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Victorian Energy Overview June 2010

Victorian Energy Overview June 2010. Victoria – Unique Energy Market. Large Reserves of Brown Coal – 500 years No Black Coal Offshore Natural Gas ~ 25 years Good wind resources Privatised Energy Market Many Assets Owned by International companies

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Victorian Energy Overview June 2010

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  1. Victorian Energy Overview June 2010

  2. Victoria – Unique Energy Market • Large Reserves of Brown Coal – 500 years • No Black Coal • Offshore Natural Gas ~ 25 years • Good wind resources • Privatised Energy Market • Many Assets Owned by International companies • New Investments, wind, gas peaker, coal & solar

  3. Interstate and other Generators Snowy Mountains Scheme Ecogen AGL Southern Hydro Loy Yang A Hazelwood Yallourn Loy Yang B VENCorp SP AusNet Australian Energy Market Commission / Australian Energy Regulator United Energy Powercor Jemena Citipower SP AusNet Consumers of electricity have been able to choose their own electricity retailer since 13/1/2002.

  4. Regulated / Non-regulated Pricing • GENERATORS – Many – Less than 10 • Prices NOT regulated, can make or lose lots of money • TRANSMISSION – One only – Monopoly • Regulated, about a 6.8% Real Rate of Return (RROR) • DISTRIBUTION – Five • Regulated, about a 6.8% Real Rate of Return (RROR) • RETAILERS – Many – about 14 at present • Prices monitored, but NOT regulated, can make or lose lots of money

  5. Electricity and gas transmission

  6. MurrayLink +/- 220 MW Interconnection With SA 300 MW from SA Interconnection with Snowy/NSW 1900 MW from Snowy Major Load Major Generation Interconnection with Tas Victorian Electrical Network Summer Peak ~10,300 MW Winter Peak ~7,500 MW

  7. Electricity generating capacity in Victoria Total Electricity Generating Capacity 10,000 MW Total Renewable Generating Capacity 1,000 MW

  8. Principal Power Stations

  9. Wholesale Price Variation http://www.nemmco.com.au/mms/GRAPHS/INDEX.HTM

  10. Regulatory System Australian Energy Market Operator (AEMO) The ‘manager’ of the market http://www.aemo.com.au Australian Energy Regulator (AER) The ‘regulator’, guidelines and price determination http://www.aer.gov.au Australian Energy market Commission (AEMC) The ‘rule maker’ http://www.aemc.gov.au

  11. http://www.aer.gov.au/content/index.phtml/tag/AERMarketSnapshot/http://www.aer.gov.au/content/index.phtml/tag/AERMarketSnapshot/

  12. Average annual wholesale prices (March ’10) - $/MWh

  13. Energy Support Programs Commonwealth Government • $1.6B renewable energy funds, including the $1.5B Solar Flagships • $2.4B clean coal fund • $50 million geothermal drilling program fund • 45,000GWh of renewable energy certificates (eRET) Victoria State Government • $110m ETIS2 funds for CCS demonstration • $72m ETIS2 funds for renewables demonstration • $100m large scale solar power station

  14. Renewable Energy Target (RET) • Commonwealth Program / Policy • Changes in March 2010 • Yet to be legislated • Split into large scale (wind) and small scale (solar etc,.) • Large scale 41,000 GWh (~4500MW) by 2020 • Market to set the price • Small scale unlimited, set price of $40/MWh • To be reviewed in 2014

  15. CPRS -5% Permit Price

  16. CPRS -5% Permit Price

  17. Planning Issues • Victorian Parliamentary review underway • Need to plan well ahead • Grid connections can take three years • Some planning aspects two years • Wind is particularly slow • Flora/Fauna studies can be seasonal, requiring 12 months • Orange bellied parrots, legless lizards, growling frogs • Parallel planning (environment / building planning / finance) • Fastest but is costly if projects don’t proceed • Wind planning 100% (>2,000MW) over subscribed • But is the policy there to give you certainty?

  18. 8 Wind Speed (metres/second) 7 6 5 4 Victorian Wind Atlas Land reserved under the National Parks Act (1975) Angahook – Otway Investigation 66 kV electricity network 220 kV electricity network 330 kV electricity network 500 kV electricity network Terminal station Substation Operating wind farm Wind Speed (metres/second)

  19. Wind Projects Status http://new.dpi.vic.gov.au/energy/projects-research-and-development/wind-projects

  20. Offshore Wind > 300 m 0 – 40 m • Victoria’s coastal waters are deep compared to countries with installed offshore wind energy • With current technologies, offshore wind energy is not commercially viable in Victoria

  21. Wave Energy • Victoria has excellent wave resources, particularly along the Western coast

  22. Biofuels • Victoria - 2005 Biofuels’ Action Plan • $5m biofuels infrastructure fund • Mandates in NSW, Manildra, not in Vic’ review in 2010 • Food vs Fuel, vs beer, wine, meat • http://en.wikipedia.org/wiki/Fuel_vs_food • If move beer crops to food……. • Energy cost in a packet of corn flakes, high fuel prices give more impact • US President: Only 85% of cost increase fuel related (2008) • 70% of USA crops for meat • Australian input limits • Need 2nd generation, cellulosic, straws, pasture grasses etc,. • Commonwealth - $12m, over three years….. • Water and conditions tolerable opportunities • We have a lot of marginal land that could be used, (and improved)

  23. Biofuels

  24. Geothermal

  25. Feed in Tariffs (FiT) • Victorian legislation 1:1 Nett FiT for up to 100kW of renewables • Solar or wind or hydro • Liable party is the retailer • Cost passed through to all customers • Victorian Premiuim Nett FiT for up to 5kW of solar. Solar specific. • Liable party is the distributor, cost passed through to all customers • No Gross FiT, considered too expensive • NSW just announced a Gross PFiT up to 10kW, $500m • No national consistency • Introduced state by state • No energy efficiency FiT, for example for high efficiency combined heat and power

  26. VEET – Energy Saver Incentive (ESI) • Electricity and Gas retailers are liable • Add a small amount to all bills • Three year phases, starting 1 Jan 2009 • 2.7MT CO2e per year (Vic’ total 110MT/y) • Domestic only • Six prescribed activities so far, more can be added • Water heating, Space heating, Space conditioning (insulation, thermally efficient windows and weather sealing products), Lighting, Shower roses, Refrigerators/freezers • Who pays? • All customers http://www.esc.vic.gov.au/public/VEET/

  27. Energy Resource Efficiency Program (EREP) Mother of EREP was Industry Greenhouse Program (IGP) • At the end of 2007, IGP had delivered: • Cuts of 1.23 MTCO2e/year • Savings to business of $38.2 million each year • Average payback period was 20 months EREP • 100 TJ of energy and/or 120 ML of water • 250 liable companies in Victoria. They use 700 petajoules of energy and 300 gigalitres of water a year. • 45% of Victoria's energy use, annual water consumption of around 1.5 million average Victorian households. • Is this enough for energy efficiency? • Not sure, would like to look at the 2nd tier energy users http://www.epa.vic.gov.au/bus/erep

  28. Web Links • Sustainability Victoria • http://www.sustainability.vic.gov.au/www/html/1517-home-page.asp • Department of Primary Industries • www.dpi.vic.gov.au • http://www.dpi.vic.gov.au/dpi/dpinenergy.nsf/Home+Page/Energy~Home+Page?open • Department of Sustainability and Environment • www.dse.vic.gov.au • Department of Premier and Cabinet • www.dpc.vic.gov.au

  29. Thank YouLeigh ClemowRegional Development VictoriaTel + 61 3 9651 9260leigh.clemow@rdv.vic.gov.au

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