What’s interesting at the moment
We remain largely in a holding period policy wise ahead of Coag Energy Council. Endorsement by Coag would support the NEG but we see Coag as being reluctant. States weren’t involved in the policy process and don’t have much to gain from jumping on board.
There are plenty of alternatives to an NEG that don’t take as much bureaucracy and have been better proved up overseas. The Federal Govt. at the moment is something of a lame duck and, in our view, lacks moral authority, in the area of energy policy.
Meanwhile, we continue to be disappointed with the lack of urgency that seems to be given to transmission planning.
On the other hand the AEMO/ ARENA demand response program continues to attract attention.
EnerNOC is the largest contributor this program using its own hardward at 50 separate sites to provide 50 MW of demand response via load curtailment. This has been achieved with ARENA funding of just $9 m. EnerNOCs Eastern Australia program allows up to 10 curtailments (they say dispatches) of 1-4 hours per year.
Finally ,I thought I’d look at the new PV & Wind under construction or just completed from the point of view of who owns it. It’s interesting to see that wind is largely offshore owned and financed but there is more, but still minority, Australian share of PV.
Goldwind, PARF and NEON are twice as big as anyone else in the new development space. Note that ownership of some projects has changed already and ownership of the developers themselves is not always obvious.
The weekly action
Electricity volumes remained soft, down 1% on PCP (previous corresponding period) across the NEM and flat on a year ago. Its always difficult to get costs down when volumes aren’t growing.
Behind the meter continues to be cost competitive with grid delivered electricity and this along with the share of renewables in the grid delivered mix are the two defining debates.
A focus this week on energy efficiency will lead to renewed realization that without quite wide spread uptake of electric vehicles demand growth is going to remain problematic.
Electricity prices in QLD and NSW remain lower than in the other States during the shoulder season and also lower than last year. However we don’t think this low point of demand is a good time to be focusing on spot prices. The better test will come when demand is seasonally high over Summer.
Futures prices showed little movement although in South Australia near month futures rose and in other States they fell.
Gas prices were little changed.
REC prices rose marginally near term but Mercari’s posted 2020 price rose 28% to $60. If you can get $60 MWh for your “black” energy and another $60 MWh for the RECs over the next 3 years, merchant projects ready to start after Xmas such as for instance EcoEnergyWorld’s 132MW one at Armnanara can get well set before new policy kicks in.
Base Load Futures
David Leitch is principal of ITK. He was formerly a Utility Analyst for leading investment banks over the past 30 years. The views expressed are his own. Please note our new section, Energy Markets, which will include analysis from Leitch on the energy markets and broader energy issues. And also note our live generation widget, and the APVI solar contribution.
David Leitch is a regular contributor to Renew Economy. He is principal at ITK, specialising in analysis of electricity, gas and decarbonisation drawn from 33 years experience in stockbroking research & analysis for UBS, JPMorgan and predecessor firms.