Last week we published our latest insight paper – Wind in the Australian and Great British energy markets – which examines the outlook for wind in both the Australian and Great British (GB) markets and how it is being shaped by market design and infrastructure.
The key findings of the report are:
- Both markets will see growth; however, both markets will have their challenges
- The characteristics of the GB market means it will see more significant growth than Australia, with price cannibalisation a consequential risk, particularly for subsidy-free wind
- There are excellent opportunities for wind in Australia if obstacles relating to volatile drivers of revenue can be navigated and addressed
Discussing the research in the insight paper, Gareth Miller CEO of Cornwall Insight said, “Wind will play different roles in the future of both Australian and GB energy markets, with GB likely to see a much greater expansion of its already extensive wind capacity base. However, Australia also presents significant opportunities for wind developers, particularly in certain regions.”
The insight paper found that the GB wind market has some distinct advantages over its Australian counterpart, as there are no equivalent risks around changes to network loss factors for investors to deal with. Coupled with, a greater network resilience and system services that are already beginning to explore the value wind can bring to delivering a smart, low carbon and flexible system, makes it a perfect breeding ground for wind projects.
Australia, on the other hand, faces a difficult challenge of loss factors to contend with. System operators have also been directing thermal plant to meet system needs of wind variability, even if such plants are out of the money, which has the potential to distort energy-only markets. Wind is also often being built at the periphery of a less resilient network not always as well interconnected as it could be.
However, some common themes link the two countries “wind capacity and output, and the challenges and opportunities this creates in terms of integration with markets originally designed around centrally connected, thermal power stations”, Gareth pointed out.
Going further Gareth explained how in both markets’ investment flows will rely on trying to predict uncontrollable revenue influencers either in the form of power prices or regulatory factors that can influence a wind projects ability to capture them.
It is not just the markets that will that have similar characteristics with successful players in both markets sharing common ground as well. These include “deploying strong quantitative estimation of future cash flows and secondly, an ability to discern and link up the most significant changes emerging from detailed and dynamically changing policies and regulations. In both cases, and Australian and GB markets, Cornwall Insight is here to help wind companies thrive and succeed,” Gareth explained.
If you would like to download a copy of the insight paper for free, please click here.