Tasmanian Energy Market Update

Hi Folks,
Goanna’s pro bono work with the State’s leading Peak Industry Organisations, has helped deliver in excess of $5M of energy cost savings to Tasmanian Businesses. The Treasurer and Minister Barnett’s State Budget announcement, of another extension to the Tasmanian State Governments “Energy Rebate Scheme” into the 2019/20 Financial Year, slashes another $5.5M off the cost of doing business in 2019/20.
 
The impact of this Scheme is depicted below, where the Rebate operates between 9c/kWh up to a maximum of 9.5c/kWh, on the cost of the Wholesale Energy Commodity:

If you're not sure if your Energy Rebate is for the correct amount, or whether your business qualifies for this Rebate, please feel free to call Marc on 03 6223 7253.

Basslink Offline Again
On Saturday 24th August at around 11am Basslink "Direct Current" protection tripped out leaving the State once again "Islanded" from the National Electricity Market (NEM). Basslink have "identified a failure in the low voltage cable (metallic return) which is believed to have caused Basslink Interconnector’s Direct Current Protection system to trip"... "The identified failure is located in an above ground section of the low voltage cable in the transition station in Gifford, Victoria". The anticipated Return to Service date is targeted for mid-October.

This notice seems inline with the Expert Panel's 2012 Report on the "Basslink Operations Agreement", which talks about a "maximum repair time per cable failure of two-months", excluding Force Majeure events. Apart from our Major Industries, who play an important role in keeping the Tasmanian electricity system stable for all, given our strong water levels and availability of Gas fired Generation, the current outage is not expected to have an impact on Tasmanian electricity consumers.
 

Water in Storage
Hydro Tas Storage levels are at 46.4%, which is 11% above the "Prudent Storage Level" and 17% above the "High Reliability Level" for this time of year, shown below from the Economic Regulator's September "Energy Security Report".

Large Generation Certificates (LGC's) look to have hit a bottom point and are now bumping around trading at around $47/Cert on the Spot Market.  The forward market tails off very quickly from $29/Cert in 2020 to $14/Cert in 2021, down to less than $10/Cert for Calendar 2023, as shown below.

LGC pricing has become the new battle ground for Tasmanian electricity Retailers, meaning the importance of the accurate evaluation of LCG costs in energy tenders has also increased.

The Year to date average Load Weighted Spot price for Tasmania looks to be attempting to set a new record, at just over $100/MWh or 10c/kWh.  See the graph below courtesy of our Quantitative Analytics partners SavvyPlus, "SavvyBI" service.

PacMan set to gobble up Tasmanian Electricity retailer ERM
Shell Energy Australia has announced it's intention to acquire ERM Business Energy for $617M. Shell Australia already has a gas and electricity Trading business, a large scale solar farm in Queensland and recently acquired household Battery maker Sonnen. ERM have advised Goanna that it is "Business as Usual" for their Tasmanian and mainland energy services. Shell's move provides a timely reminder that, despite uncertainties, businesses must still place their bets and execute strategy based on their own view of the future and their role within it.

Tasmanian Retail competition continues to warm, following arrival of 1st Energy, which is around 1/3 owned by ERM Business Energy. Now Catch Energy (backed by 1st Energy) is also active in the Tasmanian residential marketplace.

Goanna Welcomes Electrical Engineer, David Asten to the Team

Goanna Energy Consulting Managing Director, Tracy White is delighted to announce the arrival of David Asten to the growing Goanna team. David has more than 40 years’ experience in the electricity industry, commencing in 1966 with the Hydro Commission. David's focus is on risk management, maintenance and compliance of High Volatge electrical assets for HV asset owners, such as water boards, hospitals, mines, smelters, minerals processors and our growing seafood industry. No doubt David, together with his Rostrum activities and extensive volunteer work with several of Tasmania's Community Not for Profit's, will be well known to many of you.
Welcome David!


Natural Gas Market Update: 
Tasmania's Natural Gas "Market" continues to be problematic for consumers delivering relatively high cost outcomes for small consumers and a lack of long term price certainty for larger users. Our 2016 Report for the TSBC, titled, "The Tasmanian Gas Market, Building the Pipeline to Opportunities", appears to have stood the test of time, with most of the issues raised remaining largely unresolved. Goanna continues to work directly with large natural gas users competitively tendering for gas supply but also developing business cases for alternative solutions.

TSBC Project Marinus Review: Consumer Impacts of the Proposed $3b Second Vic - Tas Link
The Tasmanian Small Business Council, with funding from Energy Consumers Australia, have recently commissioned Goanna to provide a major report highlighting the consumer impacts of the potential $3b second DC interconnector. Goanna Project Manager, John Devereaux is leading Goanna's multi-disciplinary team to deliver the report in October. Here is what John told Goanna News: 

"The proposed Battery of the Nation and Marinus projects are being considered against a background of comprehensive changes in the National Electricity Market, as coal-based generation reduces and renewable generation increases. The national electricity market operator (AEMO) and the national energy policy advisor (AEMC) are forecasting major challenges in the national market in the foreseeable future, and have devised plans to address those challenges, with the Battery of the Nation and Marinus projects forming part of those plans. However, significant risks accompany these opportunities, not the least of which is the timeframe over which governments and private investors can be expected to seek to recover the cost of their investments, compared to the service life of the assets they invest in, such as a second Basslink interconnector, with resulting annual cost implications which will flow through to consumers".


Finally
If energy costs are continuing to impact on your business profitability, perhaps it's time to upgrade to First Class Energy Cost Management. Our latest multi-site client to sign onto the BI immediately identified annual cost savings of over $160,000 from some very simple changes and are now reaping the benefits on their monthly account. Call us now on 6223 7253 for your in house demonstration of our market leading cloud based and mobile Energy Business Intelligence platform, SavvyBI.

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We look forward to helping you soon, all you need to do is call us!