NEM

  • Energy storage and flexibility

    R1 and L1 revving up the BESS revenues

    In our ‘The VFF… Very Fast and Financially rewarding market so far’ Chart of the week, the two new contingency markets, the Very Fast raise contingency FCAS market and the Very Fast lower contingency FCAS, were analysed and demonstrated the high participation of big batteries along with VPPs and DERs....

  • Low carbon generation

    An investigation into REZ capacity factors during Victoria’s dark doldrums

    As the grid transitions to much higher levels of renewable penetration, the range of generation outcomes on any given day increases. The worst of these ranges are known as dark doldrums when there is a combination of poor conditions for wind and solar generation, usually a windless day in winter....

  • Commercial and market outlook

    The VFF… Very Fast and Financially rewarding market so far

    On 9 October 2023, 1pm (market time), we saw the start of two new contingency FCAS markets. The Very fast raise contingency FCAS market, and the Very fast lower contingency FCAS. Upon commencement of the VF FCAS market, a commissioning period of two weeks with an initial max requirement of...

  • Commercial and market outlook

    Is the sun setting on utility solar?

    The Federal Government has legislated emissions reductions of 43% below 2005 levels by 2030. Sourcing electricity from renewable technologies is fundamental to meeting this, with a much-publicised target of 82% renewables in the grid by 2030 – up from a current value of 38% over the last year. Fortunately, the...

  • Commercial and market outlook

    The Very Fast FCAS market is about to commence – a look at a possible time-of-day profile for R1

    On 9 October 2023, 1pm (market time), the dispatch of the new Very Fast (VF) FCAS market in the NEM will commence and will add two new markets for contingency FCAS, Raise 1 (R1) and Lower 1 (L1). AEMO has released a final industry go-live plan to keep track of...

  • Low carbon generation

    “Ooh, a storm is threatening, My very [interconnection] today”: Can states utilise interconnection to share wind resources?

    Penetration of renewables continues to dominate the energy news, as we saw renewables as a proportion of total demand reach new heights this week to a new record of ~70% penetration. In light of this continuing march toward a renewable-dominated grid (building on some analysis we did in Chart of...

  • Energy storage and flexibility

    How long is the ‘Golden time of day’ for batteries?

    A key part of the business case for grid-scale standalone batteries is the arbitrage opportunity between low daytime wholesale prices (when renewable energy generation from solar is plentiful) and high evening prices (when the sun goes down and household demand ramps up quickly). The share of battery revenue coming from...

  • Low carbon generation

    MLF changes in NSW in the past decade

    MLF, short for Marginal Loss Factor, represents the portion of electricity losses that occur along the transmission network between a connection point and the Regional Reference Node (RRN). Within the NEM, the MLF serves as a metric to quantify these losses along the network, playing a pivotal role in determining...

  • Energy storage and flexibility

    Spread your wings and arbitrage away as Q2 sees ‘the spread’ increase

    The focus of batteries is constantly adjusting to reflect ‘where the money is at’. Various quarters have trends, and others have events that swing momentum. With FCAS enablement in Q2 this year dropping to some of the lowest values since 2016, shifting the solar curve, or rather arbitrage, became the...

  • Commercial and market outlook

    Zap, Crackle, Pop! SA’s shocking electric dance party on the 11th

    Across the mainland states in the NEM, South Australia (SA) relies heavily on variable renewable energy (VRE) resources. SA is an excellent subject to test the premise “What if the wind doesn’t blow, and the sun doesn’t shine”? Negative spot prices persist in South Australia due to an abundant supply...

  • Commercial and market outlook

    Polarisation of wholesale spot prices leads to opportunity for arbitrage services

    Over the last five financial years, South Australia has seen a significant increase in price volatility, with substantial portions of time both negative and above $250/MWh, leading to increasing opportunities for storage systems to provide arbitrage services. A number of events initiated the reduction in wholesale energy prices between $50/MWh...

  • Commercial and market outlook

    Two more retailers bite the dust

    The announcement on Friday that QEnergy and Mojo Power will no longer provide retail services illustrates the battering Australian electricity retailers have faced over the last year. High hedging costs, especially for non-vertically integrated retailers, have seen smaller retailers hit the wall, such as Elysian Energy, Enova Energy, and Power...

  • Energy storage and flexibility

    Operating in a vicious cycle

    When project developers evaluate the potential profits for a new battery project in the NEM, one key variable being considered is the maximum allowable cycling rate of the battery. Cycling at higher rates can enable more arbitrage profits to be earned, but every MWh of energy that passes through the...

  • Commercial and market outlook

    How does thermal storage stack up compared to batteries?

    Along with the retirement of coal/gas power plants in the NEM, long-duration energy storage systems (LDESS), often exceeding 8 hours of storage, are becoming more crucial in transitioning to a more sustainable and renewable energy future. LDESS technologies, such as battery storage systems (BESS), thermal energy storage systems (TESS), compressed...

  • Commercial and market outlook

    VNI West selected path; an incentive for delaying coal retirements?

    On 29 May 2023, AEMO published a conclusions report on the VNI West Project. According to the report, option 5A (a variant of  AEMO’s preferred option in a previous consultation paper) is preferred for VNI West. In option 5A, the transmission line crosses the Murray River north of Kerang (Wamba...

  • Commercial and market outlook

    Spot the spread: Are current battery revenues enough to encourage further investment?

    In AEMO’s ‘Step Change’ scenario, it was estimated that storage capacity in the NEM would need to increase by a factor of 30 between 2022 and 2050 to support a grid transformation that limits temperature rises below 2 degrees. This represents about 13GW of new storage capacity by 2030 and...

  • Commercial and market outlook

    Feast or famine? FCAS costs in South Australia

    Frequency Control Ancillary Service (FCAS) prices are highly volatile, at times resulting in short periods of extremely high FCAS cost. Three such events in recent history are the South Australian (SA) islanding events in November 2019, February 2020, and November 2022. During these events, FCAS costs in SA totalled $16...

  • Low carbon generation

    NSW’s transition to a new era: What will replace Eraring?

    After 52 years of operation, the NSW Liddell power station officially shut down last 28 April. With Liddell’s closure, NSW’s transition to a green energy future is in full swing. First announced in 2015, NSW had seven years to ensure there is enough replacement capacity once Liddell is retired. Since...

  • Commercial and market outlook

    It’s the Liddell things that matter

    Australia’s oldest coal-fired power plant Liddell retired completely in the last week of April 2023 after 52 years. This giant of AGL, which had a total registered capacity of 2,000 MW, operationally acted as a 1600MW station and 1200MW after the closure of its third unit. Australia’s transition to clean...

  • Energy storage and flexibility

    A look at AEMO pre-dispatch forecasts over the last year

    The Energy Security Board (ESB), under the direction of the National Cabinet, is currently working on a number of changes that will impact how generators connect to and operate within the National Electricity Market (NEM). The Congestion Relief Market (CRM) model is one such change to how the NEM currently...

  • Commercial and market outlook

    Patriots ‘Dynasty’ off to a rough start, as New England suffers loss to the MLFs…

    For many, the first of April is marked in calendars as a day for jokes and silly nuisances. For the few, specifically the energy industry, we have it pencilled in for the release of the upcoming year’s Marginal Loss Factors (MLFs). Over the last half-decade, movements in MLFs have received...

  • Energy storage and flexibility

    A pebble in the water makes a ripple effect…

    At demand levels averaging only ~200-700MW, FCAS markets are dwarfed by the ~20,000MW energy demand in the NEM. Nonetheless, with 8 different markets to participate in, the potential value that participating in FCAS can add to a participant's revenue should not be underestimated. In this Chart of the week, we...

  • Energy storage and flexibility

    Delays to NEM connections and accurate forecasts

    AEMO is currently consulting on its methodology for reliability forecasting in the NEM, and among their proposed changes is an adjustment to the inclusion of projected new capacity. The existing assumptions are being examined due to two factors; Most new connections in the NEM assume that the time taken to...

  • Energy storage and flexibility

    Crying over spilled solar – how much can a battery help?

    A standalone battery earns its revenue not only from the arbitrage opportunity between day and night prices but also from participation in FCAS markets. This remains true when the battery is paired with a solar farm but can be complicated by constraints or trade-offs between FCAS participation and solar export....

  • Power and gas networks

    Queensland SuperGrid – Faster than a speeding bullet

    The Queensland Energy and Jobs Plan (QEJP) sets an ambitious goal to deliver the Queensland SuperGrid. The SuperGrid is the future electricity system aiming to deliver consumers clean, reliable, and affordable power. As part of the plan, all publicly owned coal-fired power plants are intended to be retired by 2035....

  • Commercial and market outlook

    Australia’s hydrogen success is tied to energy market policies

    According to South Australia’s Hydrogen Power Plant study, the global demand for hydrogen is projected to reach 650 megatons in 2050, with a potential export market of $300b per year. In this market, Australia is well placed for renewable hydrogen production with a considerable penetration of variable renewable energy (VRE)....

  • Commercial and market outlook

    It’s finally happening; EV market hotter than ICE in 2022! Is the NEM ready?

    For the first time in 30 years, Australia’s highest-selling mid-size vehicle is not a Toyota Camry - running an internal combustion engine (ICE). As reported by 7 news, it has been replaced by the Tesla Model 3. This piece of information demonstrates that the EV uptake in Australia is achieving...

  • Low carbon generation

    Building up the road to the coast – can we deliver energy from Gippsland’s offshore wind?

    On 19 December 2022, the Federal Minister for Climate and Energy officially declared the area in Bass Strait off the Victorian Gippsland Coast suitable for offshore wind. The declared area covers approximately 15,000 square kilometres, from Lakes Entrance in the east to south of Wilsons Promontory in the west. Based...

  • Commercial and market outlook

    “There’s a hole in the bucket, dear Liza”: but maybe not as big as we think?…

    There has been talk for years about the potential introduction into the National Electricity Market of a “capacity market”, with significant pushback from the industry over the potential for a capacity market to prolong the life of coal and gas and slow decarbonisation of the grid. On Friday last week...

  • Commercial and market outlook

    “If everything seems under control, you’re not going fast enough.” – Mario Andretti

    Over the past few months, there has been an avalanche of announcements related to the energy market. Victoria wants to be 65% renewable by 2030 and 95% by 2035, AGL is likely to retire Loy Yang A ten years earlier, Queensland has its Energy and Jobs Plan, and transmission investment...