Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Independent Review into the
Future Security of the National Electricity Market (NEM)
(The Finkel Review)
Aurecon summary o...
Table of Contents
Sense making & shared benefits 3 - 5
System Security 6
Low Emissions Transition 10
The Role of Gas 13
Sy...
3
Sense making
The Review contains 50 recommendations in total. All but the Clean Energy Target have been
adopted by the g...
4
Sense making
The Review contains a matrix for success – spread across three pillars
5
Shared benefits
Government
Clear line of sight for planning energy policy and delivery
Business
Clarity around making in...
System Security
7
 Withdrawal of synchronous generation is
reducing security
− Less physical inertia
− International experience shows tha...
8
 TNSPs to quantify minimum required inertia
levels
− Also quantify the proportion to be substituted by
synthetic inerti...
9
 Establish a data collection framework/mechanism for DER
− At a suitable aggregate level
− Map locations of clusters of...
Low Emissions
Transition
11
 As coal plants are retired, the NEM will need dispatchable capacity:
− Clean coal, gas, hydro, solar thermal, biomass...
12
 Capacity market is not recommended
− Too big a transition, will take too long to implement, more immediate reliabilit...
The Role of Gas
14
 NEM is likely to require higher levels of gas fired generation to support VRE
− Gas generators will need to switch in...
15
 Gas generators to provide info to AEMO on fuel resource adequacy and fuel supply contracts
to enable assessment of fu...
System Planning
17
 Whole of system planning approach required
− Considering interstate generation availability,
interstate interconnecto...
18
System Planning: Recommendations
 Develop integrated grid plan by 2018
− Facilitate efficient development and connecti...
Rewarding
Customers
20
 Improved access to data for consumers,
service providers, system operators and policy
makers is required
− More trans...
21
 To obtain value from DER, dispatch needs to be coordinated to be material
− Example: ARENA/AEMO 100MW demand response...
22
 As part of its existing inquiry into the retail market, the ACCC should make recommendations
on improving the transpa...
Stronger
Governance
24
 No agency currently has explicit responsibility
under legislation to track emerging risks in
relation to the power sy...
25
 AER needs a data strategy to ensure:
− Visibility of DER
− Consumption data sharing
− Changing drivers of demand & de...
26
 COAG to establish an Energy Security Board
to implement the panel’s recommendations
and provide whole of system overs...
27
Acronym Definition Explanation
ACCC Australian Competition and Consumer Commission Australia’s competition regulator an...
28
Discuss the Finkel Review
Dr Alex Wonhas
Managing Director, Energy,
Resources & Manufacturing
E: alex.wonhas@aurecongro...
Follow us on
www.twitter.com/Aurecon
Join us on
www.facebook.com/Aurecon
Watch us on
www.youtube.com/user/AureconGroup
Fol...
Upcoming SlideShare
Loading in …5
×

Independent Review into the Future Security of the National Electricity Market

41,916 views

Published on

Understanding the issues, challenges and opportunities the Finkel Review presents is critically important for government, business and the community. View our in-depth analysis of the Review.

Published in: Business
  • Be the first to comment

Independent Review into the Future Security of the National Electricity Market

  1. 1. Independent Review into the Future Security of the National Electricity Market (NEM) (The Finkel Review) Aurecon summary of panel findings and recommendations
  2. 2. Table of Contents Sense making & shared benefits 3 - 5 System Security 6 Low Emissions Transition 10 The Role of Gas 13 System Planning 16 Rewarding Customers 19 Stronger Governance 23 Glossary 27 Contact 28
  3. 3. 3 Sense making The Review contains 50 recommendations in total. All but the Clean Energy Target have been adopted by the government – with four key outcomes sought
  4. 4. 4 Sense making The Review contains a matrix for success – spread across three pillars
  5. 5. 5 Shared benefits Government Clear line of sight for planning energy policy and delivery Business Clarity around making investment decisions Customers Improved supply continuity and pricing Environment Reduced emissions We shouldn’t have iStock logo images on here!
  6. 6. System Security
  7. 7. 7  Withdrawal of synchronous generation is reducing security − Less physical inertia − International experience shows that in large power systems, such as the NEM, FFR cannot provide a complete substitute for physical inertia − Minimum levels of physical inertia are required − Demand side FFR should be further considered  System restart capability − Can we get the system back up in case of a system wide blackout? System Security: Issues identified  Lack of DER visibility to AEMO − Makes management of power system more difficult  Solutions should be technology neutral, they should also be supply side/demand side neutral − Specify technical parameters of the service, not the technology − Market mechanisms preferred, however non- market approaches may still be required
  8. 8. 8  TNSPs to quantify minimum required inertia levels − Also quantify the proportion to be substituted by synthetic inertia (FFR)  Review and update connection standards requirements − Existing performance requirements are written for synchronous generators (considerations: FFR/FCAS, SCC, inertia, power ramp rates due to changing weather, etc.)  All new generators to provide fast frequency response capability System Security: Recommendations  Full disclosure by generators of parameters which could affect security or reliability  Three yearly review of connection standards for generators
  9. 9. 9  Establish a data collection framework/mechanism for DER − At a suitable aggregate level − Map locations of clusters of DER for inclusion in power system models  Cyber security − Annual report on the cyber security preparedness/maturity  National skills assessment for workforce skill − Need: Power system engineers, data specialists in analytics and visualisation, cyber security specialists, software programmers with an energy specialisation System Security: Recommendations
  10. 10. Low Emissions Transition
  11. 11. 11  As coal plants are retired, the NEM will need dispatchable capacity: − Clean coal, gas, hydro, solar thermal, biomass, interconnectors, storage and demand response  Wind and solar PV (not dispatchable), will therefore require complementary dispatchable capacity to maintain reliability  Issue with energy market: VRE capacity has been pulling wholesale prices down, inhibiting investment in dispatchable capacity – issue is if generators exit the market at short notice things could switch from a NEM capacity oversupply to undersupply in a short period Low Emissions Transition: Issues identified
  12. 12. 12  Capacity market is not recommended − Too big a transition, will take too long to implement, more immediate reliability concerns − Instead: Provide long term investor confidence and greater control to AEMO  Whole of economy emissions reduction strategy  Large generators to provide three year notice of closure  Emissions reduction mechanism (CET)  AEMO to identify and ensure adequate dispatchable capacity is available in each region “Generator Reliability Obligation” Low Emissions Transition: Recommendations
  13. 13. The Role of Gas
  14. 14. 14  NEM is likely to require higher levels of gas fired generation to support VRE − Gas generators will need to switch in and out, provide fast ramp rates while operating and require more starts (depending on intermittent generation) − Aging, inefficient turbines will need to replaced with more modern turbines at the same sites  AEMO should have better oversight of gas supply contracts to ensure sufficient supply is available  Need to avoid blanket restrictions/bans on gas projects, encourage development of the industry The Role of Gas: Issues identified
  15. 15. 15  Gas generators to provide info to AEMO on fuel resource adequacy and fuel supply contracts to enable assessment of fuel (and subsequently generator) availability  Increase community trust and understanding on gas (including hydraulic fracturing) by mid- 2019 − COAG Energy Council to bring together scientific and regulatory data in an easy to understand format The Role of Gas: Recommendations
  16. 16. System Planning
  17. 17. 17  Whole of system planning approach required − Considering interstate generation availability, interstate interconnectors − No longer appropriate to plan the network at a state/jurisdictional level  Optimise the design of the network to enable connection of new renewable energy resources − Providing capacity for new renewable generators − Integrated grid plan: renewable energy zones, concept line routes to connect, quality of resource, cost, network impacts etc. − High level assessment of economics of the zones − Publically available System Planning: Issues identified  Co-ordination of generation and transmission investment − Transition requires closer co-operation between NSPs and generators in making investment decisions
  18. 18. 18 System Planning: Recommendations  Develop integrated grid plan by 2018 − Facilitate efficient development and connection of renewable energy  AEMO to identify priority projects which governments may need to support if market is unable to deliver − Framework is required to achieve this − Cost to be allocated in NSP revenue proposal & recovered through users  COAG Energy Council to review AEMO’s role in national network planning  Reforms to limited merits review regime  Further reviews to enhance effectiveness of RIT-T & RIT-D
  19. 19. Rewarding Customers
  20. 20. 20  Improved access to data for consumers, service providers, system operators and policy makers is required − More transparency and clarity on electricity prices so customers can understand and compare prices, know when discounts expire etc − Customers should have access to consumption data in real time and control over who can access this data − Smart meters are the required enabling technology Rewarding Customers: Issues identified  Reward consumers financially for participating in demand management, energy efficiency, security and reliability improvement − Demand response is cheaper and faster to implement than new infrastructure construction − International evidence is that for long term customer participation in DR to occur, orchestrated demand response through a service provider under an agreement is preferred − An estimated 2000MW of load in the NEM is considered price responsive to a cost saving
  21. 21. 21  To obtain value from DER, dispatch needs to be coordinated to be material − Example: ARENA/AEMO 100MW demand response by December 2017  Opt in payment  Further curtailment payment  Incentivising networks to avoid capex ‒ Current model of economic regulation may not be providing enough incentive for networks to consider non-network solutions ‒ Alternate economic model: Single estimate of efficient total expenditure (totex) rather than separate capex and opex determinations Rewarding Customers: Issues identified
  22. 22. 22  As part of its existing inquiry into the retail market, the ACCC should make recommendations on improving the transparency and clarity of electricity retail prices  COAG Energy Council to remove complexities and make it easier for customers to access and share their energy data  AEMC to recommend a mechanism that facilitates DR in the wholesale energy market – draft rule change ready by mid 2018  AEMC to assess alternative models for revenue setting (totex approach) by mid-2019 Rewarding Customers: Recommendations
  23. 23. Stronger Governance
  24. 24. 24  No agency currently has explicit responsibility under legislation to track emerging risks in relation to the power system − A new body is required to:  Report on Health of the NEM  Report on actions being undertaken to respond to risks  Provide whole of system oversight for security and reliability  Market body boards, have insufficient power system engineering representation − AEMO in particular requires network expertise on the board, currently only has generation, retail and energy market backgrounds Governance: Issues identified  Response to change: NER have failed to keep up with changes in technology and the NEM − Time taken for end-to-end rule changes too long (one year) − Existing NER too long and too complex
  25. 25. 25  AER needs a data strategy to ensure: − Visibility of DER − Consumption data sharing − Changing drivers of demand & demand forecasting − Note: CSIRO Energy Use Data Model will help address this issue but a funding, governance structure needs to be in place to support this data gathering and provision under law  Current level of AER funding considered inadequate compared to the resource requirements and workload Governance: Issues identified  Perception of incumbency bias in AEMO due to funding model which relies on industry co- contributions  No single organisation has a complete view of the NEM – less visibility of emerging threats
  26. 26. 26  COAG to establish an Energy Security Board to implement the panel’s recommendations and provide whole of system oversight for security and reliability  AEMC or other suitable body to complete by 2020 a comprehensive review to streamline the NER  Vertigan review recommendations to expedite the rule making process be implemented by end of 2017 Governance: Recommendations  Increase funding to the AER  New skills matrix for AEMO directors to ensure power systems engineers are represented  AER to develop a data strategy for the NEM
  27. 27. 27 Acronym Definition Explanation ACCC Australian Competition and Consumer Commission Australia’s competition regulator and national consumer law authority. AEMO Australian Energy Market Operator AEMO is responsible for the administration and operation of the wholesale national electricity market in accordance with the National Electricity Rules. AEMC Australian Energy Market Commission The rule maker for the Australian electricity and gas markets. ARENA Australian Renewable Energy Agency ARENA funds innovation and shares knowledge relating to renewable energy. CET Clean Energy Target A policy mechanism that provides an incentive for new low emissions forms of energy generation to enter the market. COAG Council of Australian Governments An organisation consisting of the federal government, the governments of the six states and two mainland territories and the Australian Local Government Association. DR Demand Response A change in energy usage by a customer in response to a change in price or incentive payment. DER Distributed Energy Resources Small sources of power such as roof-top solar PV, diesel generators, home battery storage which can be aggregated to enable a broader demand management response. FCAS Frequency Control Ancillary Services A market in the NEM under which participants bid for the provision of active power to regulate power system frequency. FFR Fast Frequency Response An injection of active power at the right time, magnitude and phase in order to stabilise a power system following a disturbance event such as loss of a generator, or transmission line. NEM National Electricity Market The wholesale electricity market for the electrically connected states and territories of eastern and southern Australia. NER National Electricity Rules The rules which under the force of law govern the operation of the NEM. NSP Network Service Provider A business or organisation which owns and operates an energy supply network, i.e. the grid. PV Photovoltaic An electrical device which converts solar energy to electrical energy, also known as a solar cell. RIT-T/D Regulatory Investment Test – Transmission/Distribution A cost benefit analysis process required to be followed by NSPs for investment in regulated asset network augmentations of a cost over a particular threshold. SCC Short Circuit Current The magnitude of electrical current that flows under short circuit (fault conditions). SCC is a measure of the strength of the power system at a particular location. VRE Variable Renewable Energy An energy resource which is non-dispatchable, i.e. the fuel source is fluctuating and not controllable such as wind or solar power. Glossary
  28. 28. 28 Discuss the Finkel Review Dr Alex Wonhas Managing Director, Energy, Resources & Manufacturing E: alex.wonhas@aurecongroup.com Paul Gleeson Energy Leader, East Coast Australia E: paul.gleeson@aurecongroup.com Aneetha de Silva Managing Director – Government E: Aneetha.deSilva@aurecongroup.com Victor Young Client Director – Energy, ANZ E: victor.young@aurecongroup.com
  29. 29. Follow us on www.twitter.com/Aurecon Join us on www.facebook.com/Aurecon Watch us on www.youtube.com/user/AureconGroup Follow us on www.instagram.com/Aurecon Follow us on www.linkedin.com/company/Aurecon Follow us on www.slideshare.net/Aurecon

×