a year and allows the commonwealth and states and territories to thrash out the high-level direction of energy market reform. Unsurprisingly, the focus of the meeting was the immediate issue of keeping the lights on …

What else happened at last Friday’s virtual energy ministers’ meeting? Read More »

What to expect in the electricity sector now that Australia is in COVID-19 lockdown

First and foremost, the focus will be on keeping the lights on. Electricity production and delivery is clearly under the list of essential services so work will continue, albeit with new hygiene and social distancing protocols in place. AEMO has now fully activated its pandemic response and business continuity plans. Australian governments are collectively overseeing …

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The pace of change

With little fanfare, the AEMC recently (it’s not even clear when this decision occurred) punted one of its flagship reform projects, COGATI, into the NEM post-2025 project. Cynics might suspect that NEM post-2025 stands for “the long grass” in this case. COGATI is the snappy acronym for the co-ordination of generation and transmission investment and …

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Where will electric vehicles take us?

ARENA’s latest bet on the future of Australian energy is a pivot to transport. Australia’s national renewable energy R&D funding agency has taken a punt on a Melbourne-based start-up, Applied Electric Vehicles (AEV) that is developing a modular, driverless vehicle powered by solar cells on the car’s roof and a back-up battery. It’s an interesting …

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Separation anxiety

Yesterday South Australia became separated from the rest of the NEM, requiring it to operate as an energy “island” for a while. All the states at the extremities of the NEM – Tasmania, South Australia and Queensland – have to operate in island mode from time to time, but South Australia’s generation mix makes it …

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Consumer vulnerability – the emerging trends

The AER this week launched a report looking at the issue of consumer vulnerability. The report surveyed approaches from regulators in both Australia and the UK and across multiple industries to determining who is vulnerable and what regulatory interventions are necessary to protect them from adverse outcomes. Consumer vulnerability defies easy definition, but can encompass …

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The nuclear option

As the political debate over the Coalition’s proposed “technology target” to address climate change continues, the nuclear question has inevitably reared its head, with the technology investment blueprint apparently looking into small modular reactors (SMRs). So, it’s a good time to recap this technology and how it may fit into Australia’s energy system. Firstly, if …

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Transmission Revamp

It was reported today that Victoria is going it alone and breaking away from parts of the National Electricity Rules in order to speed up new transmission investment. What is Victoria doing? As always, there will be some important devil in the detail, but in short, they will be tweaking their local version of the …

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What makes an electricity retailer “green”?

Italian utility giant Enel launched its Australian retail electricity business last week, promising to be “a one-stop shop ‘greentailer’ delivering energy from Australia’s abundant renewable resources for the country’s clean energy future”, according to its country manager. Meanwhile, Shell’s takeover of Powershop has sparked an activist campaign for Powershop customers to switch away from what …

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Is the cost of going carbon neutral about to get more expensive?

The pace and cost of Australia’s fast growing, multi-million-dollar climate neutral industry may be significantly impacted by the biggest outcome at the recent climate negotiations in Glasgow. Forget all the speeches and the pledges, the big reform from COP26 was to finalise revised rules for voluntary carbon trading markets. Known at Article 6 of the Paris …

Is the cost of going carbon neutral about to get more expensive? Read More »

Green steel deal

With the world’s eyes on the COP26 event in Glasgow in recent weeks, we may be looking on the wrong direction for the next major step on decarbonisation. Bilateral trade pacts centred around a US-EU alliance may be the way forward and may give Australia pause for thought on its own approach. The first step …

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Household electrification is unlikely to produce free money

Households consume around 30 per cent of Australia’s total energy account. They’ve historically been the most expensive to supply, have the most volatile demand and are most politically sensitive customers on the grid. One way to reduce household greenhouse emissions is to use zero emissions electricity for natural gas and run an electric car on …

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