Search

Begin New Search
Proceed to Checkout

Search Results for All:
(Showing results 1 to 3 of 3)



On Entry Cost Dynamics in Australia's National Electricity Market

Paul Simshauser and Joel Gilmore

Year: 2020
Volume: Volume 41
Number: Number 1
DOI: 10.5547/01956574.41.1.psim
View Abstract

Abstract:
In theory, well designed electricity markets should deliver an efficient mix of technologies at least-cost. But energy market theories and energy market modelling are based upon equilibrium analysis and in practice electricity markets can be off-equilibrium for extended periods. Near-term spot and forward contract prices can and do fall well below, or substantially exceed, relevant entry cost benchmarks and associated long run equilibrium prices. However, given sufficient time higher prices, on average or during certain periods, create incentives for new entrant plant which in turn has the effect of capping longer-dated average spot price expectations at the estimated cost of the relevant new entrant technologies. In this article, we trace generalised new entrant benchmarks and their relationship to spot price outcomes in Australia's National Electricity Market over the 20-year period to 2018; from coal, to gas and more recently to variable renewables plus firming, notionally provided by - or shadow priced at - the carrying cost of an Open Cycle Gas Turbine. This latest entry benchmark relies implicitly, but critically, on the gains from exchange in organised spot markets, using existing spare capacity. As aging coal plant exit, gains from exchange may gradually diminish with 'notional firming' increasingly and necessarily being met by physical firming. At this point, the benchmark must once again move to a new technology set...



Firming Technologies to Reach 100% Renewable Energy Production in Australia’s National Electricity Market (NEM)

Joel Gilmore, Tim Nelson, and Tahlia Nolan

Year: 2023
Volume: Volume 44
Number: Number 6
DOI: 10.5547/01956574.44.6.jgil
View Abstract

Abstract:
Australia has committed to reducing its greenhouse gas emissions in a manner consistent with limiting anthropogenic climate change to no more than 2 degrees Celsius. One of the ways in which this commitment is being realised is through a shift towards variable renewable energy (VRE) within Australia’s National Electricity Market (NEM). Substituting existing dispatchable thermal plant with VRE requires consideration of long-term energy resource adequacy given the unpredictability of solar and wind resources. While pumped hydro and battery storage are key technologies for addressing short-term mismatches between resource availability and demand, they may be unable to cost effectively address ‘energy droughts’. In this article, we present a time sequential solver model of the NEM and an optimal firming technology plant mix to allow the system to be supplied by 100% VRE. Our conclusion is that some form of fuel-based technology (most likely hydrogen) will probably be required. This has important implications for Australian energy policy.



The Levelised Cost of Frequency Control Ancillary Services in Australia’s National Electricity Market

Joel Gilmore, Tahlia Nolan, and Paul Simshauser

Year: 2024
Volume: Volume 45
Number: Number 1
DOI: 10.5547/01956574.45.1.jgil
View Abstract

Abstract:
Over the period 2016–2021 Australia's National Electricity Market (NEM) experienced an investment supercycle with 16,000MW of new utility-scale renewable plant commitments in a power system with a peak demand of 35,000MW, and the disorderly loss of 5,000MW of synchronous coal-fired plant. This placed strains on system security, most visibly in the distribution of the power systems' frequency, requiring material changes to the NEM's suite of Frequency Control Ancillary Service (FCAS) markets. Utility-scale batteries are ideally suited for FCAS duties, but there is no forward price curve for FCAS markets, nor is there any systematic framework for determining equilibrium prices that might otherwise be used for investment decision-making. In this article, we develop an approach for quantifying long run equilibrium costs and stochastic spot prices in the markets for Frequency Control Ancillary Services, with the intended application being to guide the suitability of utility-scale battery investments under conditions of uncertainty and missing forward FCAS markets.





Begin New Search
Proceed to Checkout

 

© 2023 International Association for Energy Economics | Privacy Policy | Return Policy