Global Insights: 9th October 2018

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Global Insights: 9th October 2018


ARENA announces whole system DER initiative

The Australian Renewable Energy Agency (ARENA) have announced an initiative this week that will see the energy industry institutions come together to harness the potential of distributed energy resources (DER), the behind the meter resources such as solar PV and storage.

The Commonwealth Scientific and Industrial Research Organisation (CSIRO) and ARENA have forecasted that up to 45% of Australia’s generation could come from DER by 2050.  In order to maximise the value of DER for all energy user a multi body initiative, the Distributed Energy Integration Program (DEIP), will act as a coordinator.  DEIP involves all the major organisations in Australia’s National Electricity Market – ARENA, Australian Energy Market Operator (AEMO), Australia Energy Market Commission (AEMC), Australian Energy Regulator (AER), Clean Energy Regulator (CER), Energy Consumers Australia (ECA), Clean Energy Council (CEC), Australian Energy Council (AEC), Energy Networks Australia (ENA), CSIRO and Clean Energy Finance Corporation (CEFC).

The program will coordinate the roll-out of initiatives supporting DER growth in Australia, such as improved cost and time efficiencies, informing energy consumers and supporting development of innovative business models.  Funding from ARENA will support interdependent programs that seek to address technological challenges, regulatory and market barriers and consumer issues.

Batteries changing FCAS services and are looking for new markets

Battery services from the Hornsdale Power Reserve (or the Tesla Big Battery) have changed the Frequency Control Ancillary Services (FCAS) market.  Until the battery was bought into the market the cost of FCAS services rose to the market cap of $14,000/MWh.  The speed with which the battery was able to offer these services reduced the gas generators ability to game the market.  However there is a downside for any other battery operators coming into the FCAS market as these reduced prices means that revenue for their services is reduced.

There have been calls from battery operators for a change in regulations to allow for more revenue streams for batteries rather than being tied into one particular value.  Battery manufacturers Fluence say there are up to 20 different value streams from batteries – ranging from time shifting the output of renewables, balancing the system, arbitrating prices, and all sorts of network services – but many of these are not recognised in market rules.

The way in which batteries are classified has also been recognised as a key problem in co-generation sites.  Currently if a solar farm also has a battery installed the battery is classified as a scheduled generator and the solar farm as semi-scheduled.  This means that if the battery was to operate in a converse way to the solar farm it would breach its dispatch obligations for particular dispatch intervals, and therefore get a non-conformance breach from the Australian Energy Regulator, which limits the batteries ability to act as a firming agent for renewable in the market.


Cooperation between State and Federal Markets Needed – the PJM / Illinois disagreement rumbles on

Illinois introduced the Future Energy Jobs Act (FEJA) which has delivered many benefits to Illinois. Now efforts by PJM (which works across 13 States) to alter their capacity market rules, which would benefit fossil fuel plants, is jeopardizing FEJA implementation.  FERC, the body responsible for regulating the regional markets and transmission like PJM, rejected a previous proposal by PJM. This new PJM proposal is little better.  On one level, Illinois is considering pulling out of PJM, and this is understandable. However, on another level what is needed is sensible coordination between the US States and the trans-States wholesale markets and transmission.

FERC Storage Order 841 kicks in

The FERC Order applies to all ISOs and Regional Transmission Operators but so far there has been limited transparency from the ISOs and RTOs about what that means. The FERC order directs operators of RTOs and ISOs to draw up non-discriminatory market rules for energy storage participation in wholesale power markets. One example, is that  PJM has opened its market to frequency regulation with a new produce called Reg D for fast responding assets – which may suit the 300 MW of available batteries or 5000 MW of pumped hydro.

The Politics of Energy Continues to be Laid Bare in the US

Kavanaugh has a history of anti-environmental judgements so his pick to the Supreme Court may have implications in the future. And Bernard McNamee – a White House pick for FERC – is pleasing to the coal lobby. Currently, FERC has been holding the line on standard analysis of security, and the need or not to have more firm power (read fossil fuels).

Solar and Storage Battery needs to be valued

A key outcome of the annual Solar conference was (1) that despite there being clear value of DER – that value is still not being incorporated into regulation and policy and (2)  if we want to get to ‘tomorrow’s’  grid we need to start valuing it now.


Germany agrees plan to cut diesel pollution 

Following a meeting between minsters the German coalition government has agreed a deal to reduce nitrogen oxide (NOx) emissions from diesel cars in German cities. Diesel drivers in polluted cities will be offered incentives by carmakers to trade in their old vehicle for a newer model or to retrofit emissions reduction technologies. The government also agreed to increase the rate of retrofitting for municipal bus and lorry fleets and commercial vans. The deal comes three years after the start of the diesel-gate emissions scandal and was praised by the transport and environment ministers as a big step forward. However NGOs have been critical, suggesting the deal does not go far enough and lacks agreement with carmakers on the funding for incentives.

Phasing out coal and expanding renewables can reduce costs for Germany 

Analysis by Agora Energiende has indicated that an expansion of renewables to 65% of the power mix by 2030, together with a gradual reduction of coal-fired power production would both reduce German electricity costs and meet emission reduction targets. Reducing coal capacity would initially increase wholesale prices but a parallel increase in wind and solar power would more than offset this increase, resulting in a net reduction in electricity costs. To ensure supply security, Germany would also have to invest in building flexible new gas power plants, increase European power market integration and improve demand-side management.

Anti-coal supporters celebrate as German court orders controversial forest clearing must be paused 

Thousands of anti-coal demonstrators celebrated at Hambach Forest on 6 and 7 October following an unexpected court ruling which has suspended further clearing of the forest for lignite mining. The ruling means clearing operations must be stopped while it is determined whether the forest is protected by EU environmental rules. RWE has indicated that it is unlikely that any ruling will be made before late 2020. The ancient forest near Cologne has become a symbol of the German anti-coal movement and has been occupied by activists for the last 6 years in protests of RWE’s plans to clear 100 hectares to expand its nearly lignite mine.

European Parliament drafts law with higher ambition for car emissions and EVs

Last week the European Parliament voted through a draft law setting tighter emissions targets for new cars (compared with European Commission proposals). Manufacturers failing to hit the targets will be fined, with the money to be used to re-skilling workers affected by change in the automotive sector. The draft legislation, which will have to be agreed by the Council of Ministers and the Commission to be passed into law, also requires carmakers to ensure that zero- and low-emission vehicles – effectively electric vehicles – have a 20% market share of sales of new cars and vans by 2020, rising to 35% by 2030.

Survey shows strong public support for policies to drive EV growth.

A new survey covering nine European countries by NGO Transport and Environment on attitudes to electric vehicles shows strong support for public policy to clean up transport, including more action to provide choice and lower pricing in the EV market. According to the survey, nearly two-thirds (62%) of Europeans think that carmakers are not doing enough to sell electric vehicles by attractive marketing, pricing and offering enough choice. This includes 72% of French people, 68% of Germans and 67% of the British surveyed – the three biggest new car markets in the European Union. 40% of those surveyed say it is likely the next car they’ll buy or lease will be electric or fuel cell powered. Most carmakers are forecasting 20-25% sales of electric cars by 2025 and the survey results suggest there is demand if they can bring down prices with increasing production.


IEA Monitors Energy Transition in G20 Countries

The International Energy Agency has published a report which reviews the state of the energy transition in the countries of the G20.  The G-20 was established in 1999, following the global financial crisis, and brings together the world’s leading economies (19 countries plus the European Union).  It has a rotating presidency, which is current Argentina, followed by Japan (2019) and Saudi Arabia (2020).

The G20 account for 85 percent of the global economy, three quarters of the world’s trade and comprise of two-thirds of the population.  Furthermore, they are responsible for 82 percent of energy related Co2 emissions and nearly 80 percent of energy consumption.  The Argentinian Presidency has called for the transitioning towards cleaner, more flexible and transparent energy systems as one of their eight priority areas.

The IEA have produced guidelines for further action that could be undertaken by the G-20 and include calling for a target to ‘triple the share of modern renewable electricity and double the share of renewable energy in total energy consumption by 2030’.   To integrate renewables the G20 should foster collaboration on power system flexibility and put forward a G20 roadmap.

G20 countries have led the global boom in renewable electricity installation, and in 2016 they accounted for just over 80% of the world’s new renewable capacity and generation, half of which was introduced by China.  Looking ahead, the renewable generation installed capacity of G20 countries is forecast to expand by 825 GW between 2017-22, to reach 2 665 GW and account for 90% of global growth.  Of this 410 GW is expected to come from solar PV and 300 GW from wind (75% of which is onshore).

The report notes that ‘market and regulatory designs are critical to both support variable renewables and to accelerate deployment of system integration technologies such as storage’.  The report notes that there are insufficient market signals to support increase in storage.  However, applications of storage duration of less than one hour (frequency regulation, load following), led by markets in Australia and the California Independent System Operator Corporation (CAISO) in the United States, provide test beds for storage technologies. Together with further deployment of batteries in EVs and consumer electronics, these early applications could help drive costs down and provide new opportunities for battery storage in other markets

South African Integrated Resource Plan sees move away from Coal and Nuclear

The South African Government’s draft Integrated Resource Plan envisages a significant increase in the installation of  new electricity generating capacity including gas (8.1 GW), solar (8.1 GW) and wind (5.6 GW) through until 2030, however, with no increase in nuclear and only 1 GW of new coal   The plan, for which the Government is receiving comments until 26th October, is a significant shift for one of the world’s largest coal producers and where coal is the dominant fuel, with 33 GW of existing capacity. The IRP also sees a significant move away from new nuclear, with the previous President of South African, Jacob Zuma, supportive of an expanded nuclear programme, but the current President Cyril Ramaphosa abandoned the plans on economic grounds.

The proposed IRP calls for studies to inform future IRPs, including on:

  • Detailed analysis of the appropriate level of penetration of RE in the South African national grid to better understand the technical risks and mitigations required to ensure security of supply is maintained during the transition to a low-carbon future.
  • An in-depth analysis of technical options such as reduced inertia, reduced synchronizing torque, reduced voltage support and reduced contribution to short-circuit currents to overcome stability issues resulting from non-synchronous generation and distributed generation.
  • Detailed analysis of other “clean energy” supply options (coal, hydro, nuclear and others), including their associated costs and economic benefits.


The proposed South African IPR could mark the beginning of a new wave of energy transition in South African, with implications for the whole continent.  However, the proposed limited role for coal and nuclear power will potentially have a profound impact on these powerful sectors and their backers and likely to be challenged both within the drafting of the final document and its implementation.

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