It’s been a busy month in energy news, most significantly with the announcement of early coal plant closures creating increased pressure on the delivery of transmission infrastructure and renewable generation to fill the gap. This has affected futures prices in all states across the NEM, which have recorded a significant jump in recent weeks (in particular NSW Cal 2025 futures which rose 24.5% in 2 weeks since the announcement of the early Eraring closure). The BOM is predicting above average rainfall and minimum temperatures for Autumn across Australia, which provides some positive news and should ease pressure on the market if mild conditions reduce heating demand leading into winter, however this has not been enough to offset other uncertainties in the market.
- NSW and Queensland experienced very tight supply and demand balance on Tuesday 1st Feb as heatwaves collided with generator outages. AEMO was forced to activate the Reliability & Emergency Reserve Trader mechanism (RERT) in Queensland on Tuesday evening as a last resort to prevent blackouts. WattClarity
- Under the RERT contracted companies are paid to cut their power usage or use alternative sources such as diesel generation for a certain period of time.
- The market cap ($15100/MWh) was reached for multiple 5-minute dispatch periods.
- AGL has brought forward the closure of two major coal generators. The closure of the Bayswater Plant in NSW was brought forward 2 years to 2033 and the Loy Yang A plant in Victoria was brought forward 3 years to 2045 at the latest. AFR
- One week later Origin announced that Eraring power station, the largest coal fired generator in Australia and responsible for 20% of NSW total electricity consumption, may close as early as 2025 (the minimum notice Origin is required to give the Energy Regulator).
- The announcement prompted backlash from the Federal government who cited energy security concerns, however AEMO and NSW energy minister Matt Kean say there will be enough supply aided by additional transmission capacity and storage. AFR
- Just days later AGL refused a bid by billionaire Mike Cannon-Brookes and Canadian private investor company Brookfield to acquire AGL, with the intention of closing all coal generators by 2030.
- This sparked much discussion around energy security, the pace of the energy transition and the validity of the AGL demerger planned for later this year, as well issues surrounding Brookfield’s ownership of Victorian electricity networks. ABC
- The latest IPCC assessment has warned that the impacts of climate change are already occurring and will be more severe than predicted, and “Any further delay in concerted global action will miss a brief and rapidly closing window to secure a liveable future.” ABC
Renewable Energy News
- NSW has received another 40GW of proposals for the Hunter and Central Coast renewable energy zone. This takes the total number of proposals for NSW REZs to 135GW, far larger than the planned 12GW of generation and 2GW storage. RenewEconomy
- Australia’s battery capacity is expected to double this year as large-scale battery projects come online, as 2021 saw the beginning of construction for many major projects. AFR
- Wind and utility-scale solar produced a record combined output of 3628GWh for the month of January. RenewEconomy