How the Changing Wholesale Market Conditions in Australia ...€¦ · Large rooftop solar penetration, not much growth in utility-scale renewables No major entry / exit of thermal

How the Changing Wholesale Market Conditions inAustralia Should Benefit Flexible Demand and Supply

Technologies

Gordon Leslie

Monash University

14 May 2019Monash Energy Workshop

Content from today’s presentation largely derived from work-in-progress, How does Rooftop Solar Penetration Affect GeneratorEfficiency and Market Power? (w/ Akshaya Jha, Carnegie Mellon)

Gordon Leslie (Monash) Rooftop Solar and Changing Wholesale Market Conditions 14 May 2019 1 / 28

Welcome!

Slides for each session can be found at:

https://sites.google.com/site/gwleslie/home/workshop

https://tinyurl.com/MonashWorkshop

Toilets are next to the lifts

Sessions are set up to allow for lots of Q&A and discussion




The growth in rooftop solar: Victoria

>5-fold increase in rooftop solar capacity in 7 years

Regularly covered 10-15% of daylight load in January 2019


Energy Storage and Demand Response for aHigh-Renewables Future

The growth of intermittent renewable energy:

Changes the dynamics of system demand throughout the day

⇒ Changes ramping patterns of generators over the dayFocus of this session

Increases the need for frequency regulation

Changes the distribution of short-interval balancingNot the focus of this session

This session:

How the Changing Wholesale Market Conditions in Australia ShouldBenefit Flexible Demand and Supply Technologies

Aims for this workshop / overview of the day


The growth in rooftop solar: Western Australia

>5-fold increase in rooftop solar capacity in 7 years

Regularly covered 20-25% of daylight load in January 2019


What we can learn from the WA wholesale market (SWIS)

Since 2015:

Large rooftop solar penetration, not much growth in utility-scalerenewables

No major entry / exit of thermal plants

Aside from rooftop solar impact, system demand similar

⇒ Great conditions to study the impacts from mass rooftop solar adoptionon wholesale market prices and competition


Trends in electricity price, fuel prices and solar

January 2015 to December 2018:

Wholesale electricity prices ⇑ 6%

$47.4/MWh to $50.2/MWh Annual load-weighted average balancingmarket price

Natural Gas prices ⇓ 17%

Natural gas accounts for ≈ 41% of system demand

Coal prices ⇑ 5%

Coal accounts for ≈ 50% of system demand

Rooftop solar generating capacity ⇑ 133%

448 MW to 1,045 MW (from ≈ 10% of middle-of-day load to 20-25%)

Why isn’t the growth in rooftop solar adoption resulting in lowerwholesale electricity prices?


Is it the “duck curve?” (or “black swan?”)

System demand: Middle of day dip, but end of day ramp hasincreased



Prices: Middle of day now cheaper, but sunrise / sunset moreexpensive



Can envisage two reasons why mass rooftop solar adoption couldresult in higher wholesale prices:

1 Costs: Base load generation (high start-up costs, low marginal costs)unable to meet changing dynamics of load and is replaced by peakinggeneration (lower start-up costs, higher marginal costs)

2 Competition: Less generating units are capable to ramp up for peaks.Those left operating face less competition and therefore might be ableto exercise market power to capture more rents

Question: How would this affect within-day price dynamics, andtherefore the prospects for flexible demand and supply technologies?


Pre-solar penetration market outcomes

Daylight hours Sunset hours (daily demand peak)

Third generator has start-up costs, recovers them over both intervals

Same clearing price daylight and sunset


Post-solar penetration market outcomes

Daylight hours (r’top solar demand shift) Sunset hours (daily demand peak)

Third generator not running in daylight, increases bid price at sunset

Prices fall in daylight, rise in the evening


Base load and peaker substitution

Coal + CCGT generation (base load) OCGT generation (peakers)


The “duck curve” and complementary technologies

In WA, open-cycle gas turbines have captured large profits from thenew wholesale market conditions

Incumbent peaking technology, capable of ramping / output flexibility

Increased solar penetration will continue to increase the value offlexible supply and demand technologies in WA

Is this the case everywhere and all-year round?


Seasonal impacts - Spring

System Demand Real-time price

Spring - rooftop solar exacerbates day-time trough and sunset ramp

Spring - rooftop solar exacerbates within-day price differences


Seasonal impacts - Summer


Summer - rooftop solar dampens morning ramp and has a smallerimpact on sunset ramp

Summer - rooftop solar has smaller impact on within-day pricedifferences


NEM - Queensland (all year)


QLD has a slight “duck curve” emerging

Price trough to peak is growing (slowly)


NEM - Victoria (all year)


VIC had flat prices in 2013-14

Price trough to peak is growing (slowly?)


No, price trough to peak is growing fast!

20% of days in 2015 had peak to trough differences >≈$50

20% of days in 2018 had peak to trough differences >≈$175

Measured as difference between maximum post 6pm price andminimum pre 6pm price


Rooftop solar and the changing wholesale marketconditions

There has been a composition shift in output by generatingtechnology

No entry/exit in WA yet, but a small substitution between base loadand peakers can drive big changes in daily price dynamics

Growth in intermittent renewables (esp. solar) should benefit flexiblesupply and demand conditions IF:

The within-day ramping requirements increase

Solar exacerbates trough to peak ramp in more temperate zones /seasonsSolar likely to be load-following in summer, less payoff for flexibletechnologies?

So... what is happening with storage and demand-side participation inAustralian wholesale markets?


What is happening with storage and demand-sideparticipation in Australian wholesale markets?

The purpose of today is to find out!

Storage: High-profile, grid-connected and distributed batteries

Is this a drop in the ocean or a sign of things to come?Are there hidden barriers beyond the direct installation costs, operatingcosts and projected operating revenues?Is Snowy 2.0 the elephant in the room?

Demand-side participation: Lower-profile(?) development oftechnology and programs

Is this a drop in the ocean or a sign of things to come?Are there hidden barriers beyond the direct installation / recruitmentcosts, operating costs and projected operating revenues?Is Snowy 2.0 the elephant in the room?


Session 1: Panel on storage in Australia

Ted McKlveen, Advanced Microgrid Solutions

Algorithmic Trading for Storage Assets in the NEM

Aylin Cunsolo, Baker McKenzie (and Monash alumni!)

Exploring the Regulatory Landscape for Energy Storage

A/Prof. Iain MacGill, UNSW Centre for Energy and EnvironmentalMarkets

Facilitating Distributed Storage in a Future High Renewables AustralianNEM: Aggregating Resources Up, Disaggregating Markets Down


Session 2: Lessons from California

Prof. Frank Wolak, Stanford University

What Kinds of Storage Enable a Greener Grid in California? (WithLessons for Australia)


Session 3: Panel on demand side participation in wholesalemarkets

Rachele Williams, Transgrid

Powering Sydneys Future, Deferring a Replacement

Rando Yam, Enel X Australia (and Monash alumni!)

Enel X: An Aggregators Demand Response Experiences in the NationalElectricity Market

Emma Jenkin, DCPowerCo.

Innovation in Electricity Retailing: Challenges for a New Entrant


Session 4:


Session 4: Discussion of Snowy 2.0

Prof. Chloe Munro AO, Monash University

If Snowy 2.0 is the answer, then what is the question?

Prof. Frank Jotzo, ANU Centre for Climate Economics and Policy

How should state-owned grid-scale storage be operated and regulatedin a competitive electricity market?


My selfish objectives and requests for today

Objectives:

Understand the barriers to the adoption of storage / demand sideprograms at levels that scale with the penetration of renewables

Identify research and policy priorities on designing, operating andregulating Australia’s electricity markets

Requests:

Please share your industry and research experience, give input and askquestions to our speakers

Please reach out to Monash researchers with future challenges you’dlike studied

Monash Business SchoolMonash Energy Materials and Systems Institute (MEMSI)


Do the Leslie’s have a duck curve? Looks like they feel the cold in Winter!

[email protected]://sites.google.com/site/gwleslie/home/workshop


Content from today’s presentation largely derived from work-in-progress, How does Rooftop Solar Penetration Affect GeneratorEfficiency and Market Power? (w/ Akshaya Jha, Carnegie Mellon)


mailto:[email protected]



Documents

How the Changing Wholesale Market Conditions in Australia ...€¦ · Large rooftop solar penetration, not much growth in utility-scale renewables No major entry / exit of thermal