The sunshine state is shining, but what impact will that have on electricity generators like Stanwell

28 November 2018

By Isaac Pratt, Stanwell Energy Trader Analyst (Physical Markets)

We’ve seen big growth in large-scale renewables (solar and wind) over the past five months throughout Queensland.

This growth has been spurred on by the Queensland Government’s drive towards 50 per cent renewable generation by 2030, the Federal Government’s Renewable Energy Target, increased consumer concern about electricity sustainability and other market factors.

The following chart shows the staggering recent growth of output from the large-scale solar and wind generation in the state – particularly as newly commissioned plant came online.

Source: AEMO’s Infoserver dispatch data, showing coincident maximum daily dispatch.

What’s the likely impact on Stanwell?

The majority of the existing renewable power sources are located in North Queensland, with more projects planned in the coming years.

The increasing renewable generation in North Queensland, when the majority of the electricity demand in South-East Queensland, may create some challenges for participants in the Queensland market.

Loss factors are more sensitive, and constraints may become more likely, the further a power station is away from the area of major demand (load centre) and major transmission corridors.

Evidence of this can been seen in recent marginal loss factors (MLFs) for Stanwell’s generators, with Barron Gorge and Kareeya hydro power stations and Mackay Gas Turbine seeing greater impacts.

Source: AEMO, regional boundaries and marginal loss.

 

Projects in the pipeline

The following chart highlights the huge pipeline of committed and proposed solar (and less so wind and battery) projects, which dwarfs the current thermal capacity in Queensland.

While not all of the proposed projects will proceed, a significant proportion is expected to be developed, and it will impact how dispatchable thermal plants operate in the future.

Source: AEMO, Queensland’s existing, committed and proposed generation capacity (MW).

What is Stanwell doing about the shift in our industry?

At Stanwell, we are well aware of the potential impacts to our business and are preparing and positioning ourselves to respond to an evolving market. We have the people and strategy in place which sets us up for the long term, but with an eye to the short-term challenges and opportunities in the market.

Our strategy preserves what is distinctive about Stanwell but encourages us to find better ways of doing things. It has been developed so that we:

• contribute to security of electricity supply, in view of the increasingly intermittent nature of supply and demand;
• adapt to and support the transition to a lower carbon energy market by integrating renewables into our portfolio; and
• provide affordable energy to customers by developing innovative and tailored products.

 

Isaac Pratt is an Energy Trader Analyst at Stanwell.