Latest News

17 Jun 2019

Insider 36: The Strange Case of Snowy 2.0

In this article IES’s CEO, Hugh Bannister, uses NEO's premium curve chart to review and provide some insights into the evolution of NEM prices over the years. He then analyse Snowy 2.0’s place in the system.

Insider 36: The Strange Case of Snowy 2.0

IES’s NEO data visualisation tool has a special and extremely useful form of processing in its toolbox that generates what we call a premium curve.  Such curves can be displayed on a chart of NEM regional spot prices over some period such as a year, along with the fixed and variable costs of a range of supply technologies.  In this article IES’s CEO, Hugh Bannister, uses this chart to review and provide some insights into the evolution of NEM prices over the years.

Then, as an exercise, he attempts to use this tool to analyse Snowy 2.0’s place in the system.  However, Snowy 2.0 appears as an outlier when analysed from several angles.  It’s also very hard to reconcile its commercial operation with Angus Taylor’s target wholesale price target of $70/MWh unless that number is rather short term.  Under a premium curve analysis, Snowy 2.0 is a strange case indeed.

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26 Mar 2019

Insider 35: Why the Wholesale Demand Response Rule Change is Stuck and How to Unstick it

Since November 2018 the AEMC has been running a rule change process to deal with three proposals for, or relating to, a Wholesale Demand Response Mechanism.

Insider 35: Why the Wholesale Demand Response Rule Change is Stuck and How to Unstick it

Since November 2018 the AEMC has been running a rule change process to deal with three proposals for, or relating to, a Wholesale Demand Response Mechanism.  Such attempts, or related attempts to constraint existing demand response to be more controllable and visible, are one of the great perennials of the NEM.  Even prior to the NEM, we grappled with the same issue during the Victorian reforms from 1993. The most recent attempt to deal with the demand side was in 2016 when Snowy Hydro proposed a rule change that would have required price responsive load to be scheduled.  That went nowhere; according to the AEMC it wasn’t worth doing.

The latest attempt appears to be far more serious but has hit a road block.  According to reports from the March 2019 AEMC workshop on the topic, no-one knows how to measure demand response satisfactorily.  Also, and while hardly recognised as a problem right now, there currently seems to be passive acceptance that any approach needs a middle man to work, so demand responses can be aggregated and scheduled.  Such an approach will throttle demand response, just when the NEM needs as much as it can get.

In this brief article, IES CEO, Hugh Bannister, suggests a way to expose willing retail customers to short term spot price volatility while keeping risk to a manageable level.  He also outlines what needs to be done to allow retail customers to bypass the middle man, while ensuring that the system is not destabilised by errant short term behaviour.

These concepts need to be fleshed out in more detail.  They should then be considered as possible “more preferable” options to achieve the goals of the current rule changes.

IES presented to the AEMC on these topics on 20 March 2019.  The presentation can be downloaded here.

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31 Jan 2019

Insider 34: Can the NEM Survive More Renewables?

There remains a popular perception that a high level of renewables in the National Electricity Market (NEM) necessarily implies unreliability. In this article Hugh Bannister explores this notion by building up a plausible plant development strategy from the ground up; then trying to improve it.

Insider 34: Can the NEM Survive More Renewables?

There remains a popular perception that a high level of renewables in the National Electricity Market (NEM) necessarily implies unreliability.  In this article Hugh Bannister explores this notion by building up a plausible plant development strategy from the ground up; then trying to improve it.  The backbone of such a strategy is gas plant to provide reliability.  Renewable energy can then be used to lower operating costs, mainly fuel.

The article explores the limits to renewable energy penetration and what will be needed to relieve those limits, at least in part.

The article also touches on the issue of energy security.  The NEM is posing new challenges for AEMO to maintain security – the ability of the system to continue operating satisfactorily when disturbed.  While AEMO has a system security work program underway, the need to find robust long term solutions is becoming ever more urgent, as highlighted in the final report of the 25 August 2018 system incident.

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