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 progress from ‘Committed’ status to being fully in service would take on average 150 days, while the observed actual time was 576 days. This discrepancy of 426 days means forecasts like the ESOO significantly over-forecast capacity in the short term.[1]
- The ESOO does not include projects further behind in the development cycle as their connection is not certain as far as the existing criteria go. However, it is rare for these projects to not eventually make it to market, resulting in a long-term under-forecast of capacity.
To compensate for this, AEMO has proposed applying the following:
- A 6-month delay to all projects that have been granted ‘Committed’ status and have not met their first commissioning hold point.
- Including projects with ‘Anticipated’ status, while also applying a 12-month delay to the project’s full commercial use dates supplied by the participants.
In Figure 1, the capacity in the NEM (including the closure of Liddell in the imminent future) is compared with the forecast capacities from the last 4 major annual ESOO releases. The changes to ‘Anticipated’ timing aren’t significantly relevant in this timeframe, but the delays to ‘Committed’ units can be seen in the dotted lines. As highlighted in the chart, each dotted line, which has been adjusted for AEMO’s proposed methodology, is closer to the actual NEM capacity line than the original.
[1] https://aemo.com.au/-/media/files/stakeholder_consultation/consultations/nem-consultations/2022/reliability-forecasting-guidelines-and-methodology-consultation/nem-reliability-forecasting-guidelines-and-methodology-consultation-paper.pdf
Reflecting on these changes and comparing them with the actual capacity that has been observed in the NEM over the last 4 years, this change appears to be a step towards closer alignment between forecasts and reality. This means that reports like the ESOO provide more value to participants, more accurately showing the risks to reliability and the opportunities for new storage and generation assets.
Delays during the commissioning process are a known issue, and reforms like the Connections Reform Initiative are being implemented to help assets connect to the NEM, however for developers looking to connect, there is still uncertainty. This is where Cornwall Insight Australia can help, from providing accurate forecasts of potential revenues, understanding and communicating the content of reports that market bodies produce, bespoke models that can take significant infrastructure delays into account, and helping understand the connections process in the Australian energy markets.
Have you recently connected to the NEM or are you seeking to? Please tell us about your experiences! And if you have any questions, please feel free to reach out and we can discuss how Cornwall Insights can help you, contact enquiries@cornwall-insight.com.au.
