ENERGY NETWORKS
BARRIERS TO ENTRY INTO THE ELECTRICITY GENERATION SECTOR:
INSIGHTS FROM AN
INVESTOR SURVEY by Alan Rai, Director, Baringa Partners, and Senior Fellow, Macquarie University Research recently undertaken by Alan Rai and Tim Nelson has identified the common barriers to investment in electricity generation in Australia. Here, Alan outlines some of the findings of the research, and provides suggestions to remove the barriers that are holding large-scale investment back.
T
hree key trends have occurred over the 21 years since Australia’s national electricity market (NEM) commenced: 1. Entry of more than 6GW of gas-fired plant over the decade to 2009, with more than half of this (3.6GW) entering in 2008 and 2009 alone. This investment occurred in response to state-based policy signals – namely, Queensland’s 18 per cent gas scheme and NSW’s greenhouse gas abatement scheme – and to the drought-induced electricity spot price spikes of 20072008 (see Figure 1). 2. Exit of baseload plant over a relatively short period: between June 2014 and June 2017, over 4.1GW of coal-fired plant exited. This unwound all the excess baseload capacity existing at the time of the NEM’s commencement. These exits occurred suddenly and unexpectedly, contributing to the
Figure 1. Net entry and exit of large-scale plant across the NEM, year to 30 June. Source: Authors’ calculations based on data from AEMO and from the AER.
While the term “dispatchability” does not have a universal meaning, it incorporates notions of controllability and flexibility. Dispatchability is the extent to which a resource can be relied on to follow a target in relation to its load (for demand-side resources) or output (for supply-side resources). 1
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June 2020 ISSUE 10
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