August 2023
It’s been a busy month for news in the energy market, primarily in relation to the energy transition. The dominating news for the month was the release of AEMO’s Electricity Statement of Opportunities (ESOO) which provides a grid supply and reliability outlook for the summer ahead and the next 10 years. The outlook has worsened since previous reports, and the ESOO identifies that the system will breach the interim reliability standard this summer for South Australia and Victoria, and from 2025 in NSW. More information is included below.
Despite this news, the mild ‘winter’ weather and soft demand meant that the market continued to fall slightly at the end of the month. Futures prices ended the month similar to the beginning of the month, despite a temporary rise in the middle of August. In the spot market it was a volatile month for SA with multiple large price spikes, along with some price spikes in the rest of the NEM in the middle of the month, however prices averaged below $100/MWh for much of the month.
Recent Highlights
- The Electricity Statement of Opportunities for 2023 highlights that the renewable energy transition is gaining pace and more urgent investment is required. ABC
- Summary of the ESOO here.
- The report also identifies a need to deliver current planned projects without delays.
- The ESOO only considers sufficiently advanced projects when evaluating system reliability, however when anticipated developments and government programs are included there is significant improvement in the reliability outlook.
- The NSW government is entering into discussions with Origin about extending the life of Eraring power station past it’s planned 2025 closure date, after a government review into the state of the energy market. SMH
- Energy Expert Tim Buckley has estimated the cost of keeping the power station open at $200-400 million a year plus the cost of the coal. ABC
- AEMO also identified in the ESOO report that keeping two of the four units operating for an additional couple of years would help ease supply pressures.
- The Victorian Government has also struck a deal with AGL to keep the Loy Yang A generator operating until 2035 in line with its current expected closure date. RenewEconomy
Renewable Energy News
- For the second quarter in a row the number of renewable energy projects reaching financial close was well below what is required for current emissions and renewable energy targets. AFR
- A total of 4 projects reached financial close with a capacity of 348 MW.
- However investment in battery storage smashed records, with $2 billion in investment finalised in the quarter.
- The initial size of the first NSW Renewable Energy Zone (Central West Orana) has been increased in size from 3 GW to 4.5 GW, with plans to increase to 6 GW later on. RenewEconomy
- The cost of the Snowy 2.0 project has blown out again to $12 billion, six times the initial estimate of $2 billion made in 2017. RenewEconomy
- AGL has opened their first big battery, which is the largest battery project in the world to use “grid forming inverters” to provide grid services and system strength as well as energy. ABC
Market Reports
