Winds of change: SA wholesale electricity market developments
Over the past decade, the South Australian electricity market has undergone a dramatic change in the supply mix. Prior to 2005, energy generation needs were predominantly sourced from gas and brown coal powered generation. Since then, over 1500MW of wind capacity has been installed and 770 MW of brown coal capacity has exited the market. These developments have substantially reduced South Australia's greenhouse gas emissions, but also created challenges for the electricity supply industry. Publicly (see any recent issue of the Australian or Financial Review, for example), recent increases in electricity prices have often been blamed on the higher share of wind power.
In this seminar, we present an in-depth report that investigates the evolving dynamics in the wholesale electricity market in South Australia. In particular this report examines three main drivers for potential changes in wholesale prices: growth in renewable energy generation, increased gas prices and the impact of market concentration and competition issues. Options to mitigate the underlying causes for increased prices and volatility will be discussed.
Presenter: Dylan McConnell (University of Melbourne)
Panel discussion: Kelly O'Shanassy (Australian Conservation Foundation), Andrew Stock (Chair Melbourne Energy Institute Advisory Board; Board member Clean Energy Finance Corporation and Comissioner Climate Council)
Dr Dylan McConnell is an energy systems research fellow at the University of Melbourne Climate & Energy College and researcher at the multi-institutional Energy Transition Hub. He has extensive experience in analysing the electricity sector in Australia. Dylan’s work is focused on electricity infrastructure and governance, and the energy transition in liberalised electricity markets. He also specialises in operations research and the optimisation of electricity systems. His work is interdisciplinary and has been published in forums including the Journal of Energy Policy, the Journal of Applied Energy, the Electricity Journal, and the Journal of Environmental Sociology. His work can be found on The Conversation.
PhD Project: Merit of Solar - Impact and Future of Solar Photovoltaics in the Australian Market
Renewable energy capacity has rapidly expanded in recent years as part of global efforts to dramatically reduce carbon emissions and avoid catastrophic climate change. The addition of generation capacity been shown to markedly reduce wholesale spot prices in restructured electricity markets around the world. This phenomenon, known as the 'merit order effect', is demonstrably impacting electricity wholesale prices in Australia and abroad. On the one had, the effect has been argued to offset the cost of schemes supporting renewable energy. On the other hand, others suggest it is a wealth transfer and not welfare enhancing, leading to higher prices. Tthe long-term implications of the merit order effect, for both renewable generators and liberalised electricity markets, are poorly understood, while be critical to these debates, and renewable energy policy. This research aims to investigate this issues in relation to distributed solar generation. Firstly, inversion modelling will be used to assess and characterise the contributions of rooftop solar generation to Australia’s electricity supply. Results from this analysis will then allow econometric techniques to be used to determine, estimates of the merit order effect, the impact on incumbent generator output and bidding behaviour and effect on emissions. Finally, this will allow potential short and long-term effects of renewable energy to be explored, using market modelling techniques.
Supervisor: Prof. Mike Sandiford
Start Date: November 2013
Contact: dylan.mcconnell@climate-energy-college.org