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Australian February 2020 Energy Market Report

A collaboration between SavvyBI, Savvyplus and Empower Analytics, a complete monthly review for the Australian Energy Market.
AEMO
Forward Market
LGC
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Australian February 2020 Energy Market Report

  1. 1. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 Feb 2020 Monthly Market Report National Electricity Market
  2. 2. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 2 Executive Summary The Australian energy market is not immune from Coronavirus as soft demand for LNG in Asia is infecting the domestic gas market, setting gas prices equal to the levels of 2016. Not quite the levels of the ramp-up gas period of 2012 to 2015, but nevertheless much softer than the last few years. Domestic natural gas prices for the month were the highest in Adelaide with an average of $6.96/GJ, and the lowest was Brisbane with $5.46/GJ. Tasmania had the lowest average spot power price being below $40/MWh, while South Australia which was impacted by the Heywood interconnector outage, was the highest price at over $64/MWh. VIC solar farms in the dreaded “Rhombus of Regret” of the West Murray region, with the addition of the Broken Hill solar farm, continue to have 50% of their output curtailed. Further adding to their pain were recently announced draft Marginal Loss Factors, where the same solar farms have had their MLF reduced even further. This month’s report includes an update on the growth of wind and solar capacity in the NEM. In the period 2016-2018, there was commissioning of around 1.7GW of wind capacity, and 2018 had a colossal jump of almost 2GW of solar farm connections. Over the past year the growth of both wind and solar capacity has been constant and there are more than 50GW of proposed wind and solar projects (not far off the current installed capacity of the NEM at around 60GW). Although the new connections growth rate is expected to slow. Also in the news this month was the falling price of batteries. Market expectations sees the cost of batteries falling by around 65% by 2032, a view that reflected by investor appetite for batteries, as shown by the likes of AGL and Origin. AEMO’s ISP forecasts meanwhile, are soft on batteries, based on CSIRO forecasts which show only a 33% fall in costs by 2032. Also reviewed in this month’s report is the triggering of the Retailer Reliability Obligation by the SA Energy Minister in response to forecasted Reliability Gaps for 2022 and 2023. Lower wholesale gas prices led to gas- powered generation monthly market share increase by 1.2% taking the market share to 9.2% across the NEM. After a string of record levels of LNG exports in the past year, exports for February were at their lowest level in six months. Given that February 2020 had an extra day than last year, the daily export quantity was lower than the previous year by about 400 tonnes/day. The soft domestic natural gas prices impacted power prices, with February delivering the lowest February prices in all States since 2016 for NSW, Vic and SA; and the lowest since 2015 for Qld and Tas.
  3. 3. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 5 Feb, The Energy Users Association of Australia, which represents large power and gas consumers, has said that it fears that AEMO’s role as market operator and responsibility for network security and reliability may lead to over-investment in grid infrastructure. The EUAA claims there hasn’t been an appropriate level of meaningful consultation and transparency to accept on face value that the actions of AEMO have been in the best interest of consumers. 3 Market News Headlines 19 Feb, EPC contractor Signal Energy Australia are to design and build the Glenrowan West Solar Farm. Signal Energy Australia has partnered with German investment company WIRTGEN INVEST for their first Australian investment in the Renewables. Construction is due to begin early this year and to be completed by March 2021. Signal Energy Australia to build 149MW Solar Farm 13 Feb, AGL’s CEO Brett Redman has said that battery prices are coming down and that new battery installations have grabbed a big share of the Frequency Control and Ancillary Services (FCAS) market. AGL has announced two major battery storage projects in recent months. A 200MW/400MWh project with Maoneng in NSW and another 100MW/150MWh battery in QLD with Vena Energy. AGL has two other large battery projects in the pipeline, in Broken Hill and Liddell. AGL says batteries at tipping point 13 Feb, UPC has announce plans to build a huge 800MW wind farm in central-western NSW. Battery storage is also being considered as part of the project. The “Valley of the Winds project” will be situated between the towns of Coolah and Leadville UPC eyes another massive wind farm in NSW Big energy users wary of grid over-investment 3 Feb, Tomago’s CEO has expressed fears that the Tomago aluminium smelter will have to increasingly switch off in the absence of the Liddell coal-fired power station post 2023. He said he doubted whether the grid would cope during times of extreme demand without coal baseload generation. The Tomago smelter took almost 2 weeks to return to full capacity after its partial shutdown Friday 31 Jan during the extreme weather event. Tomago expresses post-coal fears 3 Feb, In a briefing to industry players this morning, AEMO announced that it would be directing SA’s three grid scale batteries to operate in a mode that would stabilise the “islanded” SA region until interconnection with VIC could be restored. AEMO takes control of SA batteries during crisis 7 Feb, as part of the drive for lower energy prices, the Federal Government plans to spend $6m in Queensland on prefeasibility studies for 2 “high energy, low emissions” generating coal generating plants at Collinsvale ($4m-1GW) and a hydroelectric plant as part of the Urannah Water Scheme ($2m-1.5GW). QLD feasibility studies for Coal and Hydro Feb 17, Bald Hill residents are off to Victorian Supreme Court to ask to hear the health and financial impact on 12 residents through the wind farm operations; 52 turbines and produces 380,000MWh per year. The applicant has asked for a judge and jury to hear the case and set to start in April Bald Hill wind farm off to court Feb 6, AEMO paid out $15.1m on Jan 31 to secure 6 reserve contracts (134MW-NSW) and nine reserve contracts (184MW-VIC) to avoid large scale blackouts, due to the lack of reserve which lasted 4.5hrs in NSW and 5.5hrs in VIC. This is in spite of 3700MW coming in since 2018-19, AEMO estimated it would spend $44m for 1500MW of short to medium energy shortfall this summer. AEMO takes control of batteries to meet supply Feb 6, Shell has committed to its first large scale solar project, 120MW, known Gangarri, as part of it’s move into renewable energy. This follows Shell’s $617m takeover of ERM Power and 49% stake in solar developer ESCO Pacific. This is to supply power to the QGC coal seam business in Queensland, is part of their global integrated power business. Shell first solar project Feb 17, The federal government has urged gas producers to pass on the recent cost savings in gas production. The ACCC, in its half yearly report has said east cost crisis is easing, however accuses producers of “warehousing” gas, not bringing gas to market, therefore reducing prices from the current $9-12GJ with the softening Asian market. Export prices are expected to fall from $7.75/GJ to $4.89/GJ. ACCC says gas price reductions not passed on Feb 20, Federal Energy Minister, Angus Taylor, through ARENA has made available $1.25m to develop the Australian Hydrogen Centre (AHC). This is pathway to facilitate hydrogen research and projects. To date there is some $180m committed to hydrogen research development projects.. Hydrogen Centre announced
  4. 4. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 Feb 6, Tomago, the nation’s largest power consumer sees gas as the answer for continued power supply for its operations. CEO Howell, not a renewables sceptic, outlines how the business and with firmed renewable power (wind with gas) at $70/MWh is not viable for continuous operation. Gas he said was the logical answer, however was currently too expensive to firm/compliment renewable energy. 4 Market News Headlines Feb 20, AGL has cancelled it proposed pumped hydro project with its partner Hillgrove resources at their Kanmantoo mine. There is no ongoing obligations by either partner. AGL still indicate their intentions to proceed with renewables, in spite of a deal not being secure. AGL cancels SA pumped hydro project Tomago sees gas as answer Feb 10, Large scale wind and solar developers warned of further constraints of up to 7 years with AEMO delay in infrastructure to connect into the grid. In response AEMO pointed to the physics of the grid being unable to connect and distribute the power. Further, AEMO’s ISP does not see this being fixed by 2026-27. The challenge seems to be in West Murray zone, where AEMO is looking to synchronous condensers to assist in grid stability with renewables entering the system. Large scale wind and solar face long term constraints Feb 20, ARENA announced further work for their AHC to investigate blending up to 10% hydrogen to the existing gas network. This work will be supported by the Victoria and SA governments. In SA this will be undertaken at the Tonsley Innovation Centre (Hydrogen Park SA), being seen as a H2 hub for a range of hydrogen innovations. Hydrogen and gas networks Feb 22, Negotiations for continuing Alcoa's subsidy for the loss making Portland Smelter by the Victoria government hit a snag when the ATO said they have to pay an additional $212m in tax. Alcoa do not agree, stating it is a statement of claim through the audit process. The tax subsidy in 2018 was $250m. Further Alcoa have said Victoria has the most expensive energy on the planet. Alcoa, ATO and subsidies Feb 23, Energy Security Board (ESB) report, while supporting solar as cost effective and cheap power, warns the grid is a critical stage for continual firm power, with the advent of abundant cheap renewable generation. ESB forecasts renewables to go from 16% in 2018-19 to 27% 2022 to 40% by 2040. Further ESB notes the current system was not built for renewables and there is need for developments in technology and infrastructure for secure and stable NEM. ESB warning for grid stability Feb 25, National Parks Australia (NPA) have released an assessment of Snowy Hydro 2.0 and have found the assumptions used in the assessment are flawed and grossly over stated. The report states the environmental impact to the Kosciusko National Park did match the benefits of the system, being located far from the major centres, requiring significant transmission investment to deliver the energy. Further, losses from the round trip efficiencies could be as high as 40%. Using an ANU study, NPA says they better opportunities in other dams and emerging storage technologies for dispatchable generation. National Parks blast Snowy 2.0 Feb 23, AEMO issued a statement around the challenges of integrating renewable energy to the West Murray zone. Currently there is 1700MW with a further 600MW being commissioned and the same again in planning, however the limit of 1700MW thermal network transfer to the NEM will cause constraints to be imposed. It is further proposed that for renewable developers to connect they will need to fund the network connection and any work required for the surrounding network. This is all part of AEMO ISP development for the NEM to meet the changing energy landscape Challenges for West Murray Zone Feb 17, QEnergy and People Energy have executed a 10 year PPA on a fully standardised and digitised contractual architecture, enabled by WePower’s energy tokenisation technology. The PPA is valued at more than $10m is drawn from Robinvale 9.6MW solar power plant. People Power are looking to WePower platform to optimise wholesale energy procurement strategies in a challenging market. WePower and 10year PPA Feb 6, the Australian Energy Regulator announced the continuing fall in energy prices (Q4 2019) through the NEM. While there were a number of $5,000/MWh price points during the quarter, the volume weighted average price was 10-20% lower across the NEM, with $65/MWh in Qld to $87/MWh in SA. The extreme heat during the later part of the quarter stopped the price reductions from being lower. This was further supported by generator stability, meaning the reserve was not called on during the quarter. AER highlights continuing fall in energy process
  5. 5. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 5 NEG RRO activated in SA The South Australian Energy Minister triggers the Retailer Reliability Obligation AEMO’s Short-term reliability outlook (2-5 years) published in the 2019 Electricity Statement of Opportunities (shown below) indicated no expected unserved energy for SA. The current revised STPASA outlook now exceeds the Reliability Standard for January 2022 and January 2023 periods. In response to this the SA Minister for Energy has issued a T-3 Reliability Instrument effecting these periods. The Retailer Reliability Obligation (RRO) was set up as part of the National Energy Guarantee (NEG), as a mechanism that would require retailers to hold sufficient contracts linked to firm capacity from dispatchable generation in order to ensure system reliability. The RRO follows a process as summarised below: ESOO 2019: Expected unserved energy, 2019-20 to 2028-29, AEMO 1. The RRO is triggered when a Reliability Gap is forecasted by AEMO that exceeds the Reliability Standard of 0.002%. 2. The RRO process can start anywhere up to 15 months prior to the forecasted Reliability Gap and begins by the Minister of Energy issuing a T-3 Reliability Instrument and beginning consultation with AEMO and the AER. 3. Within one month of the issuing of the T-3 Reliability Instrument the Market Liquidity Obligation is applied to specific large generators requiring them to make capacity available for trade to cover the forecasted Reliability Gap. At this stage AEMO will also run the Voluntary Book Build process, which provides a platform for matching potential buyers with sellers of RRO contracts for the Reliability Gap Period. 4. If, 15 months prior, the forecasted Reliability Gap still exists the AER will issue a T-1 Reliability Instrument. At this time AEMO by commence procuring Reliability and Emergency Reserve Trader (RERT) contracts. 5. 12 months prior to the forecasted Reliability Gap is Contract Position Day (CPD) where liable retailers are required to report on the volume of RRO contracts held for the Reliability Cap period. 6. Reliability Gap period begins and last for the period determined by the T-1 Reliability Instrument. 7. Following the completion of the Reliability Gap, if actual demand exceeds AEMO’s 1 in 2 year (POE 50) maximum demand forecast, the AER will investigate whether liable parties held sufficient contracts to cover their RRO requirements. Non-compliant parties could be liable for fines of up to $10m as well as a share in RERT costs of up to $100m.
  6. 6. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 6 AEMO MLF Report FY-20/21 AEMO has published their Draft Marginal Loss Factor (MLF) report for FY-20/21, with the final report due on 1 April 2020. The draft MLFs for FY-20/21 show solar farms located in the infamous “rhombus of regret” as well as solar farms in the far west of NSW have had their marginal loss factors slashed. The Limondale Solar Plant in NSW was the worst hit, with it’s MLF degraded by more than 10% compared to the previous financial year. Broken Hill Solar Farm was also hit hard with its MLF being degraded by a further 7%. Both solar farms have the worst MLF in the NEM at just over 0.7. MLFs for the three most north- west Victorian solar farms also suffered a heavy blow falling below 0.8 for the coming financial year. AEMO releases draft Marginal Loss Factor report for FY-20/21 Generator Description Region 2019-20 MLF 2020-21 MLF Change % Change Karadoc Solar Farm VIC 0.8097 0.7641 -0.0456 -5.6% Bannerton Solar Farm VIC 0.8246 0.7717 -0.0529 -6.4% Wemen Solar Farm VIC 0.8246 0.7717 -0.0529 -6.4% Gannawarra Solar Farm VIC 0.8994 0.8693 -0.0301 -3.3% Murra Warra Wind Farm VIC 0.8885 0.8796 -0.0089 -1.0% Kiata Wind Farm VIC 0.9066 0.8865 -0.0201 -2.2% Ararat Wind Farm VIC 0.9038 0.8935 -0.0103 -1.1% Crowlands Wind Farm VIC 0.9139 0.8981 -0.0158 -1.7% Waubra Wind Farm VIC 0.9324 0.9192 -0.0132 -1.4% Yendon Wind Farm VIC 0.9612 0.9446 -0.0166 -1.7% Generator Description Region 2019-20 MLF 2020-21 MLF Change % Change Limondale Solar Plant 2 NSW 0.7872 0.7032 -0.084 -10.7% Broken Hill Solar Farm NSW 0.7566 0.7041 -0.0525 -6.9% Silverton Wind Farm NSW 0.8298 0.8332 0.0034 0.4% Coleambally Solar Farm NSW 0.8689 0.8408 -0.0281 -3.2% Uranquinty PS Unit 11 NSW 0.8671 0.8563 -0.0108 -1.2% Uranquinty PS Unit 12 NSW 0.8671 0.8563 -0.0108 -1.2% Uranquinty PS Unit 13 NSW 0.8671 0.8563 -0.0108 -1.2% Uranquinty PS Unit 14 NSW 0.8671 0.8563 -0.0108 -1.2% Finley Solar Farm NSW 0.8461 0.8576 0.0115 1.4% Griffith Solar Farm NSW 0.9063 0.8615 -0.0448 -4.9% Generator Description Region 2019-20 MLF 2020-21 MLF Change % Change Clare Solar Farm QLD 0.8596 0.8437 -0.0159 -1.8% Collinsville Solar Farm QLD 0.8585 0.8537 -0.0048 -0.6% Whitsunday Solar Farm QLD 0.8573 0.8544 -0.0029 -0.3% Hamilton Solar Farm QLD 0.8573 0.8546 -0.0027 -0.3% Mackay GT QLD 0.9062 0.8551 -0.0511 -5.6% Haughton Solar Farm QLD 0.8701 0.8616 -0.0085 -1.0% Daydream Solar Farm QLD 0.8494 0.8623 0.0129 1.5% Hayman Solar Farm QLD 0.8494 0.8623 0.0129 1.5% Hughenden Solar Farm QLD 0.8678 0.8637 -0.0041 -0.5% Kidston Solar Farm QLD 0.8678 0.8637 -0.0041 -0.5% Generator Description Region 2019-20 MLF 2020-21 MLF Change % Change Wattle Point Wind Farm SA 0.8125 0.8208 0.0083 1.0% Snuggery PS Units 1 to 3 SA 0.9474 0.9008 -0.0466 -4.9% Snowtown Wind Farm SA 0.9095 0.9179 0.0084 0.9% Dalrymple North BESS SA 0.9045 0.921 0.0165 1.8% Cathedral Rocks Wind Farm SA 0.8858 0.927 0.0412 4.7% Mt Millar Wind Farm SA 0.8935 0.9376 0.0441 4.9% Lake Bonney Wind Farm SA 0.9777 0.9506 -0.0271 -2.8% Lake Bonney Wind Farm Stage 2 SA 0.9777 0.9506 -0.0271 -2.8% Lake Bonney Wind Farm Stage 3 SA 0.9777 0.9506 -0.0271 -2.8% Angaston Power Station SA 0.9517 0.9582 0.0065 0.7% Generator Description Region 2019-20 MLF 2020-21 MLF Change % Change Bluff Point and Studland Bay WF TAS 0.89 0.8777 -0.0123 -1.4%
  7. 7. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 7 Market News Heywood Update As a result of a tornado that damaged six transmission towers in north of Colac VIC on 31 Jan, the Heywood interconnector was effectively disconnected, leading to AEMO taking a number of counter measures. These included operating the SA region as an “island” despite MurrayLink remaining in operation, the activation of Reliability and Emergency Reserve Trader (RERT) contracts in VIC and NSW, and the curtailment of four wind farms. The Heywood Interconnector outage lasted for almost 3 weeks up until 17 Feb, during which a total of 890MW of wind capacity was curtailed. The wind farms that were directed by AEMO to curtail their full capacity were: SA Canunda 44 MW Lake Bonney 1,2 & 3 274 MW VIC Portland 145 MW Macarthur 426 MW Heywood Interconnector Failure and Wind Curtailment 18 Feb31 Jan 17 Feb31 Jan
  8. 8. © SavvyPlus Consulting 1 Mar 2020 Feb 2020Market News Solar Curtailment AEMO has issued directions to five solar farms in the West Murray region to curtail their energy output after a technical fault in mid-September put the stability of the national energy grid at risk. The solar farms effected by the AEMO direction include Bannerton, Wemen, Gannawarra and Karadoc in VIC, and Broken Hill in NSW. All five solar farms have had their output curtailed by 50% which amounts to approximately 170MW less available capacity in the NEM. In the adjacent chart top-right, the comparison of the 2019 summer generation profile can be compared with the curtailed generation profile from the current summer. The generation of these solar farms since mid-September 2019 is around 265GWh, which is also the amount of generation that has been forfeited by the same solar farms. The reduction in generated energy from September 2019 is evident in the bottom chart when compared to the previous year. Five Solar Farm Curtailed since Sep-19
  9. 9. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 9 Market News Wind Generation Four large wind farms were accredited in mid-2019 and began exporting to the grid. The commissioning process has been a slow process, especially in the case of Coopers Gap Wind Farm in QLD which as only just reached 30% of it’s nameplate capacity. The commissioning of the other three wind farms also had a slow start but has picked up in last month, with Lincoln Gap and Yendon Wind Farms reaching 70% of max capacity and Murra Warra hitting 90%. Yendon Wind Farm – VIC – 142MW Lincoln Gap Wind Farm Stage 1 – SA – 126MW Coopers Gap Wind Farm – QLD – 453MW Murra Warra Wind Farm – VIC – 225.7MW Power Station Name Registered Capacity (MW) Current Max Capacity (MW) Region Lincoln Gap Wind Farm Stage 1 126 91 SA Murra Warra Wind Farm - Stage 1 225 202 VIC Coopers Gap Wind Farm 453 140 QLD Yendon Wind Farm 142 101 VIC
  10. 10. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 10 Market News New Generation The chart below shows the commissioning timeline for new wind and solar projects in the NEM since 2016. The area chart to the right shows the aggregate wind and solar installed capacity over time for the entire NEM. From the charts it is evident that 2016 and 2017 was the golden age for wind projects with some 1,680MW commissioned. In 2018 it was Large Scale Solar’s turn to shine, with almost 2GW of new capacity added. More than double the new wind capacity added during the same period. During 2019, more than 1GW of both wind and solar capacity was added to the NEM. So far, 2020 is off to a good start, with the addition of two solar farms in QLD and the Cattle Hill Wind Farm in Tasmania. - 100 200 300 400 500 600 700 Feb Jun Nov Feb Jul Aug Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Sep Dec Jan 2016 2017 2018 2019 2020 NameplateCapacity(MW) Timeline New Entrant Capacity – Wind and Solar (MW) Solar Wind - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Feb-2016 Nov-2016 Jul-2017 Nov-2017 Jan-2018 M ar-2018M ay-2018 Jul-2018 Sep-2018 Nov-2018 Jan-2019 M ar-2019M ay-2019 Jul-2019 Dec-2019 AggregateCapacity(MW) Aggregate Wind and Solar Capacity (MW) Lincoln Gap WF & Murra Warra WF Coopers Gap WF & Yendon WF
  11. 11. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 11 Market News Storage 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2021-222022-232023-242024-252025-262026-272027-282028-292029-302030-312031-322032-332033-342034-352035-362036-372037-382038-392039-402040-412041-42 InstalledCapacity(MW) ISP -Storage capacity by year – Central Scenario Large-scale Battery Behind the Meter Batteries PHES 6hr PHES 12hr PHES 24hr PHES 48hr Snowy 2.0 AEMO’s assumptions book for the Integrated System Plan (ISP) shows a strong bias toward deep storage in the form hydro generation, particularly Pumped Hydro Energy Storage (PHES). Granted the benefits that deep storage can offer, there is still a strong case for Large Scale Batteries, but these seem to have be abandoned in AEMO’s ISP forecast due to assumptions that may not reflect the current (or future) market appetite for large scale batteries. The ISP assumes only a 10-year economic life, yet market battery farm warranties currently being offered are for 15-years. Also, the CSIRO forecasts (2018) used by AEMO, consider only a 33% reduction in large scale battery costs, while others leading market analysts like Bloomberg expect battery costs to fall by around 65% by 2032. Battery properties Property Battery storage (2hrs storage) Battery storage (4hrs storage) Virtual Power Plants (aggregated ESS) Maximum power 1 1 1 1 MW Energy capacity 2 4 2.6 MWh Round Trip efficiency (aggregated) 2 85 % Charge efficiency (utility) 90 90 % Discharge efficiency (utility) 90 90 % Round Trip efficiency (utility) 81 81 % Economic life 10 10 years Technical life 15 15 years Allowable Max State of Charge 90 90 90 % Allowable Min State of Charge 10 10 10 % ISP Draft AssumptionsNo place for Large Scale Batteries in ISP Forecast? BloombergNEF ISP Draft 2020
  12. 12. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 12 Market News Storage (Cont…) The absence of large scale batteries in the ISP forecast doesn’t correlate to current market appetite for batteries either, with a number of projects in the pipeline, a number of which are already well advanced. Presently, there are more than a dozen large scale battery projects at various stages of development in the NEM, representing 1,290MW of storage capacity. Origin Energy has stated that, due to higher than expected costs for Shoalhaven pump storage, they are exploring large batteries at 5 locations including Darling Downs (Qld), Eraring (NSW), Uranquinty (NSW), Mortlake (Vic), Morgan (SA). Project State Capacity (MW) Status Owner/Developer Sapphire Storage NSW 30 Committed CWP Renewables Newcastle BESS NSW 40 Probable RES Australia NSW Grid Battery NSW 50 Probable TransGrid Sunraysia Emporium NSW 50 Probable Maoneng Australia Buronga Energy Park Battery NSW 250 Proposed Renew Estate Uralla Renewable Energy Hub NSW 100 Proposed Walcha Energy Kaban Green Power Hub – BESS QLD 100 Committed Neoen Bungama Storage SA 140 Proposed Energy Projects Sola Robertstown Storage SA 250 Proposed Energy Projects Solar Kingfisher Storage SA 100 On Hold Lyon Solar Nowingi Solar Storage – Storage VIC 80 On Hold Lyon Solar Riverland Storage SA 100 On Hold Lyon Solar AGL/Maoneng 4 battery project NSW 200 Committed AGL/ Maoneng Wandoan Battery QLD 100 Committed AGL/ Vena Energy Broken Hill Battery NSW 50 Probable AGL Darling Downs Battery QLD TBA Proposed Origin Eraring Battery NSW TBA Proposed Origin Uranquinty Battery NSW TBA Proposed Origin Mortlake Battery VIC TBA Proposed Origin Morgan Battery SA TBA Proposed Origin Early last year AGL delivered the Dalrymple 30 MW ESCRI battery on the Yorke Peninsula in South Australia as part of a joint venture with ElectraNet. In October last year AGL announced a deal with Maoneng Group to buy capacity from four 50 MW /100 MWh batteries in NSW. They also recently announced that one of Australia’s largest grid-scale batteries (100MW/150MWh) will be built at Wandoan in Queensland under a 15-year agreement between AGL and Vena Energy Australia. They are also currently working with the New South Wales Government's Emerging Energy Program on a proposal to build a 50 MW battery in Broken Hill NSW.
  13. 13. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 13 Electricity Spot Price After near record average spot prices in VIC and NSW during January around $150/MWh, average spot prices tumbled across the NEM during February. Average spot prices in VIC and NSW were more than 60% lower than the previous month with VIC falling below $50/MWh. The average spot price in TAS fell by more than 30% during February to less than $40/MWh for the month. In SA and QLD the average spot price was about 20% lower than the previous month, with the SA average spot price at $64/MWh and QLD just under $54/MWh The risk-of-change is used to measure the potential price outcome for a relatively small change in demand (i.e. +/-100MW) in all states, except for SA and TAS which is +/-50MW. January’s risk-of-change metrics showed a strong risk- of-change for lower price outcomes for all mainland regions which we have seen play out during February. The risk-of-change metrics are now showing that spot prices are showing little risk of change for QLD, VIC and NSW. While SA shows there is still a high level of risk-of-change for lower prices. TAS which had the lowest average spot price for February is showing a high risk-of-change for higher spot price outcomes. In the intraday spot price profiles to the far right, the duck curve is evident in the median price profile, while the average price shows significant price volatility during the month, particularly in SA which experience both extreme prices and considerable negative price periods.
  14. 14. © SavvyPlus Consulting 1 Mar 2020 Feb 2020Q1-20 Spot Price Forecast 14 The dials to the right compare the current Q1-20 forward price against our spot forecast prepared in Q4-19. The lower and upper extremes of the dark grey area mark the 25th to 75th percentiles respectively, and the median is marked as the break in the dark area. QLD During January the QLD Q1- 20 forward price continued to plummet, closing at $58.75/MWh which is now below the median of our spot forecast. NSW The NSW Q1-20 forward price had a stronger rebound late in January before continuing to soften. It is currently just above the 75th percentile of our spot forecast at $88.50/MWh. VIC The VIC Q1-20 forward price also experienced a significant rally late in January, but continued to soften throughout February to close at $82.55/MWh which is just above the median of our spot forecast. SA The SA Q1-20 forward price stopped its free fall towards the end of January, but mid- February continued its path downwards to a close of $70.50/MWh which is just below the median of our spot forecast. Q1-20 Flat Swap ($/MWh)
  15. 15. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 15 Electricity Demand Compared to the same time last year, total energy consumption for February was slightly higher than the same time last year with energy consumption higher in all states except SA. SA experience the largest change in energy consumption, down 7% compared to Feb-19. Energy consumption in QLD and TAS was more than 5% higher than the same time last year, while VIC and NSW saw much smaller increases in consumption. In terms of maximum half-hourly demand levels, There were significant differences for a number of regions in comparison with last February. SA’s maximum demand was a massive 24% lower than the same time last year at just over 2,000MW. VIC was 12% and 1,000MW lower than last year. In contrast, Maximum demand was 11.5% or 1,400MW higher than the same time last year, owing to their hottest day on the 1st of February. Intraday demand overlay profiles were noticeably different during February. SA with its much lower demand and consumptions levels had a considerably compact demand profile. Such was the case in NSW excluding the standout outlier on 1st Feb. The intraday demand profiles for VIC show significant variation in demand levels throughout the month, as does Tasmania. While QLD’s demand profiles show significant variation particularly in the afternoon peak demand due to a very even spread of maximum daytime temperatures during February from as low as 24 degrees and as high as 34 degrees.
  16. 16. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 16 Consumption and Demand With low levels of intermittent generation during February it can be observed that unscheduled generation was low during the month particularly in TAS. The demand profiles also show the short burst of hot weather and associated high demand at the start of the month followed by a very uneventful remainder of the month. On the charts to the far left, total energy consumption has been decreasing over the years for NSW, VIC and SA, with last month being record low consumption for February in SA. In contrast, monthly energy consumption has been on the rise in QLD, with February being a record high month. Energy consumption for February has been relatively consistent in Tasmania over the years. In the next set of charts showing maximum demand levels, we can see that SA recorded a record low February maximum demand for February, as did VIC. In contrast, maximum demand levels in QLD, NSW and TAS were high compared to historic levels.
  17. 17. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 17 Weather Pattern In similar fashion to January, average temperatures for February were lower for all regions compared to last year, particularly in SA, VIC and TAS. The demand weighted maximum daily temperature was 1.3 degrees lower than the previous month at 22.9 degrees, and the aggregate weather exposure was significantly down from 12.7% in January to only 9.7% last month. The plot charts to the right compare maximum daily temperatures with daily total energy consumption and maximum demand levels. The considerably cooler weather in the south is evident in the lower charts. The distribution of temperature and demand is similar to last year at the lower temperatures, but the outliers are noticeably absent in VIC and SA. The charts below show weather dependent energy. As was the case for VIC (shown below), all regions experienced lower weather dependent energy during February compared to the previous month.
  18. 18. © SavvyPlus Consulting 1 Mar 2020 Feb 2020Forward Prices 18 In the risk-of-change metrics to the right show the lowest risk-of- change in the forward price in SA and TAS, slightly higher risk-of- change in QLD, and both VIC and NSW showing a high risk-of-change. In the electricity forward market, FY-20/21 forward prices continued to fall across the NEM. The FY-20/21 forward fell the most in VIC, falling by $14/MWh over the month. TAS and VIC were the next biggest movers, with both regions softening by about $8 to a close of $61/MWh. The NSW FY-20/21 forward price softened by just under $4 to close below $66/MWh, while QLD with the least movement remains the lowest FY-20/21 forward price at $53.65/MWh.
  19. 19. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 Nov Generation Mix: During February there were only marginal changes in the share of total NEM generation. The most notable change was a 1.2% decrease in black coal-fired generation to 54.5% which was replaced by an increase in 1.2% share by gas-fired generation to 9.2%. The change in share of total NEM generation by all other fuel types was less than 1%. Generation: Total generation for the NEM decreased by 8% compared to the previous month. February’s total generation for the NEM was a massive 1.4TWh lower than January at 15.6TWh. Black coal generation decreased the most during February, almost 1TWh lower than the previous month at 8.5TWh. Brown coal generation also decreased substantially, down by more than 7% compared to the previous month at 2.9TWh Market Share Non-Baseload: Non-baseload generation decreased by around 5% compared to the previous month. Wind generation saw the largest decrease during February, down by more than 15% compared to the previous month at 1.2TW. Solar generation also had a substantial decrease, down by more than 6% compared to January at 528GWh. Hydro generation was 2.7% lower last month at just over 1TWh, while gas-fired generation went up during February, 5% higher than the previous month. Outages: Outages during February were significantly higher compared to the previous month, particularly in NSW with significant outages at Bayswater which had one unit with 692MW out for most of the month and a second unit out during the first half of the month. Mt Piper had a unit with 704MW out for the second half of the month and Liddell had numerous outages throughout the month. QLD also had increase outages in the second half of February with outages at Gladstone with two 281MW unit outages, Tarong North with a 444MW outage for 18 days and Tarong with a 364MW unit out for 10 days. Callide also had a 385MW unit out for the first 2 weeks. Outages were significantly less in VIC with one unit out all month (536- 576MW) and Yallourn with 401MW out for 5 days. Generation Mix 19 Jan Feb Solar 3.31% Solar 3.37%
  20. 20. © SavvyPlus Consulting 1 Mar 2020 Feb 2020Water Storages 20 Snowy Hydro’s water storage continued to fall during February with another big month of generation for Snowy Hydro at 314GWh. The current level of 27% is at a similar level to the previous year, a level not seen since 2010. Hydro Tasmania’s average water storage level also continued its decline during February. Hydro Tas generation for February was a similar level to the previous month with 614GWh of generation. Despite the current levels of generation and decreasing storage levels, the current average storage level of 43% for February is high compared to historic levels.
  21. 21. © SavvyPlus Consulting 1 Mar 2020 Feb 2020Interconnector Flows 21 Exports across the QNI interconnector from QLD to NSW continued to favour the direction of NSW last month. Net flow towards NSW was 173GWh for February, just slightly less than the previous month. The QNI interconnector was constrained 8% of the time during the month. Interconnector flows across the NSW-VIC link were at the highest level in over a year. Net flow for the month was 201GWh towards NSW. The NSW-VIC Link was constrained 13.5% of the time, about half as often as the previous month. Net energy flow across between VIC and SA was significantly hampered by the Heywood interconnector outage during the first half of February and is still not operating at full capacity. The small amount of slow in either direction resulted in a net flow of just 9GWh during February. Due to the outage the interconnector was constrained 83% of the time. VIC continued to be a net exporter across the Basslink during February with a net flow of 50GWh towards TAS during the month. Basslink was constrained 14% of the time during February.
  22. 22. © SavvyPlus Consulting 1 Mar 2020 Feb 2020Gas Spot Prices 22 The average wholesale gas price across the DWGM fell overall from an average price of $6.30/GJ in January to $6.00/GJ last month. The Gas post price in QLD fell the most during February with an average of $5.46/GJ for the month and a close of just $4.34/GJ. The Gas price in NSW also fell below $5/GJ during the month to a close of $4.75/GJ and an average price of $5.81/GJ for the month. The average price in VIC was also fell below $6/GJ during February, while the average gas post price in SA increased to almost $7/GJ due to a rally in prices early in the month to almost $10/GJ.
  23. 23. © SavvyPlus Consulting 1 Mar 2020 Feb 2020Gas and Power Spot Prices 23 The quarterly correlation between natural gas prices and power prices are shown in the following charts, and it is clear there is a positive correlation The outliers above the trend line correspond to Q1 quarters that experienced extreme price events and high average spot prices for the period. The correlation between the wholesale gas and electricity prices highlights the role of gas generation in setting prices across the NEM, particularly when the price is above $100/MWh. Also evident from the charts is consistent correlation between the high gas prices in the past four years and elevated electricity prices. Sydney BrisbaneVictoria Adelaide
  24. 24. © SavvyPlus Consulting 1 Mar 2020 Feb 2020Summary LNG Exports 24 From the most recent information available from the Gladstone Port Authority, the total volume of LNG exports for February fell considerably compared to the previous month, from almost 2m tonnes in January to under 1.8m tonnes for February. Compared to February 2019 which had just 28 days, February 2020 had only slightly less tonnes per day at 61,600t/day compared to 62,000t/day in 2019. Exports to China during February were just over 1m tonnes. Exports to Malaysia were 246,000 tonnes for the month, while Korea received 226,000 tonnes. Exports to Japan for February were just under 194,000 tonnes and Singapore received just 67,000 tonnes of Australian LNG exports. Total exports to China for 2020 to date is 64% of all exports, with the next largest importer of Australian LNG being Korea at 14%. Malaysia has a 11% share of our LNG exports, followed by Japan at 8.6% and Singapore with 2%.
  25. 25. © SavvyPlus Consulting 1 Mar 2020 Feb 2020Enviro Spot Certificate Prices 25 The LGC spot price rallied early in the month to a high of $42/certificate but softened soon after to its February closing price of $34.25/certificate. The STC price continued climbing during February to a close of just under $38/certificate. 28-Feb-20 28-Feb-20 $34.25 $37.95
  26. 26. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 $22.98$22.33 28-Feb-19 28-Feb-19 Enviro Spot Certificate Prices 26 During January, certificate prices for VIC and NSW renewable energy schemes continued to climb. In NSW, the ESC spot price rose by just over $1/certificate to a close of $26/certificate. In Victoria, VEEC’s also climbed by about $1/certificate to a close of $23/certificate.
  27. 27. © SavvyPlus Consulting 1 Mar 2020 Feb 2020Enviro Forward Prices 27 In the LGC forward market, prices rallied in late January/early February by as much as $10/certificate in Cal-20 and Cal-21, and around $5/certificate in Cal-22 and Cal-23. The rally was short lived and price quickly returned to levels similar to where the same price point before the rally. All LGC forward market vintages closed the month at similar levels to where they began the year. The Cal-20 LGC forward price closed the month at $35/certificate, Cal-21 closed at just under $26/certificate, Cal-22 closed at $16/certificate and Cal-23 ended the month at $9/certificate.
  28. 28. © SavvyPlus Consulting 1 Mar 2020 Feb 2020 The El Niño-Southern Oscillation (ENSO) outlook show INACTIVE, meaning there is little chance of El Niño or La Niña forming in coming months. Following last year’s hottest and driest year on record, the past two months have brought much needed rain, filling dams and giving hope to drought-stricken farmers. Several local rainfall records were broken in NSW and QLD, with Sydney receiving 392mm in four days, more than the second half of 2019. The outlook for coming months is for average rainfall which is bad news for many areas still affected by drought. 28 The rainfall outlook for much of the country is for is average for most east coast, Tasmania and central Australia. Areas to the north including Darwin and Broome have a below average chance of exceeding median rainfall, while southern WA and SA have a higher than average chance of higher rainfall. Weather Report & Outlooks According to the BOM’s outlook, temperatures are likely to be higher than average for most of the north and east coast of the mainland. While the southern areas including Perth, Adelaide, Melbourne and Hobart have an average chance of exceeding median maximum temperatures. Mar-May Source: BOM Rain Relief Mar-May ENSO Outlook Temperature Outlook Rainfall Outlook v v v v 31 Dec 2019 16 Feb 2020

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