Remote area power

market overview

Presenter: Felix Jander

Remote Area Power Supply Conference, Melbourne Date:22/03/2016

Slide 2

ACIL Allen Consulting

Australian owned, independent, economics, public policy and public affairs

management consulting firm in Australia

60 consultants plus support staff

Offices in Melbourne, Sydney, Brisbane, Perth and Adelaide

Recent projects:

Queensland Productivity Commission inquiry into electricity prices

Market modelling for the 2014 RET Review

Market advisor for energy market transactions:

Vendor market advisors in the successful $3bn+ sale process of Pacific Hydro to China

State Power Investment Corporation

Advisor to QIC on the successful $1.78bn acquisition of the Iona underground gas

storage facility in Victoria

Advisor to NSW Treasury in the sale processes for the NSW generator assets

Advisor to project developer and financiers of numerous renewable energy projects

Slide 3

Market overview

8

7

9

6

3

41 5

2

6 Remote Queensland

4 Remote Western Australia

5 Remote Northern Territory

1 North West Interconnected System

3 Mt Isa

2 Darwin Katherine Interconnected System

9 Remote Victoria and New South Wales

7 Remote South Australia

8 Remote Tasmania

0 2,000 4,000 6,000 8,000

GWh

As of FY 2011-12

6 Remote Queensland

4 Remote Western Australia

5 Remote Northern Territory

1 North West Interconnected System

3 Mt Isa

2 Darwin Katherine Interconnected System

9 Remote Victoria and New South Wales

7 Remote South Australia

8 Remote Tasmania

Residential/commercial/ community

21%

Energy and resources77%

Other2%

15 TWh of demand

Slide 4

Generation by fuel

As of FY 2011-12

6

Natural gas68%

Liquid fuels32%

3

Natural gas99%

Liquid fuels1%

4

Natural gas76%

Liquid fuels20%

Other renewables4%

1

Natural gas98%

Liquid fuels2%

5

Natural gas30%

Liquid fuels70%

2Natural gas97%

Liquid fuels3%

Natural gas79%

Liquid fuels19%

Other renewables2%

NEGI

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

MW

Inst

alle

d C

apac

ity

MW

4,800 MW

Natural gas Liquid fuels Wind Solar Other renewables

Slide 5

Demand growth and outlook

5-year CAGR for Energy Demand

Horizon Power (excl. NWIS) -0.7%

DKIS 1.2%

Tennant Creek 0.7%

Alice Springs -1.6%

Note: Based on actual demand, FY 2009-10 to

2014-15 for Horizon Power, FY 2008-09 to

2013-14 for Northern Territory

Source: Horizon Power, Annual Reports NT Power System Reviews

-10%

-5%

0%

5%

10%

15%

Sa

nd

sto

ne

No

rse

ma

n

La

vert

on

Es

pera

nc

e

Lo

om

a

Le

on

ora

Wilu

na

Ha

lls

Cre

ek

Dja

rin

dji

n

Fit

zro

y C

ross

ing

De

rby

Me

ek

ath

arr

a

Co

ral

Ba

y

Bid

yad

an

ga

Ho

pe

tou

n

On

slo

w

CA

GR

20

09

-10

to

20

14-1

5

Demand growth

Since 2011-12:

Some 37 MW of new large scale solar

(incl. under construction)

More than 100 MW (conservative

estimate) of roof-top solar in remote areas

Slide 6

Regional electricity subsidies

Queensland

Uniform tariff policy for all customers

Western Australia

Uniform tariff policy for customers

consuming less than 160 MWh/a in the

SWIS and customers consuming less than

4 GWh/a outside the SWIS

Northern Territory

Community Service Obligations for

customers in remote areas and customers

consuming less than 750 MWh/a in the

DKIS

Price signals are lost:

Reduced incentive to conserve electricity

Reduced incentive for renewables

WA, $651

NT*, $164

QLD, $596

• Incl. remote water and sewerage

services

$1,410 million/a total in 2014-15

0 5,000 10,000 15,000 20,000

Ergon East

Ergon West

Ergon Isolated (excl. Mt Isa)

NT

NT remote*

Synergy

Horizon

$/connection/a

Slide 7

Regional Electricity Subsidies

What type of power system could you

imagine?