2014 ESOO METHODOLOGY
Methodology for the Electricity Statement of Opportunities
2014
2014 ESOO METHODOLOGY
IMPORTANT NOTICE
Purpose
The purpose of this publication is to provide technical, market data and information regarding opportunities in the
National Electricity Market.
AEMO publishes the Electricity Statement of Opportunities in accordance with clause 3.13.3(q) of the National
Electricity Rules (Rules). This publication has been prepared by AEMO using information available at 7 June 2013,
unless otherwise specified. Information made available after 7 June 2013 may have been included in this
publication where practical.
Disclaimer
AEMO has made every effort to ensure the quality of the information in this publication but cannot guarantee that
information, forecasts and assumptions are accurate, complete or appropriate for your circumstances. This
publication does not include all of the information that an investor, participant or potential participant in the National
Electricity Market might require, and does not amount to a recommendation of any investment.
Anyone proposing to use the information in this publication (including information and reports from third parties)
should independently verify and check its accuracy, completeness and suitability for purpose, and obtain
independent and specific advice from appropriate experts.
Accordingly, to the maximum extent permitted by law, AEMO and its officers, employees and consultants involved
in the preparation of this publication:

make no representation or warranty, express or implied, as to the currency, accuracy, reliability or
completeness of the information in this publication; and

are not liable (whether by reason of negligence or otherwise) for any statements, opinions, information or
other matters contained in or derived from this publication, or any omissions from it, or in respect of a person’s
use of the information in this publication.
Acknowledgement
AEMO acknowledges the support, co-operation and contribution of all participants in providing data and information
used in this publication.
Copyright
© 2014 Australian Energy Market Operator Limited. The material in this publication may be used in accordance
with the copyright permissions on AEMO’s website.
Revision History
Number
1
ii
Date
Notes
August 2014
First issue
Important Notice
© AEMO 2014
Published by
AEMO
Australian Energy Market Operator
ABN 94 072 010 327
Copyright © 2014 AEMO
© AEMO 2O14
Important Notice
iii
2014 ESOO METHODOLOGY
CONTENTS
IMPORTANT NOTICE
II
CONTENTS
IV
FIGURES
V
1 INTRODUCTION
1
2 ESOO MODELLING
1
2.1
Aims and scope
1
2.1.1 The Reliability Standard
2.1.2 Inter-regional reserve sharing
1
2
Inputs
Methodology
2
4
2.3.1 Modelling and reporting demand in the ESOO
4
2.2
2.3
3 ACCOMPANYING INFORMATION
5
3.1
5
Modelling results
3.1.1 Interpreting the ESOO adequacy chart
3.2
3.3
iv
Error! Bookmark not defined.
NEM Historical Market Information report
5
3.2.1 Wind contribution to peak demand
5
Changes from 2012
6
Contents
© AEMO 2014
FIGURES
Figure 1 — ESOO modelling inputs and outputs
Figure 2 — ESOO modelling methodology flow-chart
Figure 3 — Example ESOO adequacy chart
© AEMO 2014
2
4
Error! Bookmark not defined.
Introduction
v
1
INTRODUCTION
The purpose of this document is to provide further information on the following:

The methodology used to develop the 2014 Electricity Statement of Opportunities (ESOO).

The detailed modelling results that accompany the 2014 ESOO.
AEMO continues to improve the focus and clarity of its planning publications, targeting succinctly presented key
messages in the main document, and accompanying information including the methodology published separately.
AEMO has used the same time-sequential model which was introduced in the 2013 ESOO. This model performs
optimised electricity dispatch for every hour in the modelled horizon.
2
ESOO MODELLING
This section describes the 2013 ESOO modelling aims, inputs, and methodology.
2.1
Aims and scope
The ESOO assesses the adequacy of existing and committed supply to inform stakeholder decision-making. It
highlights opportunities for generation and demand-side investments.
In 2014, assessing supply adequacy for the ESOO involved detailed computer modelling that simulated the
behaviour of the system at hourly resolution, including the following:

The availability of generation capacity accounting for planned and unplanned outages.

Demand side participation activity.

The impact network limitations and congestion.

The intermittent nature of wind and rooftop solar installations.

Electricity demand projections under both moderate and extreme weather conditions.1
Simulation outputs are compared against the system reliability standard (explained below). The assessment is
conducted over a 10-year outlook period, with results presented on a regional basis.
The same process was used to determine the amount of surplus capacity. The term surplus capacity is the amount
of capacity which can be removed from the National Electricity Market (NEM) before the reliability standard is
breached.
2.1.1
The Reliability Standard
In the context of the NEM, reliability refers to the likelihood of having sufficient supply to meet demand. It is
measured in terms of accumulated unserved energy over time, and is expressed as a percentage of the total
energy requirement over the same timeframe.
The Reliability Standard2 established by the Australian Energy Market Commission’s (AEMC) Reliability Panel
defines the minimum acceptable level of reliability to be met in each region, and places a limit on the amount of
1
2
Represented in the 2014 ESOO as 50% probability of exceedance (POE) and 10% POE demand conditions.
AEMC. NEM Reliability Standard – Generation and Bulk Supply. Available: http://www.aemc.gov.au/getattachment/f93100d9-72d2-46fb-9c25ac274a04ae58/Reliability-Standards-(to-apply-from-1-July-2012).aspx. Viewed 17 June 2014.
© AEMO 2014
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2014 ESOO METHODOLOGY
expected unserved energy. The NEM Reliability Standard states that, over the long term, the maximum expected
unserved energy in any region should not exceed 0.002% of the region’s total annual energy consumption.
The low reserve condition (LRC) point indicates a year when unserved energy is projected to exceed the Reliability
Standard. An LRC point does not necessarily signify that load shedding will occur; however, continued operation
with a low reserve indicates the system may not meet the Reliability Standard over the long term.
2.1.2
Inter-regional reserve sharing
The LRC points are presented on a regional basis, but take into account the scope for reserve-sharing by
neighbouring regions since the modelling is conducted on a NEM-wide basis. The amount of capacity that can be
contributed between regions via interconnectors mainly depends on the demand diversity between regions,
network losses within regions, and transmission network limitations such as interconnector power transfer
capability.
Demand diversity is the extent to which demand varies between regions. For instance, if one region had a high
level of demand while a neighbouring region concurrently had a low level of demand, there would be a high level of
demand diversity. Reserve-sharing allows a region’s supply-demand outlook to be optimised so that regions with
excess available capacity can support neighbouring regions that are unable to meet their reserve requirements
locally.
2.2
Inputs
Supply adequacy results are particularly sensitive to aspects of the power system that change over time - such as
demand diversity, the location and reliability of installed generation capacity, and significant transmission network
augmentations.
Figure 1 shows the key inputs to the supply-demand modelling. Inputs are updated as new information becomes
available.
Figure 1 — ESOO modelling inputs and outputs
Define scenarios
Existing and committed projects
Electricity demand
forecasts
Develop load
traces
Generator
information
survey
NEM system
normal network
constraint
equations
Supply-demand
modelling
ESOO Report
Each of the inputs in Figure 1 is described in further detail as follows:

2
Define scenarios. AEMO undertakes scenario-based modelling in the ESOO, with each scenario
representing a narrative of how future environmental, political, and economic conditions may change. These
© AEMO 2013
narratives are used to create detailed assumptions that govern the growth of demand over time. AEMO and
the industry-based Scenarios Working Group developed three scenarios representing high, medium and low
energy consumption for both gas and electricity from centralised sources.3

Electricity demand forecasts. These are published in the National Electricity Forecasting Report (NEFR)
each year. Section 2.3.1 below provides detail on how demand is reflected in the ESOO modelling.

Develop load traces. See Section 2.3.1 and step one of the modelling methodology in Section 2.3 below.

Generator information survey. AEMO surveys generators each year to obtain the latest information on
generation forecasts, including information on the status of committed and proposed projects. The results
from this survey are summarised on the generator information page.4

NEM constraints. A representative set of system normal network constraint equations for the NEM is
developed and input into the model to ensure system security.
3
AEMO. Available: http://www.aemo.com.au/Electricity/Planning/RelatedInformation/~/media/Files/Other/forecasting/2014_Planning_and_Forecasting_Scenarios.ashx Viewed 17 June 2014.
4
AEMO. Available: http://www.aemo.com.au/Electricity/Planning/Related-Information/Generation-Information. Viewed 17 June 2014.
© AEMO 2014
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2014 ESOO METHODOLOGY
2.3
Methodology
Figure 2 shows the steps of the ESOO modelling methodology using the time-sequential model.
Figure 2 — ESOO modelling methodology flow-chart
(1) 10% and
50% POE
demand
trace.
(2) Run time
sequential
model over the
outlook period.
(3) Identify the year
in which USE
exceeds 0.002% (the
LRC point).
(4) Use results from
the year in which LRC
occurs to determine
reserve deficits.
The steps are further described as follows:
1. The annual energy and maximum demand forecasts are fitted to profiles to create demand traces for each
probability of exceedence (POE) studied. A detailed description of the trace development process used for
AEMO’s planning studies is available from the 2013 Planning Assumptions webpage.5
2. The time-sequential model is run over the 10 year outlook period reported in the ESOO. The output from the
model includes the regional unserved energy (USE), enabling assessment of the supply–demand balance.
3. The year in which the weighted unserved energy exceeds 0.002% is identified (see below for more
information on weightings). The financial year in which weighted USE equals or exceeds the 0.002% reliability
standard is the low reserve condition (LRC).
4. The gap between supply and demand results is progressively increased by removing capacity until the
resulting USE matches 0.002% of regional energy. The amount by which the gap was increased represents
the current oversupply – or an estimate of capacity which can be removed before creating a low reserve
condition.
Weighting
AEMO’s time-sequential modelling used weighted 50% and 10% POE demand conditions to determine USE. The
following weights are applied to the USE:

30.4% for 10% POE.

69.6% for 50% POE.
See Section 4.1.3 of the 2013 Planning Consultation Methodology and Input Assumptions6 document for further
information on deriving weighting factors.
2.3.1
Modelling and reporting demand in the ESOO
For consistency across planning publications, operational consumption has been used in the 2014 ESOO unless
specified otherwise.7 However, as a result of the demand trace development process, adjustments are made to the
NEFR demand projections to align the demand forecasts with supply assumptions made in the modelling process.
This section details the components of the resultant demand used in the modelling and reported in the 2014
ESOO.
.
5
AEMO. Demand Trace Development for the 2012 National Transmission Network Development Plan, 12 June 2013. Available:
http://www.aemo.com.au/Electricity/Planning/Related-Information/~/media/Files/Other/planning/Demand_Traces_Development.ashx. Viewed 17
June 2014.
6
AEMO. 2013 Planning Consultation Methodology and Input Assumptions. 12 June 2012. Available:
http://www.aemo.com.au/Electricity/Planning/Related-Information/2013-Planning-Assumptions. Viewed 19 June13.
7
For instance, as described in Section 3.2.1, the wind contribution to peak demand calculations used total demand, not operational consumption.
Where operational consumption has not been used, it has been specified.
4
© AEMO 2013
3
ACCOMPANYING INFORMATION
The accompanying information derived from the 2014 ESOO modelling that is published on AEMO’s website
includes:

The Prophet model database.

The constraint workbook.

A series of data files containing the modelling results.
The Prophet model database, containing a representation of all the input assumptions, is made available to
stakeholders for use in modelling or as reference material.
The constraint equations modelled in the ESOO are published alongside the Prophet database in Excel format for
use by stakeholders in other modelling tools. AEMO continues to update and refine constraints through its
modelling projects throughout the year, and welcomes feedback to incorporate into future studies where possible.
The following section describes the modelling results data files in more detail.
3.1
Modelling results
AEMO publishes the detailed results from the ESOO modelling.
AEMO did not graph the adequacy chart presented in previous years. There was no low reserve margin observed
for any region under any scenario and only very minor unserved energy in Queensland under the high scenario.
The data to create the chart is still included.
AEMO has created charts to show the amount of surplus generation. These represent how much capacity could be
removed from each region before creating a low reserve capacity. There is a range which represents the difference
between the three scenarios (high, medium and low). It should be noted that removing generation could cause
local transmission problems and when discussing surplus generation, it is assumed that it will have minimal impact
on transmission network or the impact can be mitigated. For more detail on current transmission project, see the
relevant transmission network company or the National Transmission Development Plan published by AEMO. 8
3.2
NEM Historical Market Information report
The NEM Historical Market Information report9 is a component of the ESOO document suite and publishes
historical demand, generation, inter-regional power flows, regional spot prices, inter-regional settlements residue
and wind contribution to peak demand.
3.2.1
Wind contribution to peak demand
The wind contribution to peak demand presented in the NEM Historical Market Information report is analysed for
each region using historical generation data obtained from AEMO’s systems. The analysis commences from the
time at which each wind farm was fully installed and started transmitting energy to the NEM.
The top 10% of seasonal demand periods for each region is selected; summer refers to the period 1 November to
31 March, and winter refers to the period 1 June to 31 August for all regions.10 The Tasmanian wind contribution to
peak demand was recognised to have unique qualities among the regions, given that generators tend to respond to
combined Tasmanian and Victorian demand, via Basslink (the Victoria–Tasmania interconnector). For this reason,
8
AEMO NTNDP: http://www.aemo.com.au/Electricity/Planning/National-Transmission-Network-Development-Plan. Viewed 17 June 2014.
Available: http://www.aemo.com.au/Electricity/Planning/Electricity-Statement-of-Opportunities.
10
The standard definition of summer for Tasmania for the ESOO and electricity planning is usually 1 December to 28 February.
9
© AEMO 2014
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2014 ESOO METHODOLOGY
wind contribution in Tasmania was measured during the top 10% of the combined Tasmanian and Victorian
demand periods.
Non-scheduled wind farms in the NEM are generally treated as negative load elements when recording demand.
This means that non-scheduled generators lower the total demand in the region by the amount of electricity they
generate. To adjust for this and ensure that the total demand figures reflect actual demand levels, the total for each
non-scheduled wind farm is added to the corresponding regional demand. For the abovementioned periods, the
wind output as a percentage of the installed capacity for each region is then calculated and used to produce a
frequency analysis.
The wind contribution factor is taken at the 85% confidence level. That is, giving a percentage of installed capacity
that can be expected to generate during high demand periods 85% of the time.
The Queensland region was not studied as there was insufficient wind farm data available.
3.3
Changes from 2013
The methodology is unchanged since 2013 and the only major difference is the calculation of surplus capacity as
described above.
6
© AEMO 2013