The latest summary edition of our monthly Australian energy & environmental market update is now available. Keep reading for energy and carbon pricing movements, policy updates and other news.
This month we cover energy and environmental market movements, the NSW government targeting 28 GWh of long-duration storage by 2034, the Broken Hill BESS operating in island mode, and the Q3 Quarterly Energy Dynamics Report.
Keep reading for an overview of key market developments and a discussion of the impact of these announcements.
A comprehensive report with additional insights, charts and commentary from our industry analysts, is available to paid subscribers. Contact our team to find out more.
For a comprehensive update on the ACCU market, read our ACCU Monthly Market Report here
The NSW government announced a new target of 28 GWh of long-duration storage by 2034 and at the same time reaffirmed the definition of long-duration storage under the Energy Infrastructure Act will remain 8-hours.
The NSW government previously set a target of 16 GWh of long-duration storage by 2030. This month, it was announced that the NSW government would legislate an additional target for a further 12 GWh long-duration storage by 2034.
In the lead up to this announcement, there was some confusion regarding what would qualify as long-duration storage. NSW energy minister Penny Sharpe clarified that the state’s long duration storage targets would continue to be based on an 8-hour storage requirement.
As of October 2024, a total 4,592 MWh of long-duration storage projects have been awarded long-term energy service agreements (LTESA), the largest being Richmond Valley BESS, which is a lithium-ion BESS project that is expected to deliver 2,200 MWh.
LTESA tender round 5 is expected to announce successful projects for South-West Renewable Energy Zones (REZ) access rights and long-duration storage in early 2025, but after that no new Capacity Investment Scheme (CIS) or LTESA rounds for long-duration storage have been announced.
Broken Hill BESS is now enabled to create a local microgrid after a major storm caused extended blackout events in the region.
On 17 October 2024, a major storm in Broken Hill took down seven transmission towers, which effectively isolated the region from the rest of the grid.
In case of such events, there are back-up diesel generators in-place, however one of them was out of service, while the other kept tripping as it could not adequately support the evening load and because of various other problems including fuel pump issues, resulting in blackouts.
The Broken Hill BESS is operational and designed to be grid-forming with the ability to create a local microgrid, however Transgrid had reserved islanded operations for the Silver City Energy Storage project – an advanced compressed air energy storage system that is expected to achieve COD in 2027.
Due to the blackouts, an agreement was reached to allow the Broken Hill BESS to operate in island mode, charging off excess rooftop solar and the diesel generators, instead of the nearby Broken Hill Solar Farm and Silverton Wind Farm.
The BESS provider remains contracted to deliver islanding operations, but this had been inhibited to avoid interaction with the compressed air system.
The Australian Energy Regulator (AER) is expected to launch an investigation on the extended blackout events, together with the Independent Pricing and Regulatory Tribunal (IPART), to understand if there has been any breach in the market rules.
The 2024 Q3 Quarterly Energy Dynamics (QED) report has outlined higher spot prices in Q3 compared to the same time last year, but importantly reported promising signs of the transition picking up pace.
AEMO released its Quarterly energy dynamics report for Q3 in October. The report is designed to give an indication on trends and outcomes of the electricity and gas markets, both in electricity and gas spot price outcomes and advancements to the development pipeline.
They key takeaways from the report are:
Energy market
Subdued electricity spot prices across all NEM regions seen in September continued into October due to lower seasonal demand and increasing availability of renewable energy generation, both of which are typical for spring. As in September, ample supply driven by increased rooftop solar and minimal coal outages kept daytime prices particularly low.
The significantly higher renewable energy output this month has contributed to an abundant supply of Large-scale Generation Certificates (LGCs) and lower LGC prices. Both of which may incentivise asset owners to sell LGCs to bolster cashflow, underscoring the value of green product hedging strategies. Buyers looking to offset emissions or lock in green energy should consider leveraging current supply conditions to secure favourable terms in their LGC purchases.
Regional variances in asset performance also persisted, emphasizing the need for localized insights when making investment decisions. The CORE Markets team partners with renewable energy developers and corporate buyers to support strategic planning and effective risk management. Reach out to discuss how we can help optimize your strategy in this evolving market.
Carbon market
October was another record-breaking month for trade volumes in 2024, as a sharp increase in options activity more than made up for the slight drop in spots and forwards trading.
Prices also continued to increase with spot Generic, No Avoided Deforestation, and Human-Induced Regeneration unit trading at their highest level since April 2023
The increase in interest in the ACCU market is also seen through primary market engagement where buyers engage with project developers as part of their strategic carbon procurement. This may be through carbon offtake agreements, co-investment or partnership opportunities with values-aligned projects.
To explore your carbon procurement strategy and market engagement mix, get in touch with our advisory team. We can support you in structuring a plan that supports your overall decarbonisation roadmap and commercial goals.
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.
Australian Energy & Environmental Market Update - October 2024
