Australian news, and some related international items

South Australia’s Tesla big battery can stop the price gouging by Australia’s major energy players

How Tesla’s big battery can smash Australia’s energy cartel, REneweconomy, By Giles Parkinson on 4 September 2017  A series of reports from Australia’s Energy Regulator has illustrated how Australia’s big energy players have taken advantage of their market dominance to push up prices for critical grid services, and underline why South Australia was so keen to support the new Tesla big battery.

The Tesla battery, due to be installed by December 1, has been derided by the federal government as too small to do much and about as useful as a Big Banana or Big Pineapple.

But going by the AER reports, it could completely puncture the price gouging (which, we should point out, is perfectly legal according to the market rules) by major energy players that is costing consumers $60 million a year.

The series of AER reports highlight how, on at least seven occasions over the last 10 months, the actions of the major players – AGL, Origin and Engie – managed to push prices of Frequency Control Ancillary Services FCAS) in South Australia up by nearly 100-fold, despite having more than enough capacity……..

Such is the cosy, coded world of Australia’s energy markets.

And it is worth pointing out that these reports have taken up to 10 months to come to light, even though most players in the industry know within a day or two exactly what has happened when they analyse the bidding.

This creation of scarcity is a common tactic in both FCAS and wholesale energy markets in Australia.

It has been identified by network operators, smaller retailers, energy equipment suppliers, analysts, and governments, but is laughingly dismissed by ACCC boss Rod Sims as an example of “the market at work”.

However, analysis shows it has added billions to the cost of wholesale generation and therefore consumer costs.

And, with the exception of South Australia and Queensland, governments and regulators have done absolutely nothing to stop it, instead blaming renewable energy policies or the lack of a climate policy for high electricity prices.

Queensland intervened a few months ago to stop the wholesale price manipulation by its state-owned generators, a result that has seen power prices fall by a third.

South Australia does not own the generators in its state, so instead it has had to turn to other means, including commissioning its own emergency generator to ensure there is enough capacity in the event the big players try to create “scarcity” as they did in the February load shedding, and to deal with these FCAS rorts.

The Tesla big battery will be contracted by South Australia to bid into the market for FCAS – and to provide other network services. It will cost South Australia about $50 million over 10 years, but on the basis of the AER reports it will get its money back very quickly.

Battery storage also has the potential to stop such gaming of prices in the wholesale markets, but a proposal put forward by large energy users, and supported by battery storage makers and AEMO, has been fought vigorously by the big generators, and the energy rule maker has repeatedly delayed a final decision on the proposal.

Another 30MW battery will also be built in SA early next year, but it will be operated by AGL, although the network operator Elecranet will have some control over its use.


September 6, 2017 - Posted by | South Australia, storage

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