SUPPLY AND DEMAND IN THE AUSTRALIAN ENERGY MARKET

Jason West Senior Energy Market Consultant, Energy Exemplar

INTRODUCTION TO ENERGY EXEMPLAR

2

Energy Exemplar

Develops and commercialize PLEXOS® Integrated Energy Model.

PLEXOS® development and support

Implementation and Training

Commercial Databases

Solutions according to customer request

Cloud & Cluster Computing

3

Penetration in the Current Market

Exceeded 1,155 PLEXOS licenses at 185 sites in 38 countries

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Function & Scalability

Power system model scalable to thousands of generators and transmission lines and nodes

• System size:

– From single generator or node to 1000’s

– Largest system studied:

• Eastern Interconnect (US)

• 50000+ nodes

• 7000+ generators

• Simulation interval:

– Switch easily between hourly, half-hourly, 10-min, 5-min, etc.

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PLEXOS Key Functions

PLEXOS Functions

Price Forecasting

Renewable Integration

Investment Planning

Ancillary Services & Energy Co-

Opt

Risk Management

Portfolio Optimisation

Dispatch Optimisation

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How Accurate is PLEXOS?

Back test of 2012/13 spot market price

Back test validates the model and dataset

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KEY INFLUENCING FACTORS WHEN GAS PRICE FORECASTING

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PLEXOS Australian database

• PLEXOS Australian Electricity Database

• PLEXOS Australian Gas Database

• PLEXOS WA Database

9

Heating Oil Futures Price

10 Chart courtesy of Stockcharts.com

Downtrend since 2011

2005

Copper Price

11 Chart courtesy of Stockcharts.com

Downtrend since 2011

Copper and Energy

12 Chart courtesy of Stockcharts.com

Downtrend since 2011

Copper

Heating Oil

1980 2005 GFC

2015

Uranium Oxide Price

13 Chart courtesy of InfoMine.com

Natural Gas – Henry Hub Futures Price

14 Chart courtesy of Stockcharts.com

2009

Forecasting What?

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• Contract demand / supply balance

• Physical demand / supply balance

• Fuel Prices

• Regulation

• Government Policy

• Generator / Retailer strategies

• Inter-connectors

• Plant performance (reliability)

• Contract Types

• Generator Balance Sheet

• New entrant timing and economics

• Large I&C retail load coming to market

• Weather forecasts

• Risk Management Policies

• Traders / Speculators incentives

Factors Affecting the Contract Market

Applied to a model

To…..

Forecast Electricity Spot & Gas Prices

Blue font: Can be captured in PLEXOS

Net Generation Profile in Eastern Australia

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Generator Capacity Schedule Generator Capacity Schedule

Mt. Mercer 131 2014 Morwell/EnergyBrix -189 August 2014

Gullen Range 166 November 2014 Redbank -144 August 2014

Snowtown Stage 2 270 November 2014 Wallerawang C -1,000 November 2014

Wilga Park B 6 January 2015 Pelican Point CGT U2 -239 April 2015

Royalla 20 February 2015 Tamar Valley CCGT -208 August 2015

Portland 47 February 2015 Anglesea -156 August 2015

Boco Rock Stage 1 113 March 2015 Tamar Valley Peaking -58 withdrawn, return by Jun-16

Chepstowe 6 March 2015 Mackay GT -34 2016

Taralga 107 May 2015 Collinsville -190 June 2016

Bald Hills Phase 1 107 May 2015 Torrens Island A -480 2017

Nyngan 102 July 2015 Smithfield -171 2017

Broken Hill 53 August 2015 Northern -546 March 2017

Moore 56 March 2016 Playford B -240 mothballed, retirement by Apr-17

Ararat 240 May 2017 Bell Bay Three -120 January 2018

Liddell -2,000 2022

Mt Stuart -424 2023

New Builds Retirements

Net change to NEM Generation Capacity

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Tasmania Hydro Levels

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• El Nino

• Record Warm Sea Surface Temperatures

Snowy Hydro • Water levels currently at 50%

• PLEXOS can model – Different initial conditions for water levels

– Perform sensitivity analysis for differing water availabilities

– Perform 5 minute and 30 minute simulation to assess impact of different hydro generation

– Emulates the AEMO Market clearing engine

– Does less coal generation in the NEM result in Snowy supplying more swaps?

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CASE STUDY: INTEGRATING GAS AND ELECTRICITY

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PLEXOS database objects for modelling gas

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Case Study: Co-optimisation Example

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Energy Exemplar 22

~

~ Electricity Market

Gas Generator G1

Coal Generator G2

Gas Industrial Demand 1 Gas Industrial Demand 2

Gas Residential Demand

Electrical System

Spot Gas Market

Gas Storage

Take or Pay contract

Case Study: Co-optimisation Example

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GasGen1

Take or Pay Contract

Sell into Spot Market

(spot gas > ToP)

Powergen (spot elec >

SRMC)

Inject in Storage

Withdraw from Storage

Sell into Spot Market

Powergen

Buy from Spot Market

Powergen

Inject in Storage Usually modelled but not part of this example

Profit analysis - 1 year simulation

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(in MM$)

Electric Electric + Gas Markets

Electric + Gas Markets + Gas Storages

Sales to Electric Pool 29 28.5 26.5

Sales to Gas Spot Market - 24 28

Fuel Costs 24 42.5 42.5

Total Profit 5 10 12

MODELLING THE IMPACT OF LNG DEMAND ON THE EAST COAST GAS MARKET CASE STUDY: NSW

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Study topology

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Study assumptions • Maximization of market welfare by taking a least-cost modelling approach.

• Perfectly competitive market – no market power of participants

• LNG netback price of $13/GJ in QLD

• LNG demand - 6 trains totalling 1518PJ/Year by 2023

• New build variables for CSG development in NSW

• Production and transmission constraints from AEMO GSOO

• Published AEMO natural gas load used

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Results – Scenario 1

• In context, going by NSW demand of 155PJ in 2012, this equates to $532M in total savings by 2023

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Results – Scenario 2

• In context, going by NSW demand of 155PJ in 2012, this equates to $1.6B in total savings by 2023 29

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