Edge presents at the GEA 2018 National Forum on the Gold Coast

Edge has been invited to present at the Gas Energy Australia 2018 National Forum, which is being held over the next two days on the Gold Coast. The forum seeks to provide important insights and new learnings across a range of industry relevant issues including policy, innovation, supply and security of Gas within Australia.

Gas Energy Australia is the national peak body which represents the bulk of the downstream gaseous fuels industry which covers Liquefied Petroleum Gas (LPG), Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG).  The industry comprises major companies and small to medium businesses in the gaseous fuels supply chain – refiners and supplies, fuel marketers, vehicle and equipment manufacturers, vehicle converters, consultants and other providers of services to the industry.

Thomas Dargue, our Manager of Markets and Advisory, will be presenting on innovative distributed energy solutions and gaseous fuels highlighting some of the opportunities that the change in the National Electricity Market could bring to gas producers.

If you would like to know more about Australian gas or discuss what changes are on the horizon in the gas market both short and longer term, please contact Edge on 07 3905 9220 or 1800 334 336.

Federal Opposition commits to 50% renewable by 2030

Penny Wong, Labor’s foreign affairs spokeswoman has told an emissions summit today that if elected, Labor’s emission target would be a 45% reduction on 2005 levels. The current target under the Coalition is 26% on 2005 levels.

Labor has also committed to a target of 50% of energy to be renewable by 2030. Currently, the Coalition is committed to 23.5% by 2020 through the RET scheme. Senator Wong advised that whilst her party has reservations on the National Energy Guarantee they would build on the Guarantee if possible rather than replace it.

The comments from Senator Wong carry significant weight as the potentially large increase in the renewable energy target will require further investment. At this stage, the next federal election is expected to occur in 2019. Technically an election will not have to take place until November 2019 however norm dictate that it is held with the senate election which must be held no later than 18 May 2019.

Edge note that the current renewable generation target only captures renewables constructed after 2001 and therefore does not include Snowy Hydro. From the comments today it is unclear if the Labor party plan to use the same basis for measurement.

If you would like to speak with an energy expert regarding your electricity portfolio, please contact Edge on (07) 3905 9220 or 1800 334 336.

New Firming Product released to market

As more and more large energy consumers look to contract directly with renewable generators, and renewable generators seek price certainty, a new product referred to as the “clean energy derivative” has hit the market.

In the last few weeks, AGL and ERM have released a somewhat standardised product which is built on generation from a renewable source and then “firmed”. AGL’s  “Wind Product Firming Unit” was described as being firmed through physical gas generation whilst also allowing the renewable generator to access the spot market (available in SA and VIC). ERM announced a similar product which is based on generation from solar. These are great initiatives from the retailers who are working to create liquidity in a new market, though keep in mind that there must be profit there for them as well.

Last year Clean Energy Derivatives Corporation featured in the AFR indicating that they would be raising $250m to develop CFD products bundled with generation from wind, solar, battery and storage. Little has been heard since regarding the capital raise or any successful deals.

There are existing generators, such as Snowy Hydro who are in a good position to provide ‘clean energy derivatives’.  However, there hasn’t been any news of Snowy partnering with a renewable generator to provide a firmed product as yet. Unsurprisingly, providing a firmed product would potentially cannibalise potential future earnings for Snowy Hydro. The absence of Snowy in this market could be a result of the change to a five minute settlement market. Fast start technology such as batteries will be one of the few technologies that will be able to capture (mitigate) spikes in spot prices within a 5 minute period, assuming that they are not part of central dispatch.

This product is still in infancy stage, however with strong interest from buyers and sellers we anticipate that it will develop quickly. Tradition Financial Services are soon launching a new wholesale “Renewable Energy Hub” which is described as a platform to firm, standardise and transact between wholesale renewables and energy buyers.

If you would like to understand Clean Energy Derivatives in more detail, please contact Edge on (07) 3905 9220 or 1800 334 336.

Northern Territory Government lifts moratorium on fracking

The Chief Minister of the Northern Terriroty (NT) Michael Gunner has announced that the 135 recommendations made in the recent inquiry into fracking in the NT would be implemented, allowing on-shore fracking to take place in the territory. The 135 recommendations made in the inquiry mitigate the risks associated with onshore gas development to acceptable levels, and in some cases claim to eliminate the risks completely.

New gas developments will require environmental management plans which will be assessed by the NT Environment Protection Authority and signed off by the environment minister.

There will also be area’s where fracking will not be allowed. These include indigenous protected areas, special environmental areas, cultural and agricultural areas of significance to the Northern Territory.

There is a number of studies to be completed before fracking production can begin including strategic environmental and baseline assessments. At this stage it is estimated exploration will begin in 2019 and production in 2021.

If you would like to understand how these changes will affect your gas portfolio please contact Edge on (07) 3905 9220 or 1800 334 336.

AEMC sets maximum price for power

The Australian Energy Market Commission (AEMC) has released its schedule of reliability settings which outlines the maximum price for electricity for both an individual dispatch interval as well as the maximum cumulative price.  The current maximum price of $14,200/MWh will increase to $14,500/MWh and the cumulative price threshold will increase from $212.800 to $216,900.

The maximum price sets the highest cost a generator can be paid in any period and consequently what a consumer can be exposed to. It is escalated each year in line with CPI to encourage new peaking plant to enter the market if needed.

The cumulative price threshold aggregates the trading intervals over the last seven days. If they add up to more than the cumulative price threshold, the prices received by a generator and paid by a retailer will be $300.00/MWh, until the day after the aggregate of the last seven days drop back below the cumulative price threshold. This is put in place to ensure retailers are not exposed to unlimited price risk if there are local issues in a region.

The market floor price (minimum price a generator can receive) has not been escalated and is staying the same at -$1,000/MWh.

All changes take effect 1 July 2018 and more details can be found on the AEMC’s website here.

If you would like to understand how these changes will affect your energy prices please contact Edge on (07) 3905 9220 or 1800 334 336.

Nearly 30 million certificates to be surrendered to meet small scale renewable energy scheme obligations

The Clean Energy Regulator (CER) announced earlier today, the 2018 small-scale technology percentage (STP) as 17.08%. This means that liable entities (mainly electricity retailers) are required to surrender to the CER approximately 29.3 million STCs to meet their small scale renewable energy scheme obligations for 2018. This figure is derived by adding 7.2 million STCs to the estimated 22.1 million supply of STCs in 2018 (see below for how this is determined). The 7.2 million STC adjustment is the difference between previous years’ STC creations and the actual number of STCs surrendered in those years.

Last year the STP was 7.01%, therefore this year is an increase of 10.07%. The uplift was anticipated by the market due to information previously released by the CER regarding a surplus of certificates.

Surrendering certificates is a legal requirement for liable entities in accordance with the Renewable Energy (Electricity) Act 2000,​ and works to increase the portion of renewable energy generated and supplied to the Australian electricity market.

If you would like to know more about STCs or the impact this announcement has on your electricity portfolio, please contact Edge on (07) 3905 9220 or 1800 334 336.

Northern Territory Hydraulic Fracturing

 

After 15 months, 151 public hearings, 31 community updates and 1,257 submissions, Justice Rachel Pepper has presented the independent Scientific Inquiry into Hydraulic Fracturing of Onshore Unconventional Reservoirs to the Northern Territory Government. The inquiry makes 135 recommendations which mitigate the risks associated with onshore shale gas development to acceptable levels, and in some cases, eliminate the risks completely. The report clearly states that it is necessary for all the recommendations to be actioned in order for the risks to be reduced to acceptable levels.

The final report builds on the recommendations made in the Draft Final Report by including:

  • an implementation Chapter, which states clearly that all of the recommendations in the Final Report must be implemented;
  • greater clarity on the timing of the implementation of the recommendations; and
  • the inclusion of a requirement that there be no net increase in greenhouse gas emissions in Australia as a consequence of the development of any onshore shale gas industry in the Northern Territory.

 

The findings of the Inquiry have triggered the expected (opposing) responses from gas producers and environmentalists. The NT Government must now make their decision on whether or not the moratorium on fracking will be lifted. The Federal Government last year made their intentions clear, consistently pressuring the NT Government to lift the moratorium. The NT Government has indicated that the decision to lift the moratorium would be based on the findings of this inquiry however have said that they will not rush their decision. No indication has been given as to when a decision would be made.

It is the general consensus that a portion of the gas extracted from the Beetaloo Basin will be transported to the east coast through the under construction Northern Gas Pipeline. This is a key driver behind the Federal Government’s push to lift the moratorium as reducing gas prices has been high on the agenda. The impact that NT gas will have on the southern gas markets is likely to be minimal as transport costs remain high due to limited available capacity in key transmission pipelines.

If you would like to know more, please contact Edge on (07) 3905 9220 or 1800 334 336.

Softer forward electricity prices recorded on the Australian Stock Exchange

Quarterly forward contracts from Q118 to Q219 declined across all mainland regions in the National Electricity Market (NEM) yesterday. The largest decline was in the illiquid South Australian market where Q219 prices dropped by $9.75/MWh. Queensland contracts are currently the most affordable which is driven by the surplus of firm capacity in the region and a direction from the Queensland Government last year to Stanwell Corporation to lower wholesale prices. New South Wales contract prices have declined since the beginning of 2018 driven by lower than expected spot price outcomes in the region. Snowy Hydro corporation have been instrumental in reducing volatility in the region aggressively defending the $300.00/MWh cap price. VIC contracts have softened in the last week potentially raising interest for participants to hedge volume who have been on a hold.

The following prices are end of day closing prices from the ASX.

Table 1. QLD Forward Contracts ($/MWh)

Queensland 27/3/2018 26/3/2018 Daily Change Daily Change (%)
Q118 $70.36 $70.67 -$0.31 -0.44
Q218 $67.50 $67.50 $0.00 0.00
Q318 $66.05 $67.73 -$1.68 -2.54
Q418 $67.02 $68.73 -$1.71 -2.55
Q119 $81.00 $82.70 -$1.70 -2.10

Table 2. NSW Forward Contracts ($/MWh)

New South Wales 27/3/2018 26/3/2018 Daily Change Daily Change (%)
Q118 $71.80 $72.00 -$0.20 -0.28
Q218 $77.00 $77.50 -$0.50 -0.65
Q318 $77.00 $78.75 -$1.75 -2.27
Q418 $70.65 $71.60 -$0.95 -1.34
Q119 $81.81 $83.10 -$1.29 -1.58

Table 3. SA Forward Contracts ($/MWh)

South Australia 27/3/2018 26/3/2018 Daily Change Daily Change (%)
Q118 $116.15 $116.15 $0.00 0.00
Q218 $98.25 $108.00 -$9.75 -9.92
Q318 $89.00 $91.00 -$2.00 -2.25
Q418 $84.00 $85.75 -$1.75 -2.08
Q119 $120.00 $120.00 $0.00 0.00

Table 2. VIC Forward Contracts ($/MWh)

Victoria 27/3/2018 26/3/2018 Daily Change Daily Change (%)
Q118 $102.75 $103.00 -$0.25 -0.24
Q218 $83.50 $86.50 -$3.00 -3.59
Q318 $82.75 $84.76 -$2.01 -2.43
Q418 $76.00 $78.78 -$2.78 -3.66
Q119 $98.43 $100.85 -$2.42 -2.46

If you would like to know more about energy costs and the state of the energy market, please contact Edge on (07) 3905 9220 or 1800 334 336.

Edge makes submission regarding NEG

It is important that the National Electricity Market remains secure and Australia can be part of the international commitment to reducing climate change while remaining competitive.

The NEG seeks to achieve these objectives while trying to achieve support from both major federal parties. The importance of bipartisan support has been acknowledged, as the market struggles to self-adapt with uncertainty. Having a lasting framework which is flexible enough to allow for changes in a rapidly changing energy market whilst providing certainty to investors who need to recoup long term fixed charges is difficult. Ensuring the market remains efficient and effective is critical to achieving the objectives. It is in this context that Edge provides this initial Submission.

If you would like to learn more about the National Energy Guarantee or have any questions or concerns regarding our submission, please contact Edge on (07) 3905 9220 or 1800 334 336.

[pdf-embedder url=”https://edge2020.com.au/wp-content/uploads/2018/03/Edge-Energy-Services_ESB-NEG-Response_180308.pdf” title=”Edge Energy Services_ESB NEG Response”]

Ergon Retail offer ‘EasyPay Rewards’ to help alleviate rising costs in energy

On Tuesday 24 October, Queensland Treasurer Curtis Pitt and Energy Minister Mark Baily announced a new suite of measures to create electricity savings for Queenslanders under the Palaszczuk Government’s Affordable Energy Plan.

One of the initiatives announced will be the removal of Ergon’s non-reversion policy.  The non-reversion policy prevented customers who transferred away from Ergon Retail from returning.  The Government believes that removing this policy will give customers in regional Queensland more choice when selecting a retailer.  Not only will regional customers be able to shop around, but they will now have the ability to test the water and return to Ergon Retail should they wish to do so.  Coupled with this announcement, Ergon Retail are now offering ‘EasyPay Rewards’ whereby regional customers could earn discounts of up to $75 for residential households and $120 for small businesses every year.

Other initiatives under the Affordable Energy Plan included:

  • Rebates of up to $300 to purchase an energy efficient fridge, washing machines or air conditioner, providing bill savings of up to $50 a year for an energy efficient washing machine or fridge or $135 a year for an air conditioner. Up to 100,000 Queensland households are expected to take up the offer.
  • An Asset Ownership Dividend of $50 a year for every household bill over the next two years, starting from January 2018 and evident on bills from the second quarter of 2018.
  • Another 4000 regional households can save up to $200 through the expansion of the Energy Savvy program.
  • Support for primary producers by delivering an additional 200 energy audits to agricultural customers through an expanded Energy Savers Plus program in partnership with the Queensland Farmers’ Federation, as well as providing a 50% co-contribution (up to $20,000) to implement audit recommendations.
  • Support for Queensland jobs and industry by providing energy audits for large customers including manufacturers, with a 50% co-contribution to implement recommendations (up to $250,000 per customer). This is expected to deliver savings of 10% to 40% for large industrial customers.
  • No-interest loans to help those Queenslanders who don’t have access to the upfront capital required to invest in solar and battery technologies to help reduce their bills and be part of a clean energy future. Queenslanders will be able to apply from March 2018, with savings of up to $700 per year expected for those who take up solar.

 

The initiatives are planned to be available from 1 January 2018, with calls for applications for Ergon’s EasyPay Rewards open now.