A new “super-peak” contract that is designed to cover demand in the morning and early evening peaks outside the main period of rooftop solar generation is being hailed as a landmark deal that will open up the market for renewable supporting technologies such as batteries and hydro.
The deal announced by the Renewable Energy Hub, which puts together renewable-based contracts for businesses and other players in the wholesale market, involves a “super peak swap” totalling 25MW in 2021 and 2022 with the government owned utility Snowy Hydro.
“What makes this contract different is it covers only the high-demand hours of the morning, afternoon and evening periods,” says Chris Halliwell, the head of markets at Renewable Energy Hub.
Halliwell says these ‘super peak’ periods are becoming more pronounced in Australia’s main grid, known as the National Electricity Market (NEM) – because while the stunning growth of rooftop solar is suppressing net demand and prices during the middle of the day, demand and prices are ramping up rapidly as the sun sets.
“This new hedge contract enables market participants to manage the risk of very high prices during these periods,” says Halliwell. “Importantly, it also gives renewable energy generators like Snowy Hydro access to new markets, and encourages new forms of supply into the grid to improve energy security.”
Halliwell says the so called “super peak contract” is ideal for pumped hydro, batteries and other forms of flexible peaking generation to firm up the output of renewables, and will be one of a number of new standardised contract types that will be offered through Renewable Energy Hub’s online platform.
The market for financial products that manage the risk in the Australian energy system is estimated to be worth $26 billion a year, almost $10 billion more than the actual energy market itself.
Products such as swaps, caps and options are key tools in helping energy buyers and sellers manage their risk and provide a stable price to customers. Yet Halliwell says this market has not evolved to embrace the new requirements of clean generation and emerging technologies in Australia.
REH has developed an online market platform – backed by the Australian Renewable Energy Agency – that will provide data and tools to facilitate price discovery, support the evaluation of PPAs and contracting options, and recognises the unique requirements of contracting and procuring variable renewable energy.
“This new marketplace will facilitate trade in contracts that reflect the ‘profile’ of renewable generation, filling a gap in risk solutions and creating price efficiency to unlock more clean energy technology,” says Halliwell.
“Importantly, this new marketplace with contracts such as the super peak will ‘firm up’ Australia’s rapidly-growing fleet of renewables by enabling generators, retailers and large energy users managing their PPAs to trade fixed volumes of clean energy out into the future.”
Cameron Fisher, general manager of trading at Snowy Hydro, says athere is a growing need for new hedging instruments backed by on-demand energy resources such as hydro and batteries as the energy market transitions to more renewables,
“The super peak products are a natural fit for Snowy Hydro and complement the existing firming products we are offering to both the wholesale and large customer markets,” Fisher said.
“Being involved in the first trade of the super peak contract enables us to utilise our existing hydro assets, providing the on-demand renewable energy needed to firm up intermittent energy sources.”
RenewEconomy and its sister sites One Step Off The Grid and The Driven will continue to publish throughout the Covid-19 crisis, posting good news about technology and project development, and holding government, regulators and business to account. But as the conference market evaporates, and some advertisers pull in their budgets, readers can help by making a voluntary donation here to help ensure we can continue to offer the service free of charge and to as wide an audience as possible. Thankyou for your support.
As 2025 begins, Victoria is already making its mark on the energy landscape with a…
Co-locating renewable generation, load and storage offers substantial benefits, particularly for manufacturing facilities and data…
Australia’s economic future would be at risk if we stop wind and solar to build…
Transmission remains the fundamental building block to decarbonising the grid. But the LNP is making…
Snowy blames bad weather for yet more delays to controversial Hunter gas project, now expected…
In 2024, Renew Economy's traffic jumped 50 per cent to more than 24 million page…