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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
VENCorp SP AusNet Australian Energy Market Commission /
Australian Energy Regulator
Loy Yang A Hazelwood Yallourn Loy Yang B Southern Hydro
Snowy Mountains Scheme
Interstate and other
Generators
Powercor Jemena Citipower United Energy
SP AusNet
Consumers of electricity have been able to choose
their own electricity retailer since 13/1/2002.
Ecogen
AGL
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
500 kV330 kV275 kV220 kV
Red Cliffs
Kerang
Horsham
Portland
Bendigo
Ballarat
WodongaShepparton
Glenrowan
Hazelwood/Morwell
Mount Beauty
Loy YangTerang
Dederang
Yallourn
DartmouthMcKay Creek/West Kiewa
Eildon
Anglesea
MooraboolGeelong
Pt. Henry
Victorian Electrical Network
Summer Peak ~10,300 MW Winter Peak ~7,500 MW
Major Generation
Major Load
Interconnection with Snowy/NSW
1900 MW from Snowy
Interconnection With SA300 MW from SA
Interconnection with Tas
MurrayLink
+/- 220 MW
Electricity generating capacity in Victoria
Wind
Biomass
Solar
Hydro
Natural Gas
Brown Coal
Renewables
Total Electricity Generating Capacity 10,000 MW
Total Renewable Generating Capacity 1,000 MW
Technology Cost of Power
-100
-50
0
50
100
150
200
Brown Coal Black Coal ClosedCycle Gas
Open CycleGas
Wind Geothermal Nuclear Solar
$ p
er M
Wh CCS
CPRS
REC
Principal Power StationsPower Station Company MW Units Type Year
Loy Yang A Great Energy Alliance CoTokyo Electric
2100 525 x 4 Steam/Coal 1984/87
Hazelwood International Power – UK 1600 200x8 Steam/Coal 1964/71
Yallourn ‘W’ Yallourn Energy - CLP 1450 350x2
375x2
Steam/Coal 1973/75
1981/82
Loy Yang B International Power, Mitsui 1000 500x2 Steam/Coal 1993/96
Morwell Energy Brix 170 20x1
30x3
60x1
Steam/Coal
Steam/Coal
Steam/Coal
1958
1958/59
1962
Newport Ecogen Energy 510 500x1 Steam/Gas 1980
Jeeralang Ecogen Energy 468 57x4
80x3
Gas Turbine 1979
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.HTM
Regulatory SystemAustralian 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
Victorian Wholesale Power Prices - In NOMINAL $/MWh
0
10
20
30
40
50
60
Years
NO
MIN
AL
$/M
Wh
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?
Victorian Wind AtlasLand reserved under the National Parks Act (1975)Angahook – Otway Investigation
66 kV electricity network220 kV electricity network330 kV electricity network500 kV electricity networkTerminal station
Substation
Operating wind farm
Win
d S
peed
(m
etr
es/s
econ
d)
8
7
6
5
4
Win
d S
peed
(m
etr
es/s
econ
d)
Wind Projects Status
http://new.dpi.vic.gov.au/energy/projects-research-and-development/wind-projects
Offshore Wind
• 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
> 300
m
0 – 40
m
Wave Energy
• Victoria has excellent wave resources, particularly along the Western coast
Mean Average Wave Energy(kW per metre)
20 to 5010 to 20
0 to 10
• 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
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– Add a small amount to all bills
• 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
– 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~Home+Page?open
• Department of Sustainability and Environment
• www.dse.vic.gov.au
• Department of Premier and Cabinet
• www.dpc.vic.gov.au