Victorian Energy Overview
June 2010
Victoria – Unique Energy Market
•
•
•
•
•
•
Large Reserves of Brown Coal – 500 years
No Black Coal
Offshore Natural Gas ~ 25 years
Good wind resources
Privatised Energy Market
Many Assets Owned by International companies
New Investments, wind, gas peaker, coal & solar
Loy Yang A
Hazelwood
VENCorp
Yallourn
Loy Yang B
Southern
Hydro
Snowy
Mountains
Scheme
SP AusNet
Powercor
Jemena
Ecogen
AGL
Interstate
and other
Generators
Australian Energy
Market Commission /
Australian Energy
Regulator
Citipower
United
Energy
Consumers of electricity have been able to choose
their own electricity retailer since 13/1/2002.
SP AusNet
Regulated / Non-regulated
Pricing
• GENERATORS – Many – Less than 10
– Prices NOT regulated, can make or lose lots of money
• TRANSMISSION – One only – Monopoly
– Regulated, about a 6.8% Real Rate of Return (RROR)
• DISTRIBUTION – Five
– Regulated, about a 6.8% Real Rate of Return (RROR)
• RETAILERS – Many – about 14 at present
– Prices monitored, but NOT regulated, can make or lose lots
of money
Electricity and gas
transmission
MurrayLink
+/- 220 MW
Victorian Electrical Network
Summer Peak ~10,300 MW
Winter Peak ~7,500 MW
Interconnection With SA
300 MW from SA
Interconnection with
Snowy/NSW
1900 MW from Snowy
Major Load
Major Generation
Interconnection with Tas
Electricity generating
capacity in Victoria
Natural Gas
Solar
Biomass
Renewables
Wind
Hydro
Brown Coal
Total Electricity Generating Capacity
10,000 MW
Total Renewable Generating Capacity
1,000 MW
Technology Cost of Power
200
150
$ per MWh
100
CCS
CPRS
REC
50
0
Brown Coal Black Coal
-50
-100
Closed Open Cycle
Cycle Gas
Gas
Wind
Geothermal
Nuclear
Solar
Principal Power Stations
Power Station
Company
MW
Units
Type
Year
Loy Yang A
Great Energy Alliance Co
2100
525 x 4
Steam/Coal
1984/87
Tokyo Electric
Hazelwood
International Power – UK
1600
200x8
Steam/Coal
1964/71
Yallourn ‘W’
Yallourn Energy - CLP
1450
350x2
Steam/Coal
1973/75
375x2
1981/82
Loy Yang B
International Power, Mitsui
1000
500x2
Steam/Coal
1993/96
Morwell
Energy Brix
170
20x1
Steam/Coal
1958
30x3
Steam/Coal
1958/59
60x1
Steam/Coal
1962
Newport
Ecogen Energy
510
500x1
Steam/Gas
1980
Jeeralang
Ecogen Energy
468
57x4
Gas Turbine
1979
80x3
Latrobe Valley
International Power, Mitsui
300
50x5
Gas Turbine
2002
Somerton
AGL
150
150x1
Gas Turbine
2002
Wholesale Price Variation
http://www.nemmco.com.au/mms/GRAPHS/INDEX.HT
Regulatory System
Australian Energy Market Operator (AEMO)
The ‘manager’ of the market
http://www.aemo.com.au
Australian Energy Regulator (AER)
The ‘regulator’, guidelines and price determination
http://www.aer.gov.au
Australian Energy market Commission (AEMC)
The ‘rule maker’
http://www.aemc.gov.au
http://www.aer.gov.au/content/index.phtml/tag/AERMarketSnapshot/
Average annual wholesale prices (March ’10) - $/MWh
19
98
-1
99
9
19
99
-2
00
0
20
00
-2
00
1
20
01
-2
00
2
20
02
-2
00
3
20
03
-2
00
4
20
04
-2
00
5
20
05
-2
00
6
20
06
-2
00
7
20
07
-2
00
8
20
08
-2
00
9
20
09
-2
01
0
NOMINAL $/MWh
Victorian Wholesale Power Prices - In NOMINAL $/MWh
60
50
40
30
20
10
0
Years
Energy Support Programs
Commonwealth Government
•
•
•
•
$1.6B renewable energy funds, including the $1.5B Solar Flagships
$2.4B clean coal fund
$50 million geothermal drilling program fund
45,000GWh of renewable energy certificates (eRET)
Victoria State Government
•
•
•
$110m ETIS2 funds for CCS demonstration
$72m ETIS2 funds for renewables demonstration
$100m large scale solar power station
Renewable Energy Target (RET)
• Commonwealth Program / Policy
• Changes in March 2010
– Yet to be legislated
• Split into large scale (wind) and small scale
(solar etc,.)
• Large scale 41,000 GWh (~4500MW) by 2020
– Market to set the price
• Small scale unlimited, set price of $40/MWh
– To be reviewed in 2014
CPRS -5% Permit Price
CPRS -5% Permit Price
Planning Issues
•
•
•
•
•
•
•
•
•
Victorian Parliamentary review underway
Need to plan well ahead
Grid connections can take three years
Some planning aspects two years
Wind is particularly slow
Flora/Fauna studies can be seasonal, requiring 12 months
– Orange bellied parrots, legless lizards, growling frogs
Parallel planning (environment / building planning / finance)
– Fastest but is costly if projects don’t proceed
Wind planning 100% (>2,000MW) over subscribed
But is the policy there to give you certainty?
Land reserved under the National
Parks Act (1975)
Victorian Wind Atlas
Wind Speed
(metres/second)
8
7
6
Wind Speed (metres/second)
5
4
Angahook – Otway Investigation
66 kV electricity network
220 kV electricity network
330 kV electricity network
500 kV electricity network
Terminal station
Substation
Operating wind farm
Wind Projects Status
http://new.dpi.vic.gov.au/energy/projects-research-and-development/wind-projects
Offshore Wind
> 300 m
•
•
Victoria’s coastal waters
are deep compared to
countries with installed
offshore wind energy
With current technologies,
offshore wind energy is not
commercially viable in
Victoria
0 – 40 m
Wave Energy
•
Victoria has excellent wave
resources, particularly
along the Western coast
Mean Average Wave Energy
(kW per metre)
20 to 50
10 to 20
0 to 10
Biofuels
•
•
•
•
•
•
Victoria - 2005 Biofuels’ Action Plan
–
$5m biofuels infrastructure fund
Mandates in NSW, Manildra, not in Vic’ review in 2010
Food vs Fuel, vs beer, wine, meat
–
–
–
–
–
http://en.wikipedia.org/wiki/Fuel_vs_food
If move beer crops to food…….
Energy cost in a packet of corn flakes, high fuel prices give more impact
US President: Only 85% of cost increase fuel related (2008)
70% of USA crops for meat
Australian input limits
Need 2nd generation, cellulosic, straws, pasture grasses etc,.
–
Commonwealth - $12m, over three years…..
Water and conditions tolerable opportunities
–
We have a lot of marginal land that could be used, (and improved)
Biofuels
Geothermal
Feed in Tariffs (FiT)
•
•
•
•
•
Victorian legislation 1:1 Nett FiT for up to 100kW of renewables
– Solar or wind or hydro
– Liable party is the retailer
– Cost passed through to all customers
Victorian Premiuim Nett FiT for up to 5kW of solar. Solar
specific.
– Liable party is the distributor, cost passed through to all customers
No Gross FiT, considered too expensive
– NSW just announced a Gross PFiT up to 10kW, $500m
No national consistency
– Introduced state by state
No energy efficiency FiT, for example for high efficiency
combined heat and power
VEET – Energy Saver Incentive (ESI)
•
•
•
•
•
Electricity and Gas retailers are liable
–
Three year phases, starting 1 Jan 2009
2.7MT CO2e per year (Vic’ total 110MT/y)
Domestic only
Six prescribed activities so far, more can be
added
–
•
Add a small amount to all bills
Water heating, Space heating, Space conditioning
(insulation, thermally efficient windows and weather
sealing products), Lighting, Shower roses,
Refrigerators/freezers
Who pays?
–
All customers
http://www.esc.vic.gov.au/public/VEET/
Energy Resource Efficiency
Program (EREP)
Mother of EREP was Industry Greenhouse Program (IGP)
•
At the end of 2007, IGP had delivered:
–
–
–
Cuts of 1.23 MTCO2e/year
Savings to business of $38.2 million each year
Average payback period was 20 months
EREP
•
•
•
•
100 TJ of energy and/or 120 ML of water
250 liable companies in Victoria. They use 700 petajoules of energy and
300 gigalitres of water a year.
45% of Victoria's energy use, annual water consumption of around 1.5
million average Victorian households.
Is this enough for energy efficiency?
–
Not sure, would like to look at the 2nd tier energy users
http://www.epa.vic.gov.au/bus/erep
Web Links
•
•
•
•
•
•
•
•
•
Sustainability Victoria
http://www.sustainability.vic.gov.au/www/html/1517-home-page.asp
Department of Primary Industries
www.dpi.vic.gov.au
http://www.dpi.vic.gov.au/dpi/dpinenergy.nsf/Home+Page/Energy~Hom
e+Page?open
Department of Sustainability and Environment
www.dse.vic.gov.au
Department of Premier and Cabinet
www.dpc.vic.gov.au
Thank You
Leigh Clemow
Regional Development Victoria
Tel + 61 3 9651 9260
leigh.clemow@rdv.vic.gov.au