Renewables and Energy Technology

Wind turbines, solar panels, home battery storage - if it's discussion about renewable energy you're after, you'll find it here.

Wind turbines, solar panels, home battery storage - if it's discussion about renewable energy you're after, you'll find it here.

Some question about the australian market

Switched-on

Hi,

my name is alexandre,i don't really know if someone can help me in this forum, but i'll try anyway.

I am a french master student at École Polytechnique. I am currently involved in a project management course in which we have to developp a renewable energy project. We chose to build a 25 MW PV plant in Broken Hill (NSW). We know that since 2014, the electricity market in NSW is deregulated, so every generator has to bid their production in real time to the AEMO, which will chose whether you are in or out of the market.
My question are, since the levelized cost of electricity of the renewable energy production sources are higher than the cost of the conventional fossil-fuels generator :

-How the renewable energy producers can compete ?

-Is the green cost "tax" on the australian consumer sufficient to help the renewable energy producers ?

-Do the renewable producers (utility scale) directly bid to the AEMO ? Or do they have a intermediary ?

 

If you could help me with these question, it would really allow us to advance in our project.

 

Kindly,

Alexandre.

2 REPLIES 2

Re: Some question about the australian market

AGL Employee

Hi Alexandre

 

Many thanks for your questions.

I’ll do my best to answer them.

 

 

How the renewable energy producers can compete?

 

It’s a real challenge. Fossil fuel generators in Australia can create and sell energy at a much lower cost – because of their size/ scale and their low cost running costs. They’ve also been around for a while (a decade or more) meaning a lot of their original fixed costs have been paid off – again meaning low cost.

The only ways the renewables can compete in this market is:

  1. They get free ‘fuel’
  2. Government subsidies - “the Renewable Energy Target” scheme.

 

I’ll explain these in turn.

 

  1. They get ‘Free Fuel’

This is the beauty of renewables. You are using mother nature as a fuel source, in terms of solar, wind, waves or gravity. Your fuel is constantly renewed, thus has unlimited supply, thus has zero cost. Once you build your plant, you don't need to pay for 'fuel'. Just capital and maintenance, thats it.

 

  1. They get government subsidies – “LRECs”

Although you have unlimited and free fuel, renewables are a relatively new technology and are expensive. Because of upfront capital costs, as a rule of thumb a wind farm will cost double to produce a unit of electricity that a coal plant.

To get around this and help renewable generators the Australian government introduced a scheme which helps ‘top up’ the difference between the renewable cost and the market (largely influenced by coal generation) price. This mechanism is called the “ RET Scheme“ and more info can be found about it here.

 

It’s a shame that renewables need to rely on government subsidies to compete – but until the price of coal fuel includes the environmental cost, energy prices in Australia will be too low for them to compete on their own feet.

 

Is the green cost "tax" on the Australian consumer sufficient to help the renewable energy producers ?

I think you are referring to the carbon tax. This legislation no longer applies in Australia as it was reversed by the current government.  

 

Do the renewable producers (utility scale) directly bid to the AEMO ? Or do they have a intermediary ?

This gives an overview of how generators ‘bid in’ to the National Electricity Market or NEM. Generators tend to ‘Bid In’ themselves.  For a diversified energy generator like AGL - bidding in is a complex and skilled job and is the realm of specialised energy traders. Interestingly enough though, because renewable generators have effectively got ‘free fuel’ and operate whenever the sun shines or the wind blows, they “bid in” at $0. This way their energy is always part of the mix and helps set the price of the market.

 

As an aside if you are really interested in energy prices, you can actually watch the energy price fluctuate live on the AEMO website. Check out the NSW market here, very interesting to watch this on a hot day in Australia. Prices can go from $30 to $5000 back to $30 all in the space of an hour – making the NEM the one of the most volatile markets in the world.

 

I hope these answered your questions. Good luck with your project. 🙂

Tags (1)

Re: Some question about the australian market

Conductor

Solar running costs cheaper than coal.

Daily use can be mostly automated. Replace panels in 25 years, when cost will be half.

For coal each day buy transport and burn coal.

To clean gases which noone does, its costly.

 

To build a solar PV is much cheaper than a clean coal plant.