Australian Energy Daily, from Schwartz Pro No Images? Click here Good afternoon and welcome to your daily Pro briefing. Today in summary: The role of Snowy Hydro needs to be assessed as the government-owned gentailer expands, Rod Sims says; Senate inquiry warned off an 'instant fix' on the gas Australia gives away; and the AEMC rejects a proposal to average marginal loss factors across the NEM, saying it would drive power prices up. -- Sophie Current policy spin level: 💨💨 Should your whole team be getting this briefing? Email subscribe@schwartzpro.com.au.to upgrade your subscription. Then we can keep our journalists around to help you look good. Sims calls for clarity on Snowy 2.0 Competition czar Rod Sims says speculation about Snowy 2.0's future role is dampening investment and it's about time the government delivered on his "essentially costless" underwriting recommendation. Senate inquiry warned off 'instant fix' on gas giveaway Chevron, tax collectors and conservationists give divergent evidence to the Senate inquiry into Australia's oil and gas reserves. Coal insurance out of reach by 2030 QBE won't insure local energy generators by 2030 if they're still more than 30% coal. On current trajectory, none of them will qualify. Morrison's captain's call on secondary boycotts, explained The Australian Energy Market Commission released its draft determination rejecting a request from Adani Renewables to change the way AEMO calculates marginal loss factors. The AEMC said the average loss factor method proposed by Adani could dampen locational signals for new generation and could make dispatch decisions less efficient, causing wholesale prices to rise. Recent volatility in MLFs is due to the energy market's transition, and the methodology used now is "the most efficient way of accounting for losses in the national electricity market, and continuing to set these loss factors on an annual, forward-looking basis remains the most appropriate approach given the existing broader market design," the AEMC said. The draft rule it released includes some tweaks to help AEMO improve MLF calculations by removing certain requirements about how those calculations are made. Broader, long-term issues will be dealt with through the COGATI review, the AEMC said. The Clean Energy Council this morning said the decision would put future investment at risk and that the AEMC's proposed COGATI access reform model was "hugely unpopular with key industry stakeholders". Submissions on the draft rule are due by January 16. -- A Treasury discussion paper to be released today will include energy projects among A$500 million in nationally significant infrastructure which could be given a 15% concessional tax rate, The Australian reported. Labor has described the move as 'old policy' but said it would wait for the detail before forming a position, the AFR reported. -- The AEMC set out its vision for a two-way electricity market in a new discussion paper, with criteria about how the market should best be designed including competition and market signals, risk allocation, being technology neutral, minimising information asymmetry, integrating complementary markets and cutting regulatory costs. Against those criteria, the AEMC assessed market design features such as shifting locational pricing from regional to nodal; whether reliability incentives should be regional or centralised; and single vs multiple dispatch horizons and settlement periods. Its initial assessment supports stronger market signals ahead of stronger control systems. The rulemaker saw more positives from compelling small generators to give AEMO information on supply and demand, as large scheduled generators must already do, than from allowing voluntary participation.
The paper is part of the Energy Security Board's post-2025 market design work, and the AEMC said the paper was informing its rule making, specifically its work on the final version of the wholesale demand response mechanism due next month. The draft version of that rule allowed more large consumers to participate in demand response but excluded households and small customers. -- The Australian Energy Regulator released the single submission it got on its draft paper on wholesale electricity market performance reporting as it develops its 2020 Focus. EnergyAustralia said over-the-counter derivatives trading should not be subject to new reporting requirements as the data is sensitive; that the AER should focus on demand side participation in its 2020 focus, including whether the RERT is crowding out demand response; that it should identify the impact of AEMO's changes to load relief on FCAS markets; and that offer behaviour from black coal participants should be considered in light of supply challenges in NSW. AEMO looks abroad to help wrangle renewables The market operator is looking to various US states and across Europe for examples of potential strategies to handle Australia's rapid take-up of renewables and particularly DER. Snowy Hydro reports 'turbulent year' Snowy Hydro's annual report captures a “turbulent year for the energy industry” and commits to underpinning the decarbonisation of the national electricity market with Snowy 2.0. Reforms to transmission investment needed now: AEMC The AEMC's two proposed changes to transmission access are what some industry participants have been crying out for — and the rulemaker intends to make changes quickly. Policy and report summaries are only available to Advisory Team subscribers. Upgrade by emailing subscribe@schwartzpro.com.au. Genex Power told the ASX yesterday the Northern Australia Infrastructure Facility (NAIF) had extended its A$610 million loan offer for the Kidston pumped hydro project to June 2020, improving hopes for the project after EnergyAustralia pulled back earlier this month. Genex is working with NAIF and other stakeholders to restructure the project's financing and is aiming for financial close as soon as possible in 2020, it said. -- BHP's chief executive Andrew Mackenzie will be replaced by the company's head of Australian operations Mike Henry from January 1, the company said. The International Energy Agency's World Energy Outlook, released yesterday, has come under criticism for underplaying the speed of the transition to renewables and justifying continued investment in fossil fuels, Reuters reported. Australia's resources minister Matt Canavan cited the outlook in a press release this morning, saying it:
-- The latest Countdown report from the Lancet said every child born today would have their life "profoundly affected by climate change" but limiting global temperature rises below 2 degrees would be possible and would improve the health of those children. In Australia, the report said there had been no federal-level engagement on health and climate change and the country "remains at significant risk of declines in health due to climate change". In The Australian, AEMC chair John Pierce provides more commentary around the rulemaker's marginal loss factors decision.
Submission and event deadlines in the next 5 days On November 15, submissions are due on AEMO's indicative marginal electricity loss factors for the 2020-21 financial year. Beau Hoffman, Bioenergy Technologies Office, US Department of Energy will speak alongside Michael Burke, Director Biofutures in the Queensland Department of State Development and Brendan Nelson, Chief Executive Officer at Regional Growth NSW at the Bioenergy Strong conference in Brisbane on November 14. National Wind Farm Commissioner Andrew Dyer and Energy Change Institute Director Ken Baldwin will speak at the national Renewables in Agriculture conference in Wagga Wagga on November 14. SA Minister for Energy & Resources Dan van Holst Pellekaan will speak at an Australian Institute of Energy event in Adelaide on November 19. AEMC Senior Economist Alan Rai will join Sandra Gamble, Board member and Chair of System Operations Committee – New Zealand Electricity Authority, and Hugh Bannister, CEO, Intelligent Energy Systems at an Australian Institute of Energy event in Sydney on November 19. WA Minister for Energy Bill Johnston will speak at a Clean Energy Council event in Perth on November 21. ![]() |