Possible Australian perspectives for the EU electricity market in 2025

Transcription

1 Possible Australian perspectives for the EU electricity market in 2025 Iain MacGill Associate Professor, School of Electrical Engineering and Telecommunications Joint Director (Engineering), CEEM UNSW Australia Policy Session The Electricity Market in 2025: EU perspectives Environmental and Resource Economics Conf. (EAERE) Zurich, June 22-25

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3 Lessons from the other side of the world 3

4 Caution required Many of us who keenly observe the energy sector can take a pretty good guess at what our next big challenges are Federal Energy Minister MacFarlane, 10/9/2014 But his previous 2004 White paper missed almost all key drivers over following decade: CSG (CSM) East Coast LNG export Falling demand Falling costs and growing uptake of Wind, PV 4

5 The Australian National Electricity Market SA: Av. load 1500MW Gen Capacity 4000MW QLD: Av. load 5600MW Gen Capacity 12000MW NSW: Av. load 8500MW Gen Capacity 16000MW TAS: Av. load 1200MW Gen Capacity 3000MW VIC: Av. load 5700MW Gen Capacity 12000MW

6 Interesting design choices Multi-region energy only wholesale market 5 minute dispatch, 30 minute pricing 5 market regions regional interconnection flows solved dynamically every 5 minutes; 5 regional prices No formal day ahead market only day ahead indicative pre-dispatch with rebidding permitted on 5 minute basis Co-optimised dispatch of wholesale spot market and 8 frequency control ancillary services market Very flexible, dynamic regional pricing, closely integrated wholesale energy and FCAS markets 6

7 Eg. Regional 5 minute pre-dispatch 7

8 Historical and day-ahead FCAS dispatch and 30 minute prices 8

9 A meaningful carbon price for a time 9

10 Emissions fell for a time 10

11 By some measures, a highly successful retail market however Little focus on energy services an important reason there is effective competition in Victoria is.. because the provision of energy is viewed as a homogenous, low engagement service (AEMC, 2008) Current measures of competition miss key issues Yes, NEM high switching rates but real customer choice or just churn? Yes, NEM price spreads but reflect competition, stickiness, or govt policy? Although welcome new focus on customer engagement and demand side participation (Accenture, 2013) 11

12 NEM s most competitive market regions seem to have highest prices (AER, State of the Energy Market Report, 2015) 12

13 PV now offering real retail competition (% dwellings with household PV) (APVI, Solar map website, 2016) Australia's retail electricity market experience 13

14 Very significant network expenditure (AER, State of the Energy Market Report, 2015) 14

15 How is PV impacting incumbents? follow the money, particularly falling revenues from households with PV, EE, perhaps soon with Battery Systems (Oliva et al, 2015) 15

16 Possible incumbent responses For retailers, new service orientation, or grow the oligopoly For DNSPs under economic regulation, revenue cap based on approved expenditure can correct revenue shortfalls changing current tariff levels (eg. volumetric c/kwh) more fundamental tariff restructuring (mix of fixed, consumption, peak) The risks No unprofitable customers for DNSPS if can get approval for expenditure required to serve them; how do we incentive businesses to facilitate PV households to deploy DSP and storage in order to reduce peak demand hence required network capacity and longer-term expenditure? Network tariffs have wide range of cross-subsidies already between households with and without Air-C, city versus regional and rural, as well as those with PV versus those without. If solar cross-subsidies are to be targeted, what about the rest of these? 16

17 The death of the death spiral? Australia often seen as possible death spiral example sun + high retail prices. Considerable market interest in battery energy storage systems However; savings from demand reduction depend critically on energy/network tariffs..and end-user departure depends critically on DG technology progress, particularly storage Economics of departure look pretty challenging even with Australia s advantages, falling BES costs. except on fringe of grid where may already be competitive (via google news archive) 17

18 Where next? "The best way to predict your future is to create it!" Abraham Lincoln That depends certainly opportunities to improve outcomes from what look to be current directions 18

19 Thank you and questions Many of our publications are available at: 19