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posted on:
February
14
2018

Is 2018 the turning point for domestic gas?

 

Source: Gas Today


The Australian Domestic Gas Outlook (ADGO) 2018 conference will provide a clear picture of what’s in stall for the sector this year and what needs to be done to make it work better for all players.


Domestic gas - the outlook for 2018


Progress could be in the pipeline for Australia’s domestic gas sector. But will it be soon enough to weather a supply crunch?


On one hand, local gas demand is forecast to outstrip supply and keep prices locked in the $8-$10 GJ range this year.


On the other, a federal deal with the big three producers and a new pipeline connecting the Northern Territory to the east coast could offer relief for domestic users. But it’s obvious more needs to be done.


Demand from residential, commercial and industrial gas users, as well as gas-fired power generators, is forecast at 642 PJ in 2018, but supply is tipped to fall short at just 588 PJ according to the Australian Energy Market Operator.


The shortfall is down to a forecast four per cent fall in production driven by rising costs, a lack of local transport and storage infrastructure and the diversion of supply to international markets.


A new deal between the Australian government and Origin, Shell and Santos means the big three players will supply at least 54 PJ of gas to the domestic market, and potentially more in case of a bigger shortfall potentially brought about by increased demand.


Looking forward, the federal government has just announced a $26 million Gas Acceleration Program to fast track new supply to the East Coast, granting up to $6 million to new projects that can demonstrate good prospects for supplying gas to the market within three years.


It remains to be seen whether that will be enough to encourage producers facing various moratoriums in Victoria and New South Wales and dealing with inadequate and congested transport infrastructure between Queensland and its southern neighbours.


However, those issues could come to a head when the Commonwealth Heads of Government Energy Council has an important policy meeting in April.


Infrastructure development – any progress in the coming year?


On the infrastructure front there’s tantalising news that Western Australia Premier Mark McGowan is publicly backing the Browse Pipeline, linking Woodside’s LNG project northwest of Broome to the North West Shelf on the mainland.


McGowan revealed this week his government will expedite the development of the subsea pipeline, which will bring domestic gas to his state.


To the east, the first gas is due to flow through Jemena’s $700 million Northern Gas Pipeline (NGP) between the Northern Territory and Queensland by the end of the year, linking the NT and East Coast gas markets for the first time.


In Victoria, AGL is still awaiting state government approval of its plan to build a gas import jetty and pipeline at Crib Point in Western Port Bay, while Adelaide-based Cooper Energy continues to develop its $355 million offshore Sole Project.


Further north, Senex is on track to start producing CSG for the domestic market from its Project Atlas in southern Queensland by next year.


What can we learn from last year?


Higher gas prices are still squeezing domestic consumers, particularly commercial and industrial users.


Australia has enough gas to supply both the domestic and international markets, which is made apparent by the federal government’s supply agreement with Origin, Shell and Santos.


However, the government obviously wants to balance the need to ensure domestic gas supply while supporting the export market at the same time.


It had the ability to restrict exports in July under the Australian Domestic Gas Security Mechanism but instead opted to work with the big producers to avoid disrupting growing exports.


Challenges and how to avoid a crisis


The most critical challenge for the domestic gas sector this year will be keeping prices affordable and securing a viable long-term supply.


Continuing high prices or a supply drought are likely to push end users toward alternative energy sources like renewables.


Keeping prices sustainable isn’t rocket science; what’s needed is more competition, better infrastructure and new reserves.


Some good ways to spur innovation and competition include fostering collaboration and making data on production costs and transportation pricing more transparent.


Australia desperately needs more pipeline capacity, especially between Queensland and the southern states. One solution is to expand access to current excess capacity to include all players.


Another option - which has been put forward by the Australian Competition and Consumer Commission - is to build better storage in southern states, so that stored gas can be used to back up supply when needed.


Developing new gas reserves in the southeastern states would solve many problems. It would open up more supply for the domestic market, reduce the transportation costs and in turn put downward pressure on end prices.


Finally, finding an acceptable political solution to the highly charged issue of various state moratoria on gas exploration and non-conventional production methods is critical to the viability of the domestic gas market both now and over the longer term.


Read More: HERE

 
 
posted on:
February
12
2018

Extreme weather and disappearing coal supply in the NEM

 

Source: Renew Economy 


More grid-aches plagued Australia’s National Electricity Market over the weekend – none of them anything to do with renewables – as extreme weather flattened power lines in Queensland, faults in the poles and wires caused blackouts in Victoria, and ageing Latrobe Valley coal power generators proved once again that they cannot be relied upon.


In Queensland, the state with barely a wind farm to be seen, extreme winds and extraordinary storms with “upwards lightening” and “tennis ball-sized hail stones” flattened down power lines across the state and left around 55,000 without power.


In Victoria, meanwhile, a substation fault, this time in Boronia, cut power to more than 20,000 homes in Melbourne’s south-east just before midnight on Sunday; while a few hours before that, more than 400MW of coal-fired capacity went AWOL due to “coal supply reliability issues.”


The network fault related outages in Victoria came just a couple of hours after the state government announced that thousands of Victorians would get an “unprecedented” one-off payment in compensation for late the January blackouts that left tens of thousands of households without power during a heatwave.


As reported by RE at the time, the January 28 blackouts were caused by faults in the delivery of electricity and not the supply or generation of it, renewable or otherwise – a disappointing twist for anti-renewable campaigners in both media and politics who had been rooting for a summer black out, to boost their cause.


Rather, as absolutely everyone in the state turned their air conditioners up to 11 to cope with temperatures hovering around 40°C – and an overnight low of around 30°C – the state’s “poles and wires” (mostly substation fuses) systems were overwhelmed by demand that peaked at around 9,144MW: “the highest operational demand for a Sunday, ever,” says AEMO.


Of course, this led to different conversations about grid reliability – and the price consumers are paying for it. Now the networks are paying too.


According to the Western Advocate, Victorians who lost power for between three and 20 hours would get $80 in compensation, while those affected for more than 20 hours would get up to $180. About 50,000 people were expected to receive the payments by the end of February.


Meanwhile, on Sunday night, the substation fault wasn’t the only thing going wrong in Victoria.


At around 8pm, AEMO warned the market of a reduction of supply of a possible 1400MW of coal-fired power in the state, due “coal supply reliability issues” at two different power stations, AGL Energy’s Loy Yang A and Alinta Energy’s Loy Yang B, in the Latrobe Valley.


As Paul McArdle from WattClarity has noted, available generation was, in the end, only reduced by 420MW across all 6 units, while 960MW of additional capacity was still offered to the market,
but at a higher price.


“Given the price offered (>$300/MWh), it was unlikely this would be called on overnight, so the AEMO dispatched the output of the 6 units in aggregate down by that combined amount (i.e. 1,380MW). Important to note that whatever repair work was required was completed overnight, as AEMO had indicated, and the units are all back up around full load.”


And as The Australia Institute has pointed out, the combination of milder weather in Victoria on Sunday, and the fact that it was a weekend evening, meant the impact of this sudden lack of supply was minimal.


ut it does offer another well-timed reminder that the coal-fired power generators that the federal government wants us to fall back on in the quest for reliable supply, are not really all that reliable.


Meanwhile, in Queensland, the extent to which our grids are at the mercy of extreme weather – extremes that are only becoming more frequent as global warming worsens – was writ large, after severe storms left 135,000 south-east homes in darkness on Sunday night.


ABC News Online reports that at the height of the storm on Sunday night, more than 500 power lines were brought down in high winds and 265,000 lightning strikes were recorded.


Not much you can do about power lines being “ripped down” by wind and struck by lightening, but it does help to make the case for more distributed solar and storage in our cities.


As Brisbane and other parts of Queensland head for highs between 35°C and 41°C on Monday, the ABC reports that two schools have closed their doors to students due to the power loss, while a number of train services had been cancelled due to failing radio communications.


Energex said crews had worked through the night, but some homes and businesses might not have power restored until Tuesday afternoon. More than 55,00 homes and businesses were still without power on Monday morning, around 40,0000 of those in Logan City, in Brisbane’s south east.


Read More: HERE

 
 
posted on:
January
24
2018

Coal power producers defend record after heavy spending

 

Soure: Financial Review



Electricity generators have hit back at suggestions that the country's coal power fleet is failing consumers and leaving them exposed to price spikes and blackout risks just as power demand is set to return to full levels after the Australia Day holiday weekend.


A string of unexpected outages at coal generators including AGL Energy's Loy Yang A, Alinta Energy's Loy Yang B and EnergyAustralia's Yallourn plants in Victoria over the past few weeks has been seized on by the pro-renewables lobby as evidence that coal - rather than renewable energy - is the villain when it comes to unpredictable supply.


A heatwave across South Australia and Victoria in mid-January coincided with a brief outage at Loy Yang B and stretched the power grid despite relatively moderate holiday period electricity usage, causing the market operator to trigger demand response measures to trim the load.


The Australia Institute and Environment Victoria are among bodies putting the blame for tight power supply on, in particular, ageing brown coal generators in the Latrobe Valley, which they say cannot cope with extreme high temperatures.



 But AGL's director of operations Doug Jackson said the issues at Loy Yang A were unrelated to the summer heat but were driven by "not uncommon" problems that arose while restarting a unit after a major overhaul to ready it for peak summer demand.



Mr Jackson said Loy Yang A is showing "still above average performance" for a "middle-aged" plant and is in fact running as reliably if not more so than in previous years. Still, AGL is aiming to improve utilisation of the plant from the mid-80 per cent range, which he described as "good": to an "excellent" range of high 80s over the next couple of years.


More intense scrutiny of plants and power system by the Australian Energy Market Operator means that "our system is actually more ready now than it has been in years past," Mr Jackson said.


Generators across the sector have carried out what sources say is the heaviest ever pre-summer maintenance, at the urging of AEMO, while acknowledging that plants inevitably become less reliable as they age. AGL has pointed to repeated breakdowns at its 46-year old Liddell coal plant in NSW as evidence it needs to close in 2022.


"Significant planning and maintenance programs were carried out ahead of summer to make sure generators could provide reliable power over peak periods," said Greg Jarvis, head of energy supply and operations at Origin Energy, which owns the huge Eraring coal plant in NSW, which suffered a brief outage last week.



"Origin has worked hard to manage our fleet of coal and gas generators and we believe this is probably our best summer to date in terms of delivering reliable supply into the market."


Alinta, which earlier this month completed the acquisition of Loy Yang B for about $1.2 billion, said an unexpected trip of one unit on January 18 was rectified and the plant supplied critical energy into the market during the hot spell last weekend.


Data from the market operator show the plant is one of the most efficient and reliable coal plants in the national market, including in sustained hot spells, a spokeswoman said. During the 72-hour heatwave in Victoria last Thursday, the plant was 100 per cent available for over 95 per cent of the time, with one of two units available the rest of the time.


EnergyAustralia also defended the performance of its power plants, saying performance has been maintained, notwithstanding outages at Yallourn earlier in January for repairs.



 "From time to time things can and do go wrong, as they do with any large, complicated industrial machinery, especially ones operating in extreme conditions," a spokeswoman said.


Part of the problem is that the supply system has less spare capacity than in previous years after the closure of Hazelwood last March, increasing the market impact of outages, said Grattan Institute's Tony Wood.


"This potentially highlights why we need clear policy, not only for new investment but to keep existing plants running," he said.


Federal Energy and Environment Minister Josh Frydenberg said a national solution on energy and climate policy is "on the table" in the form of the National Energy Guarantee, "as recommended by the experts to deliver a more affordable and reliable energy system without subsidies, taxes or trading schemes."



 Campaigns by the pro-renewables lobby to highlight the supposed unreliability of coal were ignoring the problems that renewables plants could also suffer in hot weather, Mr Jackson added.


"High temperature weather extremes for two or three days in a row puts a larger system demand on and coincidentally, all generating assets have greater risk of failure - it's not unique to coal or gas," he said.


The debate comes as further evidence emerged this week of the flood of investment still pouring into renewable energy and as the Clean Energy Regulator confirmed the 2020 target for large-scale renewables will be met ahead of schedule.


This week saw financial close on Neoen's 189 megawatt Coleambally solar project in south-west NSW and on two solar farms in south-east Queensland by ESCO Pacific and Elliott Advisers, while Nexif Energy broke ground on its $450 million Lincoln Gap wind farm in South Australia.




Read More: HERE
 
 
posted on:
January
15
2018

Is Victoria's power grid prepared for a heatwave?

 

Source: THE AGE


Victoria is forecast to hit highs of 38 and 37 degrees Celsius on Thursday and Friday, while South Australia can expect to see every day this week hit 30 degrees or above, spiking to 38 degrees Celsius on Thursday, pushing state power systems to their limits.


The states' energy systems have come under fire over the last two months as a number of coal-fired power station generator unit trips have raised concerns of critical failure ahead of this heatwave. A trip or a short is when the generator experiences an outage due to an overload or failure of the system.


Over the last four weeks, AGL’s Loy Yang A power station has had at least six failures, while one of its units remains down.


Two units at Energy Australia’s Yallourn power station have also recently tripped, and suffered a false start on Monday morning.


An industry insider said Victoria's coal-fired power stations were likely to operate well, but the real test would come if the wind was not blowing in South Australia.

“It will be an interesting test into this week, and it will depend on what happens in South Australia, as there is low wind forecast,” he said.



This means South Australia could potentially be an importer, rather than exporter, of excess energy, and as New South Wales will be nearing its capacity, very little energy will be sent to Victoria, which almost matches energy generation with demand and leaves very little headroom for increases or stress to the system.


This means Victoria has a thin line between a well-functioning grid and failure.


“The system is like an old car that has lost its spare tyre, if everything is running well then the system is ok, but if any big generators go down then there are going to be big issues,” he said.


Dylan McConnell, a researcher at Melbourne University's Climate & Energy College said despite the heatwave, Victoria’s energy system is likely to hold up.


"However, it looks like there will be a challenge if Yallourn remains out of action," Mr McConnell said.


"Victoria will rely heavily on excess energy from New South and Tasmania towards the end of this week."


While the Australian Energy Market Operator has the potential to call on the Reliability and Emergency Reserve Trader (RERT) mechanism to draw down power from major energy users, Mr McConnell believes AEMO is unlikely to utilise it.


However, AEMO has issued a Level One Lack of Reserve notice for Victoria on Thursday.


This means a likely reduction in pre-determined electricity reserve levels and is released as an indicator to the market to increase generation. At this stage, it does not indicate there will be an impact on energy reliability or security.


There are three major coal-fired power stations still operating in Victoria, following the closure of the Hazelwood power station in March, last year.


The owners of both Loy Yang A – AGL – and Loy Yang B – Alinta Energy – are confident their power stations have the capacity for the heatwave.


“There are no issues expected ahead with the forecast hot weather,” Alinta chief executive Jeff Dimery said.


“Loy Yang B has contingency plans in place in the event of any unit trips and fails.”


An Alinta spokeswoman added, “Every effort has been made by the operations and maintenance team to ensure that performance is reliable during the peak loads associated with hot weather.”


AGL is also confident over the operation of Loy Yang A, a spokesman said planned maintenance had been carried out on the plant last weekend.


The operator of Yallourn, Energy Australia, believes it has prepared for hot weather and higher demand.


“All of our units are ready to go by the time the hot weather comes on Wednesday and Thursday,” an Energy Australia spokesman said.


The spokesman added that there are no planned outages or maintenance which will impact generation.


Read More: HERE


 
 
posted on:
January
10
2018

SA planning to build world's largest thermal solar plant

 

Source: The AGE


Following the success of the world’s largest battery, South Australia is aiming to build the world’s largest thermal solar plant.


SolarReserve’s $650 million, 150 megawatt Aurora solar thermal plant has received state development approval.


Construction of the facility will begin this year.


South Australian acting energy minister Chris Picton called the project a welcome development for the state.


"It's fantastic that SolarReserve has received development approval to move forward with this world-leading project that will deliver clean, dispatchable renewable energy to supply our electrified rail, hospitals and schools," Mr Picton said


“South Australia is fast becoming a global centre for the development of renewable energy with storage, with a range of other projects set to come online over the next few years.”


Commenting on the latest approvals, SolarReserve chief executive Kevin Smith said it is a major milestone.


“It is a significant step in the development of the Aurora solar thermal power station, which will bring clean power generation technology to South Australia,” Mr Smith said.


The Clean Energy Council executive general manager Natalie Collard told Fairfax Media, "the price that the government will pay for power is remarkably low, considering solar thermal is a very young technology in Australia.


"The state has taken a series of positive steps towards greater energy independence which are really starting to pay off. And it has already met its target of 50 per cent renewable energy almost a decade early," she said.


“South Australia is providing the rest of the country a glimpse of a renewable energy future. Our electricity system is rapidly moving towards one which will be smarter and cleaner, with a range of technologies providing high-tech, reliable, lower-cost power."


The power plant will be able to generate 500-gigawatt hours of energy annually, providing power to around 90,000 homes, with eight hours of full load storage.


Once constructed, the facility will be the world’s largest single-tower solar thermal power plant.


It works by using multiple heliostats - which are in essence turning mirrors - to focus solar energy onto a single central tower.


This tower uses molten salt technology to store this heat, which it can later use to create steam to turn a turbine and generate electricity when needed.


The plant will displace the equivalent of 200,000 tonnes of CO2 annually.


Australia has two other large-scale solar thermal plants, a 44-megawatt plant at Kogan Creek in Queensland, and a small 9.3-megawatt facility built to support AGL’s Liddell coal-fired power plant in NSW, although neither is a single-tower style of thermal solar plant.


South Australia drew international focus late last year when, in a partnership with Tesla, it installed the world's largest single battery unit, capable of powering 30,000 homes.


The new plant will be located 30 kilometres north of Port Augusta, in South Australia.


 


Read More: HERE

 
 
posted on:
January
09
2018

Can the power grid survive another heatwave?

 

Source: The AGE


On Sunday, Australia became the hottest place on earth, stretching the east coast’s energy grid as it attempted to supply the increased demand.


However, Saturday was the first real test of the National Electricity Market's reliability in 2018 after its failures in the summer of 2016-17, and whether the Australian Energy Market Operator’s new summer power plans are strong enough to prevent massive blackouts as the grid comes under pressure during heatwaves.


Late last year, AEMO announced it was adding almost 2000 megawatts of additional power for the summer ahead, which it said would more than replace the 1600 megawatts taken offline after Victoria's Hazelwood brown coal-fired power station closed in March.


These additional megawatts were called upon over the weekend as all states in the NEM saw high temperatures, with South Australia reaching an average high of 46.7 degrees Celsius, Victoria seeing up to 45.2 degrees Celsius, and NSW and Queensland hitting 46.1 and 45.4 degrees respectively, while Tasmania saw an unusual high of 35.8 degrees, increasing energy demand across the entire grid.


Grattan Institute energy director Tony Wood told Fairfax Media the grid performed well, and AEMO had learnt the lessons of last summer.


“They’ve learnt from the experience of not being prepared,” Mr Wood said.


However, this was helped by the fact the heatwave event occurred over a weekend in early January as opposed to later in the year, or during the business week when most heavy industries are operating at scale.


This was echoed by Federal Energy Minister Josh Frydenberg.


“Fortunately it was on a weekend, so it wasn’t business as usual activities for the commercial and industrial sectors,” Mr Frydenberg told 2GB on Monday.


Looking forward, he said the skills of AEMO would be tested.


A spokesman for AEMO said the NEM performed as planned, despite the heatwaves.


“We’re happy to say that the NEM performed very well over the weekend with no lack of reserve conditions occurring across any of the states,” he said.


As such, it did not require any major power users, such as smelters, to reduce their energy consumption.


Renewable energy also played a role in supporting the NEM’s reliability, with wind, solar, and hydro providing up to 41 per cent of Victoria’s energy, meeting 36 per cent of that state’s peak demand.


None of the states reached their respective record peak operational demand levels, although NSW’ grid was stretched on Sunday, with a number of small blackouts occurring as it sweltered in the hottest day in 80 years. It drew on power from other states to reach a total operational demand level of 12,319 megawatts.


An Ausgrid spokeswoman said many of these outages “were caused by significant loading due to heavy air conditioning use by residents, some outages were also caused by underground cable faults”.


A spokeswoman for Endeavour Energy, which distributes power to the western Sydney suburb of Penrith, whose temperature reached 47.3 degrees on Sunday, said it experienced no major issues, providing a positive forecast for future heatwave events.


“We had no major heat-related problems in zone sub-stations yesterday,” she said.


"Our summertime preparedness plan also includes steps to configure the network on very hot days to prevent overloading. This provides extra capacity normally used for network security, to help meet extra customer demand for power; and agreements with large customers to curtail load if and when necessary.


"We didn't need to use of any of these requests yesterday as our load of 3399 megawatts fell short of the previous record of just over 4000 megawatts, set on 30 January last year as temperatures hovered around 43 degrees across western Sydney.”


While the energy distribution network was stable, electricity prices spiked.


The NSW power spot price leapt to $146.69 a megawatt hour at 5pm on Sunday, 50 per cent above the state’s average 2018 first-quarter electricity futures price of $97.50 a megawatt hour.


Mr Wood said the two differing days – one of hot weather across the NEM and extreme heat across a single state – provided an opportunity to see how the NEM could perform under stress, particularly ahead of the historically high demand period of February.


“The real test is still yet to come.”


Read More: HERE



 
 
posted on:
November
22
2017

Power Plant failures push VIC energy grid close to the edge

 

Source: The AGE


Victoria's strained energy network is about to face its first real test of the summer – several days before summer has even started.


This week's mild November heatwave and the recent failure of two coal-fired power units in the Latrobe Valley have drained the state's energy grid of reserve supply and pushed it towards the danger zone for blackouts.


The Australian Energy Market Operator issued two notices Wednesday afternoon forecasting a lack of reserve in the energy grid as the temperature soars towards the mid-30s on Thursday and Friday afternoons.


The level one alerts are a signal that there is a shortage of back-up energy, meaning any further unanticipated loss of capacity or spike in demand has the potential to cause blackouts in parts of the state.


They are not a signal that blackouts are expected, but merely a warning for the energy market to take steps to provide extra reserves.


The alerts have been triggered by a huge drop in capacity at Victoria's Latrobe Valley plants in the past month, due to two sudden system failures. 

 

On Saturday one of Yallourn's four generation units was switched off after a boiler failed. It is still under repair.

A second unit was switched off months ago for maintenance.


Last month one of four units at the Loy Yang power station failed. It remains under repair.


The two temporary malfunctions at the Loy Yang and Yallourn have reduced Victoria's energy capacity by about 1300 megawatts and  drained the state of more than 10 per cent of its peak period energy supply.


The failures follow the permanent closure of the 1600-megawatt Hazelwood power plant in March.


The dramatic drop in available coal-fired power has forced Victoria to import large amounts of energy from South Australia, Tasmania and NSW this week and to burn more gas, contributing to spikes in the wholesale energy price in the past week.


The price in Victoria has soared from an average of about $80-$90 per megawatt hour this month to well over $200 in this week's heatwave.


Read More: HERE

 
 
posted on:
October
17
2017

A better energy future for Australia

 

Sourced: Department of the Environment and Energy 


The Australian Government is powering forward with a plan that will deliver an affordable and reliable energy system that will also help meet our international commitments.


As our energy system transitions, we must ensure there is enough electricity generation to supply households and businesses reliably while delivering affordable power.


Our plan to address Australia’s urgent needs and prepare for the long term is based on engineering and economics.


The Government has already taken steps over the past 12 months to address generation, network and retail costs, while pursuing reforms that place an emphasis on well-regulated markets and technology.


Building on this comprehensive package, the Government is acting on the Chief Scientist’s recommendation that new measures are needed to improve reliability and investment certainty in the electricity sector. To do this, we will take the advice of the independent Energy Security Board and implement a new National Energy Guarantee.


“… we need reliable, affordable and secure baseload. For the first time in 10 years we are finally addressing all three.”


Paul O’Malley, CEO, BlueScope Steel


Tackling the energy ‘trilemma’


A decade-long failure to effectively integrate energy and climate policy has created uncertainty in the market, affecting investment decisions and therefore prices and reliability.


Affordability


Household electricity prices as at June 2017 have more than doubled over the past decade. Since 2007, this has been driven by network costs and, most recently, generation costs due to high gas prices.


Reliability


South Australia’s statewide blackout in 2016 and the February 2017 load-shedding events in New South Wales and South Australia were wake-up calls. They threw the spotlight on the energy challenges facing Australia with a greater reliance on intermittent sources of generation and a more decentralised grid. They indicated that the National Electricity Market (NEM), designed in 1998, was no longer fit for purpose.


Emissions


Australia’s emissions per capita and per GDP are at their lowest levels in 27 years, and emissions in the electricity sector have fallen over the past two quarters as coal-fired power stations have closed and demand has flat-lined. But this cannot come at the expense of the reliability and affordability of our electricity system.


It is in these challenging times that the Government is powering forward with our energy plan.


A National Energy Guarantee


To respond to these challenges, the Government will implement a National Energy Guarantee, as recommended by the independent Energy Security Board.


Formed out of the Independent Review into the Future Security of the National Electricity Market (the Finkel Review), the Energy Security Board comprises an independent chair and deputy chair along with the expert heads of the Australian Energy Market Commission (AEMC), the Australian Energy Regulator (AER) and the Australian Energy Market Operator (AEMO).


The Guarantee is made up of two parts that together will require energy retailers and some large users across the NEM to deliver reliable and lower emissions energy generation each year.


reliability guarantee will be set to deliver the right level of dispatchable energy—from ready-to-use sources such as coal, gas, pumped hydro and batteries—needed in each state. It will be set by the AEMC and AEMO.


An emissions guarantee will be set to contribute to Australia’s international commitments. The level of the guarantee will be determined by the Commonwealth and enforced by the AER.


This two-part Guarantee, proposed by the Energy Security Board, will deliver affordable and reliable energy for households and businesses without subsidies, taxes, emissions trading schemes or carbon prices. It is a market-based solution that will integrate energy and climate policy to deliver a more affordable, more reliable and lower emissions energy system.


Past approaches have ignored reliability and affordability, rewarding some industries, punishing others and slugging consumers. We are taking a very different course. The National Energy Guarantee does not pick winners—it levels the playing field and is technology-neutral.


The Energy Security Board says these obligations will encourage much-needed investment in the electricity sector.


Based on Energy Security Board advice, it is expected that the Guarantee could lead to a reduction in residential bills in the order of $100–115 per year over the 2020–2030 period.


 


Read more : HERE


 


 

 
 
posted on:
September
27
2017

13 terms you need to know in Australia's energy debate

 

Source: Business Insider  


Australia’s energy market is a prominent fixture in our daily news cycle. Amid the endless ideology and politics swirling around the sector, technical terms such as “baseload power” and “dispatchable generation” are thrown around so often that there is a danger the meaning of these terms can get lost in the public debate.


The term “energy crisis” is bandied around quite loosely with some confusion around whether the crisis is about prices or security of supply. The politics of this are infernal and largely avoidable if all sides of politics had paid consistent and principled attention to energy policy over the 20 years since the formation of the National Energy Market.


It’s worth setting the record straight on the meaning of some of these terms and how they relate to climate policies, new technologies and the progression of market reform and regulation in Australia.


This glossary, which is by no means exhaustive, is a first step.


Baseload power


Baseload power refers to generation resources that generally run continuously throughout the year and operate at stable output levels. The continuous operation of baseload resources makes economic sense because they have low running costs relative to other sources of power. The value of baseload plants is mostly economic, and not related to their ability to follow the constantly varying system demand.


Baseload plants include coal-fired and gas-fired combined-cycle power plants. However, Australia’s international commitment to reduce carbon emissions is curtailing the economic viability of traditional baseload sources.


Wholesale market (the “National Energy Market”)


The term National Energy Market is confusing because it refers to a competitive market for wholesale energy mostly on the east cost of Australia. It doesn’t include Western Australia or the Northern Territory and also includes the gas system. The National Energy Market allows all kinds of utility-scale power resources to connect to transmission system to meet large-scale power requirements.


However, industry talk about the “energy market” or even the “NEM” can also refer to the entire supply chain that includes the networks for voltage transmission, and medium- and low-voltage distribution as well as the retailing to the end consumer. The prices consumers see include all these aspects of the supply chain. This can add significantly to confusion.


 The wholesale market is referred to as a “market” because there is competition between generators. Each generator places daily price “bids” to sell power and adjusts quantities in up to 10 price bands every five minutes. In this way, the sale of power is matched to the available energy and performance of the generating unit.

The market works to efficiently dispatch all variable and “dispatchable” resources to minimise the cost of electricity. The Australian Energy Market Operator (AEMO) co-ordinates the National Energy Market.


Wholesale price


The wholesale “spot” price at which power is traded in the NEM is based on the highest accepted generator offers to balance supply and demand in each region. This is intended to encourage efficient behaviour by generators, as well as to co-ordinate efficient directing of resources.


Storage


Storage refers to energy captured for later use, typically in a battery. Electricity has been expensive to store in the past, but the cost of storage is expected to continue to fall with the improvement of battery technologies. For example, lithium-ion batteries were developed for mobile communications and laptops but now are being upscaled for electric vehicles and utility-scale energy storage.


Read More: HERE

 
 
posted on:
September
27
2017

Australia's east coast LNG producers avert export curbs

 

Source: Reuters


*LNG exporters vow to meet projected 2018 gas supply gap


* No guarantee given on price


* Competition watchdog to keep close eye on gas bids, offers (Adds Shell, APLNG, ACCC comments)


By Tom Westbrook and Sonali Paul


SYDNEY/MELBOURNE, Sept 27 (Reuters) - Australia’s three east coast LNG plants have staved off threatened export curbs after promising to plug a projected domestic gas supply shortfall in 2018, Australian Prime Minister Malcolm Turnbull said on Wednesday.


The agreement follows six months of government pressure on the producers of liquefied natural gas (LNG), led by Royal Dutch Shell, ConocoPhillips, Origin Energy and Santos Ltd, who have been blamed for sapping the local market of gas and driving up prices.


The Australian Energy Market Operator (AEMO) this week projected there would be a gas shortfall of between 54 and 107 petajoules in 2018, or up to 17 percent of demand, which the companies have now vowed to supply.


“They have given us a guarantee that they will offer to the domestic market the gas that was identified as the expected demand shortfall, by AEMO, in 2018,” Turnbull told reporters in Sydney after meeting with the three LNG operators.


The threat of export controls on the three LNG plants had raised alarm about sovereign risk, especially for the investors in those plants and their Chinese, Japanese, Korean and Malaysian customers.


Gas has become a hot political issue as soaring prices are hurting households and threatening jobs at manufacturers like food, building materials and chemical producers, as well as driving up electricity prices, as gas-fired power is needed to back up wind and solar energy.


To deal with the crisis the government passed a law earlier this year that would allow it to limit exports from any of the three LNG plants on the east coast to beef up local supply in any year that it deems there will be a shortfall.


For 2018, the export controls will now not be invoked.


“We are very pleased to contribute to a solution which will provide certainty for Australian customers to have access to available gas,” Australia Pacific LNG chief executive Warwick King said in emailed comments. Australia Pacific LNG is run by ConocoPhillips and Origin.


Shell said it had set up an Australian trading business because it saw an opportunity to sell gas from Queensland to customers in the country’s southeast, where there is little competition among suppliers.



The Australian Competition and Consumer Commission this week flagged that producers were offering gas at A$10-$16 a gigajoule to industrial users, well above the forecast Asian LNG price LNG-AS for 2018 netted back to Australia plus local pipeline costs, which worked out to A$7.77.


“The new announcement should open up the market for contracting again and flush out the real demand, as the 107 PJ supply shortfall announced by AEMO remains highly questionable,” said Wood Mackenzie analyst Saul Kavonic. (Reporting by Tom Westbrook. Editing by Jane Wardell and Richard Pullin)


Read More: HERE

 
 
posted on:
September
26
2017

World's second biggest gas exporter prepares to run short

 

 Source: The AGE 


Surely the world's second biggest exporter isn't about to run short of gas?


We are, according to the Australian Competition and Consumer Commission, although not for the reasons that are widely believed.


The conventional wisdom has been that when three big exporters opened six big liquefaction plants at Gladstone in Queensland and locked themselves into long-term supply contracts with Japan that they couldn't fulfil they had to commandeer gas that the rest of us would have used.


That did happen, but it's not the main reason we're about to run short of gas. It's that the exporters also shipped a lot of extra gas overseas, in addition to the gas they were contractually obliged to export.


It's easy to understand why. They spent billions building the liquefaction plants and they are trying to get a return. The ACCC has a particularly good insight into their thinking. It's used compulsory information-gathering powers to amass a trove of 20,000 industry board papers and reports.


The commission says next year the big three are planning to export 64.3 petajoules of gas that they are not contractually required to export. One petajoule is enough to supply the residential needs of a city like Warrnambool, Wollongong or Penrith for a year; or enough to supply one very big industrial user.


It says coincidentally 64.3 petajoules "accounts for the entire expected gas supply shortfall".


Next year's expected gas supply is 1901 petajoules. Domestic users – industry, business and households – will need only 642 petajoules. But the exporters are planning to ship out more than all of the rest: 1314 petajoules, resulting in a shortfall of 55 petajoules. (A worse-case scenario, also modelled by the commission, is a shortfall of 110 petajoules).


The ACCC says it would be possible for the exporters to ship out less than they are planning to without breaking contracts, and although they've made some moves in that direction, it is "unclear" why they haven't done more.


In the meantime, in a disturbing development for the businesses that rely on gas, many are being offered blind auctions. Rather than being given a price, they are being asked how much they would be prepared to pay to keep the gas on. It's a one-shot game. If they don't offer enough they miss out.


One offered 20 per cent more than it had been paying and missed out. Those that get offers are being given very short deadlines to accept, often just two to five days, a "significant constraint for many large users who are required to obtain approval from company boards and executive management". Even when they accept offers, some have them withdrawn.


 Read More: HERE


 

 
 
posted on:
September
25
2017

Gas export curbs loom as East AUS faces gas shortfall

 

Source: Reuters


MELBOURNE (Reuters) - Royal Dutch Shell, ConocoPhillips and Santos face curbs on exporting gas from Australia’s east coast in 2018 if they fail to plug a projected local supply shortfall, Prime Minister Malcolm Turnbull warned on Monday.


Eastern Australia faces a gas shortfall of up to 17 percent of market demand in 2018, the nation’s energy market operator and competition watchdog projected in reports submitted to the government on Monday that will be the basis for a decision by Nov. 1 on whether to limit exports.


The shortfall of around 110 petajoules (PJ) seen in 2018 is far worse than the market operator flagged in March.


“We are determined to ensure and we will ensure that that shortfall, which we’ve been advised of today - three times bigger than we thought it would be six months ago - is not going to occur,” Turnbull told reporters.


Turnbull said he would press the east coast LNG exporters - Shell at Queensland Curtis LNG, ConocoPhillips and Origin Energy at Australia Pacific LNG, and Santos at Gladstone LNG - for plans to plug the 110 PJ supply gap.

Gas has become a hot political issue as soaring prices are hurting households and threatening jobs at manufacturers like food, building materials and chemical producers, and at the same time driving up electricity prices, as gas-fired power is needed to back up wind and solar energy.


To deal with the crisis the government passed a law earlier this year that would allow it to limit exports from any of the three LNG plants on the east coast to beef up local supply.


“Gas supply remains tight in eastern and south-eastern Australia in 2018 and 2019, and there remains a risk of a supply shortfall,” Australian Energy Market Operator Chief Executive Audrey Zibelman said in a statement.


For 2018 the shortfall risk is between 54 petajoules and 107 PJs, the market operator said, in line with the gap that the competition commission found.


The three LNG exports plants, which were completed between 2014 and 2016, have long-term contracts to sell gas to customers in Asia, but have also been selling spot cargoes overseas instead of locally due to high costs and access issues on pipelines in Australia.


“The expected shortfall could be reduced to a significant extent if the expected sales on international LNG spot markets were instead redirected to the domestic market,” competition chairman, Rod Sims, said in a statement.


Under the terms of the Australia Domestic Gas Security Mechanism, the LNG plant that has been seen most at risk of being forced to divert gas from exports to the domestic market is the Gladstone LNG plant, operated by Santos Ltd.


Shell, Origin and Santos have already announced plans to step up local supply, but the commission said that was insufficient.


Read More: HERE

 
 
posted on:
September
10
2017

Next Generation: the long-term future of the NEM

 

Source: Grattan Institue 


Australia should start work immediately on an electricity ‘capacity mechanism’ in case it is needed to ensure reliable supplies, encourage investment in new generation, and reduce the threat of shortages and blackouts.


But the cost of such peace of mind would ultimately fall on consumers in the form of higher electricity prices, so a capacity mechanism should be introduced only if all other market reforms have been exhausted and supply is still under threat.


Through a capacity mechanism, generators would be paid not only for the electricity they produce to meet current demand, but for committing to provide power for years into the future. The market operator or retailers could contract for sufficient electricity to meet future demand, to ensure new generation and storage is built in time.


Australia has endured a decade of toxic political debates about climate change policy, South Australia suffered a state-wide blackout last year, electricity bills are skyrocketing, and coal-fired power stations are closing.


In these circumstances, it is understandable that governments feel the need to ‘do something’. But the danger is they will rush in and make things worse. What Australia needs now is perspective, not panic.


The Australian Energy Market Operator (AEMO) last week called for a ‘longer-term approach’ to ensure electricity supplies. This Grattan report identifies a capacity obligation on retailers as the most effective and lowest-cost approach.


The report calls for a three-step policy. First, the Federal Government should implement all recommendations of the June 2017 Finkel Review, including a Clean Energy Target or a similar mechanism to price greenhouse gas emissions.


Second, alongside the Australian Energy Market Commission’s work on the market’s reliability framework, AEMO’s annual assessment of future supply and demand should be extended to include a more comprehensive assessment of the future adequacy of generation supply.


And third, if the newly created Energy Security Board concludes that projected shortfalls are unlikely to be met under the current market design, AEMO should introduce a capacity mechanism.


This pragmatic, planned approach offers the best prospect of affordable, reliable, secure and sustainable power for Australia.


Read More: HERE

 
 
posted on:
September
07
2017

Santos redirects export-bound gas to Aus East Coast Market

 

Source: ABC


Energy company Santos has agreed to supply gas to 330,000 Australian east coast homes over the next two years rather than export it.


Santos and its GLNG partners announced they would sell 30 petajoules (PJ) of gas to east coast customers including electricity companies next year and in 2019.


Santos managing director Kevin Gallagher said that the gas would otherwise have been exported as LNG.


"Over the last few months Santos has been working constructively with the Federal Government and our GLNG partners to supply additional gas to the east coast domestic market," he said.


The announcement follows a Federal Government decision earlier in the year to restrict gas exports, in a bid to counter domestic shortages which have been pushing prices higher in Australia, and in turn affecting power generation.


Prime Minister Malcolm Turnbull did not specify how much impact export controls were likely to have on prices, but said wholesale prices fell after the federal decision was taken.


Mr Turnbull argued it would be unacceptable for Australia to become the largest global exporter of LNG but have a shortage of east coast domestic market gas.


Mr Gallagher said the decision taken by Santos was further proof of its readiness to respond to market dynamics and meet local gas demand.


"We are committed to improving energy reliability and affordability for all Australians, both householders and industry," he said.


Santos earlier decided to deliver up to 72 PJ of gas over four years into the south-east market through a swap agreement and sale of 15 PJ to the Pelican Point power station in Adelaide.


Read More: HERE

 
 
posted on:
August
23
2017

Renewable energy boost to power Victoria's regional cities

 

Source: The Age


In a huge boost to Victoria's electricity supply, renewable energy companies will compete to supply Victoria with 650 megawatts of power – enough for the energy needs of every household in Geelong, Ballarat, Bendigo and the Latrobe Valley.


The competitive "reverse auction" will be the biggest of its kind in Australia, as corporations tender for the contracts to power 389,000 households. This is expected to trigger investment of about $1.3 billion in renewable projects such as construction of wind and solar farms. Expressions of interest will open in October.


The projects are critical to the government's target to increase Victoria's renewable energy level to 40 per cent by 2025. The government will seek to lock in its renewable energy target – 25 per cent by 2020 and 40 per cent by 2025 – by tabling legislation today. Currently about 10 per cent of the state's power needs are met with renewable sources.


Read more HERE.

 
 
posted on:
August
14
2017

Port Augusta home to new $650 million solar thermal plant

 

Source: The Advertiser


PORT Augusta will be home to a new $650 million solar thermal power plant that supplies all of the State Government’s power needs.



SolarReserve will build the 150MW plant, which will be operational in about three years. Its standard output under normal conditions will be 135MW, with the capability of exceeding that during the evening peak demand in favourable conditions.


Construction is set to begin in 2018 and be complete by 2020, creating an expected 650 construction jobs and 50 ongoing positions.


SolarReserve will pay to construct the plant and the State Government will buy the power it generates over a 20-year contract.


The project will rely on a $110 million concessional equity loan from the Federal Government, which was promised as part of negotiations with South Australian Senator Nick Xenophon on the Commonwealth’s company tax cuts legislation.


The plant, to be built about 30km north of the town on state-owned land, will be able to store between eight and 10 hours of energy so it can operate when the sun is not shining.


Read more HERE

 
 
posted on:
August
09
2017

Turnbull “eyeballs” energy bosses, kids himself on solution

 

Source: Renew Economy 


Prime minister Malcolm Turnbull “eyeballed” the heads of Australia’s biggest retailers over the scale of consumer bills on Wednesday and would like you to believe that they blinked.


Truth be told it was more of a knowing wink than a blink, and it is likely that all Turnbull achieved is to kill the size of discounts available to smart consumers. There is not a snowflake’s chance in hell (or a coal boiler) that the big utilities are taking a haircut on this.


The fundamental problem – the high price of electricity – remains unaddressed because the Coalition will not deal with issues such as long term energy policy, or the legal rorting of wholesale markets by an oligopoly of generators, some of them the same mob that turned up to look concerned and contrite in Canberra.


The heads of AGL Energy, Origin Energy and EnergyAustralia, and five other leading retailers along with their lobby group, met with Turnbull, federal Treasurer Scott Morrison and energy minister Josh Frydenberg, to discuss retail market practices that have padded company profits at the expense of consumers.


Top of the agenda were concerns that millions of Australian households were on electricity plans that were costing them “hundreds of dollars” – and potentially thousands – a year more than they needed to pay, due to a combination of customer confusion and inertia.


What was agreed fell a long way short of the sort of regulation vaguely mooted by the government, flagged by the head of the Australian Energy Market Operator, and promoted by the Greens.


Confusion is profit, as we reminded readers last week, and it appears to have finally sunk in with the government, once they had paused their relentless attack on renewables and battery storage.


“Complexity and inertia are the big energy company’s friend,” Morrison told reporters after the meeting. “We’re ensuring that there is less complexity, and working on this inertia issue,” he said.


“What we want to put in place is the ability of consumers to have an informed choice,” Turnbull said. “Many households and consumers are paying hundreds of dollars more, right now, than they need to.


“The biggest (bill) discount doesn’t necessarily mean the best deal… It’s that level of complexity that customers are not aware of, and they are effectively getting short-changed.”


 


Read more HERE



 
 
posted on:
July
18
2017

What if Big Oil's Bet on Gas is Wrong?

 

Source: Bloomberg 


Talk to a Big Oil executive these days, and the chances are they’ll steer the conversation toward gas.


“In 20 years, we will not be known as oil and gas companies, but as gas and oil companies,” Patrick Pouyanne, chief executive officer of French giant Total SA, told a conference in St. Petersburg last month.


But with the cost of renewable technologies falling sharply, some are warning that the outlook may not be so rosy. Forecasters are beginning to talk about peak gas demand, spurred by the growth of alternative power supplies, in the same breath as peak oil consumption, caused by the gradual demise of the internal combustion engine.


In a long-term outlook published last month, Bloomberg New Energy Finance predicted that gas’s market share in global power generation will drop from 23 percent last year to 16 percent by 2040, and that gas-fired power generation capacity will start to decline after 2031. BP Plc has highlighted “risks to gas demand” as a key uncertainty, including the possibility that consumption plateaus by 2035, “squeezed out by non-fossil fuels.”


Read more HERE

 
 
posted on:
July
14
2017

COAG splits over clean energy target

 

Source: Renew Economy


Four Labor states and governments have formalised their push to purse their own clean energy target mechanism, officially breaking away from the federal government after the Coalition refused to endorse the Finkel Review’s recommendation on the issue.


The COAG energy council meeting in Brisbane endorsed 49 of the 50 recommendations from the Finkel Review, and endorsed the decision to get rid of the “limited merits review” that affects network spending. However, the federal government said it could not commit to a clean energy target.


South Australia, Victoria and Queensland, along with the ACT, said they would ask the Australian Energy market Commission to study how a CET might be implemented by the states saying “they can’t wait any longer”.


It is not clear how long this will take, and how quickly legislation can be introduced, or if it can survive state-based partisan politics given that both the South Australia and Queensland Labor governments are facing elections in the next 12 months.


The role of the ACT is also unclear, given that it will reach its target of 100 per cent renewable energy by 2020.


These same states this week all committed to zero net emissions by 2050, in a ceremony marking the visit of former vice-president and climate campaigner Al Gore.


“It is incredibly frustrating that despite the overwhelming community support for a market mechanism, the Federal Government is still resisting committing to all 50 Finkel recommendations,” South Australia energy minister Tom Koutsantonis said in a statement.


“Opposition from the coal lobby and the right wing of his party is preventing the Prime Minister from acting in the interests of all Australians.” The federal Coalition has been riven by divisions over the proposed CET, with conservative commentators unanimously condemning the idea, and the rump of Far Right Coalition MPs also voicing their opposition.


Federal energy minister Josh Frydenberg said COAG had agreed a “significant set of reforms to ensure a more affordable and reliable energy system.” The recommendations include the creation of an Energy Security Board. Each jurisdiction will send through a name; and the next few weeks the states will agree on a chair and deputy chair. 


The other members will be the heads of the three main energy industry regulators, rule-makers and operators.

 
 
posted on:
July
13
2017

Gas exports the culprit for electricity price hikes

 

Source: The Australia Institute


The Australia Institute has released the Electricity Update of the National Energy Emissions Audit (The Audit*) for July 2017.


The report, by renowned energy analyst Dr Hugh Saddler, reveals a stunning correlation between domestic electricity prices and gas prices, despite gas making up only 10 percent of electricity generation.


Australian gas prices have risen significantly, as predicted, upon the development of export terminals and the linking of domestic gas to the Asian market.


“The correlation between the two data series is striking, confirming that higher wholesale electricity prices, and hence higher retail prices in SA are almost entirely caused by higher gas prices,” Dr Saddler said.


“The launch of the NEM in 1998 was followed by a rush of construction of gas turbine power stations in Queensland, NSW and Victoria, and even in Tasmania, accelerated in Queensland by a gas generation mandate policy introduced by the state Labor government. 


“So this is not a malfunction of the National Electricity Market, but precisely how it was expected to operate, when set up. What has changed is the price of gas, driven up by export contracts.”


The alternate narrative, that the electricity price rises is to do with increased renewable production, does not stand up to the data, where we see no correlation, even in the usual example given, South Australia. 


“It seems that the decision to allow so much of the gas resources of eastern Australia to be exported was made without considering the likely effects on the electricity market.


“Household and business consumers of electricity are now paying the price for this policy failure,” Dr. Saddler said.