The Australian Energy Market Commission (AEMC) has decided that developers of grid-scale wind and solar farms will have access to more information about other generators in the pipeline.
At the moment, the amount of information available to renewable energy planners is limited. This makes finding investment for renewables difficult.
That’s because without knowing what new plants are being developed, investors cannot make educated estimates about their likely returns.
The AEMC ruling will allow access to information about proposed power output or plants under development, their location and time frame for construction.
New generators and investment risks
Right now, new generators are only required to reveal their plans to the distributors. Under the new ruling, this information will be more broadly available.
One factor that affects return on investment when constructing a new plant is the marginal loss factor or MLF, set by the AEMC. This is the percentage of power subtracted from a power plant’s actual output due to loss along a transmission line.
As electricity travels along lines, it loses energy to heat. The more generators there are on the network, the more loss.
For example, a rural solar farm produces N amount of power. AEMO predicts this amount will be N x MLF by the time it reaches consumers. The lower the MLF, the lower the financial return. In some cases, the MLF can reduce the price paid to a generator considerably.
Rule change will benefit consumers
Suzanne Falvi, AEMC acting chief executive, said the change will benefit investors in new generation and consumers.
“More efficient decisions on where to invest in new generation ultimately benefits consumers by promoting reliable supply at lower costs,” she said.
By providing more information to the developers, better investment decisions can be made on where to locate new generators.
It also means that one location will not be inundated with several new renewable generators, devaluing the output of each.
AEMC says the visibility of new assets to other new assets is one of the important changes that needs to be made to integrate renewable energy into the electricity grid.
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