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Providing Sufficient Capacity
Attracting Investment I Reserve Trader Scheme I Demand Side Response I Energy Supply Emergencies
Energy Supply Security
The Role for Government
Although the Government no longer owns or operates energy generating assets, one of its primary objectives is to ensure the ongoing security of Victoria's energy supplies. A key feature of this role is to maintain Victoria's reputation as a reliable and stable State for energy investment. The Government also plays an important role in managing energy supply emergencies.
Despite anticipated improvements in energy efficiency, Victoria's energy demands are projected to increase significantly over the next decade. Projections indicate that between 2006 and 20016 base load electricity demands will increase at about 1 per cent per year, summer peak electricity demands at about 2 per cent per year, and gas demands (including demand for gas used in electricity production) at about 0.8 per cent per year between 2007 and 2011
The Government is facilitating further investment in energy generation to ensure the State has affordable and secure energy supplies.
In the last 12 months our capacity has increased by 10 per cent due to Basslink (a transmission line from Victoria to Tasmania) and a new power station at Laverton North coming on line.
Electricity Supply Security
Victoria's electricity market experiences short periods of very high demand - the top 1,000 Megawatts of demand occurs for less than 2 per cent of the year during the summer. This type of demand is primarily driven by the increased use of air-conditioning on very hot days and is referred to as 'peak' demand.
'Baseload' demand refers to average energy demand observed for around 60 per cent of the year. 'Intermediate' demand is observed for around 30 per cent of the year.
The National Electricity Market Management Company (NEMMCO) (extenal link) publishes its supply and demand projections for the National Electricity Market annually in its Statement of Opportunities.
There are a number of ways in which Victoria's growing electricity demands could be met in the future:
- augmenting transmission interconnections between New South Wales, South Australia and Victoria
- facilitating new investment in power stations in Victoria, and
- increasing the uptake of energy efficiency and the use of demand side management techniques in the National Electricity Market (NEM).
Gas Supply Security
Victoria's gas market is characterised by peak demand on cold winter days driven by increased heating consumption in households. During winter, liquefied natural gas (LNG) is sometimes used on days of very high system demand to meet the supply shortfall.
The Victorian Energy Networks Corporation (VENCorp) (external link) is responsible for assessing the adequacy of available gas supply and transmission capacity to meet peak demand.
Despite the development of major new gas fields in Victoria, particularly in the Otway Basin which has significantly improved the security of Victoria’s gas supplies Victoria continues to rely heavily on Bass Strait gas processed at the Longford plant.
Attracting Investment
In Victoria, base load demand in electricity is growing at around 1.5 per cent per annum, and peak load demand is growing some 30 per cent faster.
The Victorian Government is working to facilitate investments that will help meet Victoria’s future energy requirements and the Victorian energy sector continues to attract substantial investment from both Australian companies and overseas investors.
Already Victoria has seen substantial investment in energy, with approximately 1,500 MW of new power supplies becoming available over the past three years. This includes three new gas peaking plants, the 400MW SNOVic upgrade and several wind farms.
The Victorian Government has also facilitated the construction of major gas assets such as the SEA gas pipeline, the VicHub gas interconnector, the Victoria to Tasmania pipeline and Origin Energy’s BassGas project.
In July 2006 Victoria became the first Australian state to create its own mandatory renewable energy target and supporting scheme, the Victoria Renewable Energy Target.
Reserve Trader Scheme
The Reserve Trader Scheme operates in Victoria – when deemed necessary by the authorities to ensure energy supplies during summer. Under the scheme participants tender to reduce their power consumption on hot days.
At the start of summer each year NEMMCO – which is responsible for the day to day running of the National Electricity Market – assesses the power needs of Victoria and decides whether to invoke the scheme. Under the National Electricity Rules, NEMMCO can only invoke the scheme if it forecasts a lack of supply.
At the start of this summer NEMMCO assessed that our energy supplies were sufficient to meet demand. Consequently, the scheme could not be invoked.
It was only when unprecedented fire behaviour caused a failure of transmission infrastructure that power to some Victorians was cut. This event will be reviewed by the relevant authorities.
Demand Side Response
If supply is forecast to be just short of forecast load on any given day, NEMMCO could seek to reduce load by invoking a strategy called Demand Side Response.
Demand Side Response can be either scheduled or unscheduled.
NEMMCO can rely on scheduled Demand Side Response power to be reduced when required. This is taken into consideration when assessing whether the Reserve Trader Scheme is required to be invoked at the start of summer each year.
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