Global Insights: 24th July 2018

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Global Insights: 24th July 2018


AEMO releases Integrated System Plan

The Australian Energy Market Operator (AEMO) is the system operator and national transmission planner.  This week AEMO released its inaugural Integrated System Plan (ISP) which builds on its annual National Transmission Network Development Plan.  The idea behind the ISP is to give a more coordinated approach to system planning and a long term strategic plan for the future of the energy market which will incorporate the policies from the National Energy Guarantee and state-based policies.

The plan recognises that there are fundamental changes happening within the Australian energy system:

  • Flattening of grid demand due to the rise in behind the meter DER and energy efficiency (even assuming a rise in EV ownership)
  • The coal power stations that currently provide the majority of power are due to be retired in the next 20 years
  • The costs and capabilities of new supply resources have changed significantly and are expected to do so in the future
  • Renewables, storage technologies and flexible gas-powered generation are expected to be the core components to a low cost and reliable energy future


In order to incorporate renewables, both at grid scale and at domestic scale, the ISP makes recommendations for increased interconnection between the states and investment into Renewable Energy Zones (REZ) and coordination of behind the meter DER.

What the report does not do is state that there should be more investment in coal generation.  Coal is currently Australia’s biggest export and provides a large proportion of the country’s GDP and also the majority of the country’s power.  This will be interesting in the political spectrum where the coal lobby has many supporters.

CER releases data for the June LRET

The Clean Energy Regulator (CER) who is the administrator of the certificate scheme for renewable energy has released its June figures for the Large-scale Renewable Energy Target. Last month saw 31 power stations accredited with a combined capacity of 307MW.

It has been a record year for large scale renewable energy (LRE) (partly due to the fact that the LRET will finish in 2020 and partly the falling costs of solar and wind) with 177 power station accredited this year, the largest amount since the scheme began.  2018 has also seen the largest amount of capacity accredited with 1216MW of renewable generation.  At the end of June 7565MW of LRE were under construction or operating and a further 774MW of projects have signed a power purchase agreement.


Sweden leads on renewables, energy efficiency

Sweden is proving a consistent leader in energy system decarbonisation. It is anticipated that the renewable electricity production target it set for itself for 2030 – adding 18 TWh of generation to the 2020 target level of 28.4 TWh – could be met by the end of this year, much of it from a large wind programme. At the same time, the country is due to close its last coal plant in 2022, ahead of Britain’s 2025 phase out deadline. Back in 2015 Sweden already obtained 50% of its energy from renewable sources. The country also has an energy efficiency target for 2030 that is over 50% more ambitious that the EU goal. Sweden also aims to achieve net-zero emissions by 2045. However, all of this impressive record could be threatened by the rise of the far-right Swedish Democrats, currently riding high in polling for a general election later this year, and the only political party not to engage in the process for the 2018 Climate Act.


IEA:  5% of investments in power sector globally are made with only wholesale market pricing

The International Energy Agency (IEA) has published its annual World Energy Investment Outlook.  The headline findings of the report have been widely reported and include that:

  • For the third consecutive year, global energy investment declined, to USD 1.8 trillion in 2017 – a fall of 2% in real terms,
  • China remained the largest destination of energy investment, taking over one-fifth of the global total, this was followed by the United States and Europe. In India, investment in renewable power topped that for fossil fuel-based power generation for the first time.
  • A total of USD 236 billion was invested in energy efficiency across buildings, transport and industry in 2017.
  • In 2017, global power sector investment fell by 6% to near USD 750 billion in 2017, although it declined by 7%, investment in renewable power, at nearly USD 300 billion, accounted for two-thirds of power generation spending in 2017.
  • Global spending on the electricity network in 2017 was around USD 300 billion. Spending reached a new high, and the grid’s share of power-sector investment rose to 40% – its highest level in a decade.


However, amongst all the statistics there are two less highlighted figures that should be considered.

  • 10% of the investment in networks, so approximately $30 billion, is being invested in modernising electricity grids by spending more on smart grid technology, including smart meters, advanced distribution equipment and electric vehicle charging. This is roughly the same as was spent on ‘base-load’ power plants.
  • Over 95% of power sector investment, including generation, networks and storage, in 2017 was made by companies operating under fully regulated revenues or mechanisms to manage the revenue risk associated with variable wholesale market pricing.



N.B.  Next Global Insights will be published on 4th September

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