FEBRUARY 2015
AN INTERESTING SUMMER P3 FOCUS ON ENERGY CONSUMERS P5 INTERNATIONAL OPERATORS MEET P7
Energy Update February 2015
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UPDATE FROM MANAGING DIRECTOR AND CEO MATT ZEMA Happy New Year – and welcome to the first edition of Energy Update for 2015. We have observed some interesting consumption trends in the National Electricity Market over recent months. Our report (see over) on our update of the 2014 National Electricity Forecasting Report shows changes in consumer behaviour can have just as much an impact on consumption as weather conditions. In Queensland, we saw a run of recordbreaking spring temperatures and high overnight minimums leading to an increase in air conditioner use. In a period of extended high temperatures, it appeared sweltering Queenslanders simply did what they could to keep cool. In addition, there was lower-thanexpected rooftop photovoltaic output, contributing to the state’s highest level of actual consumption in four years. Improving our understanding of the drivers of consumption is vital to the energy industry, in particular market participants and investors. This includes recognising the drivers of consumer behaviour, which as noted earlier, can have considerable impact. To coincide with the establishment of Energy Consumers Australia in January, AEMO launched the first of its consumer stakeholder forums late last year, which was warmly received by participants. Increased consumer engagement continues to be a key priority for AEMO in 2015 and beyond.
This month, we commenced our annual planning consultation. The consultation reflects our continuing focus on industry engagement to help us better understand stakeholder needs and expectations. We look forward to industry feedback to support our program of continuous improvement for our reports, analysis, and forecasts. Looking ahead, it’s shaping up to be an important year for our eastern and south-eastern gas markets, with the first liquefied natural gas (LNG) shipments loaded in December. The commencement of the new LNG export facilities in Gladstone links Australian gas markets to international gas markets – and their driving influences – for the first time. This is expected to affect domestic gas prices, consumption and supply in the near term. Exposure to international oil prices is also likely to influence local markets and investment.
It’s shaping up to be an important year for our eastern and south-eastern gas markets.
AEMO will publish the 2015 Gas Statement of Opportunities (GSOO) in mid-March which will provide information and analysis on the state of the eastern and south-eastern gas markets. The report explores gas supply adequacy in light of the recent changes in gas infrastructure to support competitive market development and efficient energy investment and use. The GSOO follows our first National Gas Forecasting Report released in December last year, which, including the ramp-up of LNG projects, forecast a 23% average annual rise in total gas usage over the short term. Together, the NGFR and GSOO documents provide a picture of gas demand and supply adequacy in our domestic gas markets to inform investors, market participants, and the wider community.
CONTENTS
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03 Spring-summer consumption trends
06 Women lead at business summit
04 AEMO commences 2015 planning studies consultation
07 AEMO meets with world’s largest power system operators
05 AEMO consumer engagement complements ECA start
08 In brief
Energy Update February 2015
SPRING -SUMMER CONSUMPTION TRENDS AEMO has observed a trend of increased electricity consumption in Queensland for the six months from July– December 2014 compared to AEMO’s 2014 National Electricity Forecasting Report.
AEMO Group Manager Forecasting Margarida Pimentel said the increase appeared to be driven by Queensland’s residential and commercial sector reacting to unusually warm spring weather.
“This decrease was the result of lowerthan-expected rooftop PV uptake leading to higher grid-connected electricity consumption in the residential and commercial sector,” said Ms Pimentel.
“Queensland experienced recordbreaking temperatures in late October and November last year. The November 2014 mean maximum temperature was the highest on record for the state, leading to some very warm nights for Queenslanders,” said Ms Pimentel. “This rise in electricity consumption in the residential and commercial sector appears to be related to the increased use of air conditioning as Queenslanders kept cool in the unseasonal hot weather.” AEMO also found that in Queensland, the estimated rooftop photovoltaic (PV) output of 517 gigawatt hours (GWh) was less than the forecast 585 GWh between October and December 2014.
In a number of NEM regions, electricity consumption for the month of January was the lowest in over a decade:
• South Australia’s operational consumption in January 2015 was 1,106 GWh, close to the 1,049 GWh recorded in January 2004. • New South Wales had the lowest operational consumption for January since 2002, when 5,997 GWh was recorded in January this year compared to 5,833 GWh in January 2002.
Ms Pimentel said that AEMO is committed to providing the industry with critical information and timely reporting on emerging energy consumption trends and developments. “We will continue to monitor actual consumption in Queensland over the summer period to establish if this trend continues,” said Ms Pimentel. For more information, contact AEMO Group Manager Forecasting Margarida Pimentel.
4,400
4,200
4,000
3,800
GWh
• In Victoria, January 2015 recorded the lowest operational consumption for the month of January since 2002, with 3,901 GWh in January 2015 compared to 3,786 GWh in January 2002.
Actual consumption in November and December 2014 reached its highest level in four years.
3,600
2014 NEFR
2014 NEFR UPDATE
3,400
3,200
3,000 JULY
AUG 2014 NEFR
SEP ACTUAL 2014-15
OCT ACTUAL 2013-14
NOV
DEC ACTUAL 2012-13
SPREAD OF PREVIOUS 4 YEARS (JAN 11 TO DEC 14)
Queensland consumption between July–December for 2012–13, 2013–14, and 2014–15.
Energy Update February 2015
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AEMO COMMENCES 2 015 P L A N N I N G S T U D I E S C O N S U LTAT I O N AEMO is seeking stakeholder feedback on its proposed initiatives to evolve the 2015 National Transmission Network Development Plan (NTNDP). AEMO Group Manager Planning Louis Tirpcou said AEMO is committed to continually improving its suite of planning publications to better meet stakeholder needs. “AEMO respects the expertise of our stakeholders and values all feedback,” Mr Tirpcou said. “A key focus for AEMO this year is ensuring the NTNDP remains a valuable information resource that represents a holistic view of the eastern and south-eastern Australian electricity transmission network.” AEMO has published its proposed planning study assumptions for the 2015 NTNDP in the 2015 Planning Studies Consultation Paper. This paper also outlines the issues AEMO intends to address in the 2015 NTNDP.
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Energy Update February 2015
AEMO welcomes stakeholder feedback on the following aspects of the 2015 NTNDP:
• Review the scope for the 2015 NTNDP by considering relevant sensitivities to the planning scenarios.
• Revise the methodology for modelling plant retirements by updating cost data and reviewing alternative modelling approaches.
The 2015 NTNDP will use scenario definitions developed by the 2014 scenarios working group, comprising both AEMO representatives and external stakeholders. AEMO may need to consider additional sensitivity studies, including studies to model any carbon abatement policy changes. Stakeholders are invited to comment on AEMO’s proposed scope for NTNDP scenario considerations.
Stakeholders are invited to comment on AEMO’s proposal to revise the cost data and treatment of generator retirements. In particular, AEMO is looking for comment on the appropriateness of using the current retirement/rehabilitation cost assumptions. • Improve the methodology for modelling renewable generation by considering alternative approaches to least-cost expansion. The long-term expansion plans are currently modelled using short-run marginal costs for all generators. AEMO considers this assumption may bias against renewable generation expansion, favouring instead Largescale Renewable Energy Target (LRET) non-compliance. AEMO invites stakeholders to comment on alternative approaches to modelling renewable generation.
Stakeholders who have additional suggestions on ways AEMO can improve the 2015 NTNDP, other than the topics outlined in the consultation paper, should also include these ideas in submissions. Feedback is sought by Friday, 27 March 2015. For more information, contact AEMO Group Manager Planning Louis Tirpcou.
AEMO respects the expertise of our stakeholders and values all feedback.
AEMO CONSUMER ENGAGEMENT COMPLEMENTS E C A S TA R T The commencement of Energy Consumers Australia (ECA) on 30 January 2015 marks an important step in strengthening the voice of energy consumers on national energy market issues. ECA, established by the COAG Energy Council, provides a new focus on energy market matters of strategic importance for energy consumers, and residential and small business consumers in particular. Energy users will be able to engage on issues such as price, quality, safety, reliability and security of the supply of energy services in a more meaningful way. The new organisation is chaired by experienced consumer advocate Louise Sylvan, who leads a five-person board bringing together expertise in consumer protection and advocacy, energy markets, and regulation. Key ECA activities will include participating in energy market issues and reform for the benefit of Australian energy consumers, undertaking research and education to build knowledge and influence energy market policy development. As ECA establishes its functions and work program, AEMO has an opportunity to play an important advisory role. In response to a request for input, AEMO has offered to work with ECA, especially in the area of information provision, and is facilitating the collection of market participant fees to support ECA initiatives. AEMO’s support for ECA coincides with the launch of its first consumer forum, held in late November 2014 and attended by consumer representatives from all National Electricity Market (NEM) regions. “Consumer advocacy groups are important to the energy industry, providing insights into consumer views, ideas and concerns on energy pricing, supply, reliability, and consumption,” said AEMO Executive General Manager Stakeholders and Information Karen Olesnicky. “For this reason, AEMO and consumer groups have decided to partner in a trial dialogue program to discuss relevant issues and initiatives in an open forum. At our first forum, AEMO updated the group on progress of the Retail Market Roadmap, and the results of the Value of Customer Reliability review,” said Ms Olesnicky. “Consumer representatives were very interested in both topics, and provided us with valuable feedback and comments on the agenda, presentations, and ways to enhance our understanding of energy consumer perspectives.” The session was also useful in helping AEMO improve understanding of the topics consumer representatives are interested to learn more about. These include how the NEM and market bidding work, forecasting, load shedding, renewable energy, and rule changes. Following the success of the November consumer forum, AEMO will host a further forum in April 2015, working with consumer representatives ahead of the meeting to provide training sessions on suggested topics. For more information see AEMO’s website, or contact AEMO Group Manager Stakeholder Relations Sandra McLaren.
Energy Update February 2015
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WOMEN LEAD AT B U S I N E S S SUMMIT Photo courtesy Aventedge.
AEMO employees were among Australia’s best and brightest leaders, managers, and entrepreneurs attending the second annual Women in Leadership Summit last December. The two-day interactive forum was held in capital cities around the country and brought together Australia’s most accomplished leaders to deliver first-hand advice and insight into their career challenges and successes. The event centred on three key areas: diversity and inclusion; flexible working arrangements; and career development. AEMO’s Acting Manager National Planning Laura Walsh said it was encouraging to hear that Australian companies are increasingly focused on gender diversity across all levels as a proven method to drive business innovation, lift performance, and improve economic competitiveness. “Many organisations discussed the importance of demonstrating commitment to gender diversity as a means of retaining high performers,” said Ms Walsh. “From a personal point of view, the forum was a great opportunity to interact with women that are successful in their careers. This inspired me to reflect on the direction that I want to take my own career.”
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Energy Update February 2015
AEMO Principal Engineer Congestion Modelling Sarah Probert said it was interesting to learn about the varied career paths of the speakers. “Several speakers stressed the importance of personal brand, networking, and having a sponsor,” said Ms Probert. “The conference also provided good insight into how companies are addressing diversity and employee retention through fostering an inclusive workplace culture and introducing flexible working arrangements.” AEMO Senior Analyst Operations Yvonne Tan said she enjoyed hearing successful people from different backgrounds and industries discuss what makes a good leader. “A key take-out from the forum for me was the importance of demonstrating an attitude of gratitude,” said Ms Tan. “It’s a valuable reminder to recognise and thank the people that helped you make a project successful.” See Women In Leadership Summit website for more information.
Australian companies are increasingly focused on gender diversity across all levels.
AEMO MEETS WITH WORLD’S LARGEST POWER SYSTEM O P E R AT O R S AEMO Managing Director and Chief Executive Officer Matt Zema joined top energy executives and experts from leading international large power grid operators at the recent GO15 annual general meeting (AGM) in Guangzhou, China.
The AGM marked the 10-year anniversary of GO15, a voluntary initiative of 17 of the world’s largest power grid operators, representing more than 70% of global electricity demand, and delivering electricity to 3.4 billion consumers across six continents. Mr Zema said the GO15 initiative is beneficial for member countries seeking to share ideas and find solutions to common issues facing power system operators across the globe. “The complexity of our respective power systems and power grids is increasing each year. The ability of these organisations to get together annually to discuss in an open forum the challenges and opportunities we each face is very valuable,” said Mr Zema. “Even though our issues are similar, we end up with bespoke solutions which take into account each country’s geopolitics, environment, and market design. For example, Australia shares many similarities with power grid operators in Europe, the United Kingdom, and the United States, in that we’re all facing declining consumption driven by the local economy and the rise of rooftop photovoltaic renewable energy, however we’re each tackling the problem slightly differently.“ GO15 leaders attending the forum shared their views on pressing issues facing grid operators around the world, including: • Sending the right signals for the entry and exit of generation capacity in an efficient and cost-effective way. • Anticipating and mitigating the impact of extreme weather on reliability and security of supply. • Promoting and managing stronglyinterconnected countries and regions, and appropriate systems security. • The role of electric vehicles and storage in the changing energy mix. Mr Zema said these themes were common to all power grid operators. “Across the board, demand profiles are changing and forecasting is becoming harder to predict.
The other area of interest to GO15 member countries is what the systems and markets of the future will look like – are the market designs of 10-15 years ago able to keep up with new technology and innovation?” said Mr Zema. “There is the issue of storage. Everyone is struggling with how to integrate storage and some countries are moving faster on this than others. And in the United States they’re putting in around 10,000 electric vehicles a month.” As a GO15 Steering Board Member, AEMO plays a vital role in the member community through its contribution to four standing committees. The committees are tasked with investigating and reporting on: • Grid-flexible resources. • Grid reliability and security. • Grid economic sustainability. • Grid intelligence. AEMO Chief Operating Officer Mike Cleary and Executive General Manager Corporate Development David Swift represent AEMO at these working groups which meet throughout the year to produce reports, case studies, discussion papers, and solutions for GO15 members. “These steering committees and the working groups that develop out of them are why the GO15 initiative is so important. Their remit is to deliver tangible outcomes and possible solutions that members can modify to take back to their own countries,” said Mr Zema.
Key challenges for GO15 members include: • Low economic growth. • Severe weather conditions. • The rapidly changing energy mix. • Connection of renewables. • International standards for power electronics to contribute to the required generation inertia. • Integrated grids (multiple local smart girds connected through interconnected power grids).
Energy Update February 2015
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IN BRIEF E-LEARNING HELPS TO REINFORCE U N D E R S TA N D I N G AEMO’s e-learning and faceto-face courses are a great way for industry participants to access knowledge and expertise from some of industry’s leading experts. These courses provide a unique blend of independent technical and practical information to help those with an interest in Australia’s energy markets to better understand AEMO’s market operator role, the services we provide, and the National Electricity Market and eastern and south-eastern gas markets. “We have received great feedback from our participants,” said AEMO Training and Knowledge Specialist Joe Cignarella. “We have found that people who take part in AEMO e-learning really enjoy the online aspect, and reinforcing their understanding when they meet experts in face-to-face training, as well as networking with other industry participants.” To register or learn more about AEMO’s courses, visit AEMO’s Learning Centre or call the Information and Support Hub on 1300 236 600.
AEMO TRAINING
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Course
Location
Date
Network and FCAS constraints in the NEM
Melbourne
11-12 March 2015
National Electricity Market (NEM) Overview
Sydney
19 March 2015
National Electricity Market (NEM) Overview
Melbourne
26 March 2015
Overview of the Victorian Gas Market (DWGM)
Melbourne
16 April 2015
For more details and how to register for a course, visit AEMO’s Learning Centre or call the Information and Support Hub on 1300 236 600.
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Energy Update February 2015
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