aemo energy update newsletter april 2015

7/25/2019 AEMO Energy Update Newsletter April 2015

1/8


2/8Energy Update April 2015P2

It is no longer newnews that the energyindustry is undergoingan unprecedentedtransformation. Every day,we hear about sweepingtechnological advancements

in gas, electricity andrenewables; we debatehow to update our existingregulatory and policyframeworks to reflect thechanging generation mix andthe rapid development ofAustralias energy markets;and we marvel at thechallenges and opportunitiesborne out of increasing

consumer engagementwhen it comes to choice andenergy supply solutions.

We are an industry in transformation but as seen in this Energy Update,it is clear that our industry has thevision, leadership, and discipline towork together and pool our knowledgeand resources. In doing so, we havethe opportunity to influence the futuredirection of the sector, to supportimproved information and data, strongercompetition, and increased market

efficiency and productivity, for thebenefit of Australian consumersand industry participants.

The National Gas Market Bulletin Board(NGMBB), which AEMO presented atthe Australian Domestic Gas OutlookConference in Sydney in March, is a vitalinitiative to give gas market participantsmore transparent, accurate and accessibleinformation. The NGMBB is the resultof close consultation between AEMOand gas market participants, and a greatexample of industry working together todevelop an end product that is timely,strategic, and future-focused.

And just 12 months after AEMO launchedAustralias first voluntary gas supply hubin Wallumbilla, Queensland, we celebratethe April listing of the Wallumbilla GasFutures, a joint project of AEMO and theAustralian Stock Exchange (ASX). Theestablishment of a gas futures market isan important step in helping participantsmanage risk by providing greater pricetransparency, and is another exampleof industry working together to pursuegrowth opportunities and developtimely solutions.

In developing our 2015 Gas Statementof Opportunities (GSOO) published thismonth, it became clear that the rate andscope of change in our energy marketsincreases the challenge of sourcingreliable information, hampering industrysability to make informed decisions andimplement strategic responses in thistime of change. Therefore, accessibilityto accurate data is increasingly valuable

to industry participants, governments,regulators, and consumers in terms ofenergy supply and security, and futureinvestment opportunities.

This is an ongoing issue for theenergy industry, and one recognisedby the Federal Government whichhas announced that the AustralianCompetition and Consumer Commission(ACCC) will conduct a 12-month publicinquiry into the competitivenessof wholesale gas prices in easternand southern Australia.

Reliable, transparent, and accessibleinformation is increasingly critical to an

industry looking to successfully navigateand shape this new world order, andthis is a topic we intend to explorein more detail at our MembersBriefing on 14 May.

We will continue to pursue diverseopportunities to give industry andconsumers better quality information toaddress the challenges and opportunitiesof our fast-changing industry as quickly,efficiently, and effectively as possible.

UPDATE FROMMANAGINGDIRECTORAND CEO

MATT ZEMA

CONTENTS

02 Update from Managing Director and CEO Matt Zema

03 No short-term gas supply gaps expected

04 New products, big impact

05 ASX and AEMO launch Wallumbilla Gas Futures

06 Sunny days ahead for Nyngan Solar Plant

07 The people behind AEMO

08 In brief


3/8Energy Update April 2015 P3

AEMOs 2015 Gas Statement of Opportunities(GSOO),released on 13 April 2015, forecasts no supply gaps for

any of Australias eastern and south-eastern gas marketsover the short term to 2019.

The 2015 GSOO reports on the adequacyof eastern and south-eastern Australiangas markets to supply maximum demandand annual consumption, as forecast inthe 2014 National Gas Forecasting Report(NGFR) published in December.

Lower than forecast consumption levels,most notably in the industrial sectorwithin Queensland and New South Wales,combined with upgrades to gas market

infrastructure, have alleviated short-termsupply gaps that were forecast by AEMOin its previous GSOO update in mid-2014.

Matt Zema, AEMO Managing Directorand Chief Executive Officer, said the shiftin supply forecasts illustrates the dynamic,ever-changing natural gas landscape,most notably following the initiation ofliquefied natural gas (LNG) exports.

Australias eastern and south-easterngas markets are experiencing rapidtransformational change. The 2015 GSOOpoints to a 17%*forecast decline in NewSouth Wales gas consumption in 2019and identifies crucial upgrades to gas

market infrastructure, such as thecommissioning of the Newcastle LNGstorage facility, said Mr Zema.

A fall in the forecast demand, increasedcapacity of the Victoria New SouthWales interconnector, and upgrades to theMoombaSydney and MoombaAdelaidepipelines, all reduce the potential forsupply gaps in the short term,said Mr Zema.

The forecast medium and long-termsupply gaps equate to 214 petajoules(PJ), down from the 1,000 PJ anticipated

in the 2013 GSOO, largely due to lowergas consumption forecasts following areduction in the industrial consumptionacross eastern and south-eastern gasmarkets, said Mr Zema.

The 2015 GSOO also confirms that theVictorian Declared Transmission System(DTS) can supply the maximum forecast1-in-20-year gas demand of 1,257terajoules per day from 20152019.

NO SHORT-TERM

GAS SUPPLYGAPS EXPECTED

*The 17% reduction is due to the decline inresidential, commercial and industrial demand inNew South Wales, as reported in the National GasForecasting Report (NGFR) of December 2014.
http://aemo.com.au/Gas/Planning/Gas-Statement-of-Opportunitieshttp://aemo.com.au/Gas/Planning/Forecasting/National-Gas-Forecasting-Reporthttp://aemo.com.au/Gas/Planning/Forecasting/National-Gas-Forecasting-Reporthttp://aemo.com.au/Gas/Planning/Gas-Statement-of-Opportunities



Following a collaborative effort by ourCorporate Development, Operations,

and Markets departments, the submissionstates it is critical that regulatorystructures allow our energy markets toevolve in light of the massive changetaking place, rather than entrenchexisting structures.

Energy markets are developing andchanging quickly in terms of whointeracts with customers, the productsand services offered, and how customerssource energy services, says AEMOExecutive General Manager CorporateDevelopment David Swift, who recentlypresented on the topic at a COAGEnergy Council workshop, highlighting

how risks to network and marketoperations from new products andservices can be managed.

The current retail framework reflects amarket model that prevailed a decadeago, when the potential and scale ofembedded generation or storagetechnology was not envisaged,he said.

What were seeing now are newbusiness models and service providersseeking to develop new products toleverage the customer response.

Markets are also transitioning, to offera variety of products and services withan increased focus on unbundling.As an example, advances in meteringmean that service providers can nowdevelop products tailored to the needs ofindividual customers, where before usagepatterns were much more opaque.

New and alternative energy services including from the grid, off the grid,

photovoltaic, energy storage, electricvehicles and so on are also emergingalongside new technologies, like smartdevices, to help us better understandand manage energy use.

The submission states a streamlinedregulatory framework focused on futureneeds, and which supports efficientnetwork pricing including tariffs thatgive customers the opportunity torespond to price signals is necessary.

Greater network access is alsoneeded to ensure our markets evolveefficiently. Networks should developbusiness models that do not inhibit the

development of competitive markets,to support new products and services,Mr Swift said.

Importantly for AEMO, we needappropriate access to information tooperate the market and maintain powersystem security and reliability. The riskfor us is that we lose visibility of whatis happening behind the meter, whichcould compromise system securityand undermine our ability toprepare accurate forecasts.

For more information contact AEMOExecutive General Manager CorporateDevelopment David Swiftor see thepresentation on the COAG website.

A shared platform to

support key marketprocesses will support theefficient deployment ofnew electricity productsand services. This, and arange of other reforms willhelp drive a more efficient,more competitive, and moreenvironmentally sustainableelectricity market, accordingto a new AEMO submissionto the Council of AustralianGovernments (COAG)Energy Council.

NEWPRODUCTS,BIG IMPACT
mailto:David.Swift%40aemo.com.au%20?subject=https://scer.govspace.gov.au/workstreams/energy-market-reform/demand-side-participation/new-products-and-services-in-the-electricty-market/https://scer.govspace.gov.au/workstreams/energy-market-reform/demand-side-participation/new-products-and-services-in-the-electricty-market/mailto:David.Swift%40aemo.com.au%20?subject=



ASX AND

AEMO LAUNCHWALLUMBIL LA

GAS FUTURES

This month, the ASX and

AEMO launched the ASXWallumbilla natural gasfutures, which commencedtrading on 7 April 2015.

The launch comes a year after AEMOestablished Australias first voluntary gas

supply hub in Wallumbilla, Queensland.The Wallumbilla End of Day Benchmarkprice will be used as the reference pricefor ASXs new gas futures contract.

The listing coincides with a significantchange in the dynamics of the Australianeast coast gas market, with the start ofliquefied natural gas exports moving anincreasing number of molecules offshore.

ASXs Deputy Chief Executive OfficerPeter Hiom said, ASX is committedto supporting the development ofAustralias energy markets. Our newfutures products help gas industryparticipants manage their forward

price risk and will provide greater pricetransparency both critical ingredientsfor customers in growingtheir businesses.

Matt Zema, AEMO Managing Directorand Chief Executive Officer, said that theestablishment of a gas futures marketwill greatly assist the gas industry, andis an important step towards increasingtransparency and competition inAustralias growing eastern andsoutheastern gas markets.

Participants will be able to use theWallumbilla Gas Supply Hub Benchmarkprice as a basis price for their gascontracts, with the development ofa derivatives market providing a riskmanagement tool for forward pricingand planning, said Mr Zema.

The new ASX gas futures are part ofASXs expanding energy derivatives

business, which is designed to meet therisk management needs of Australianenergy participants. They complementASXs existing electricity derivativesproduct suite, which has grown 18%year-to-date compared to the sametime last year, from 135,329 to 159,455contracts traded, or the equivalentof 1.8 million megawatt hours ofelectricity per day.

Mr Zema said that AEMO held regularmeetings with industry to refine itsbenchmark price methodology in keepingwith industry needs and expectations.

Industry has been supportive of

mechanisms to facilitate the developmentof a derivative market in gas, with thepublication of a benchmark price beingintegral to the process, said Mr Zema.

For more information about theWallumbilla End of Day Benchmarkprice, contact AEMO Trade FacilitationSpecialist Angelo Mantsio.
mailto:Angelo.Mantsio%40aemo.com.au?subject=AEMOmailto:Angelo.Mantsio%40aemo.com.au?subject=AEMO



SUNNY DAYS AHEADFOR NYNGAN

SOLAR PLANT

ASEFS was a joint project, withcollaboration between organisationsincluding CSIRO, AEMO, the Bureauof Meteorology, and several Australianuniversities. ASEFS joins the existingAustralian Wind Energy ForecastingSystem (AWEFS) in meeting AEMOsobligations under the Rules forintermittent generation.

AEMO Group Manager ForecastingLouis Tirpcou said the introduction of theASEFS was key to facilitating increasedparticipation from large-scale solargeneration in the National ElectricityMarket (NEM) and improving AEMOsability to forecast the solar energycontribution to electricity supply.

To date, solar generation has largelybeen confined to residential photovoltaic(PV). The Nyngan Solar Plant is anexample of the NEMs evolving

generation mix and was the firstsemi-scheduled solar plant in theNEM to register in ASEFS inDecember last year, said Mr Tirpcou.

Once in production, two AGL-ownedsolar plant projects this one at Nynganand a second to be built at Broken Hillwith a generating capacity of 53 MW will produce around 360,000 megawatthours (MWh) of electricity annually.

The Nyngan plant comprises around1,350,000 solar PV north-facing modulesinstalled on frames. The modules arewired together in arrays and connected toinverters to transform the direct currentthat is produced into alternating currentto be fed into the electricity network.

The Nyngan plant has been developedwith funding assistance from theAustralian Renewable Energy Agency(ARENA) and the New South WalesGovernment. There are only twoother small non-scheduled solarplants in the NEM.

For more information see theNyngan Solar Plant fact sheet.

The Nyngan SolarPlant is an example of

the National ElectricityMarkets evolvinggeneration mix.AEMO Group ManagerForecasting Louis Tirpcou.

The first large-scale solargenerating plant to beregistered in AEMOsAustralian Solar EnergyForecasting System(ASEFS) production systemcommenced operation inMarch. The Nyngan SolarPlant, a 102 megawatts(MW) solar plant located10 kilometres west of theNew South Wales townof Nyngan, has begungenerating up to 25 MWof electricity as it rampsup to full capacity.

Nyngan Solar Plant photo courtesy of AGL.
http://www.agl.com.au/~/media/AGL/About%20AGL/Documents/How%20We%20Source%20Energy/Solar%20Community/Nyngan%20Solar%20Plant/Factsheets/2014/Nyngan%20Fact%20Sheet%20v7.pdfhttp://www.agl.com.au/~/media/AGL/About%20AGL/Documents/How%20We%20Source%20Energy/Solar%20Community/Nyngan%20Solar%20Plant/Factsheets/2014/Nyngan%20Fact%20Sheet%20v7.pdf



In a new column forEnergy Update, we takeyou behind the scenes atAEMO, introducing you tosome of our employees.In this edition we talk toMatt Armitage ahead ofhis presentation to theAustralian Energy StorageCouncil Conference on3-4 June 2015.

Energy Update (EU):Thank you forsharing your story with us, Matt. Letsstart with your background?

Matt Armitage (MA):I started my careeras a Chartered Accountant and Tax

Adviser in the United Kingdom. Afterworking in the financial services sectorfor a number of years, I realised that Isimply wasnt impassioned by tax andaccounting. My wife and I relocated toAustralia in early 2011 so that she couldbe closer to her twin brother who hadbeen here for years, and I saw this as anopportunity to focus on a career that Icould feel truly excited about. The energyand resources sector is arguably thelargest industry in Australia, and giventhe ever-changing energy landscapes,I went back to school and studieda Masters in Energy and ResourcesManagement. The research phaseof my Masters led to a role atAEMO in March 2014.

EU:What was the focus of your research?

MA:I looked at the economics ofresidential electricity storage (RES)battery systems that complement solarphotovoltaic (PV), now being sold togrid-connected consumers. Many people

believe this technology could disruptthe electricity industry in the future. Myresearch paper used a cost optimisationmodel to analyse the economic viabilityof battery-based RES for residentialconsumers today, and to project the likelypaybacks for such systems when investingover the next decade. I also looked intohow RES could impact the NationalElectricity Market (NEM) in terms of thetiming, volume and volatility of residentialdemand for grid delivered electricity. Iwrote, and still strongly believe, that alot of work is required by the industryas a collective to ensure that storageand other emerging technologies areintegrated into the NEM effectively asthe uptake from consumers increases.But from my experience in the industryso far this topic is a high priority formost people, which is great.

EU:Is this the subject of yourpresentation at the upcoming AustralianEnergy Storage Council conference?

MA:Yes. Electricity storage is a veryexciting subject. There are certainlysome limitations for the widespreadintroduction of energy storage systems,most notably the high cost of thetechnology. However, with a reduction

in cost, combined with changes to tariffsto incentivise uptake, and possiblechanges to the business models thatdeliver this technology to consumers,I believe adoption of this technologywill be sooner than many believe.

EU:Whats it like working at AEMO?

MA:I love it here! I love the people asthere is a real breadth of backgroundsand diversity. As a career transitioner,AEMO welcomed my diverse, non-traditional engineering background. I

am the only non-engineer in my team inthe National Planning division, but I feeltruly welcomed by my colleagues who areassisting me in getting up to speed onthe technical side of things.

EU:The energy sector can be dauntingfor newcomers. Any tips for thoseinterested in a career in energy?

MA:I love to speak to people who haveyears of experience and wisdom. I havefound people, not just at AEMO butacross the broader industry, to be veryopen and generous with their time.So my tip is to listen to the expertsand ask as many questions as you can.

Matt Armitage will be speaking at theEnergy Storage Council Conference inSydney at Australian Technology Parkon 3-4 June 2015. For more informationon the Conference, please visit thewebsiteor contact Mattdirectly.

THE PEOPLEBEHIND

AEMO

INTRODUCINGMATT ARMITAGE

ANALYST, NATIONALPLANNING AT AEMO
http://www.australianenergystorage.com.au/mailto:Matthew.Armitage%40aemo.com.au?subject=mailto:Matthew.Armitage%40aemo.com.au?subject=http://www.australianenergystorage.com.au/


8/8

Course Location Date

Understanding MSATS Melbourne 6-7 May

Metrology for the National ElectricityMarket

Sydney 6-8 May

Overview of the National Electricity Market Brisbane 14 May

Overview of the Short Term Trading Market Sydney 28 May

Overview of the National Electricity Market Hobart 4 June

Overview of the National Electricity Market Sydney 25 June

AEMO TRA INING

For more details on all courses, and on how to register, visit AEMOsLearning Centreor call the Information and Support Hub on 1300 236 600.

AEMO is pleased to announce its first Overview of the National ElectricityMarket session for Hobart, Tasmania, scheduled for 4 June 2015.

AEMO Energy Updatewelcomes your feedback.

If you have suggestions and comments or wishto change your contact details, please [email protected].

TELL US WHAT

YOU THINK

FOLLOW US ON

IN BRIEF

Twitter Linked In Facebook

AEMO is pleased toannounce that it will berelocating its existingQueensland operationsfrom Mansfield to 10 EagleStreet in the Brisbane centralbusiness district (CBD).

AEMO Managing Director and ChiefExecutive Officer Matt Zema said theMansfield site has served AEMO wellover the years.

We are proud of the diverse teamenvironment and the culture of hard workand commitment we have developed atMansfield over the years, and we lookforward to building on this legacy at ournew office in the Brisbane CBD,Mr Zema said.

The move to 10 Eagle Street willposition AEMO for a successful futureby ensuring our people and systems

continue to be accommodated in

AEMO has commenced aformal search for a new chair,and also to fill an existingvacancy on the AEMO boardfor a non-executive director.

In accordance with AEMOs Constitution,the search for a chair arises due to theretirement of current chair, Dr Thomas(Tom) Parry AM, when his second termconcludes at the annual general meetingto be held in November 2015. AEMO hasengaged board search firm Heidrick &Struggles to undertake the search fora new chair.

For the non-executive director vacancy, theBoard is seeking suitable candidates whohave experience leading transformationalchange driven by technology. Whileexperience in the energy industry, marketsor utilities is desirable, it is not consideredessential. AEMO has engaged a separateboard search consultancy, Boomerang, to

conduct this search.Both appointments must meet theindependence criteria set out inAEMOs Constitution.

AEMO Members are welcome to referpotential candidates for both positions tothe relevant executive board consultancy.

A Special General Meeting will beheld once the Council of AustralianGovernments (COAG) Energy CouncilAppointments Selection Panel has

AEMOS QUEENSLAND OPERAT IONS

ON TH E MOV E

AEMO BOARD UPDATE

modern and functional facilities thatare fit-for-purpose, adaptable, andcentrally located for the convenienceof employees, visitors and industrystakeholders.

Mr Zema said AEMO is closely managingthe relocation process and working withour stakeholders to ensure that there isno disruption to critical systems, and onlyminimal impact on employees and marketparticipants during the transition.

AEMO is planning for a smoothtransition of our Queensland operations,which we expect to be completed by

early 2016, said Mr Zema.

undertaken candidate interviews and is ina position to make recommendations forthe appointments to AEMO Members.At that meeting, Members will considerwhether they agree to recommend thecandidates to the COAG Energy Councilfor appointment. This meeting will alsoconsider any directors eligible

for reappointment.Further information on the processfor appointment is available on theAEMO website.

For more information on the selectionprocess or the Special General Meeting,please contact AEMO Company Secretaryand General Counsel, Brett Hausler.
http://www.aemo.com.au/About-the-Industry/Traininghttp://www.aemo.com.au/About-the-Industry/Trainingmailto:media%40aemo.com.au?subject=Newsletter%20Feedbackmailto:media%40aemo.com.au?subject=Newsletter%20Feedbackhttps://twitter.com/AEMO_Mediahttp://www.linkedin.com/company/australian-energy-market-operatorhttps://www.facebook.com/AEMOenergyhttp://www.aemo.com.au/About-AEMO/Board-and-Governance/Director-Appointment-Processmailto:Brett.Hausler%40aemo.com.au?subject=AEMOmailto:Brett.Hausler%40aemo.com.au?subject=AEMOhttp://www.aemo.com.au/About-AEMO/Board-and-Governance/Director-Appointment-Processhttps://www.facebook.com/AEMOenergyhttp://www.linkedin.com/company/australian-energy-market-operatorhttps://twitter.com/AEMO_Mediahttps://twitter.com/AEMO_Mediahttps://www.facebook.com/AEMOenergyhttp://www.linkedin.com/company/australian-energy-market-operatormailto:media%40aemo.com.au?subject=Newsletter%20Feedbackhttp://www.aemo.com.au/About-the-Industry/Traininghttp://www.aemo.com.au/About-the-Industry/Training