AEMO TO FASTTRACK TO NET ZERO EMMISSIONS

 

On Friday, the Australian Energy Market Operator (AEMO) published its 2021 Inputs, Assumption and Scenarios Report (IASR) which includes five scenario’s which may take the industry into the future. The five scenarios range from the slow change where not much happens in relation to technology changes and the existing generation mix right through to the Hydrogen superpower where changes in technology make huge advancements. The scenarios outlined in the IASR will form part of the 2022 Integrated System Plan (ISP).

AEMO have spent the last 10 months working with industry, governments, and consumers to build the scenarios. During consultation, most stakeholders supported the rapid decarbonisation scenarios leading to achieving net-zero emissions.

Compared to the input to the 2020 ISP, the 2022 ISP will include economy wide decarbonisation not just across the electricity sector and increased investment in distributed energy resources. To model decarbonisation across the economy, the 2022 ISP will include scenarios of electrification across industry and the transport sector.

To understand how the market moves to a lower carbon world, AEMO have modelled a ‘steady progress’ scenario and a ‘net zero’ scenario. The steady progress scenario employs existing government policy including emission abatement targets and a steady growth in the uptake of PV. In the Net-zero scenario the change in the electricity industry is driven by technology led emission abatement and progressive tightening of emissions targets leading to net zero emission by 2050.

AEMO have also modelled a ‘Hydrogen superpower’ scenario where the market is structured to support the development of a renewable hydrogen export economy.

A draft ISP will be published in December with the final ISP released in June 2022.

THE EDGE ENERGY MANAGEMENT SYSTEM

Edge has invested heavily in bespoke infrastructure and specialised personnel to develop systems that allow Edge to receive data electronically and process that data for analysis, forecasting, reporting and snapshots. The ability to store and receive data with immediacy means we can supply data to you directly or via our online portal, EdgeLIVE.

ONLINE PORTAL – EDGELIVE

EdgeLIVE is a secure cloud-based information portal that gives you instant access to contracts, portfolio information, reports, data and so much more. The portal provides you with the information you need to make informed choices regarding your energy portfolio.

EdgeLive allows you to use interactive graphical dashboards to view your consumption and costs. The functionality of the dashboard allows you to drill down to specific sites, regions, or filter the data to specific criteria that is important to you.

THE EDGE ENERGY MANAGEMENT SYSTEM (TEEMS)

Edge has built bespoke proprietary in-house systems to efficiently and effectively manage the entire portfolio.

TEEMS also ensures we meet the highest quality standards expected not only by ourselves, but as required under our QMS and ISO certification.

TEEMs is utilised as follows:

  • storing details relating to your energy portfolio, down to individual site details such as tariffs and rates;
  • validation of meter data, ensuring that any data received through our FTP servers is qualified (actual / substitute / missing), and data quality issues are raised with relevant meter providers / data agents to ensure timely resolution;
  • receipt, calculation, and reconciliation of invoices – with site costs calculated from first principals efficiently and accurately (as per TEEMS’ billing engine capability);
  • calculation of accrual and cash call reporting (on any day) – with month-to-date actual data extrapolated to full month data sets for accurate forecasting;
  • calculation of snapshot reporting (budgets) – marked-to-market each day;
  • distribution of all reporting;
  • logging of all contracting recommendations for each client portfolio and reasons for recommendations to be progressed or not (this includes all recommendations to buy or hold in scheduled weekly or monthly reporting);
  • capturing of all deals, to ensure adequate tracking of deals and associated documentation, and to ensure all account and portfolio management reporting is from a single data source with portfolios accurately marked-to-market each day.

If you would like to view a demonstration of EdgeLIVE please email us and a demonstration user log in can be sent to you.

E: save@edgeutilities.au or P:1800 334 336

 

3 MISCONCEPTIONS ABOUT ENERGY BROKERS

Securing the best Energy Deal for your business should be one of the easiest things to do in a business, right? Wrong! Without the right guidance and information, it can also be one of the costliest.

A simple way to reduce the stress and increase your chances of locking yourself into the wrong deal is to reach out and sort the help of an Energy Broker. Not only will they save you time and energy, but they’ll also get you the best deal for your business.

Despite this, many people are still under the misconception that if something sounds too good to be true, it probably is. We’ve picked the top three misconceptions about Energy Brokers.

  1. Are Energy Brokers expensive?

Simple answer, nope.

This is probably the biggest mix-up out there. Energy Brokers help you at their own expense and are free for businesses like yours.

Most Energy brokers are paid a commission. At Edge Utilities, we earn between 1% – 2.5% on the energy component, paid by your chosen retailer, should you wish to contract with them.

If you decide not to contract, we don’t get paid. No deal. No pay!

  1. Do Energy Brokers act in your best interests?

You may be wondering… if an Energy Broker is free and gets commission, won’t they just go with their favourite retailers for the highest commission?

It’s easy to see how this could happen… and yes, it does happen! If a retailer is offering more commission, it seems obvious which deal, they would recommend, right?

This isn’t the case at Edge Utilities. Our biggest interest is to help a business owner choose a contract that’s right for them. What would you think would happen if the business is unhappy with their bill when they receive it?

They’ll go elsewhere and let other business around them know. Consequently, so does the commission. So, keeping everyone happy for as long as possible is the goal for Edge Utilities.

  1. Wouldn’t a retailer prefer working with the individual over a broker?

Not necessarily! A broker will assess your contracts and find a retailer with T&Cs to match your business needs. We do all the leg work and will also ensure all documents are filled out correctly, so you can do what you do best.

Another thing to remember is that most retailers love Energy Brokers. Paying a broker’s commission to bring in customers is a lot cheaper than paying employees to develop business.

Edge Utilities works for you

We will offer expertise, access to many options, and the ability to negotiate the best rates. Our job is to ensure your timing to enter a retail contract considers the underlying markets that ultimately drive your costs (which we analyse daily), to ensure you don’t end up on penalty rates, and to go to market to get you the best deal on the day we both decide to do that.

And did you know, we can also invoice?

Now is a good time to talk about your current agreements and if you have other sites that need this attention, don’t hesitate to reach out.

Call us on 1800 334 336 or email save@edgeutilties.com.au

ORIGIN STILL IN THE RED

More bad news for electricity retailers with Origin Energy announcing an impairment of $1.6B after further writing down the value of its generation assets and reducing the value of its renewable energy contracts.

In a statement, Origin said the write downs were a result of falling wholesale prices, mostly driven by the influx of new wind and solar projects. High gas prices also reduced the returns from their fleet of gas-powered generation.

Origin owns the largest coal fired generation unit in the NEM, so the market pressures weighed heavily on the balance sheet. Origins large exposure to the non-renewable segment of the market through its Eraring coal fired power station which resulted in a $583M post-tax impairment. This comes because of Origin’s assumption of a lower outlook for wholesale electricity prices driven by new supply expected to come online, including both renewable and dispatchable capacity, impacting the valuation of the generation fleet, particularly Eraring Power Station.

Eraring is expected to be the cause of much of the impairment, but the gas-powered generation (GPG) units did not fair much better. The GPG were affected due to the increased cost of gas and the decrease in the spot and contract electricity market price.

Strategically Origin has chosen to source renewable energy through PPA rather than build physical generation so are not exposed to the physical renewable market. Origin was an early mover in the renewable PPA space so the PPA’s on their books are very expensive compared to what the market offers are today. This has resulted in Origin writing down some of the value of these existing PPAs.

Origin says it will write down $995M in value of goodwill for these renewable PPA’s and the gas contracts that are out of the money. Origin expects the spot market price to be up to $20/MWh below where they previously anticipated the price to be.

Origin expect their FY2022 profits to be lower than expected at $450- 600M which will again be largely supported by the LNG export part of the business.

On a positive front, Origin expects the market to recover in FY2023 where earnings are expected to increase by $150-250M on the back of a material rebound in energy market earnings.

NEM BACK IN BLACK

On Wednesday last week the Energy Security Board (ESB) released a statement outlining that they had finalised advice on the redesign of the national electricity market (NEM) and handed the report to the Energy National Cabinet Reform Committee. This advice comes from a 2019 request to redesign the market to support the orderly transition to a modern energy system that allowed a rapid increase in the growth of large and small scale renewable energy.

Details of the advice is not publicly available but wording in the media release indicates that coal fired generation will play a key role in the transition. The statement outlines that there must be a coordination of the exit of aging coal fueled generation to maximise the opportunities and minimise risks associated with the transition to deliver affordable, smart, and clean energy.

The ESB consulted widely with industry stakeholders, conChanges to the generation mixsumer bodies, academics, government bodies and interested parties over the last two years. An options paper was released in April and the final advice is expected to closely reflect the options discussed.

Key areas we expect to be tackled in the final redesign advice is preparing for the older coal fired generation retirement, backing up power system security, unlocking benefits and opening the grid to cheaper large-scale renewables.

In preparing for the retirement of the older coal fired generation, the ESB want to give an incentive for the right mix of resources including renewables and non-renewable generation. This was to restore confidence in consumers that energy will be available when required and the mix will include intermittent generation like wind and solar as well as firm dispatchable generation like gas.

To tackle the need for a more secure power system, the ESB will require different ancillary services like inertia, voltage, and frequency control. A market for these services will be required to ensure the procurement and dispatch of these services save money while keeping the network electrically secure.

Further work will also include unlocking the benefits for all energy consumers to gain the advantages of rooftop solar PV, batteries, and smart appliances. Improvement in these areas may also include how consumers source their energy.

As generation is only part of the equation the need to reform the way electricity is transported is also a key redesign topic. Upgrading the network with the construction of transmission lines will reduce congestion and allow cheaper generation to be built in regional areas and improve the diversification of the grid by opening up more geographic locations.

The question most end users are asking is who is paying for all these improvements. As usual the end user will pay. The ESB is understood to be recommending capacity payments for electricity generators to remain online. These generators are likely to be the older coal fleet so consumers will be paying to keep higher carbon intensive technologies online rather than supporting renewables.

This situation will pay generators an available payment to generate when required. In reality, these units will not generate unless the market is at the point of load shedding.

Capacity payments are used in the Western Australian electricity market, under their current arrangements, generators receive capacity credits in line with their units generating capacity.

In the NEM if capacity payments are introduced, they will essentially offset the Reliability and Emergency Reserve Trader (RERT) costs currently used to provide a similar service.

EDGE NEWS – JULY NEWSLETTER

In this issue we look at the following;

  • We recently contracted 3 of Brisbane’s Largest Towers. How do we do it?
  • What is causing the increase in the spot &futures market prices?
  • What is aggregated electricity procurement and should you do it?

National NAIDOC week was celebrated during July and Edge acknowledge the Turral and Yuggera peoples as the traditional owners of the land on which our offices sit. We pay respect to elders past, present and future.

CHANGES TO THE GENERATION MIX

Last Tuesday saw a new record set for wind powered generation with NEM wide production reaching 5,899MW late in the afternoon. Wind made up 20% of the total generation at the time and on occasion peaked to 26% of NEM wide generation. As seen from my market commentary in recent weeks we have seen large fluctuations in available generation from intermittent sources such as wind and solar. In the past 6 months although peak wind production reached 26% it has also reached a low of just 2%. As more wind farms come online and are built across different regions, we will see more diversification of output. Currently Victoria leads the pack with the most wind generation followed by NSW and SA with TAS and QLD only contributing small amounts of wind generation.

In line with the increase in renewable generation, last year operational demand increased by 350MW primarily driven by cooler Q2 conditions and the opening up of the economy following the Covid lockdowns the previous year. LNG export prices have also increased as the world economy improved, this led to an increase demand in QLD for electricity in the gas production value chain. Overall wind and solar generation have reached record highs peaking at 57% market share in April.

Although the average operational demand has grown, the increased penetration of roof top PV reduced demand by 298MW between 10:00 and 14:30. Generation from intermittent sources such as wind and solar reached a record 7,368MW in the second quarter, 457MW more than the same quarter a year ago.

Coal fired generation dropped for a few reasons over the quarter, initially coal generation was being offset by renewable generation then interruptions in coal supply and unit failure lowered production.

The largest contributors to these reductions where Victoria’s Yallourn power station where flooding in the neighbouring mine reduced the output and a catastrophic failure at Queensland’s Callide C4. Following the failure of Callide C4, network protection took out a significant amount of coal units over the next couple of hours while the network was reinstated to isolate Callide power station. As a precaution the undamaged coal fired units at Callide remained offline for the following weeks while the cause of the initial failure was investigated.

With low and sometimes negative prices during the day due to high levels of rooftop PV, large scale solar and wind, the remaining generators tried to extract value from the morning and evening peaks. Historically this would have been taken up by coal fired generation but in Q2 gas powered generation (GPG) operated more due to the scarcity of coal fired units.

A record amount of 57% renewable generation occurred at 11:30 on 11th April, this was made be solar, roof top PV, hydro, and biomass, and was 1% more than the previous record seen in October 2020.

Although renewable generation has been high, restrictions on the network are limiting further output. Curtailment occurred for about 4% of semi-scheduled intermittent generation which was higher than Q1 primarily due to higher negative prices. Intermittent generation now their output at times of negative pricing to limit their exposure to the market. We also see an increase in the amount of curtailment resulting from network congestion and network constraints. In regions with very high levels of renewable penetration such as South Australia saw intermittent generation curtailed to manage AEMOs System strength concerns.

BRISBANE BASED BUSINESS CHARGING AHEAD

Currently Lithium-ion batteries provide various benefits over conventional batteries including charge time and weight. Li-S Energy is hoping to use lithium sulphur batteries which have a longer life, higher energy density and are even lighter than Lithium-ion batteries.

Lithium sulphur batteries can be cycled 600 cycles which is more than the current batteries. Advancement in this technology comes as a result of a joint venture between Deakin University and BNNT Technologies. Deakin University researched boron nitride nanotubes (BNNTs) which are pivotal to the advancement. Through the joint venture, BNNT Technologies will manufacturing the batteries.

BNNTs were only discovered in 1995, they are a very tough material comprising of nanotubes of Carbon, Nitrogen and Boron atoms. Until recently the challenge for these products was to develop them outside the lab and reduce the cost for them to be made.

The cost to produce the BNNT has been around $1M per kilogram, now the BNNT manufacturing facility at Deakin University’s Geelong campus has been setup to produce 50kg of BNNT per year per manufacturing module per shift.

The lithium-ion battery market is worth about $47.5 billion and is expected to double by 2025. A representative of the company would not state how many batteries could be made each year but believes the batteries would be competitive with other lithium-ion batteries.

Reducing the weight of batteries is crucial to the long-term success of EV’s and other devices. Li-S Energy believe removing the heavy elements that are in a lithium-ion batteries and are not required in lithium sulphur batteries will make the lithium sulphur battery very cost competitive considering the higher energy density.

Li-S Energy is expected to be listed on the ASX in August with an expected market cap of $544 million.

CHINA LAUNCHED NATIONAL CARBON EMISSIONS TRADING SCHEME (ETS)

Six years after the establishment of the scheme was pledged at the end of 2015, China has begun operating the national carbon Emissions Trading Scheme (ETS). This started on 16th July 2021, with the opening price of the Carbon Emission Allowances (CEAs) reported at CNY 48 (AUD 10.01) per ton. The first trading day concluded with the closing price of CNY 51.23 (AUD 10.68) per ton, up 6.7%. The total trading volume reached 4.1 million tons at CNY 210 million (AUD 43.79 million).

Shanghai Environment and Energy Exchange (SEEE) will handle account openings for traders and the operations of the new trading platform until a formal national carbon emissions quota trading operator is set up at a later stage. Trading in carbon emissions takes place from 9.30am to 11.30am, and from 1.00pm to 3.00pm Monday to Friday, much like the markets in Shanghai and Shenzhen. The national ETS initially set daily trading limits at 10% of prices and limits for block deals will be set at 30% of price moves.

According to ICAP, the ETS regulates more than 2,200 companies from the power sector, which emit more than 26,000 tCO2 per year. Its scope is expected to be expanded in the future. Currently, the ETS is intensity-based, with the cap being adjusted ex post, based on actual production levels. The compliance obligations are also limited.

While the new ETS is a part of China’s plans to make use of “market mechanisms” to help bring its carbon emissions – now the world’s highest – to a peak before 2030 and to achieve carbon neutrality by 2060. Critics have questioned its effectiveness due to its benchmark-based design, limited coverage, and the lack for a firm cap on emissions.

MINING EXEC JOINS RENEWABLE AGENCY

Scott Morrison and his Minister for Energy and Emissions Reduction continue to appoint mining executives to the Australian Renewable Energy Agency (ARENA). The next to be appointed is Stephen McIntosh from Rio Tinto. Fellow board member John Hirjee is also a former Rio Tinto executive.

As Rio Tinto is one of Australia’s largest coal producers, opponents to the appointments find it hard to understand how these executives can add value to the ARENA board.

However, Minister Angus Taylor said “that the addition of McIntosh would bring to the ARENA board experience in the production of the materials used in clean energy technologies like electric vehicles and battery storage”.

Taylor went on to say “Mr McIntosh is a former Rio Tinto Group Executive with experience in green metals, wind, solar and batteries. He has also worked across hydrogen and carbon capture technologies during his time with the company.”

Darren Miller, the CEO of ARENA, has had his contract extended for another three-year term and will work with other senior staff and board members to provide funding into the development of new clean energy technologies.

Questions have been raised about if ARENA is distributing its funding fairly with Rio Tinto awarded funding for a feasibility study into the use of Hydrogen at its Yarwun alumina refinery and the funding of the Kidston pumped Hydro project where renewable projects in the region were rejected.