Collinsville solar thermal project: energy economics and dispatch forecasting (draft report)

The primary aim of this report is to help negotiate a Power Purchase Agreement (PPA) for the proposed hybrid gas-Linear Frensel Reflector (LFR) plant at Collinsville, Queensland, Australia.  Considering The report’s wider appeal is the techniques and methods used to model the Australian National Electricity Market’s demand and wholesale spot prices for the lifetime of the proposed plant. 1        Introduction This report primarily aims to provide both dispatch and wholesale spot price forecasts for the lifetime of the proposed hybrid gas-solar thermal plant at Collinsville, Queensland, Australia .  This report is the second of two reports and uses the findings of Bell, Wild and Foster (2014b) in the first report. 2        Literature review The literature review discusses the ANEM model that is used to forecast wholesale spot prices from demand and supply forecasts. The review introduces the concept of gross demand to supplement the Australian Electricity Market Operator’s (AEMO) “total demand”.  This gross demand concept helps to explain the permanent transformation of the demand in the NEM region and the recent demand over forecasting by the AEMO.  Factors causing the permanent transformation are discussed.  The review also discusses the implications of the irregular ENSO cycle for demand and its role in over forecasting demand. Forecasting supply requires assimilating the information in the Electricity Statement of Opportunities (ESO) (AEMO 2013a).  AEMO expects a reserve surplus across the NEM beyond 2022-23, excepting a small reserve deficit in Queensland in 2020-21.  However, there is a continuing decline in manufacturing, which is freeing up supply capacity elsewhere in the NEM.  The combined effect of export LNG prices and declining total demand are hampering decisions to transform proposed gas generation investment into actual investment and hampering the role for gas as a bridging technology in the NEM.  The review also estimates expect lower and upper bounds for domestic gas prices to determine the sensitivity of the NEM’s wholesale spot prices and plant’s revenue to gas prices. The largest proposed investment in the NEM is from wind generation.  However, the low demand to wind speed correlation is inducing wholesale spot price volatility.  Economically viable energy storage is expected shortly beyond the planning horizon of the ESO in 2022-23.  This viability is expected to not only defer investment in generation and transmission within the NEM but also accelerate the growth in off-market produced and consumed electricity within the NEM region. 2.1     Research questions The report has the following overarching research questions: What is the expected dispatch of the proposed plant’s gas component given the plant’s dispatch profile and expected LFR yield? What are the wholesale spots prices on the NEM given the plant’s dispatch profile? The literature review refines the latter research question into four more specific research question ready for the methodology: What are the wholesale spots prices on the NEM for a gas price of $8.50/GJ given the plant’s dispatch profile? How sensitive are wholesale spot prices to a gas price change from $8.50/GJ to $11/GJ given the plant’s dispatch profile? What is the plant’s revenue for a gas price of $8.50/GJ given the plant’s dispatch profile? How sensitive is the plant’s revenue to gas price change from $8.50/GJ to $11/GJ given the plant’s dispatch profile? 3        Methodology In the methodology section, we discuss forecasting the proposed plant’s dispatch, the NEM’s supply capacity, the process to produce a normalised TMY total demand and the ANEM model to calculate the wholesale spot prices from the supply capacity and total demand.  These forecasts help address the research questions. 4        Results and analysis In the results section we will present the findings for each research question. 5        Discussion We analyse the extent to which the research questions are informed by the results from the yield report. 6        Conclusion In this report, we have identified the key research questions and established a methodology to address these questions.  The models have been established allowing the calculation of the wholesale spot price, dispatch and revenue projections for the proposed plant at Collinsville. This is a draft report. The final report has been published and is available here