Addressing oversupply in wholesale energy market

The National Electricity Market (NEM) is currently experiencing a period of chronic oversupply due to falling demand for electricity, the RET and a number of generators within the NEM operating past their intended life.

Short term, the suppressed wholesale prices that stem from this are great news for end users; however, it is making it significantly more difficult to attract the additional investment needed to meet RET targets and is leading to the mothballing of cleaner gas plants in favour of older coal stations with lower LRM costs — a poor outcome for the environment.

This is occurring at a time when there are a number of new technologies which are rapidly becoming more cost efficient and quickly entering the wholesale market at a large- and small-scale level.

Addressing oversupply and understanding how the energy mix might evolve are two of the central themes of the Eastern Australia’s Energy Markets Outlook conference, being held 15–18 September in Sydney. The conference brings together over 40 speakers from the length of the energy supply chain to share the views and give all in attendance a far deeper understanding of the issues and the solutions that may be available.

John Pierce, chairman of the AEMC, will be speaking at the event.

The event will also bring together CEOs, directors and other top-level executives from some leading companies including CS Energy, Hydro Tasmania, ESAA and Alinta.

In the lead-up to the event, Alinta’s General Counsel (and member of the event’s advisory panel) Michael Riches said, “The challenges that face today’s energy markets are immense. All market participants need to come together to discuss and propose solutions to ensure a viable and effective energy market into the future.”

The other key issue for the market players is understanding which technologies will continue to maintain their place in the energy mix and which technologies will grow rapidly. Different forms of small-scale distributed generation, including solar, fuel cells and biomass, all have great potential and could transform the east coast energy mix. Similarly, changes in information technology and tariff structure could significantly impact their uptake.

The Clean Energy Finance Corporation’s COO, Meg Mcdonald, will discuss the exciting outlook for a number of renewable technologies and their role in the NEM going forward. “Renewables and new technologies are set to play an increasingly important role in helping drive energy and operating costs and reducing carbon intensity of the economy. The EAEMO conference provides a timely for discussion of these trends,” said Mcdonald.

The big question for market participants is how existing utilities will react to the changing dynamics. Ian Mcleod, chief executive officer of Ergon Energy and one of conference speakers, said: “The markets have never been more relevant to customers and the industry. Demand, supply, services and information will all become commoditised. How do we differentiate and create value? EAEMO 2015 will be an opportunity for insight and reflection.”