UNDERGRADUATE THESIS OPEN DAY, SESSION 1 2017

A MODELLING ANALYSIS OF THE

DIFFERENT POLICY OPTIONS FOR

AUSTRALIA’S ELECTRICTY MARKET

Author: Alexander Ostermayer

Supervisors: Anna Bruce & Iain MacGill

SCHOOL OF PHOTOVOLTAIC AND RENEWABLE ENERGY ENGINEERING, UNSW, SYDNEY 2052 AUSTRALIA

Energy Market Modelling

The Australian Government has committed to reduce national greenhouse gas emissions to 26-28%

below 2005 levels by 2030. Considerable emphasis has been placed on Australia’s electricity sector,

given its potential as a significant source of emissions reduction opportunities.

AEMO+

1. Emissions Intensity Baseline and Credit Trading Scheme (EIS)

2. Explicit tax on CO2 emissions (Carbon Price)3. Extended Renewable Energy Target (RET)4. Regulated Closure5. Current policy - 33,000 GWh RET (BAU)

NTNDP

0

50

100

150

200

250

TWh

'All inclusive EIS' 'Coal/Gas EIS'

0

50

100

150

200

250

TWh

‘40-150 Carbon Price' '50% RET'

Liquid Fuel Biomass Solar Wind Hydro Natural Gas Brown Coal Black Coal

Results: Generation Mix (2017-2040)

Scope: Policies Assessed

1. Pathway of carbon dioxide emissions (Annual tCO2-e)2. Average wholesale price of electricity ($/MWh)3. Changes to generation mix4. Investment and retirement

Criteria for comparison:

0

40

80

120

160

200

2017 2020 2023 2026 2029 2032 2035 2038

Ave

rage

Ge

ne

rato

r P

rice

Re

ceiv

ed

($

/MW

h)

BAU 40-150 CP 50% RET 800-100 EIS 800-100 Coal/Gas

Context

Approach

How should Australia go about regulating the electricity sector to maximise reduction opportunities?

How should policy options be accessed – on what criteria?

Aim: To conduct a quantitative comparison between the proposed emission reduction options for Australia’s

electricity sector. This was achieved through the use of PLEXOS, a commercially available energy market

modelling software package. Data related individual generator characteristics, regional demand forecasts, fuel

pricing, and inter-regional transmission constraints were sourced publicly from AEMO (AEMO).

Results: Wholesale Prices (2017-2040)

0

50

100

150

200

250

2017 2020 2023 2026 2029 2032 2035 2038

Emis

sio

ns

(tC

O2

-e)

BAU 40-150 CP 50% RET 800-100 EIS 800-100 Coal/Gas 28% Target 50% Target

Results: Emissions Pathway (2017-2040)

Emissions Intensity Scheme – ‘All Inclusive’ vs ‘Coal/Gas’Both EIS scenarios had identical baseline and emission prices. Comparing

both schemes highlights the importance of policy scope. The scenarios had

an accumulative difference of 425 MtCO2-e over the 24 year period.

Expansion of renewables lacking in ‘coal/gas’ only scenario. Prices similar.

Question