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Future Grids in Australia

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Luke Reedman | PowerFactory Users' Conference and Future Networks Technical Seminar 2013

6 September2013

ENERGY FLAGSHIP

In this talk

• Where have we come from

• Some recent changes

• The next 10-20 years

2 | Future Grids in Australia | Luke Reedman

Where have we come from

(last 10 years)

Future Grids in Australia | Luke Reedman3 |

Peak and average demand

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Source: CSIRO calculations from AEMO data

Electricity generation

5 | Future Grids in Australia | Luke Reedman

0

50

100

150

200

250T

Wh

AUS Principal electricity generation by fuel type (TWh)

Wind

Solar

Oil products

Natural gas

Coal seam methane

Brown coal

Black coal

Biofuels

Hydro

Source: ESAA (2013), Electricity Gas Australia 2013

Wholesale electricity prices

6 | Future Grids in Australia | Luke Reedman

0

20

40

60

80

100

120

140

160

180

200

NSW

QLD

SA

SNOWY

TAS

VIC

$/M

Wh

Source: AEMO

Retail electricity prices

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Sources: ABS 2012, Producer Price Indexes, Australia, cat. no. 6427.0; Consumer Price Index, Australia, cat.

no. 6401.0.

Some recent changes

Future Grids in Australia | Luke Reedman8 |

Electricity consumption declining

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188

190

192

194

196

198

200

202

204

206

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Consumption (TWh)

Source: ESAA (2013), Electricity Gas Australia 2013

Electricity consumption declining

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0

20

40

60

80

100

120

140

160

180

200

2008 2009 2010 2011 2012

TW

hConsumption by NEM State (TWh)

TAS

SA

QLD

VIC

NSW & ACT

Total Consumption

Source: ESAA (2013), Electricity Gas Australia 2013

Possible reasons for NSW

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Source: Intelligent Energy Systems (2013), IES Insider, Issue No. 14

Solar PV

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Source: Australian PV Association

Solar PV

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End of Solar Bonus

Scheme, April 2011

Reduction of solar Credits

Multiplier, June 2011

Reduction of Solar Credits

Multiplier, June 2012

0

0.5

1

1.5

2

2.5

3

3.5

4

0

500

1,000

1,500

2,000

2,500

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12

kWMW

Solar PV Capacity in Australia

Solar PV Capacity

Average PV system size

Source: Clean Energy Regulator

Peak demand

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Source: CSIRO calculations from AEMO data

‘Strong’ La Nina on the east coast

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Source: Bureau of Meteorology

Electricity generation

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0

50

100

150

200

250T

Wh

AUS Principal electricity generation by fuel type (TWh)

Wind

Solar

Oil products

Natural gas

Coal seam methane

Brown coal

Black coal

Biofuels

Hydro

Source: ESAA (2013), Electricity Gas Australia 2013

Average wholesale prices down

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0

10

20

30

40

50

60

194,000

196,000

198,000

200,000

202,000

204,000

206,000

208,000

2008-09 2009-10 2010-11 2011-12

Average price ($/MWh)Total Energy GWh

Total energy Average price

Source: ESAA (2013), Electricity Gas Australia 2013

Wholesale price spikes subdued

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37 35

66

34

102

131

120

48

88

47

27

175

39 37

22

12 11

59

1

22

12

0

1319

0

20

40

60

80

100

120

140

160

180

200

NSW QLD SA VIC TAS NEM

Da

ys a

bo

ve $

30

0

2008-09

2009-10

2010-11

2011-12

Source: ESAA (2013), Electricity Gas Australia 2013

The next 10-20 years

Future Grids in Australia | Luke Reedman19 |

The next 10-20 years

• Will electricity consumption continue to decline?

• Will peak demand rebound?

• What about centralised generation?

• More PV?

• Prices rising?

• What about storage and EVs?

• Can retailers keep their customers?

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Electricity consumption forecast

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Source: AEMO, National Electricity Forecasting Report 2013

140,000

160,000

180,000

200,000

220,000

240,000

260,000

Financial yearResidential and commercial* Industrial Consumption Transmission LossesAuxiliary Loads Rooftop PV Energy EfficiencyAnnual energy - as generated Annual energy - as sent out

An

nu

al e

ner

gy

seg

men

ts

Electricity consumption growth, some uncertainty

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Source: AEMO, National Electricity Forecasting Report 2013

0

50,000

100,000

150,000

200,000

250,000

An

nu

al e

ner

gy

con

sum

pti

on

(G

Wh

)

2013 High 2013 Medium 2013 Low Actuals

2013 NEFR native annual energy forecasts (10-year outlook - GWh) - NEM

Peak demand rebound

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Source: AEMO, National Electricity Forecasting Report 2013

Peak demand rebound

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Source: Bureau of Meteorology

More rooftop PV

Future Grids in Australia | Luke Reedman25 |

Source: AEMO, National Electricity Forecasting Report 2013

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

An

nu

al e

ner

gy

con

sum

pti

on

(G

Wh

)

2013 High 2013 Medium 2013 Low Actuals 2012 High 2012 Medium 2012 Low

2013 NEFR rooftop PV annual energy forecasts(10-year outlook - GWh) - NEM

Peak demand and solar PV: market level

Future Grids in Australia | Luke Reedman26 |

Source: CSIRO calculations from AEMO data

Peak demand and solar PV: network level

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Source: SKM (2013), Assessment of Economic Benefits of a National Energy Savings Initiative

Retail prices up some more

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Source: AEMC (2013), Electricity Price Trends Report

The ‘death spiral’• Networks have fixed costs because they build capacity ($/kVA)

• They recover their costs through energy charges (c/kWh)

• If energy consumption falls (e.g., PV, energy efficiency), fewer kWh to recover fixed costs

• Creates a revenue shortfall

• In the next round, the network charge (c/kWh) has to rise

• This feeds through to higher retail prices

• This leads to greater incentive to reduce consumption

• And so on…

Energy pathways | Luke Reedman29 |

Storage, just around the corner?

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Can retailers keep their customers?

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Source: AER (2012), State of the Energy Market 2012

Likely investment

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Source: ESAA (2013), Electricity Gas Australia 2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%other

hydro

geothermal

solar

coal

gas

wind

Percentage of proposed power stations by fuel type (MW)

More wind, but…

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Source: Reedman et al. (2012), ‘Quantifying the Impact of Setback Limits on the Possible

Deployment of Wind Farms in Australia’, Paper presented at the International Energy Workshop.

Large scale solar coming, PV…

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2013 - 10 MWp at Greenough River, WAPhoto provided by First Solar

2007 - 305 kWp on Alice Springs Crown CasinoPhoto provided by SunPower Corporation

2012 - 1.22 MWp at University of QLD

2009 - 1.0 MWp on Adelaide Showground

… can solar thermal fight back?

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Source: U.S. Department of Energy

What about gas?

Future Grids in Australia | Luke Reedman36 |

0

500

1000

1500

2000

2500

3000

PJ

Natural gas 2009-10

projections

Natural gas 2010-11

projections

Natural gas 2011-12

projections

Comparison of historical Australian domestic natural gas demand forecasts

Source: ESAA (2013), Electricity Gas Australia 2013

CCS and nuclear

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CCS

• Number of technologies being investigated

• Delays in timeline

• CCS expected to be at commercial scale in 2020 at the earliest

Nuclear power

• Currently prohibited in some states

• No local experience

• Lack of community acceptance

• Environmental issues and catastrophic risk

New demand: electric vehicles

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0

1

2

3

4

5

6

7

8

9

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Mil

lio

n

Based on vehicle manufacturer projections

Based on IEA (2011)

The take away

• Considerable uncertainty

• Demand has changed and will continue to change

• More modular centralised supply

• Less network build, but still needs spend

• Decreasing utilisation needs to be tackled (‘death spiral’ in the extreme case)

• Pricing needs to change, challenge is consumer buy-in

Future Grids in Australia | Luke Reedman39 |

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Questions?

Thank youDr Luke Reedman

Stream Leader, Energy ModellingCSIRO Energy Flagship

t +61 2 49606057

e luke.reedman@csiro.au

w www.csiro.au/Organisation-Structure/Flagships/Energy-Flagship.aspx

ENERGY FLAGSHIP

Acknowledgments

Paul Graham

John Ward

Chris Fell