Deferred WA Electricity Statement of Opportunities released

by Energy Action | Jul 04, 2016
The Australian Energy Market Operator has released its Deferred 2015 Electricity Statement of Opportunities for the 2017–18 Capacity Year which is used to determine the amount of electricity capacity required in Western Australia’s South West interconnected system to ensure the electricity network can meet forecast peak demand.

The Electricity Statement of Opportunities (ESOO), which is prepared annually by the Australian Energy Market Operator (AEMO), also presents longer-term electricity peak and operational consumption forecasts for Western Australia’s South West interconnected system (SWIS) over a 10-year forecast period from 2016–17 to 2025–26 and includes information on the SWIS in relation to:

 - generation and demand side management (DSM) capacity operating in the SWIS;
 - planned capacity, including expansions and new facilities under construction;
 - capacity retirements; and
 - key issues for potential developers.

Key findings of the WA Electricity Statement of Opportunities:

 - Based on forecasts of a slow overall growth of energy usage over the next 10 years, the Reserve Capacity Target (RCT), - ie the amount of generation capacity required in the SWIS to efficiently meet forecast demand over the next two years, has been determined as 4,552 megawatts (MW). This is calculated as the 10% probability of exceedance (POE) peak demand forecast, plus a reserve margin. 

AEMO says the forecast growth in rooftop solar PV, energy efficiency, battery storage and in-home energy monitoring devices is expected to result in slow electricity consumption growth from the SWIS from around 18,452 gigawatt hours (GWh) in 2015–16 to around 20,249 GWh by the end of the 10-year outlook.

 - AEMO forecasts the 10% POE peak demand is forecast to grow at an average annual rate of 1.4% over the 10-year forecast period. The forecast growth rate for peak demand has not statistically changed since the 2014 ESOO6 (0.8%). The peak demand forecasts are lower for the first five years of the outlook period, but higher during the outer years beyond 2021–22.

 - Due to increased use of electrical appliances, including reverse cycle air-conditioning and entertainment devices annual operational consumption is forecast to grow albeit more slowly, at an average annual rate of 1.0% over the 10-year forecast period.

 - An all-time peak demand occurred in summer 2015–16 when 4,013 MW was observed in the 17:30 to 18:00 trading interval on 8 February 2016. Annual peak demand in the SWIS has historically occurred on a late afternoon in February, however, three of the last five annual peaks have occurred later in the day and earlier in the year, between early January and early February. AEMO said that this trend is primarily driven by the rapid take-up of rooftop solar PV, customers monitoring and lessening their consumption to reduce their exposure to capacity cost payments, and changing weather and temperature conditions

 - The capacity cost allocation mechanism – the Individual Reserve Capacity Requirement (IRCR) – provides an effective incentive for contestable customers to reduce electricity use during periods of high demand. Action taken by customers in response to the IRCR reduced load by 77 MW during the peak demand interval on 8 February 2016.

 - Based on the current level of installed and committed capacity, and assuming there are no changes to the capacity outlook, no new generation or Demand Side Management (DSM) capacity will be required in the SWIS over the forecast period.

 - The ongoing WA Government Electricity Market Review (EMR) has implemented changes to the Reserve Capacity Mechanism that will affect the 2015 and all future Reserve Capacity Cycles. These changes are expected to reflect the economic value of capacity and reduce the cost of capacity procured to meet the RCT.

 - The reduction of 380 MW of Synergy’s plant generation capacity may contribute to meeting Australia’s emissions reduction targets, though how much will be determined once the specific Facilities to be retired have been confirmed. 

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