Iain MacGill. Japan-Australia Dialogue on Energy Policy & Regulation Keio University, Tokyo 24 September 2017

Transcription

1 Some regulatory and market design insights from the Australian experience of integrating high renewable penetrations into its National Electricity Market Iain MacGill Associate Professor, School of Electrical Engineering and Telecommunications Joint Director (Engineering), CEEM Japan-Australia Dialogue on Energy Policy & Regulation Keio University, Tokyo 24 September 2017

2 A destination shaped by energy trilemma Choose any two?. but you may get none Pathways to a clean energy future (World Energy Council, 2016) 2

3 For electricity, no agreed path (IEA, 2016) NEM lessons for liberalisation and regulation 3

4 The NEM path - fit for purpose? Objectives of technology and participant neutrality, but always challenging Exogenous and endogenous drivers that seem to be accelerating First gridconnected PV (3KW) First gridconnected wind farm Renewable Energy Target begins (AEMC, 2015) Pathways to a clean energy future 4

5 The NEM a single near-national market (Finkel Review, 2017) NEM lessons for liberalisation and regulation 5

6 cash flow NEM market and Network arrangements (adapted from Outhred, 2010) Wholesale Market Retail Market Generation Sector:- large generators Derivative trading (cashflow?) Intentions, offers & payments cash flow Multi-region five-minute energy & FCAS markets Intentions, bids & payments cash flow Retail sector Retailer 1 Retailer Z Retail Markets cash flow Embedded generators End-users AEMO: market & system operator Generation Sector:- large Economic regulation Transmission cash flow Distribution End-use sector Energy flow Energy flow Sector Energy flow sector (including DR) Pathways generators (Finkel Review, 2017) a clean energy future 6

7 Competitive Generation and Retail markets? Predominant private ownership of both generation and retail A mix of local + international firms, and foreign government vehicles A mix of State and Federal Government participation (AER, 2017)

8 cash flow Two worlds for renewables integration (adapted from Outhred, 2010) Centralised Renewables eg. Wind, CSP Distributed Renewables eg. PV, CHP Generation Sector:- large generators Derivative trading (cashflow?) Intentions, offers & payments cash flow Multi-region five-minute energy & FCAS markets Intentions, bids & payments cash flow Retail sector Retailer 1 Retailer Z Retail Markets cash flow Embedded generators End-users AEMO: market & system operator Generation Sector:- large Transmission cash flow Distribution sector End-use sector Energy flow Energy flow Sector Energy flow (including DR) Pathways generators a clean energy future 8

9 Success to date in low carbon transition? (AER, 2017) (Australian Energy Statistics,, 2016) Lessons on sustainable electricity industry transition 11

10 Residential PV penetration (Finkel Review, 2017) Lessons on sustainable electricity industry transition 13

11 Overall governance challenge (Riesz, 2016)

12 Changing status of large-scale RE in NEM Non-scheduled Original category for intermittent gen RE treated as negative demand Can only be curtailed for system security or key network issues Don t pay for FCAS Recent changes: technical connection standards relevant to wind generators Historical windfarm outputs published Centralised wind forecasting system (AWEFS) Scheduled Semi-Scheduled All major generation SA formerly required new wind farms to register as scheduled Specifically intended for intermittent gen >30MW + compulsory from March 2009 Submission of dispatch offers Submission of dispatch offers Compliance with targets Causer-pay for ancillary services Causer-pay for ancillary services Ability to offer ancillary services Ability to offer ancillary services Are treated as positive supply Publication of If involved in a constraint individual outputs:- Compliance with forecast, offered & targets if less than actual forecast (adapted from Outhred, 2010) elec production costing. The operational challenges of renewables 15

13 Retail pricing does this look like success? (The Australia Institute, 2017) (AER, 2017) (AER, 2017) NEM lessons for liberalisation and regulation 18

14 Facilitating greater consumer engagement demand-side participation in principle (AEMC, Power of Choice, 2012) Pathways to a clean energy future 19

15 Facilitating greater engagement in practice? CRT proposals to date: steep declining block higher fixed charges non-peak demand demand charges special solar household tariffs While some cross-subsidies are not to be discussed eg. locational between urban and regional consumers (Reneweconomy, 2015) All may limit consumer options to invest in new technologies and behave in ways that reduce bills while also reducing longer-term network expenditure Pathways to a clean energy future 20

16 Resource adequacy tightening (Grattan Institute, 2017) NEM lessons for liberalisation and regulation 21

17 SA blackout Was it wind? A complex question Electricity industry run to remain secure, major failures almost always involve multiple factors Wind and residential PV added to the challenges NEM lessons for liberalisation and regulation 22

18 South Australian Government intervention NEM lessons for liberalisation and regulation (South Australian Government, 2017) 23

19 Renewed focus on competition challenges NEM lessons for liberalisation and regulation (ACCC, Sims speech to National Press Club, 2017) 24

20 NEM Governance fit for purpose? Commitment to a clean energy future? Balancing security vs market tradeoffs? Distributed resource integration into market operation? Coherence and comprehensive framework? Currently no explicit env. objective? Speed of rule changes? Balancing incumbent vs NEM lessons for liberalisation new and entrant regulation impacts? (Finkel Review, 2017) Containing network expenditure? Managing market power? 25

21 Possible lessons for RE integration Wholesale market arrangements RE just one of the challenges facing electricity industries As RE penetrations increase, require greater integration into formal energy market arrangements External RE policy should retain exposure to energy market signals Distributed RE particularly challenging, needs more formal integration Retail market arrangements Need to accept, work within social construct for small energy users Network businesses have key role currently conflicted b/n existing and possible new business models; Need to revisit interface b/n monopoly regulation + retail mkt competition given new technologies More generally, market limitations wrt integration across policy objectives, longer term perspectives mean greater govt. involvement essential for effective low-cabon transition NEM lessons for liberalisation and regulation 26

22 Thank you and questions Many of our publications are available at: NEM lessons for liberalisation and regulation 27