Australian Energy & Environmental Market Update - February 2024

Features

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Feature 1

Queensland Battery Industry Strategy

The Queensland Government has announced a $571M Battery Industry Strategy, which includes $105M to plan and establish the Australian Battery Industrialisation Centre in partnership with the Australian Government.

Queensland's $571 million Battery Industry Strategy aims to establish a comprehensive supply chain for batteries, covering materials supply, advanced manufacturing, and recycling. The plan allocates $360 million of existing funding, supplemented by an extra $210 million for capabilities, standards, and testing. Specifically, $105 million is dedicated to establishing the Australian Battery Industrialisation Centre.

The strategy targets global battery industry leadership, potentially generating 9,100 jobs and contributing $1.3 billion to the Queensland economy by 2030. The initiative aligns with Queensland’s aims of becoming a renewable energy superpower, as outlined in a recent Clean Energy Finance report.

Queensland's battery plan is divided into three themes: innovation and commercialisation ($275 million), investment and growth ($92.2 million), and positioning and promotion ($202.5 million). Emphasizing responsible battery stewardship, the strategy prioritizes reusing, repurposing, and recycling, guided by a robust governance structure for societal, environmental, and economic benefits.

Queensland's Battery Industry Strategy positions the state as a leader in mining, refining, and producing advanced battery materials. Aligned with energy and jobs plans, the focus is on energy storage's role in the state's 2030 renewables transition. Informed by an independent analysis, the strategy emphasizes collaborative investment for industry development, capturing local demand, and advancing zero-emissions technology.

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Feature 2

Power system event in Victoria

Victoria faced significant challenges with extensive power disruptions, infrastructure issues, and market implications in the aftermath of severe storms.

Severe storms in Victoria triggered substantial power disruptions affecting approximately 500,000 homes and businesses, prompting the implementation of load shedding measures to address the significant impact on the power grid.

The collapse of six transmission towers in the Geelong suburb of Anakie underscores concerns regarding the resilience of aging infrastructure. The collapsed towers were constructed in the 1980s, whilst towers in some parts of the state are nearing or surpassing the 60-year mark.

The outage at Loy Yang A power station, a crucial element in Victoria's energy infrastructure, resulted from a transmission line failure during the storms. The incident led to disrupted train services and power outages for approximately 500,000 households in metropolitan Melbourne.

The incident prompted AEMO to declare a "significant" power system event and initiate controlled load shedding as a precautionary measure and resulted in the Victorian spot price being set at the market price cap for 2 hours.

AEMO have already released a preliminary report on the incident, whilst the Victorian Government have announced a review that will report to the Minister in June and issue a final report in August.

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What this month’s developments mean for Australian business

Australian energy market

• Despite the monthly average wholesale prices being higher in February compared to January across the NEM (except for Queensland), the Cal24 Futures prices decreased across all states. This illustrates the complexity of the market in the midst of the renewable energy transition. If you’re thinking of going to market to procure energy, our advisory team can help you navigate the process.
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• Rio Tinto’s high profile renewable energy investments ahead of their 2030 targets serve as a good example for other organisations working to similar timelines.
  
  In January Rio Tinto signed a PPA for 100% of the output from European Energy Australia’s planned Upper Calliope solar farm, which is targeting completion in 2025 or 2026.
  
  The company then followed this up in February by signing Australia’s largest ever PPA, committing to buying 80% of the output from Windlab’s planned 1.4 GW Bungaban wind project, which is targeting completion by 2029.
  
  The timelines associated with Rio Tinto’s PPAs make it clear that companies with 2030 targets for significantly reducing emissions associated with their electricity consumption need to act now.
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Australian carbon market

• The uptick in the value of Generic ACCUs is likely driven by Safeguard Mechanism participants taking their mandated regulatory positions. Generic ACCUs represented nearly 74% of the total volume traded for the month.
  
  The pricing of method-specific ACCUs is still highly variable based on their method of creation. Organisations making voluntary carbon investments are usually more interested in selecting method-specific projects, but this represented a much smaller portion of the overall activity on the spot market this month.
  
  Our transactions and advisory teams, however, continue to see significant interest on the primary market as a growing number of organisations look to secure long term supply to quality projects.
  
  Forward-looking organisations, particularly from hard-abate sectors, are encouraged to develop their carbon procurement strategy early, even while their emissions reduction efforts are still underway.

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Do you need help navigating renewable energy and carbon markets?

The events outlined in this month's update highlight the evolving nature of carbon, environmental and energy markets and the complexity of the net zero transition.

To discuss your unique requirements, get in touch with our team today to see how we can help.