Past and projected future components of electricity supply to the ACT, and resultant emissions intensity of electricity supplied

Transcription

1 Past and projected future components of electricity supply to the ACT, and resultant emissions intensity of electricity supplied transport community industrial & mining carbon & energy Prepared for: ACT Government, Environment and Planning Directorate, Climate Change Client representative: Cameron Knight Date: 26 March 2015 Final

2 Table of Contents 1. Renewable share in ACT electricity supply, 2011 to Methodology and data sources Results Projected renewable share and weighted average emissions intensity of electricity supplied to the ACT, 2015 to Methodology and data sources Results... 6 References...11 Prepared by:. Date: 26 March 2015 Hugh Saddler Reviewed by: Date: 26 March 2015 Name Authorised by: Date: 26 March 2015 Name Report Revision History Rev No. Description Prepared by Reviewed by Authorised by Date 00 Final Report HS PH PH 26/3/ pitt&sherry This document is and shall remain the property of pitt&sherry. The document may only be used for the purposes for which it was commissioned and in accordance with the Terms of Engagement for the commission. Unauthorised use of this document in any form is prohibited.

3 1. Renewable share in ACT electricity supply, 2011 to Methodology and data sources The methodology used to calculate emissions intensity in this report is consistent with the approach to calculate Scope 2 emissions factors for electricity purchased from a grid, as described in Chapter 7 of the Technical Guidelines for the estimation of greenhouse gas emissions by facilities in Australia, as specified for use in the National Greenhouse and Energy Reporting System (Department of the Environment, 2014a), and is also consistent with the approach for calculating electricity generation emissions as described in the National Inventory Report (Department of the Environment, 2014b). These approaches and methods align in turn with the definitions used in The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard of the World Resources Institute/World Business Council for Sustainable Development (the GHG Protocol). Renewable electricity supplied to the ACT consists of the following components: The ACT s share of the Large Renewable Energy Target (LRET); The ACT s share of electricity supplied through the National Electricity Market by large renewable electricity generators up to the level of their LRET Baseline (below baseline generation); GreenPower purchased by ACT electricity consumers; Electricity exported to the ActewAGL network by small scale ( rooftop ) photovoltaic installations. Note that, unlike some other networks in NSW and elsewhere, the ACT network does not have any embedded non-ret renewable generators. The three small embedded renewable generators (Mugga Lane landfill gas, Belconnen landfill gas and Stromlo mini-hydro) are all accredited power stations under the RET. The approach used to calculate each of the four components listed above is as follows. LRET share This is calculated by multiplying the Renewable Power Percentage (RPP) for the relevant year, as specified by the Clean Energy Regulator by total electricity supplied to consumers in the ACT. The RPP is set on a calendar rather than a financial year basis, so the percentages used for each financial year are simple averages of the percentages for the two calendar years which cover each financial year. The RPP is also adjusted for the component allocated to waste coal mine gas. Total electricity supplied in each year is taken from ActewAGL Distribution s Benchmarking RIN Response to the Australian Energy Regulator, which includes figures for total electricity delivered to customers by the ActewAGL Distribution, i.e. the total electricity supplied by all retailers active in the ACT market. Below Baseline NEM renewable generation For the purpose of this analysis the relevant generators are those renewable generators which supply the NSW region of the NEM and are classified as Scheduled by the Australian Energy Market Operator (AEMO). There are six generators which meet this criterion: Blowering, Guthega, Hume (NSW share), Tumut 1, Tumut 2 and Tumut 3 (Talbingo). All other renewable (mostly hydro, a few landfill gas) generators in NSW with LRET baselines are embedded within one of the three NSW distribution networks, and so do not directly contribute to ACT electricity supply. The below baseline output of these generators, which in total is quite small, is assumed to contribute to the renewable electricity supplied through each of the three networks. 1

4 For each of the above six large hydro generators the quantity of electricity sent out each year, as obtained by pitt&sherry through the NEM-Review service, is compared with the baseline for the relevant year, as specified by the Clean Energy Regulator. The sum of baseline generation from all six generators is then calculated. This figure is then used to calculate the below baseline renewable share of electricity supplied from the NEM, which is the ratio of below baseline renewable electricity sent out to total electricity supplied by scheduled generators in NSW; this total includes output from the relevant generators in NSW, plus imports of bulk electricity from Queensland and Victoria, minus exports to Queensland and Victoria (noting that imports greatly exceed exports in all years over the past decade or so). GreenPower GreenPower purchases by ACT electricity consumers in each year were calculated from sales data contained in the national GreenPower quarterly reports. Electricity exported to the ActewAGL network from rooftop photovoltaic installations Figures for electricity supplied to the network by rooftop photovoltaic installations were based on the reported electrical energy supplied to the network from residential customers, as contained in ActewAGL Distribution s regulatory report to the AER (the so-called RIN response). (This approach is implicitly based on the very reasonable assumption that rooftop PV is the sole source of this supply.) These data, provided to the AER by all distribution networks in the NEM states are calculated from individual household meter data, and thus depend on whether households are on gross or net metering. In the ACT, households eligible for the gross feed in tariff are on gross metering, so that all the electricity they produce is included in the total. Households which installed their PV systems since the end of feed in tariffs, however, are on net metering, meaning that electricity from their rooftop systems which they consume behind the meter is not included in the total supply figures. That does not mean, however, that behind the meter consumption does not contribute to the ACT s efforts to reduce emissions attributable to electricity consumption; it just means that it will appear on the demand reduction side of the ledger, rather than on the zero emission supply side. 1.2 Results The full results of the calculations are shown in Table 1. Results are shown graphically in Figures 1 and 2. Table 1: Components of renewable electricity supply to ACT, 2011 to 2014, GWh Total electricity input to ACT network 3, , , ,962.8 LRET obligation GreenPower Small scale solar Below baseline NEM renewables Total renewable Total non-renewable 2, , , ,

5 GWh 3,500 3,000 2,500 2,000 1,500 1, Total renewable Total electricity input to ACT network Figure 1: Renewable share of total ACT electricity supply GWh Small scale solar LRET obligation GreenPower "Below baseline" NEM renewables Figure 2: Components of renewable electricity supply to the ACT 3

6 2. Projected renewable share and weighted average emissions intensity of electricity supplied to the ACT, 2015 to Methodology and data sources Projecting possible future renewable electricity supply and the resultant weighted average emissions intensity of electricity supplied to the ACT is a more complex task than calculating past renewable supply. The projections task has four distinct components: Future ACT demand for electricity; Future renewable electricity supplied from each of the four components quantified in Part 1 of this report; Future renewable electricity supplied from new generation commissioned by the ACT through its reverse auction process; and Future emissions intensity of the residual fossil fuel generation component of electricity supplied through the NEM. Each is described in turn ACT demand for electricity The ACT demand for electricity will be affected by a great many different factors, including rates of population and economic growth, electricity prices, the rate at which the efficiency of electricity use continues to increase, the extent to which electricity consumers continue to adopt more frugal approaches to using electricity, and the extent to which national and ACT government policies and programs may influence any of these factors. Clearly, the current exercise cannot undertake a major demand forecasting study, accounting for the effects of all these factors. The approach is to base projected ACT demand on the most recent (June 2014) National Electricity Forecasting Report by AEMO. This Report prepares demand forecasts for each of the five NEM regional markets. The ACT is part of the NSW region. The AEMO report assumes that current electricity use efficiency measures will remain in place, but that no new measures will be introduced over the forecast period. In recent years the ACT share of total NSW region electricity demand has increased from 4.24 per cent in to 4.56 per cent in There was a significant increase from to because of the large fall in NSW electricity demand caused by closure of the Kurri Kurri aluminium smelter. The projection assumes that over the projection period the ACT share of total NSW region demand will continue to grow slightly as the more electricity intensive manufacturing sectors of the economy, which are important in NSW but virtually non-existent in the ACT, grow less slowly than the economy as a whole or, in some cases, actually decline. The projection assumes that the ACT share of NSW region demand will reach 4.80 per cent by The overall outcome is that total ACT electricity demand falls slightly in and then grows slightly, so that by it is reaches a level 2.4 per cent higher than demand in Future old renewable electricity supply LRET The quantity of LRET electricity notionally supplied to the ACT each year in future will depend on two factors: the ACT share of total national electricity sales to consumers which attract an LRET obligation and the national total LRET supply required by the relevant legislation. 4

7 Not all sales to consumers attract an LRET obligation: certain electricity intensive trade exposed industries (EITEs) attract partial exemptions from the obligation. This means that total national retail sales carrying an LRET obligation are less than total national sales of electricity. Projecting what the volume of such sales may be in future years is a very complex task, if undertaken de novo. For this study we have used the projections developed by ACIL Allen as part of their modelling for the Commonwealth government s 2014 RET Review. Obligated ACT sales in each projection year are calculated by subtracting the projected quantity of distribution loses in the ACT from the projected total demand for each year. Distribution losses are projected to remain a constant 4.5 per cent share of total electricity supplied to ActewAGL Distribution. The ratio of obligated ACT sales to obligated national sales of electricity was then calculated, and found to remain almost constant, at just over 1.5 per cent. The ACIL Allen work has also been used as the source for the second component of the LRET projection, year by year total national LRET supply as required under the legislation. At the time of preparing this projection, the Commonwealth government has yet to secure political agreement for any changes it wishes to make to the LRET target levels in future years, and has made no formal statement of what its preferred levels might be. We have therefore used ACIL Allen s reference case projections, which assume no change to the current legislation. Of course, should the size of the target eventually be reduced, the absolute quantity of the ACT s share of the total will also be reduced. Applying the projected ACT share to the national total LRET generation, it was found that LRET electricity supplied to the ACT is projected to increase from 133 GWh in to 651 GWh in , and then remain virtually constant at this level out to Below baseline NEM generation In both and total NSW below baseline generation by large generators was, at around 2.46 TWh, slightly below the total baseline level for each year. In those years most generators supplied above their base levels, but two were below. BOM historical climate data suggest that rainfall in the Snowy Mountain region in those years was slightly above the long term average, but operation of the hydro stations was complicated by the commercial response of the operator, Snowy Hydro, to the financial incentive provided by the carbon price. Below hydro generation will only reach its maximum level if all stations generate at or above their baseline levels, so in most years it is likely to be below baseline. Having regard to all these considerations, we have taken 2.4 TWh as the total NSW below baseline renewable generation in each of the projection years. GreenPower The historic data shows GreenPower sales falling quite sharply between and We project that steady falls will continue, as the number of consumers, both residential and commercial, with their own rooftop PV installations continues to increase and as ACT policy results in a steady increase in the renewable share of total electricity supplied to the ACT. We project a fall in GreenPower sales from 99 GWh in to 40 GWh in , and remain constant thereafter. Exports from rooftop PV The Directorate provided estimates of total annual PV generation from rooftop installations in the ACT in recent years and also estimates of annual generation eligible for feed in tariffs. Combined with data for exports from rooftop PV to the network in each year, this made it possible to estimate the fraction of generation being consumed behind the meter from installations with net tariff arrangements in , and thus total rooftop PV generation in that year. This total was projected to grow at the same rate as total NSW rooftop PV, as projected by AEMO. In addition, it was projected that the share of total output from new installations consumed behind the meter would gradually increase over the projection period. This reflects the expectation that larger commercial installations will account for a growing proportion of 5

8 total capacity and that the economics of such installations are best if most output is consumed behind the meter Future supply from new renewable electricity All output from renewable generators which are contracted through the ACT government s reverse auction process are defined as new renewable electricity. The Directorate provided us with projected year by year supply. The data cover the Royalla solar farm and the two other PV plants contracted through the first solar auction, the three wind generation projects recently contracted through the first wind auction, a proposed second wind auction, a proposed second solar auction and a proposed community solar contract. A proposed electricity from biomass facility is also included Emissions intensity of residual NEM fossil fuel generated electricity Projecting total emissions associated with the supply of electricity to the ACT requires projections of the emissions intensity of fossil fuel electricity supplied through the NEM in NSW. A key data source for this part of the modelling was the NGER Designated Generation Facilities public reports, of which there are now two, for and These reports provide data on total annual emissions from all individual power stations. These data are combined with data on the individual output of each power station, obtained from AEMO operational data, through NEM-Review. The weighted average emissions intensity of NEM fossil fuel generation in each year in NSW, Queensland and Victoria was calculated in this way. AEMO data on imports to and exports from NSW to and from the other two states, through the various interconnectors, was also obtained through NEM Review. In , in net terms, 91 per cent of fossil fuel electricity available through the NEM in NSW was sourced from power stations in NSW, 6 per cent from Victoria and 3 per cent from Queensland. In this way it was calculated that the weighted average sent out emissions intensity of fossil fuel electricity supplied through the NEM in NSW was kt CO 2 - e/gwh in It was assumed for the purpose of projection that this intensity will gradually decrease, from kt CO 2 -e/gwh in to kt CO 2 -e/gwh in This decrease mainly reflects an expectation that the share of total supply from older, more emissions intensive coal fired power stations will gradually decrease. A more apparently precise set of intensity values could be calculated by using a detailed model of National Electricity Market operation. There are several such models, all proprietary, but pitt&sherry does not have one. Our view in this case is that there are so many unknown factors possible restoration of a national carbon price, future gas prices, possible further retirements of older coal fired power stations, and many others and intensity differences in 2020 have such a relatively small impact on emissions in that year, that the considerably extra effort and expense of using a complete Market model is not justified. 2.2 Results Overview Figure 3 shows the weighted average emissions intensity of electricity supplied to the ACT from to Table 2 shows the quantities of electricity supplied each year from the various sources and all these results are shown graphically in Figures 4, 5 and 6 for the period from to It can be seen that the major change occurs between and , as a large volume of new wind generation is assumed to be built and brought on-line, under contract to the ACT government, following the second wind auction. 6

9 Table 2 also shows the resultant weighted average emissions intensity of electricity supplied in each year, which is also shown graphically in Figure 6. Unsurprisingly, the trend of emissions intensity has a similar shape to the trend of non-renewable electricity in total supply Some notes on the underlying assumptions Total demand for electricity The total demand for electricity in the ACT is a key determinant of the emissions intensity associated with a given level of renewable electricity supply. The lower the level of demand, the smaller the requirement will be for non-renewable electricity and the lower the overall emissions intensity. If, through energy efficiency measures or by other means, demand is low enough, the level of renewable generation assumed in this analysis will be sufficient to meet the entire electricity requirements of the ACT in , so there will be no requirement for additional non-renewable electricity and the emissions intensity of electricity consumed will be zero. The AEMO projections of total demand in NSW plus the ACT have been used in this analysis because of the need to provide indicative results in a short period. The AEMO numbers cannot and do not reflect the particular circumstances of the ACT, and do not claim to do so. Projections of electricity demand developed specifically for the ACT will provide a better guide to how well the ACT is progressing towards low emissions electricity supply. Under the assumptions used by AEMO, demand keeps growing slowly after However, the ACT Government s program to support the increased supply of electricity from renewable generators currently extends only to That is, there are at present no firm plans for further reverse auctions, or other mechanisms to continue to grow renewable supply are In these circumstances, with a static supply of renewable electricity and slowly growing demand, simple arithmetic determines that the total share of renewable generation will gradually fall, as seen in Figures 3 and 6, while the weighted average emissions intensity of total electricity supplied is gradually rising, as seen in Table 2. Of course, the government could decide at any time to provide support for further renewable generation projects. 7

10 Table 1 Quantities of electricity supplied from each component of total supply, to , GWh Demand 2,950 2,981 3,004 3,026 3,048 3,063 3,081 3,098 3,113 3,126 LRET obligation GreenPower Small scale solar "Below baseline" NEM renewables Total "old" renewables New solar New wind ,167 1,567 1,567 1,567 1,567 1,567 1,567 New biomass Total "new" renewables ,246 1,693 1,860 1,860 1,859 1,859 1,858 Weighted average emissions intensity, t CO 2 -e/ MWh pitt&sherry ref: HB14533H003 rep 31P Rev00 8

11 3,500 3,000 2,500 2,000 GWh 1,500 1, Total renewable Total non-renewable Figure 3: Components of total electricity supply to the ACT: renewable and non-renewable 3,000 2,500 2,000 GWh 1,500 1, "Old" renewables New solar New wind New biomass Figure 4: Components of renewable electricity supply to the ACT Future supply from small scale solar On the basis of trends in the industry over the past year, we think that the contribution of small scale solar to future ACT electricity supply, with no change to current policy settings, has probably been underestimated by the approach used here. There are two related reasons for saying this. Firstly, it has not been possible to fully articulate the linkage between assumptions about behind the meter consumption and assumptions about total demand for electricity supplied through the meter; as a result, some part of the projected total supply from rooftop solar may have been excluded, by not appearing as either a contribution to supply, or a reduction in demand through the meter. pitt&sherry ref: HB14533H003 rep 31P Rev00 9

12 Secondly, the past year has seen an accelerated uptake in commercial scale rooftop solar installations (defined as installations of between 10 kw and 100 kw capacity), particularly in NSW. As already noted, most of the electricity generated by such installations is likely to be consumed behind the meter. We do not believe that the AEMO demand projections fully reflect this trend. It is uncertain, however, whether the shift towards commercial installations will displace or add to the level of residential installations, so we would not wish to reach a firm conclusion that AEMO has underestimated the total growth in supply from small scale solar. As with projections of total demand for electricity, a more detailed examination of the issues is required. GWh 1, Figure 5: Components of old renewable electricity supply to the ACT Small scale solar LRET obligation GreenPower "Below baseline" NEM renewables t CO2-e/MWh Figure 6: Weighted average emissions intensity of electricity supply to the ACT pitt&sherry ref: HB14533H003 rep 31P Rev00 10

13 References ACIL Allen Consulting RET Review modelling: market modelling of various RET policy options. AEMO 2014, 2014 national electricity forecasting report, Department of the Environment, 2014a. Technical Guidelines for the estimation of greenhouse gas emissions by facilities in Australia. Department of the Environment, 2014b. National Inventory Report 2012, Volume fecc8bc2/files/national-inventory-report-2012-vol1.pdf pitt&sherry ref: HB14533H003 rep 31P Rev00 11

14 Contact Name: Hugh Saddler, Principal Consultant Energy Strategies Tel: transport community industrial & mining carbon & energy Brisbane Level Edward Street Brisbane QLD 4000 T: (07) F: (07) Canberra LGF, Ethos House Ainslie Place Canberra City ACT 2601 PO Box 122 Civic Square Canberra ACT 2608 T: (02) Hobart 199 Macquarie Street GPO Box 94 Hobart TAS 7001 T: (03) F: (03) Launceston Level Cimitiere Street PO Box 1409 Launceston TAS 7250 T: (03) F: (03) Melbourne Level 1, HWT Tower 40 City Road Southbank VIC 3006 PO Box 259 South Melbourne VIC 3205 T: (03) F: (03) Sydney Level 1 56 Clarence Street Sydney NSW 2000 T: (02) F: (02) E: info@pittsh.com.au W: incorporated as Pitt & Sherry (Operations) Pty Ltd ABN Devonport Level 1 35 Oldaker Street PO Box 836 Devonport TAS 7310 T: (03) F: (03)