Retrofitting old power station sites with renewable generation

wind turbine

As coal fired generation retires the logical solution would be for renwable generation developers to use the existing connection points to install either new generation or energy storage. Generally, these locations have the best transmission infrastructure close by and have favourable loss factors.

Increasingly renewable developers are finding it hard to obtain favourable locations to build new projects particularly for solar and wind. Most developers prefer sites next to transmission infrastructure, but more and more renewable developers are struggling to find sites with good solar or wind potential. The wind sector is most influenced by site selection with the majority of the high wind yielding sites already developed.

The question is, do developers now look at redeveloping existing generation sites rather than start with a greenfield site? While there are benefits of a brownfield site, the registration and connection process of a new project is as arduous as developing a whole new new site. Additional connection studies would need to be undertaken and new projects would need to meet more stringent approval processes.

As developers are forced to develop low yielding sites the output of the projects drops and costs increase, so developing an older site may be beneficial if yield is significantly better.

The earlier wind farms were built in the late 1990’s and are now entering the final years of their life. Are these locations ideal for the next generation of wind farms or will developers opt for new sites?

Overseas data suggests repowering an existing site with new more efficient and larger wind turbines has its benefits. At this stage no Australian wind farms have been repowered.

The Australian Energy Market Commission (AEMC) estimates the average wind farm is 15 years old however some are close to 30 years old. The early wind farms are located where the wind resource was seen to be the best.

With offshore wind the next big thing in the industry will we also see the development of larger more efficient wind farms on the same ground as the industry pioneers?

At Edge 2020 keeping our customers informed on the energy market is a top priority for us. As the world shifts towards a more sustainable future, we are committed to playing our part by procuring from renewable energy sources, whilst continuing to secure cost-effective energy solutions for our customers. If your business is interested in wholesale or retail renewable PPAs we’d love to help you. Contact us on: 1800 334 336 or email:

Coal price caps result in high compensation but lower forward prices

Last week reports emerged that one coal fired power station could receive up to $450M in federal compensation as a result of the price cap on coal. Under the new legislation, coal fired generators are compensated for the cost of coal they have locked in at prices above the $125/t cap.

The coal price cap is likely to be higher than the coal currently locked in by many coal fired power stations, however some power stations are exposed to higher priced coal. Under the coal price cap mechanism, generators must bid into the market at a price inline with coal procured below the coal price cap. Generators that are exposed to coal prices above the coal price cap will not be able to dispatch their unit unless generating uneconomically. The compensation is designed to level the playing field allowing the units with fuel costs above the coal cap to continue to supply power and assist in system security.

Based on the current price of coal, compensation for Queensland’s Gladstone power station could reach $450m. The compensation will be split between the Queensland and federal governments on a 50/50 basis while the $125/t coal price cap is in place. The total compensation amount will vary depending on the amount of coal procured at prices above $125/t.

Many may argue that generators with high costs should be forced up the bid stack and not be compensated for high fuel costs. While stations like Gladstone may not have the benefit of low coal prices the station is currently crucial to system security in Queensland. Gladstone is not the only coal fired power station to receive compensation. In NSW, Origin’s Eraring power station will also receive compensation.

The coal cap legislation forbids coal producers from selling coal to domestic generators above the price cap and electricity generators must dispatch into the NEM at costs that reflects the cost of coal procured below the coal cap. The changes in bidding have resulted in the forward market electricity prices dramatically falling with the likelihood of future contract prices to level off in line with new long run marginal costs.

Below is a summary by state of recent activity:

  • QLD prices ranged between -$78.70/MWh and $270.00/MWh for the 2 weeks ending 31st December 2022, averaging $67.59/MWh.
  • QLD Q422 prices ranged between -$122.18/MWh and $15,500.00/MWh , averaging $120.24/MWh.
  • Solar output fluctuated across the period with output peaking close to previous weeks at 2,106MW, during the negative spot period the output was economically curtailed. Cloud cover also reduced output.
  • Apart from Christmas eve, wind generation displayed a consistent negative correlation with solar. Output peaked at 685MW leading up to Christmas then reduced to a normal maximum of 450MW for the remainder of the year.
  • Gas fired generation including Swanbank E, Townsville, Roma and Condamine covered the evening peaks with the exception of Yarwun that operated 24/7.
  • Wivenhoe hydro generation reflected the gas generators by covering the evening peaks and evening while Kareeya continued to generate around the clock.
  • Coal fired availability remained high with Gladstone taking a unit off over the Christmas / New Years break, Kogan creek returned to service on 20th December and remains online. Millmerran 1 came offline on the 30th and remains offline. All other operating as expected.
  • NSW prices ranged between -$69.20MWh and $223.54/MWh for the 2 weeks ending 31st December 2022, averaging $73.60/MWh.
  • NSW Q422 prices ranged between -$120.00/MWh and $15,500.00/MWh, averaging $115.66/MWh.
  • Most price spikes are now being capped below $149/MWh lower than the previous $300/MWh cap, this is likely as a result of the cap on gas.
  • Solar output fluctuated across the period with output peaking close to previous weeks at 2,367MW, during the negative spot period the output was economically curtailed. Cloud cover also reduced output.
  • Wind output dropped as we approached Christmas then increased to peak at 1,436MW at the end of the year.
  • Tallawarra was the only gas turbine to generate over the Christmas break due to relatively low prices.
  • Coal fired availability remained high despite various movement in units, Bayswater returned to service on the 20th but Eraring and Vales Point both took units offline over Christmas. Eraring returned to service on the 2nd January but the Vales point unit remains offline.
  • SA prices ranged between -$605.41/MWh and $4,027.21/MWh for the for the 2 weeks ending 31st December 2022, averaging $41.19/MWh.
  • SA Q422 prices ranged between -$1,000.00/MWh and $15,500.00/MWh , averaging $63.67/MWh.
  • Solar generation peaked at 435MW on the last day of the year but maximums averaged 350MW. Negative spot prices caused units to be constrained.
  • Wind generation was sporadic reaching a high of 1,915MW but also dropped to less than 10MW occasionally. The SA market spiked on two occasions, both times the output from wind generation dropped significantly.
  • Thermal generators continue to operate over the evening peak when spot prices are generally higher, however they are operating during other parts of the day when spot prices are high. Torrens Island is operating all hours of the day, but Quarantine, Barkers inlet, Dry creek and Pelican Point have reduce run times as they focus on higher price periods.
  • VIC prices ranged between -$141.51/MWh and $228.44/MWh for the 2 weeks ending 31st December 2022, averaging $36.17/MWh.
  • VIC Q422 prices ranged between -$996.18/MWh and $584.31/MWh , averaging $62.86/MWh.
  • Solar generation was heavily constrained due to negative prices, solar output peaked at 797MW.
  • Wind generation was sporadic reaching a high of 2,871MW but also dropped to less than 5MW occasionally.
  • Hydro generation continues with its strategy of only operating Murray over the evening peaks, with Dartmouth, Eildon and Bogong adding additional generation when required. Hydro generation continues to increase during the high price periods. Hydro generation across Victoria and NSW has been used to keep a cap on spot prices, however the market is now capping around $140/MWh rather than the traditional $300/MWh cap price.
  • Yallourn continues to have various issues over the Christmas break with unit tripping followed by a fail return to service of unit 1, by the end of the year Yallourn was operating with 3 units. The Loy Yang A & B station operated consistently across the last 2 weeks of the year, continuing with the strategy of reducing generation during low price periods.

At Edge2020 we help our customers navigate the ever-changing energy landscape and to ensure the proactive and accurate delivery of advisory, account, and portfolio management services and associated outcomes. If you could benefit from an expert eye on your energy portfolio, we’d love to meet you. Contact us on: 1800 334 336 or email:

Energy users wait for lower price after intervention bill

Following the passing of the energy reform bill in Canberra last Thursday, end users are waiting to see when the price of gas and electricity starts to match the caps imposed in the wholesale market.

Prior to the passing of the intervention bill, end users were looking at gas deals above $30/GJ. Now a cap of $12/GJ has been imposed, what will be the offer price to gas consumers? AGL have been quoted,

“as soon as the legislation is passed, they will try to get some better offers”

The legalisation covers uncontracted wholesale gas and capping this portion of the market at $12/GJ may not see the benefits flow through to end users.

Large end users of gas have the option to procure gas from the spot market, this segment of the market is not covered by the $12/GJ cap so prices in the gas spot market are likely to be higher than $12/GJ. So, with coal prices peaking again above $300/t is there the potential for gas to now be the transitional fuel to renewables?

The war in Ukraine has influenced the transition to renewables and potentially speed the process up worldwide. European countries are now less likely to take significant volumes of gas from Russia, so they will be looking at alternative fuel sources. As a result of the gas supply issues out of Russia, some European countries are reviving their coal fired generation fleet while they transition to renewables.

While international gas prices remain high, Australian gas producers have been very vocal in leaving the domestic gas market alone and let it work as intended. They argue the gas market will fix itself, higher prices will signal the investment in new supply, resulting in lower long term energy prices.

The gas market is currently proving to be very profitable for producers at the expense of end users. A recent report from the regulators exposed that the majority of offers for 2023 gas were over $30/GJ and a report out of AEMO shows the cost of production is $9.50/GJ or below. With a potential continuation of the $20/GJ profit for gas producers they will be pushing to make gas the transitional fuel and push out the coal industry.oc

While the intervention bill is designed to be in place for 12 months, the ACCC has flagged an extension to the reasonable pricing framework saying they,

“would be expected to be required until domestic gas prices are reflective of the underlying costs of production and that there is sufficient supply at these prices”.

At Edge2020 we will continue to monitor both the gas and electricity markets to understand the impacts these market caps will have on the prices offered to end users.

Edge2020 have an eye on the energy market, enabling us to support price  benefits as well as customer supply and demand agreements. Our clients rely on our experts to ensure they are informed, equipped, and ideally positioned to make the right decisions at the right time. If you could benefit from an expert eye on your energy portfolio, we’d love to meet you. Contact us on: 1800 334 336 or email:

Federal and State Government agree to power bill

On Friday National cabinet met and agreed on the states introducing a cap on wholesale gas and coal. The temporary cap will be set at $12/GJ for gas and $125/t on coal. The caps will not enforce on export contracts therefore not limiting the opportunities on high international prices.

During the meeting it was agreed that the states would sort out the coal cap and the federal government would change laws to legislate the $12/GJ cap on domestic gas. As the caps are focused on the domestic market, they will only have a small impact on the profitability of producers. It is anticipated that only 4% of gas and 10% of coal will be affected by the cap, the remaining volumes will be exposed to international markets.

As the states have been tasked with implementing the cap it is likely they will go down different routes in achieving the same outcomes. The simplest state to implement the changes will be Queensland as the government still owns and control 80% of the coal fired generation fleet. Queensland will likely use its directive powers and instruct its government owned corporations (GOCs) to dispatch the coal assets below specific prices. NSW will likely use changes in law to cap the price for the state.

In line with the price caps, national cabinet also discussed an assistance package to lower the impact on families and business as a result of high inflation and high commodity prices.

The cap mechanism will be used for uncontracted gas and coal, this may have limited impacts on generators as the majority of coal and gas has already been produced under longer term contracts with strike price below the proposed caps.

At this stage it is unlikely that the mechanism will be in place until February despite federal politicians being recalled to Canberra on Thursday to discuss the issue. While the bill will get the support of the House of representatives it is expected the Greens will put pressure on the Government in the Senate to limit any compensation for the coal producers.

When the futures market opened on Monday morning it was evident the traders expect the caps to flow into the market. Both QLD and NSW futures dropped by $20/MWh for later dated quarters and over $30/MWh for Q123.

Edge2020 have an eye on the energy market, enabling us to support customer supply and demand agreements. Our clients rely on our experts to ensure they are informed, equipped, and ideally positioned to make the right decisions at the right time. If you could benefit from an expert eye on your energy portfolio, we’d love to meet you. Contact us on: 1800 334 336 or email:

What’s Oil got to do with it?

There is no doubt that energy markets and the energy industry itself are rapidly evolving and moving away from fossil fuels. The evolution of energy seems to be coming, and only coming faster given this tumultuous time the people and countries across the world have endured. Lets start with oil; Australian’s across the nation are very aware of the recent global oil price crash to new historic levels, particularly when it is reported in the news headlines that Australian’s are seeing almost 15-year lows at the petrol bowser. The impact of the recent oil price crash however does not stop at the bowser, it has and will continue to have significant impacts on energy markets across the globe including in Australia.

Oil prices have been hit recently due to two major events; one being the global epidemic of COVID-19, resulting in a significant reduction in demand for oil across the globe. The International Energy Agency’s (IEA) April 2020 reports an expected drop in demand of global oil of 9.3 million barrels(mb)/day year on year for 2020, with April 2020 demand estimated to be lower than 2019’s demand by 29 mb/day. The second impact to oil markets has been the oil price and supply war between OPEC’s pseudo leader Saudia Arabia and non-OPEC nation, Russia, two of the largest global oil exporters. Saudi Arabia and Russia could not agree levels of supply, leading to Saudia Arabia flooding the market with oil and prices, both spot and futures, reaching new lows. The quarrel between the two global oil market power-houses and the impacts of the COVID-19 on demand for oil has led to the historical event where the West Texas Intermediate (WTI) oil price index fell into negative price territory, with May 2020 future prices settling at -USD$37.63/barrel on the 20/04/2020, after reaching a low of -USD$40.32/barrel earlier that day.

The major oil index, WTI, saw futures prices for June 2020 contracts settling at around USD$17/barrel on the 29/04/2020, whilst Brent Crude, another major oil index also felt the pain of slowing demand, with prices dropping below USD$20/barrel on the 27/04/2020. But the impact of tumbling oil prices reaches far and wide, particularly here in Australia. Australia has a booming natural gas industry and was the largest exporter of liquified natural gas (LNG) as of January 2020. A significant number of gas sales agreements are linked to the crude oil indices, with Australian gas companies feeling the hurt given the tumble in oil prices. Brent Crude oil futures for June 2020 contracts settled at around USD$24/barrel on the 29/04/2020. At these prices, the likes of Santos and Oil Search will be hurting given both flagged a cashflow breakeven oil price of ~USD$25-29/barrel, and USD$32-33/barrel, respectively. Demand for natural gas in international markets has also tumbled, and due to the linkage between oil prices and gas contracts, spot contract prices have shifted down, with June 2020 contracts settling at AUD$2.87/GJ (~USD$1.88/GJ) as of the 30/04/2020, again a far reach from prices seen in November 2019 of ~AUD$7.30/GJ (~USD$5/GJ).

Further impacts of the oil market crash on gas markets has been cheaper domestic gas prices for consumers. Queensland, the largest gas extractor and exporter on the east coast has seen prices in its short-term trading market (STTM) in Brisbane reach as low as AUD$2.31/GJ in March 2020, a significant drop from AUD$9-11/GJ we witnessed the same in 2019. Other energy commodities have also seen a decline off the back of the oil price tumble, including thermal coal. As stated above, with gas prices domestically and internationally falling away, thermal coal prices have come off due to energy users opting for cheaper fuel sources such as oil and gas. Spot thermal coal contracts for the May 2020 settled at USD$52.35/metric ton(mt) on 30/04/2020, far softer than spot prices a year ago at ~USD$90/mt.

This brings us to the all-important energy market and commodity, electricity, which with all the above combined has seen electricity prices fall off a cliff. The National Electricity Market (NEM) in the last few years has been on a renewable power growth spurt. Queensland for instance has the highest penetration of large scale solar generation of approximately ~2,400 MW and a significant penetration of rooftop solar reaching ~2,100 MW, combine them together and on a mild April day in 2020, you have almost 2 thirds of maximum demand. With renewable energy displacing thermal/fossil fuels, off the back of reducing pricing for the technology and subsidies in the form of renewable energy certificates (RECs), combined with both far cheaper gas prices allowing gas plant to bid in and capture price spikes due to their fast-start and intermittent operating capabilities, and reduced demand for electricity due to the impact of COVID-19 with business and industry operating skeletally, electricity prices continue to sit at prices not witnessed since 2016.

All the above has been caused by two events, both significant to the global economy, and the energy industry in their own rights. One thing is for sure, the events have helped push the electricity market on the East Coast of Australia into a new direction far quicker than it may have if the two COVID-19 and the oil price crash did not occur. We are seeing new market design concepts (ie. capacity markets, two-sided markets) and new contract market products (ie. super-peak swap) coming to light, that give way to new technologies and greater competition. The abundance of natural gas in Australia is affordable for households for heating and is finally being utilised as the ‘transition’ or bridging fuel it was always pegged as, to renewable energy in the wholesale market. One thing is for certain, change is afoot, and it definitely has me excited.

If you have any questions regarding this article or the electricity market in general, call Edge on 07 3905 9220 or 1800 334 336.