Our general level of busyness across the two contributing organisations (both us here at Global-Roam Pty Ltd and our collaborative partners at Greenview Strategic Consulting) means that completion of GenInsights Quarterly Update for Q1 2023 is running a bit behind our intended schedule.
We’re looking forward to having this released for subscribers as soon as possible.
In recent weeks I have had several conversations with different people about one particular aspect of the energy transition – with the conversation being particularly of interest given:
2) Looking forward to the ‘possibly as early as 2025’ mooted closure date for the larger Eraring Power Station, also in NSW.
In this coming week I’ll be attending the EUAA Annual Conference (Tue 16th and Wed 17th May) in Melbourne, and I’m sure it’s likely to be a topic of discussion there.
For all of these reasons (and more) I thought it would be worth posting two excerpts from the upcoming Update for Q1 2023 in order to help provide context to the conversation. Both come from Appendix 4 for Q1 2023:
(A) Requirement for peak ‘Aggregate Scheduled Target’
We started tracking ‘Aggregate Scheduled Target’ (AggSchedTarget) a number of years ago now, and in each quarter update some stats for what we’re seeing in the evolution of this metric.
1) As noted here in the WattClarity Glossary, this metric is the sum (for each dispatch interval) of the Target determined by NEMDE for all fully Scheduled units, regardless of technology type.
(a) Hence it includes the older thermal technology (coal, gas and liquid-fired), hydro and also batteries and negawatts.
(b) The one criteria is that the units must be fully dispatchable … so this does not take account:
i. Targets for Semi-Scheduled units (which don’t have to follow targets, and the target is more like a cap (and only when when SDC is true)); and
ii. Non-Scheduled units (which don’t even get given targets).
2) At an aggregate level a trend of this metric has been discussed earlier elsewhere.
(a) Such as in the presentation we gave in April 2022 to an audience organised by Smart Energy Council (see from ~26 minutes), drawing from Appendix 15 within GenInsights21.
(b) Also in the Smart Energy magazine for June 2022 (see p49/72).
Fresh from the Update for Q1 2023, here’s the trend of the latest statistics:
As time has progressed since we first started tracking this data, the trend appears to continue as follows:
Trend 1 = the blue line at the bottom is the annual minimum level of AggShedTarget … and this has been dropping rapidly since 2018.
(a) readers should note that this is not quite the same as declining ‘minimum demand’, but shares a similar cause.
(b) this is low, and rapidly getting lower…. which points to challenges for other ‘keeping the lights on services’.
Trend 2 = in the middle we see that the average and median levels have been falling since around 2008
(a) which speaks to the steadily lower volume of energy being required of the Scheduled Plant that needs to remain in the system.
(b) … and hence the increased difficulty of making a commercial return for these plant especially if ‘high capex and low opex’ (like coal units and CCGT).
Trend 3 = at the top of the chart, however, is the red line, which is the annual maximum level of AggSchedTarget, which:
(a) remains stubbornly high; but
(b) is becoming increasingly difficult to predict due to the increased weather dependency of the grid at various levels.
The key take-aways here are that:
Take-away #1) (in broad terms) the range of dispatch date to date* highlights that it almost does not matter how much wind and solar is added to the grid – there will continue to be a requirement for a large amount of installed dispatchable capacity (not too far under peak Operational Demand ) to be able to supply on occasions ‘when the wind does not blow and sun does not shine’.
* note that one thing that might potentially change this to some extent might be when we start to see results for increasing diversity of wind farms across Queensland … however that’s a strong ‘might’, as other analysis we’ve performed (such as Appendix 27 within GenInsights21) suggests that this is unlikely.
Take-away #2) The economics of (and operational regimes for) this plant are increasingly challenging, especially for legacy assets.
B) Waterfall diagram of ‘Aggregate Scheduled Capacity’
With the retirement of Liddell very topical as we were working through the Update for Q1 2023, and (after reflecting more on the implications of the above) we wondered how we stand in the NEM now, with respect to aggregate installed capacity for fully dispatchable plant.
Remembering these complexities of even choosing the most appropriate measure of installed capacity, and how the answer might be different for different question and technologies, we chose to focus on ‘Maximum Capacity’ for all of the fully scheduled units – both old and new.
Starting at January 2017 (i.e. prior to the closure of Hazelwood) we put together this ‘waterfall chart’ and will endeavour to keep it updated in every GenInsights Quarterly Update from this point forwards:
A couple quick points:
Take-away #3) Even prior to the closure of the last remaining 3 units at Liddell, in the 6 years since the retirement of Hazelwood, we have not replaced that magnitude of installed capacity with other dispatchable plant of any type.
(a) Adding on the Liddell closure takes us further into ‘deficit’ when measured against January 2017 levels.
(b) In aggregate at the end of the chart period (included in the Update for Q1 2023) the deficit is of the order of 3,000MW.
(c) Here’s the same chart in percentage terms, based on 100% at the start of 2017 prior to the closure of Hazelwood:
(d) From this chart we see the deficit is in excess of 6% of the entire installed capacity base of fully dispatchable assets installed at the start of 2017.
Take-away #4) Way back when we published the GRC2018 we wrote ‘the level of risk in the NEM is escalating’ (in Theme 2 within Part 2 of the 180-page analytical component) in the years since that time the waterfall charts above show that that level of risk (at least in terms of fully dispatchable capacity) has not been successfully addressed, and looks like it has further increased.