TTEG COMMENTARY
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As shown in the Wholesale Market Update and the associated charts below, the energy market has eased across all states. However, price volatility remains, primarily due to fluctuations in renewable energy output and scheduled generator outages.
Energy contracting is fundamentally about managing pricing risks. Monitoring the market allows you to secure favourable long-term energy contracts.
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But when is the best time to act?
As we’ve discussed in previous updates, we strongly recommend establishing an Energy Procurement Plan that begins at least 18 months (preferably 2 years) before your current contract’s end date.
The Plan should include ongoing market monitoring, factoring in the operational status of key power stations and other variables, and adjusting energy strategies as needed.
Timing is critical when navigating the energy minefield. Nearing your contract end date during a price spike could lock you into higher rates.
If you don’t yet have an Energy Procurement Plan, are unsure of its effectiveness, or would like advice, we’re here to help.
WHOLESALE MARKET UPDATE
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Overview:
In October, the National Electricity Market (NEM) has experienced a predominantly downward and sideways trend in futures pricing. This shift is largely influenced by an increase in solar and wind energy generation, counterbalanced by significant portions of baseload generation undergoing scheduled maintenance. With few unscheduled outages, these factors appear to be well-reflected in current market prices.
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Demand Trends:
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Operational demand has notably decreased, particularly in New South Wales (NSW) and Victoria (VIC), where minimum demand records have been broken.
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The Australian Energy Market Operator (AEMO) has raised alarms about insufficient demand to maintain system security—an unprecedented situation for the NEM.
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Traditionally, forecasts have indicated a potential for demand to exceed available supply, raising concerns about load-shedding.
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In this unique scenario, AEMO has implemented economic curtailment of grid-scale solar to ensure grid frequency and stability.
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Regional Highlights:
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Victoria has maintained a strong baseload supply and has faced minimal unforeseen weather disruptions, resulting in periods of being a net exporter to South Australia (SA) and NSW.
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Recently, however, pricing in VIC and NSW has risen due to a severe storm in central western SA that damaged infrastructure and created interconnector constraints.
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The failure of backup generators to meet demand led to AEMO issuing load-shedding advice and warning of potential blackouts in western SA and southwestern NSW.
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Looking Ahead:
As we move into Spring, grid-scale solar and wind production is expected to increase in line with historical seasonal patterns. This rise in renewable generation could contribute to lower futures pricing through summer, assuming no significant disruptions occur. However, the NEM's reliance on wind generation remains a concern; any unexpected downturns in wind production could heighten volatility and drive spot prices upward.
ELECTRICITY FUTURE PRICING CHARTS
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Australia's Energy Minister, Chris Bowen, announced on 21 October that the government is aiming to secure around 4GW of dispatchable power, such as energy storage, and 6GW of renewable energy generation in the upcoming Capital Investment Scheme (CIS) tender round.
This next round, expected to take place in the coming months, marks an increase from the previous tender, which sought 6GW and received an overwhelming 40GW of bids, including 27GW of high-quality proposals.
Bowen confirmed that market briefs will be released soon, with the tender process officially opening in mid-November 2024.
The CIS is designed to attract investments in renewable energy and storage to meet rising electricity demand and fill reliability gaps as older coal power stations are phased out, a transition anticipated to be complete by 2038.
Salim Mazouz from the Department of Climate Change, Energy, the Environment and Water noted that the CIS aims to help investors manage risks, drawing inspiration from successful schemes both in Australia and abroad, while ensuring that market signals are preserved.
Australia 'wasting' record renewable energy as wind and solar share rises
Australia is facing significant curtailment of renewable energy, with over a quarter of generated wind and solar power being wasted to prevent grid overload.
Recently, New South Wales experienced a record curtailment rate of 27.4%, equating to the output of coal-fired power stations. This issue, driven by warm temperatures and low demand, highlights the growing challenge of integrating renewable energy into the existing electricity system, which remains heavily reliant on coal.
Experts predict that curtailment will continue to rise, with the Australian Energy Market Operator forecasting an average of 20% by mid-century. While curtailment may seem wasteful, it reflects the urgent need for increased energy storage solutions, such as batteries, to effectively manage supply and demand.
As coal plants retire and more renewables come online, there will be opportunities to optimise energy use and improve the efficiency of the electricity market.
Are outdated voltage standards costing your business more than you think? Is your voltage too high? It could be hurting your business!
New research has revealed that many Australian businesses are unknowingly paying the price for outdated voltage standards. Across the country, voltage levels frequently exceed the recommended 230V standard, leading to premature failure of appliances, increased energy costs, and a higher carbon footprint.
Here are some key statistics and why addressing voltage issues is crucial for your business:
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Over 95% of voltage readings in Australia’s National Electricity Market (NEM) exceed the 230V standard, often nearing the old 240V mark, contributing to unnecessary wear and tear on your commercial equipment.
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Maximum voltages recorded are generally towards the upper end of acceptable voltage in all states and distribution network service providers (253V)
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High voltage shortens the lifespan of appliances significantly, with studies showing a 5% increase in voltage halves the lifespan of devices like incandescent lightbulbs and vacuum cleaners. Electronics with sensitive components, such as control systems in washing machines, are particularly vulnerable.
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Cut Costs: By reducing voltage by just 5%, businesses could lower energy usage by 4-5.
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Extend Equipment Life: Voltage management can prevent appliances from failing prematurely, ensuring your investment in lighting, machinery, and IT systems lasts longer, saving on replacement and repair costs.
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Maximise Solar Exports: Excessive voltage can curtail rooftop solar exports, especially when voltage levels hit 253V or higher. Optimising voltage creates room for more efficient solar power exports, enabling you to maximise your investment in renewable energy.
Victoria has already taken steps to address this issue, saving consumers over $13 million annually through improved voltage management. With 3 million tonnes of carbon emissions avoided and 1.5 gigawatts of peak grid demand reduced, the benefits of addressing voltage levels are clear.
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UNSW Voltage Analysis in Four NEM Regions:
Don’t let outdated voltage standards impact your business. Contact us today to learn how voltage optimisation can protect your equipment, lower your energy costs, and support your sustainability goals. Email babedi@tteg.com.au or call 03 9418 3945.
Construction starts on Australia’s fifth largest battery storage system
Construction has begun on Australia's fifth largest battery energy storage system, located six kilometres from Port Pirie, South Australia, and developed by Canadian company Amp Energy.
The first stage will feature a 150 MW / 300 MWh system using Wärtsilä's advanced energy storage technology, with South Australian firm Enerven managing the balance of plant. This system will provide essential grid services such as frequency control and energy arbitrage, utilising Wärtsilä's GEMS digital energy platform for optimised management.
The project is part of Amp Energy's $2 billion Renewable Energy Hub in South Australia, which includes three solar installations totalling 1.36 GW. Amp Energy's Australian President, Daniel Kim, highlighted the project's significance in advancing the region's transition to renewable energy.
This marks Wärtsilä's fifth energy storage project in Australia, reinforcing their commitment to supporting the country’s renewable energy goals.