Global Insight 16 – 10th Oct 2017

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Global Insight 16 – 10th Oct 2017

Australia

ARENA and ENA provide an overview of the future grid edge market place

The Australian Renewable Energy Agency (ARENA) and Energy Networks Australia (ENA) have teamed up to start discussions towards moving the national electricity market (NEM) towards a customer focussed, decentralised grid.  Part of this transition will involve providing value for current customers DER.  ARENA and the ENA have proposed that the current distribution network operators role will be split into that of  distribution system operator (DSO) and a distribution market operator (DMO).  The DSO responsibilities will be that of providing ‘safe, reliable and efficient operation of a high DER distribution system’ with the DMO to ‘operate and manage the platform to ensure that participants meet registration requirements, information transparency, dispatch reconciliation and market settlement’.

Australia are currently trialling various schemes to allow DER to access markets, such as GreenSync’s network optimisation market platform –  Decentralised Energy Exchange (deX),” and PowerLedger’s peer-to-peer trading market.

South Australia’s ‘big battery’ halfway to completion after 2 months

Following a twitter exchange in the summer where Elon Musk promised to build a 100MW battery in just 100 days or provide it for free is flying ahead.  The battery is being paired with the neighbouring Hornsdale wind farm and is already halfway complete after just two months since the tender was won and less than 2 hours after obtaining the connection agreement – the official start of the 100 day period.

The fully charged battery would be able to run 4000 homes for one day and will be used for load balancing as well as emergency back-up power.  This is at an estimated installed cost of $50m.

Europe

Call for greater role for EC’s proposed regional system balancing centres

As part of the Clean Energy Package, the European Commission is proposing the introduction of Regional Operation Centres (ROCs), which would work with national transmission system operators on issues such as allocation if interconnection capacity, risk preparedness, and sizing of balancing reserves to better coordinate system balancing across Europe. The argument is that as electricity wholesale markets, including intra-day markets, move towards greater integration through coupling, balancing needs to catch up. However, Phil Baker of the Regulatory Assistance Project argues that these ROCs should be given a larger role than the Commission currently envisages. This would include more of a say on assessments of national resource adequacy, the identification and management of crises, and coordinating real-time operation in balancing. This would clearly be a bigger step towards regional rather than national system operators. As with most new EU initiatives these days, it raises the question of whether and how the UK (both GB and Northern Ireland within the Irish SEM) will participate. It is also worth noting that moves towards greater coordination of national transmission systems at the European level are happening at the same time as the early stages of coordinating transmission grids with what will be increasingly actively managed distribution grids. What have historically been nationally (or large sub-national regionally in the case of countries like Germany) organised systems are moving towards multi-level governance and operation.

European blockchain electricity trading goes live

Last week Germany’s E.ON and Italy’s Enel made the first blockchain trades in a new platform set up by 33 companies in the Enerchain collaboration. The approach allows direct trading, cutting out the need for an intermediary, by tagging each trade electronically.

DONG goes green, changes name

Denmark’s DONG Energy, which stood for Danish Oil and Natural Gas, is changing its name to Ørsted, to symbolise the divestment of its upstream oil and gas business and a strategic transformation into a renewables company. It aims to reduce carbon emissions from its operations by 96% from a 2006 baseline by 2023. The company is taking its new name from Danish scientist Hans Christian Ørsted who discovered that electric currents produce magnetic fields, which is a central facet of wind turbines.

US

Extreme intervention (Pt 2)

Following on from last week’s Global Insight, more on the DoE proposal for supporting baseload power by allowing cost recovery for plants that meet the proposal i.e. coal and nuclear. The announcement has continues to gather criticism from most in the industry and from regulators who see it a mechanism that could potentially destroy the wholesale market in the US. Some members of congress have also raised concerns that the ruling would drive up power prices by picking winners and losers.

Rick Perry, the Secretary for Energy, replied to those criticism last week, dismissing concerns over the rule’s impact on the market, saying there was no ‘free market’ in the energy industry. He went to say that he is hoping for a conversation on energy resilience and the role of coal and nuclear within that, both of which he suggests play an important role. He also said that the proposed rule to FERC is ‘not a directive’, given this and the fact that some members of FERC have openly criticised the proposal, it is not yet clear how this will play out in the coming weeks and months.

Another step backwards

Whilst the baseload ruling rumbles on, the Trump administration also moved last week to rescind the Clean Power Plan (CPP) developed under Obama to control power sector carbon emissions.

When the plan was developed the argument put forward was that the cost to utilities would be outweighed by the benefits (cleaner air, greater energy efficiency and less severe climate change). The Environmental Protection Agency (EPA) is reportedly set to reverse those conclusions by arguing that the costs will far outweigh the benefits. To do that, it’s the EPA will drastically change the cost-benefit analysis it uses for health and climate change. Furthermore, they have been told to only account for climate impacts inside of US boarders, rather than consider global impacts.

The EPA will use its new cost calculations as legal justification for challenging the CCP, although it is reported that they will ask industry for comments, rather than just replace the rule outright. Another one to watch.

Wider Globe

IEA revise their renewable forecasts upwards

The International Energy Agency’s annual short-term review of renewable energy gives further evidence of the importance of renewable energy to the energy sector.  The report notes that net additions of renewables to the grid in 2016 were 165 GW, a 5% increase from 2015.  The main driver of this was solar PV with a 50% increase in installation – with 74GW (of which 34 GW was in China).  While in their forecast the IEA anticipate that renewable deployment will increase by 43% in the next five years, adding an additional 922 GW to the global grid, of which 438 GW will be from solar PV and 321 GW from wind.  China is the world’s leading producer and deployer of renewables with 39% of the global market, followed by India, which is now expected to surpass the European Union. In terms of electricity, production from renewables is expected to increase by 36% and provided 29% of global power by 2022, a 5% increase form 2016, this is double to combined growth of coal and gas.  IEA have upped their 2015 forecasts by 12%.

EU-India summit promotes EIB lending for renewables

The Communique from the 14th EU-India Summit highlighted the strong engagement of the European Investment Bank in the field of renewable energy in India. In 2017, the EIB has agreed to, or is in the process of considering, 6 separate renewable energy and efficiency projects in India, including for three solar projects and for framework loan agreements to finance small and medium sized projects, with a total financial commitment from the EIB of more than €720 million. The summit also announced a new partnership between the European Investment Bank and the International Solar Alliance to mobilise finance for solar.   The EU and India parties also released a specific declaration on energy and climate, which noted that ‘the clean energy transition as an imperative for the future development of our societies’.

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