A few days before he was rolled from the top job, Malcolm Turnbull said “We will not hesitate to use a big stick, as we did with gas, to make sure the big companies do the right thing by you, their customers.”
Well the latest quarterly update from the AEMO shows just how effective that “big stick” was with the gas companies. The AEMO reports notes that:
“Wholesale gas prices increased across all markets compared to Q3 2017 despite a year-on-year reduction in demand (largely due to reduced gas-powered generation (GPG) demand). Average quarterly gas prices in the Declared Wholesale Gas Market (DWGM) in Victoria and Brisbane’s Short-Term Trading Market (STTM) were the second highest on record.
And it doesn’t look like getting better any time soon.
“2019 electricity futures prices rallied over the quarter, particularly in Victoria and New South Wales. This coincided with: a reduction in hydro dam levels in mainland Australia; relatively high gas prices (coupled with some expectation of this continuing into 2019); forecasts of a hot and dry start to 2019; and concerns over the potential delays to the connection of new renewable projects to the grid.”
Luckily, Tasmanian hydro stepped up.
“The quarter recorded the highest NEM hydro generation since 2013, underpinned by record quarterly hydro output from Hydro Tasmania, which contributed to:
- Tasmania’s wholesale electricity price reducing substantially (to $43/MWh) as Hydro Tasmania changed its market offers to increase output. Practically, the change in bidding translated to an additional 1,000 MW offered below $50/MWh compared to previous quarters – an 88% increase.
- Comparatively high levels of inter-regional transfers north on Basslink and the Victoria to New South Wales interconnector. Total inter-regional transfers during the quarter were 18% higher than in Q2 2018, and were at their highest level since Q4 2016.”
Wind and solar also upped the ante.
“Over 1,200 MW of new large-scale solar and wind capacity began generating during the quarter. The amount of large-scale solar capacity that commenced generation during the quarter is higher than the NEM’s entire large-scale solar capacity at the start of the year. This, coupled with favourable wind conditions, led to record quarterly variable renewable energy (VRE) output which contributed to:
- GPG continuing its downward trend in 2018: year-to-date GPG at the end of Q3 2018 was at its lowest level since 2006 and 21% lower than in 2017. Q3 2018 was the first quarter on record in which wind output has exceeded GPG.
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Quarterly NEM emissions reaching their lowest level on record, both in terms of total emissions and average emissions intensity.
The South West Interconnected System (SWIS) reached over 1 GW of rooftop PV and solar farm capacity installed. High amounts of small-scale PV are resulting in falling minimum daytime demands as well as an increase in the occurrence of negative prices.
While the overall movement in average demand varied geographically, one element was consistent across all NEM regions – “the impact of small-scale PV in reducing operational demand in the middle of the day. Increased small-scale generation has the effect of offsetting consumption, thereby lowering the overall grid demand for electricity. This is a trend that has been increasing over time as the level of installed small-scale PV capacity continues to rise.”
While renewable generation in the NEM reached record quarterly levels, the New South Wales black coal-fired generation fleet recorded its lowest availability since Q2 2016, largely due to extended unit outages at Bayswater and Vales Point power stations. Average generation from Queensland’s black coal-fired fleet reduced by 155 MW compared to Q3 2017 despite a 265 MW increase in average availability. The reduction in output was due to an increase in the duration of lower priced periods: Queensland’s wholesale price was below $60/MWh 36% of the time during the quarter, compared to 15% of the time in Q3 2017. This contributed to reductions in average output at price sensitive generators including Tarong and Stanwell power stations (-249 MW and -160 MW, respectively), with Millmerran Power Station reducing average output by 268 MW due to lower availability.
Brown coal-fired generation was steady compared to Q3 2017, but reduced by 216 MW when compared to Q2 2018, largely due to reduce availability and output from Loy Yang A Power Station.
We have heard many times the dubious claim that the South Australian blackouts were due to their reliance on wind energy. But no-one seems to point out when things go the other way.
On Saturday 25 August 2018, at 1311 hrs, the NSW-QLD interconnector (QNI) tripped, separating Queensland from the rest of the NEM. This also resulted in activation of the Heywood Emergency Control Scheme and separation of South Australia from the rest of the NEM. There was also approximately 1,110 MW of under-frequency load shedding in New South Wales, Victoria, and Tasmania. Market impacts included:
- “The South Australia spot electricity price reduced to around -$450/MWh, due to the loss of export to Victoria which caused a temporary excess of supply in South Australia. Prices rapidly recovered to pre-event levels.
- Queensland’s energy price increased to around $1,400/MWh for a single dispatch interval.
- More than $10 million in frequency control ancillary service (FCAS) costs incurred – all mainland regions recorded FCAS prices at the price cap of $14,500/MWh.”
Key drivers of system strength directions during the quarter included periods of relatively low prices (<$50/MWh) and high wind output (>1,100 MW) which resulted in synchronous generators seeking to decommit from the market for commercial reasons.
This seems to be a common practice. If the price gets too low, the generators shut up shop.
But don’t expect to hear any of this from the COALition.
