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Marinus Link and Battery of the Nation WRONG WAY, GO BACK

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Marinus Link and Battery of the Nation WRONG WAY, GO BACK Marinus Link and Battery of the Nation WRONG WAY, GO BACK An analysis of the economics and greenhouse gas impact of Marinus Link and Battery of the Nation Prepared for the Bob Brown Foundation Bruce Mountain and Steven Percy The Victoria Energy Policy Centre (VEPC) is a research centre focussing on policy challenges in energy in Australia, with a particular focus on Victoria. The VEPC's core research discipline is economics, but we encourage collaboration between experts from different academic traditions. We combine academically rigorous research and analysis, with a practical understanding of government processes. Bruce Mountain’s research and advice is specialised in the economic regulation of network monopolies and on the analysis of competition in retail and wholesale energy markets. Bruce’s PhD from Victoria University was on the political economy of energy regulation in Australia, and he has a Bachelor’s and a Master’s degree in Electrical Engineering from the University of Cape Town and qualified as a Chartered Management Accountant in England. Steven Percy’s research and advisory work is focussed on applying Electrical Engineering, Machine Learning, optimisation techniques, big data analysis and visualisation to model and understand wholesale and distributed energy markets. Steven worked as a Research Engineer at CSIRO before completing a PhD in Electrical Engineering at the University of Melbourne. Before joining VEPC he undertook research at IBM-Research and University of California (Berkeley). © 2020 Disclaimer: The Victoria Energy Policy Centre and Victoria University advise that the information contained in this report comprises general statements based on scientific research. The reader is advised and needs to be aware that such information may be incomplete or unable to be used in any specific situation. No reliance or actions must therefore be made on that information without seeking prior expert professional, scientific and technical advice. To the extent permitted by law, the Victoria Energy Policy Centre and Victoria University (including its employees and consultants) exclude all liability to any person for any consequences, including but not limited to all losses, damages, costs, expenses and any other compensation, arising directly or indirectly from using this publication (in part or in whole) and any information or material contained in it. Publisher: Victoria Energy Policy Centre, Victoria University, Melbourne, Australia. Citation: Mountain, B.R., S.D. Percy (2020). An analysis of the economics and greenhouse gas impact of Marinus Link and Battery of the Nation. A report prepared for the Bob Brown Foundation. Victoria Energy Policy Centre, Victoria University, Melbourne. Authors’ affiliation: Associate Professor Bruce Mountain is the Director of the Victoria Energy Policy Centre and Dr Steven Percy is a Senior Research Fellow at the Victoria Energy Policy Centre. Contents Executive Summary ..................................................................................................................... 4 1 Introduction ..................................................................................................................... 8 2 Background ...................................................................................................................... 9 2.1 Description of the Marinus and BoTN proposal ......................................................... 9 2.1.1 Marinus................................................................................................................... 9 2.1.2 Battery of the Nation (BoTN) .............................................................................. 11 2.2 Relevant facts on the TAS and VIC power systems .................................................. 11 2.2.1 Grid demand ......................................................................................................... 12 2.2.2 Grid-based supply ................................................................................................ 13 2.2.3 Wholesale market spot prices ............................................................................... 14 2.2.4 Interconnection ..................................................................................................... 15 2.2.5 TAS/VIC wind generation correlation ................................................................. 18 2.2.6 Wind generation capacity factors ......................................................................... 19 3 Analysis........................................................................................................................... 22 3.1 Economic evaluation .................................................................................................... 22 3.2 Greenhouse gas evaluation .......................................................................................... 27 4 Discussion ....................................................................................................................... 30 5 Conclusions .................................................................................................................... 38 Appendix A. Battery and pumped hydro FCAS and energy arbitrage revenues ................ 43 Appendix B. Modelling the relationship between arbitrage margin and storage duration ............................................................................................................. 49 Appendix C. Moving average Residual Demand..................................................................... 51 Appendix D. Pumped hydro and battery storage Arbitrage Revenue versus Storage Duration............................................................................................................. 53 Appendix E. Hour of day wind resource analysis ................................................................... 55 1 Table of Figures Figure 1. Tasmania monthly average grid demand (MW) 2012 to 2020 ..................................... 12 Figure 2. Victorian monthly average grid consumption 2012 to 2020 ........................................ 13 Figure 3. Tasmania monthly average grid-based supply 2012 to 2020........................................ 13 Figure 4. Victoria monthly average grid-based supply 2012 to 2020 .......................................... 14 Figure 5. Tasmanian and Victorian monthly average spot price 2012 to 2020............................ 14 Figure 6. Eight-year average Victorian Price throughout the day ................................................ 15 Figure 7. Eight-year average Tasmanian Price throughout the day ............................................. 15 Figure 8. Tasmania monthly average interconnector flows 2012 to 2020 (negative is export from TAS) ................................................................................................................ 16 Figure 9. Spare Tasmanian hydro capacity for summer and winter in 2019 calendar year. ........ 16 Figure 10. Victoria monthly average net interconnector flows 2012 to 2020 (negative is export) ...................................................................................................................... 17 Figure 11. Basslink interconnector flow, (positive value is export from TAS) ........................... 17 Figure 12. Basslink power flow histogram (July 2014 to June 2020) .......................................... 18 Figure 13. All regional wind and demand correlation matrix ...................................................... 19 Figure 14. Average summer regional wind capacity factors measured through the day ............. 20 Figure 15. Average winter regional wind capacity factors measured through the day ................ 21 Figure 16. Arbitrage revenue as a function of storage duration in Victoria from 2015/16 to 2019/20 .................................................................................................................... 23 Figure 17. Histogram of rolling average Residual Demand in Victoria in 2022/23 and 2039/40 .................................................................................................................... 25 Figure 18. SA Brown Coal FCAS revenue .................................................................................. 45 Figure 19. VIC Brown coal FCAS revenue ................................................................................. 45 Figure 20. QLD Black Coal FCAS revenue ................................................................................. 45 Figure 21. NSW Black Coal FCAS revenue ................................................................................ 46 Figure 22. Wivenhoe Power Station U1 FCAS revenue .............................................................. 46 Figure 23. Wivenhoe Power Station U2....................................................................................... 46 Figure 24. Tumut 3 Power Station ............................................................................................... 47 Figure 25. Ballarat Battery Energy Storage System FCAS revenue ............................................ 47 Figure 26. Dalrymple North Battery Energy Storage System FCAS revenue ............................. 47 Figure 27. Gannawarra Energy Storage System FCAS revenue .................................................. 48 Figure 28. Hornsdale Power Reserve FCAS revenue .................................................................. 48 Figure 29. Lake Bonney BESS1 FCAS revenue .........................................................................
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