Locational Signals for Generation and Transmission investment
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Transcript of Locational Signals for Generation and Transmission investment
Locational Signals for Generation and Transmission investment
• Transmission Investment:
“the knottiest problem in the (energy) deregulation process”
Steven Stoft
1ACCC Regulation Conference 2010- Steve Edwell
Locational Signals for Generation and Transmission investment
• The aim is to avoid:
– Wrongly located generation– Crowding out efficient generation by transmission
overbuild– Delay in efficient transmission augmentation
2ACCC Regulation Conference 2010- Steve Edwell
Locational Signals for Generation and Transmission investment
• Transmission investment is lumpy• A “chicken and egg dilemma”• Outdated transmission flow analysis• Generation tends to happen first
3ACCC Regulation Conference 2010- Steve Edwell
Chart 1
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Low Cost Generators High Cost Generators
Small Loads Large Loads
4ACCC Regulation Conference 2010- Steve Edwell
Chart 2(a)Low Cost Generators High Cost Generators
Small Loads Large Loads
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New Generator
5ACCC Regulation Conference 2010- Steve Edwell
Chart 2(b)Low Cost Generators High Cost Generators
Small Loads Large Loads
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New Generator
6ACCC Regulation Conference 2010- Steve Edwell
Chart 3Low Cost Generators High Cost Generators
Small Loads Large Loads
XA B
New GeneratorPrice Region 1 Price Region 2
7ACCC Regulation Conference 2010- Steve Edwell
Chart 4Low Cost Generators High Cost Generators
Small Loads Large Loads
XA B
New GeneratorPrice Region 1
8ACCC Regulation Conference 2010- Steve Edwell
Locational Signals for Generation and Transmission investment
• Question:
Do we need better regulatory incentives for TNSP’s, some exposure to transmission costs by generators, or a return to some form of central planning; or perhaps a mix of these?
9ACCC Regulation Conference 2010- Steve Edwell
Locational Signals for Generation and Transmission investment
• NEM Framework:
– Generators pay direct connection costs and loss factor location signals
– But these signals are weak– No location price signals– Mis-pricing/disorderly bidding
10ACCC Regulation Conference 2010- Steve Edwell
Output of Kogan Creek and imports into Qld across QNI (1)
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Kogan Creek's output (MW)
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11ACCC Regulation Conference 2010- Steve Edwell
Output of Kogan Creek and imports into Qld across QNI (2)
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Kogan Creek's output (MW)
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Chart 5a
12ACCC Regulation Conference 2010- Steve Edwell
Locational Signals for Generation and Transmission investment
• Recent NEM policy initiatives in response to remote generation:– Remote generation zones (Scale efficient network
extensions – SENEs)– Individual generators will pay only their own
efficient network connection costs– Users will assume the risk of non arrival– Regulatory oversight of SENEs costs by AER.
13ACCC Regulation Conference 2010- Steve Edwell
Locational Signals for Generation and Transmission investment
• Recent NEM policy initiatives in response to remote generation (con’t):
Further recommendations:
– Introduce a transmission charge– Pockets of material/transitory congestion should
be priced
14ACCC Regulation Conference 2010- Steve Edwell
Locational Signals for Generation and Transmission investment
• The Western Australian WEM:– Generators pay connection and costs of deep
network impacts– Potential for recompensation– Quantifiable net market benefits of the
connection can be offset
15ACCC Regulation Conference 2010- Steve Edwell
Locational Signals for Generation and Transmission investment
• Concluding Points:
1. We can’t rely on a market solution2. Is better price signals part of the solution?3. Better incentives for TNSP’s?4. A role for (proactive) planning
16ACCC Regulation Conference 2010- Steve Edwell