abare.gov.au - Energy in Australia 2009

Electricity

The electricity industry is one of Australia’s largest individual industries, contributing around 1.5 per cent of Australia’s gross domestic product. Australia’s electricity generation sector faces a number of challenges over the medium to longer term, including the need to meet increasing domestic consumption through investment in new assets and policy measures aimed at reducing greenhouse gas emissions.

Over the past decade, final consumption of electricity in Australia increased at an average annual rate of 3.3 per cent.

Industry structure

The National Electricity Market (NEM) was established in 1998, to allow for market determined power flows across the Australian Capital Territory, New South Wales, Queensland, South Australia and Victoria (Tasmania joined in 2005). Western Australia and the Northern Territory are not connected to the NEM primarily because of their geographic distance from the rest of the market.

The NEM is comprised of a wholesale sector and a competitive retail sector. All electricity dispatched in the market must be traded through the central spot market. However, electricity retailers and generators also enter into contractual arrangements as a means of managing the risk associated with spot market price volatility.

The management of the electricity spot market and the central coordination of the dispatch of electricity from generators is the responsibility of the National Electricity Market Management Company (NEMMCO). This role is scheduled to be transferred to a new body, the Australian Energy Market Operator, on 1 July 2009. The Australian Energy Regulator (AER) monitors the market to ensure participants comply with the National Electricity Law and Rules.

9	Key performance indicators for the Australian electricity industry

unit

2002-03

2003-04

2004-05

2005-06

2006-07

Generation capacity

Asset value

A$b

Capacity utilisation

53.62

54.4

55.1

56.04

54.56

Electricity generation

TWh

206

213

217

220

227

Employment

‘000

Number of customers

‘000

9 093

9 268

9 351

9 530

9 684

Wholesale price a

- nominal

c/kWh

3.36

3.21

3.73

3.92

6.17

- real b

c/kWh

3.75

3.49

3.96

4.03

6.17

System minutes

not supplied c

mins.

8.04

4.58

4.43

3.7

5.8

System energy

not supplied

MWh

3 415

1 494

1 566

1 112

1 915

Distribution losses

5.9

5.7

5.9

5.6

a Volume weighted - average price (National Electricity Market). b 2006-07 A$ value. c Average minutes - excludes Northern Territory. na Not available.
Sources: Energy Supply Association of Australia, Electricity gas Australia; Australian Bureau of Statistics.

10	Fuel inputs into Australian electricity generation

2003-04

2004-05

2005-06

2006-07

Thermal

Black Coal

1 296

1 297

1 357

1 379

Brown coal

674

683

701

671

Oil

26.4

Gas

264

267

263

284

Total thermal

2 256

2 272

2 348

2 360

Renewables

Hydro

Wind a

Biomass

Biogas

Total renewables

a Includes solar photovoltaic electricity generation.
Source: ABARE, Australian energy statistics.

11	Principal generation businesses in Australia, 2007-08

generation

share of
Australian generation

GWh

New South Wales a

Macquarie

Generation

27 781

12.08

Delta Electricity

25 746

11.2

Eraring Energy

17 352

7.55

Snowy Hydro

3 437

1.49

Bacbcock and

Brown Power

1 185

0.52

Marubeni

1 003

0.44

Victoria

Loy Yang Power

17 292

7.52

Hazelwood Power

11 393

4.95

TRUenergy

10 300

4.48

IPM Australia

8 950

3.89

Ecogen Energy

1 912

0.83

Alcoa

1 324

0.58

Energy Brix

1 185

0.52

Snowy Hydro

395

0.17

AGL Hydro

257

0.11

Alinta

235

0.1

AGL

119

0.05

Eraring Energy

0.01

Queensland

CS Energy

19 249

8.37

Stanwell

10 168

4.42

Comalco/NRG

8 442

3.67

Tarong Energy

7 583

3.3

InterGen

6 988

3.04

Transfield Services

2 113

0.92

NewGen Power

1 965

0.85

Origin Energy

144

0.06

Enertrade

0.03

Oakey Power

Holdings

0.01

South Australia

Flinders Power

4 897

2.13

TRUenergy

3 304

1.44

International Power

3 289

1.43

Osborne

Cogeneration

1 225

0.53

Origin Energy

224

0.1

AGL

0.01

International

Power (Synergen)

0.01

Cummins Power

Generation

Tasmania

Hydro Tasmania

6 809

2.96

Bell Bay Power

1 243

0.54

Western Australia bc

20 679

8.99

Northern Territory b

Water and Power

Corporation

1 550

0.67

a Includes the Australian Capital Territory. b Not part of the national electricity market. c State total. Individual businesses not available. na Not available
Sources: Global Roam - NEM Review, www.horizonpower.com.au, Independent Market Operator, www.nt.gov.au\powerwater.

Production

Around 230 terawatt-hours of electricity was generated in Australia in 2006-07. Over the past five years, the industry has increased electricity generation by 10 per cent, while the number of customers has increased by around 7 per cent.

The majority of Australia’s electricity is produced using coal, accounting for 84 per cent of all fuels consumed by generators (in energy content terms) in 2006-07. This is because coal is a relatively low cost energy source in Australia. It also reflects the abundance of coal reserves along the eastern seaboard, where the majority of electricity is generated and consumed.

Black coal is expected to remain the most commonly used fuel in electricity generation. However, given that a large proportion of advanced and less advanced projects will be using natural gas or coal seam methane as fuel, these energy sources will account for an increasing proportion of power generation.

Capacity

In 2006-07, Australia’s electricity generation capacity was around 47 000 megawatts. As at the end of October 2008, there were 29 committed electricity generation projects and an additional 92 proposed projects. The combined capacity of the 29 committed projects was 6285 megawatts.

The National Electricity Market is linked by six major transmission interconnectors. These interconnectors link the electricity networks in Queensland, New South Wales, Victoria, South Australia and Tasmania. The National Electricity Market electricity transmission and distribution network consists of more than 781 000 kilometres of overhead transmission and distribution lines and more than 102 000 kilometres of underground cables. There are a number of projects which are under development to expand the capabilities of the interconnector system.

12	Australian thermal electricity generation capacity by plant and fuel type, 2006-07 a

NSW b

VIC

QLD c

WA d

TAS

AUS

Steam

Black coal

11 730

8 055

1 329

21 114

Brown coal

6 555

780

7 335

Natural gas

510

132

1 280

268

240

2 430

Multi-fuel

880

Reciprocating engine

124

Open Cycle Gas Turbine

Conventional gas

1 321

907

605

1 189

105

236

4 364

Oil products

338

113

614

Multi fuel

586

Combined Cycle Gas Turbine

Natural gas

160

840

663

360

131

2 154

a Non-scheduled small hydro plants are excluded. b Includes the ACT and the Snowy region. c Includes generating capacity at Mt Isa. d Includes plants owned by Western Power Corporation (now Verve Energy) in the South West Interconnected System, and exclude plants operated under power purchase agreements. MW = Megawatt. Source: Energy Supply Association of Australia, Electricity gas Australia 2008.

13	Major committed interconnector projects for Australia’s National Electricity Market

capacity interconnector

project details

net impact

start-up

Central to northern
Queensland

Stage 2 of a 3 stage project.
Constructing a Nebo-Strathmore 275 kV line

Increase transfer capacity by 80-160MW

Summer 2008-09

Central to northern
Queensland

Stage 3 of a 3 stage project.
Constructing a Strathmore-Ross 275 kV line

Increase transfer capacity by 450-520MW

Summer 2010-11

South-west Queensland
to South-east Queensland

Installation of a 120 MVAr capacitor
bank at the South Pine 275 kV substation

Increases voltage stability limit by 25MW for Tarong and Gold Coast by 10MW

Summer 2008-09

South-west Queensland
to South-east Queensland

Establishment of the Abermain 275 V
substation and installing a 275/110 kV transformer

Increases voltage stability limit by 25MW for Tarong and Gold Coast by 10MW

Summer 2008-09

South-west Queensland
to South-east Queensland

Installation of a 200 MVAr capacitor bank at Tarong; a fifth 200 MVAr capacitor bank at Greenbank; and a 120 MVAr capacitor bank
at the Mt England and South Pine 275 kV substations

Increases voltage stability limit by 135MW for Tarong and Gold Coast by 50MW

Summer 2009-10

South-west Queensland
to northern NSW
South-east Queensland
to northern NSW

Installation of a phase angle regulating transformer on the Armidale-Kempsey
132 kV line no.965

Removes impact of mid-North Coast 132 kV line rating limitations on Queensland exports to New South Wales

Summer 2008-09

Northern NSW to
South-west

South-west Queensland
to northern NSW

Upgrade of the Tamworth-Armidale
330 kV line no.86

Increases the 15 minute summer day thermal rating of the line

Summer 2008-09

Northern NSW to central NSW
Canberra to central NSW
Central NSW to Canberra

Upgrading the supply to Newcastle, Sydney
and Wollongong to 500 kV. Involves
transformer and 500 kV substation works.

Reduces thermal limitations, voltage control limitations and reactive power support limitations

Network support from Summer 2008-09; Augmentation by Summer 2009-10

Source: NEMMCO Statement of opportunities, 2008

14	Australian major power network transfer capabilities, 2007-08

interconnector

location

forward
capability

reverse
capability

New South Wales to Queensland (QNI)

Armidale to Braemar

486

1 078

New South Wales to Queensland (Directlink)

Terrinora to Mullumbimby

105

234

Snowy to New South Wales

Murray to Dederang

3 309

1 090

Victoria to Snowy

Buronga to Red Cliffs

1361

1 786

Victoria to South Australia (Heywood)

Heywood to Tailem Bend

460

300

Victoria to South Australia (Murraylink)

Red Cliffs to Berri

220

Tasmania to Victoria
(Basslink expected capability)

Seaspray to Georgetown

594

469

Transmission and distribution

Overhead

Underground

length (km)

781 383

102 725

Sources: Energy Supply Association of Australia, Electricity gas Australia 2008.

Prices

Australian electricity prices are among the lowest in the world. The average wholesale price of electricity for the NEM as a whole remained relatively constant until 2007. At the beginning of 2007, average market electricity prices increased significantly, largely as a result of record demand combined with tight supply. In particular, drought constrained hydroelectricity generation in the Snowy region, Tasmania and Victoria, and the limited availability of water for cooling in some coal-fired generators led to higher spot market prices. However, electricity prices have since moderated.

Occasional price spikes are often caused by factors such as widespread heatwaves, industrial disputes or generator malfunctions. For example, electricity spot prices in South Australia increased considerably in March 2008 following a 15 day heatwave, which encouraged record high electricity demand. However, reduced maximum allowable flows on the Heywood interconnector from December 2007 constrained the available supply.