Global Insights: 27th March 2018

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Global Insights: 27th March 2018


Market Operator report recognises the need for changes to market design for energy system transformation

The Australian Energy Market Operator (AEMO) released a report last week looking at the dynamics of the Australian National Electricity Market (NEM).  The NEM covers the five eastern states and has a world leading percentage of households (25%) with solar PV installed.  There is also a rising amount of large-scale renewables and this, coupled with increased rates of extreme weather events has prompted AEMO to evaluate the design of its markets to incorporate the changing generation mix and demand profile.

The report recognises potential avenues to address for the changes in supply, demand and weather impacts as:

  • Forecasting improvements
  • Use of DER
  • Valuing flexible performance
  • Strategic reserves
  • Day-ahead markets
  • Integrated system planning
  • Planning operating standards
  • Optimising utilisation of demand side response – for reserves to manage uncertainty and support greater system resilience


New approach to business plan assessment in NewReg trial for AusNet distribution services

The Australian Energy Regulator (AER) has announced a trial for a new way of assessing the business plans of its electricity networks, releasing an Approach and Directions paper this week.  The NewReg Trial will see AusNet, one of the distribution network companies in the state of Victoria, trialling the use of a Consumer Panel to assess their business plan before releasing it to the regulator.  The change in the way that the business plans are assessed is to allow the consumer, from domestic to large end-user, to have a voice in how network revenues are decided.  The trial will begin in March 2018 and continue until the AusNet proposal is lodged in mid-2019.  The Consumer Panel is similar to the Customer Engagement Group proposed by Ofgem in the RIIO2 consultation document.

Grattan Institute report on Network businesses excessive investments

The Grattan Institute released a report yesterday stating that the state governments have overspent by $20 billion on the electricity networks since 2005.  The report suggests that this overspend should be written down in Tasmania and Queensland, where the network businesses are still state-owned, to lower future electricity bills.  It also recommends that these state-owned businesses be privatised.  The report did not recommend write-down of all assets across the private networks as this could cause investment uncertainty.  Energy Networks Australia (ENA) challenged some of the assumptions made in the report but agreed that asset write-down could negatively impact all energy customers.

GreenSync release White Paper in the next step for DeX

The DeX platform is a digital exchange which acts as an system operator platform to enable trading between DER, the networks and the market operator.   The White Paper released last week gives details of the learning achieved over the past 18 months and the future plans for DeX.


Norway votes to accept Third Package, but at cost of interconnector with Scotland

The Norwegian Parliament has approved the adoption of the EU’s Third Energy Package (some nine years after it was produced), but the government got support only at the cost of a compromise with the opposition party stipulating that all interconnectors be state-owned. This deal could lead to the cancellation of the planned €2 billion NorthConnect 1.4 GW interconnector with Scotland, which has been developed thus far by a private consortium including Sweden’s Vattenfall. This development is a setback for the UK’s plans for interconnection post-Brexit.

Denmark and Estonia testing a secure system for sharing data with suppliers

Danish and Estonian TSOs – Energunet and Elering respectively – are testing a new system that will allow consumers to set up a secure account through which they will be able to control their consumption and production data (e.g. exporting from an electric vehicle battery). The approach uses a similar technology to blockchain. Both countries already have a datahub approach to managing data, whereby all electricity data passes through a central point managed by the TSO.

Portuguese island trialling G2V with Renault

Porto Santo, a small island in the Madeira archipelago in the Atlantic, is seeking to go fossil-fuel free, and as part of its plans to absorb increasing amounts of renewable energy on a small island grid is seeking to use vehicle-to-grid (V2G) technology. Groupe Renault is installing 40 charging points for a number of vehicles that will be able to act in V2G mode by the end of 2018.  The project will also use second life batteries, with the collaboration of Powervault, a UK storage company.

European utilities moving forward on blockchain

A wide range of European utilities are exploring the potential of blockchain for direct trading through the Enerchain project. Under the initiative several utilities plan to begin direct trading with one another using blockchain technology within months, in a move to lower transaction costs and stave off competition from more agile digital companies. The German IT company Ponton worked with 39 power and gas traders to build the Enerchain peer-to-peer platform over the last two years and the programme includes prominent names such as Italy’s Enel, Germany’s E.ON and Sweden’s Vattenfall. Ponton Managing director Michael Merz suggests that ‘Publishing orders and transactions via blockchain can replace trading via brokers’. Alongside brokers, potential losers from the Enerchain proposition include exchanges such as ICE or EEX. However both ICE and EEX are discussing blockchain applications with customers and ICE launched a cryptocurrency data feed in January 2018.

Germany’s Next Kraftwerke supports energy companies to establish virtual power plants.

Germany company Next Kraftwerke has launched software tool ‘Nemocs’ to allow utilities and grid operators to establish virtual power plants in which decentralised energy assets can be aggregated. The system enables capacity and flexibility to be aggregated and marketed, whilst allowing each individual asset within the virtual power plant (VPP) to be operated remotely. It claims to process price and network signals from transmission system operators within seconds, converting them into commands for all assets within the network. Next Kraftwerke are established players in the VPP area and in 2017 Eneco, one of Europe’s largest energy companies, acquired a stake in the company. 


State of renewable energy in Europe

The EurObserver has published its latest State of Renewable Energies in Europe which gives data on the level of renewable energy deployment and energy production across the EU for 2016;  an additional 13 GW of wind – leading to a total 154 GW; 6GW of additional solar – leading to 100 GW of capacity;  small hydro remaining roughly the same (14 GW) as the previous year.   The use of biofuel also remained constant in 2016, 14 227 toe, with the vast majority coming from biodiesel. While much of this data is available elsewhere the report has also provided interesting data on avoided costs, research and development (R and D) expenditure and patents.

According to the EurObserver, renewable energy avoided the use of 322 mtoe of fossil fuels, with an associated cost of €83 billion in fuel bills in 2016. The report also details the R and D across the EU, with public expenditure for renewables in 2015 totalling €820 million.  The largest sectors are biofuel (€292 million), solar (€283 million) and wind (€150 million), while the top three countries are, Germany (€195 million), France (€181 million) and Netherlands (€98 million).    For the EU as a whole, this is larger than any other country in the world, although data for China is not available. This compares to around €5 billion of private sector investment in 2012 of which €2.2 billion was for solar, €1.5 billion for wind and €930 million for biomass.   Data is also given on the patents filed:   Wind 564 (China, filed 671); solar 755 (China 2343, Japan 2043, Korea 1075) and biofuels 207 (China 686, US 229).

Global energy consumption rises rapidly in 2017

According to the International Energy Agency, global energy demand increased by 2.1% in 2017, which is a significant increase over the previous five-year average of 0.9%.  Consequently, CO2 emissions rose by 1.4% during the year, compared to no increase in the previous three years. The use of all fossil fuels increased; oil by 1.6%, natural gas by 3% and coal by 1% in 2017.  The coal sector reversed a decline that had been seen in the past three years, this was primarily driven by larger consumption in China – which saw electricity demand increase by 6% in 2017.   The extent of the increase in energy consumption was in part due to growth in the global economy, but also a slowdown in energy efficiency improvements – with energy intensity improvements at 1.7% (compared to 2.0% in 2016).   Renewables delivered the highest rate of growth of any energy source and met around a quarter of global energy demand increase during the last twelve months.  The largest rise was from the power sector with electricity generation increasing by 6.3% (380 TWh) in 2017. China and the United States together accounted for half of the increase in renewables-based electricity generation, followed by the European Union (8%), Japan and India with 6% of growth each.

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