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Categories
Commercial and market outlook
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Commercial and market outlook
Big Battery, even bigger revenues
The Victorian Big Battery (VBB) in Geelong, Victoria, is currently the largest commissioned battery in the NEM at 300 MW/450 MWh. In Q2 2022, VBB, and its owner Neoen, posted an estimated AEMO wholesale net revenue of just over $13 million for the three-month period. It is important to note...
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Commercial and market outlook
Elevated Wholesale Price in the NEM: QLD on the verge of triggering Administered Price Cap (APC) again
The Administered Price Cap (APC) was triggered for the first state on 12 June at 6:55 am as a result of QLD breaching the Cumulative Price Threshold (CPT) of $1,359,100 for the rolling 7-day period. This caused the withdrawal of capacities by gas generators that could not recover fuel costs...
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Commercial and market outlook
Gas generation on the move
Gas and electricity prices in Australia are unavoidably linked, particularly in the evening peaks where the gas generators have increased capability to set the price. Due to the recent spike in global gas prices, there has been a distinct change in gas generator bidding strategy resulting in an increase in...
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Commercial and market outlook
Australian gas prices have recently coupled with European spot. Will linkage persist post-2023?
Last year it was difficult to imagine that spot gas prices in Australia would hit unprecedented levels of more than $40-50/GJ, with AEMO capping the DWGM price at $40/GJ. By comparison, the DWGM only averaged $5.10/GJ last year. As was mentioned by Energy Market Intelligence Manager Mohsin Ali in the...
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Commercial and market outlook
Market suspension poised to lift, but underlying drivers may stick around
It has been a chaotic few weeks on the east coast, culminating with the NEM being suspended on 15 June 2022, an outcome not seen in the modern version of the NEM. There has been much coverage of the key drivers of the crisis. It stems predominantly from a perfect...
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Commercial and market outlook
Winter is coming: MT PASA scheduled coal outages for winter?
The number of thermal generator problems continues to grow, and so does peak time volatility in the two northern states. On top of the closure of Unit 3 at Liddell occurring on 1 April and Unit 4 at Callide C still out without a public resolution, outages and problems have...
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Commercial and market outlook
Nobody said it was easy, but it’s time for us to part: VIC’s climate targets & coal
In 2017, the Victorian Government legislated a state target of net-zero greenhouse gas emissions by 2050. Since then, short-term targets have been set in five-year increments, with the 2030 target being to cut emissions by 45-50% below 2005 levels. The Government is currently consulting on the 2035 target, which must...
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Commercial and market outlook
BSUoS charges: volatility, deferral and reform
Over the last few years Balancing Services Use of System (BSUoS) charges have experienced significant volatility, with costs reaching record high levels which have added to the rise in consumer electricity bills and ultimately resulted in intervention in order to cap BSUoS rates. In this Chart of the week', we...
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Commercial and market outlook
State election day chills; SA hit $9,934/MWh on Saturday evening 19 March
SA’s reliance on wind is getting to a point where there is not much to do except importing from VIC and generating with expensive fuel, such as diesel, when wind speed is not at its best shape. In this Chart of the week, we take a closer look at South...
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Commercial and market outlook
Back to the Future P-IV: Are P5 Forecasts reliable?
Is there a correct way to be one step ahead of your competitors? Do you want to be able to know the price before settlement accurately? The P5 Reports supposedly provide this… or do they? Many participants use this data to determine optimal outcomes for their fleets. Still, there is...
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Commercial and market outlook
“I’m an All-Pro [coal plant]… You’ll never be more than a replacement player!”
The retirement of Eraring has been the talk of the market since it was announced, but what are the actual implications of its retirement. How big a hole does it leave in the market, and what capacity is likely to fill the void? We take a quick look at some...
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Commercial and market outlook
Germany to step up climate action
The German Economic Affairs and Climate Action Minister Robert Habeck recently presented a review of Germany’s current climate action status detailing both climate targets in various sectors and the expansion of renewables and the power grid. However, the minister stated that climate action in Germany is currently below expectations, with...
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Commercial and market outlook
Hogging the spotlight: the opportunity in the evening peak
As the duck curve steepens and renewable energy penetration increases in the NEM, we briefly examine revenue share by time of day and highlight the growing opportunity in the evening peak. Will this become the new normal, with revenues increasingly concentrated in just one part of the day? Or will...
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Commercial and market outlook
Is the NEM going off schedule?
Is the NEM getting harder to control with rising variable renewable generation and distributed photovoltaic growth? AEMO’s balancing of scheduled supply is critical to ensure the system remains stable and wholesale prices work efficiently. This Chart of the week briefly examines if the NEM is “on schedule” to meet this...
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Commercial and market outlook
Round and round it goes, where the loop flow stops, nobody knows
A by-product of how market boundaries are defined, loop flows are phenomena in electricity markets that manifest as flows going in one direction across parts of a network loop and goes the opposite way in other parts of the same network loop. Regardless of whether the market design is nodal...
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Commercial and market outlook
Residues of negative pricing
Building on the last two Charts of the week, the rise in the frequency of negative wholesale energy prices in the NEM has impacts beyond the price of electricity. In this Chart of the week, we take a closer look at the impact of negative pricing on Inter-Regional Settlement Residue...
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Commercial and market outlook
Duck, duck, goose: bigger bellies and longer necks
The last few months have been littered with record low demand in the system, highlighting that the ducks of the NEM continue to arch their backs lower and lower. In this Chart of the week, we zoom out on the changes to scheduled demand and in the variability of the lowest and...
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Commercial and market outlook
CP19 of the RO sees record shortfall
The perfect storm of challenging market conditions has persisted across the duration of the 2020-21 compliance period (CP) of the Renewables Obligation (RO), driving a large volume of supplier exits, particularly over recent months. As the dust settles on the compliance process relating to CP19 (2020-21) of the RO, this...
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Business supply and services
Balancing costs exceed £200mn for three consecutive months
High underlying commodity and carbon costs haven’t only impacted costs in the wholesale market. From April 2021 to the end of October 2021, balancing costs on the electricity transmission system have totalled £1.29bn. This represents a £301.88mn (30.6%) increase in costs over the same period in 2020, where total costs...
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Commercial and market outlook
Mandated PFR tunes out regulation FCAS markets – What happens to batteries?
The introduction of the mandatory Primary Frequency Response (PFR) in September 2020 improved frequency control of the NEM considerably, as highlighted by AEMO. In this Chart of the week, we look at NEM mainland FCAS regulation services dispatch before and after PFR implementation and the behaviour of the Hornsdale Power...
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Commercial and market outlook
Don’t look back in anger: are peaking assets exploiting 5-min price spikes?
Building on our previous Chart of the week in October, where we reviewed the first couple of weeks of 5-minute settlement, we wanted to revisit this topic. Now two months in, we take another look and see how well the fastest responding assets in the NEM are capturing the best...
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Commercial and market outlook
FCAS not dead?
A couple of months ago, AEMO released the final Inputs, Assumptions, and Scenarios Report (IASR) that contains the basis of all planning publications for the next few years. The changing electricity consumption and generation pattern in the NEM is introducing new challenges to the operation of the energy system; minimum and...
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Commercial and market outlook
The Victorian story of gas demand segments
The Declared Wholesale Gas Market (DWGM) prices in Victoria have been on a rising trend since the start-up of LNG exports in 2015. Is this trend sustainable, given the Gas Statement of Opportunities (GSOO) forecasts an improved gas supply outlook with the new Port Kembla Gas Terminal (PKGT) expected to...
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Commercial and market outlook
I’m pickin’ up good vibrations
We are just through the first two weeks of 5-minute settlement. While there has been much anticipation regarding the implementation and the potential for drastic swings in prices, we felt it was an excellent time to take a quick look at the pricing outcomes to see if any immediate trends...
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Commercial and market outlook
Australian Chart of the week | Two roller coaster rides for the price of one? Preliminary vs final MLFs
In recent years, movements in marginal loss factors (MLFs) have received significant attention in the National Electricity Market (NEM). Many renewable projects in remote areas have experienced material MLF reductions as more supply connects nearby. For example, the MLF for Broken Hill Solar Farm saw a whopping 50 ppt drop...
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Commercial and market outlook
Chart of the week | Green recovery in Italy?
Issue 229 of ‘Chart of the week’ showcases Italian prime minister Mario Draghi’s economic recovery plan which was presented to the country’s parliament. The appointment of Mario Draghi, former head of the European Central Bank, as prime minister on 13 February has provided the country with a unique opportunity to...
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Commercial and market outlook
Chart of the week | The price is right? UK ETS market opens
In issue 225 of the 'Chart of the week', we considered the potential scenarios for UK carbon prices as we transitioned to the new UK Emissions Trading System (ETS), noting the role of market tools, policy, and recent EU ETS pricing trends in determining UK prices. Following the launch of the first...
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Commercial and market outlook
Chart of the week | Getting the balance right – a new approach to policy costs?
A new report from research consultancy Public First has argued that the government should move the costs of energy policy from being heavily on electricity bills onto government expenditure. In this 'Chart of the week', we look at the four models for rebalancing put forward in the report. Options for...
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Commercial and market outlook
Chart of the week | UK carbon emissions were down 10% in 2020
BEIS published its provisional 2020 UK greenhouse gas emissions figures on 25 March. In this 'Chart of the week', we consider the significant impact of COVID-19 and the resulting lockdowns in the UK on carbon emissions last year. Carbon emissions in the UK are provisionally estimated to have fallen by...
