This week (Tuesday 18th and Wednesday 19th July) I’ve been pleased to be able to attend the Clean Energy Council (CEC)’s Clean Energy Summit in Sydney. A well-attended forum by CEC Members and other interested industry stakeholders.
In the lead-up to the Summit, I was asked to speak in a session focused on forecasting for the wholesale market, and for LGCs. As I explained to my audience, I was a little surprised to be asked to speak in a forecasting forum, given my my prior comments on why forecasting is a mug’s game.
Given that we’re not a company that provides numerical forecasts, but that I have been puzzling through the wicked problem of resolving the Energy Trilemma that’s upon us, I shared some of my perspectives of the challenge that is upon us. I summed this up in the following 4-actor caricature:
I don’t have enough time today to translate my presentation to a written post here on WattClarity (and it would be too long in any case), so will endeavour to progressively provide shorter snippets as sequential posts:
1) Crisis is upon us
In July 2016 I posted about a remarkable pattern of prices seen through Q2 across all regions of the NEM. Earlier this month I updated this analysis for Q2 2017 and noted how the results had become even more extreme (which was then picked up elsewhere). In my recent article, and at the conference, I suggested that this now appears to be a more systemic change in pricing patterns. As I noted at the conference, these patterns will pose significant challenges to
(a) the “buy low, sell high” arbitrage approach that would power battery storage, and
(b) the sheer number of hours involved (more than 50% of the half-hours above $100/MWh in TAS, VIC and SA through Q2 2017) making all methods of demand response more problematic.
I’ve also noted how we’re seeing this already have a significant toll on the large industrial energy users we serve as a valued part of our client base.
As noted to the audience, I’m more pessimistic than other speakers at the event had seemed to be that we’re close to a resolution.
2) Four types of actors in the drama
Through my presentation, I then walked through some examples of how different people (and “things”) seem to have been auditioning for the four roles in the emerging crisis (the Victim, the Means of Destruction, the Villain and the Saviour). In upcoming posts, I’ll be endeavouring to translate these thoughts (more fully formed) into discrete articles on WattClarity.
In an effort to forestall misdirected comments below, let me re-state my perspective that:
(a) The energy transition is occurring for a number of different reasons.
(b) it’s not the destination that has necessarily lead to the crisis upon us, it’s been the inadequate process we’ve all been following whilst striving to get there.