Market Recap | February 2024

In case you missed it, here’s a recap on what’s been happening in the energy market over the last month.

Batteries Dominating Grid Services Market

In the latest Quarterly Energy Dynamics report by the Australian Energy Market Operator, battery storage has officially emerged as the predominant player in the provision of essential services to the grid. The December quarter saw batteries capturing an impressive 50% share in the frequency and ancillary services (FCAS) market, showcasing a significant increase from 38% in the previous year. This remarkable shift can be attributed to the speed and versatility of battery storage, coupled with the introduction of the Very Fast FCAS Service market last year. The surge in market share is further fueled by recently commissioned big battery projects, such as Hazelwood, Torrens Island, and Riverina, with ongoing developments like the Bouldercombe battery poised to contribute in the coming year.

$16.6 Million Partnership for Energy Efficiency Upgrades in Tasmanian Social Housing

In a joint effort, the federal and Tasmanian governments have announced a $16.6 million partnership, equally funded, to facilitate energy efficiency upgrades for over 1,600 social housing properties in Tasmania. Acknowledging the energy inefficiency prevalent in homes built over 20 years ago, the Homes Tasmania Energy Efficiency Program will implement enhancements such as hot water heat pumps, insulation, draught-proofing, LED lights, and window glazing. Minister for Climate Change and Energy Chris Bowen expressed delight in supporting over 1,600 social housing properties, emphasizing the commitment to real cost of living savings. Tasmania’s Minister for Housing and Construction, Nic Street, welcomed the announcement, foreseeing enhanced living conditions and energy efficiency for residents.

Cleaner, Cheaper to Run Cars: The Australian New Vehicle Efficiency Standard

On the 4th of February the draft proposal for the New Vehicle Efficiency Standard (NVES) was released. To more closely align Australian standards with those seen around the globe, the NVES will introduce an annual limit on the carbon dioxide emitted across a supplier’s fleet of vehicles.

Aimed to incentivise cleaner cars, suppliers can continue to sell less fuel-efficient cars but must offset through the purchase of credits or paying a penalty, in the event they sell more polluting cars than the target. Conversely, credits can be sold by suppliers selling more fuel-efficient cars than the target.

With cars being responsible for approximately 13% of Australia’s greenhouse gas emissions, the NVES is projected to deliver an abatement of 369 million tonnes of carbon dioxide by 2050 and approximately $108 billion in fuel savings for consumers.

Further $41 Million for Small and Medium Businesses

On the 8th of February, the Albanese Government announced a further $41 million in funding for Energy Efficiency Grants (EEG) for Small and Medium Enterprises (SMEs) to invest in energy-efficient technologies. This comes in addition to the initial round of grants, bringing the total to $62 million for the national initiative.

The initiative is hoped to lower emissions and bring relief to SMEs by putting downward pressure on energy bills.

Applications for grants between $10,000 and $25,000 for upgrading to technologies like heat pumps for hot water and air conditioning open across the country, started with Victoria on Thursday 22 February 2024.

Climate-Related Financial Disclosure: Exposure Draft Legislation

In a recent Treasury release, the exposure draft legislation proposes the introduction of mandatory climate-related financial disclosure for all entities that meet the prescribed size thresholds or are a ‘registered corporation’ under the NGER Act.

While the reporting requirements will be phased in over three periods, the first disclosure period will be required for 30 June 2025 year ends and will include limited assurance of Scoe 1 and Scope 2 greenhouse gas emissions for reports prepared from 1 July 2024.

These reporting requirements are to be included as part of a new ‘sustainability report’, along with financial, directors’ and auditors’ reports.

Refrigerated Display Cabinet Reintegration into the Victorian Energy Upgrades Program

Following the VEU’s recent consultation release in 2023, a response has been published with the RDC activity anticipated to be relaunched by 01 July 2024. To ensure further control of the program, limiting the vast integrity concerns of its first round, the following requirements are proposed:

  • Minimum copayment of $500 per unit
  • Incentive split between new and retrofit installs
  • Excluding low-efficiency, four-sided display products
  • Additional food safety checks for some units

The following requirements were not implemented as a result of stakeholder feedback:

  • Warranty requirements
  • Limits on the number of units that can be installed in a single premises
  • Exclusion of low-volume products
  • Business eligibility requirements

Battery Program Launched in QLD for 2,000 Households

The Queensland Government recently announced a battery rebate of up to $4,000 for residential properties, called the ‘Battery Booster Program’. Homes must have a new or existing solar PV array above 5kW, and purchase a battery with a capacity over 6kWh. Eligibility is means-tested for households with a combined annual income below $180,000 per annum. The rebate is granted through an application process once the system is installed, and is paid through a cash-back method. The program follows the Queensland Government’s historical

The 2024 Renewable Power Percentage and Small- scale Technology percentage have been set

On the 20th of February, the Renewable Power Percentage (RPP) and Small-scale Technology Percentage (STP) were set to 18.48% and 21.26% respectively.

With the RPP set to be 18.48% in 2024, this results in liable parties being required to surrender 33.0 million large-scale generation certificates (LGCs) to meet their Large-scale Renewable Energy Target (LRET) for the year, parallel with the target set last calendar year. The target of 33.0 million LGCs will remain constant until 2030, however, the percentage will fluctuate year on year due to changes in grid load.

This year’s STP set at 21.26%, requiring liable entities to surrender approximately 37.9 million small-scale technology certificates to fulfill their obligations. This is an increase from the previous year’s requirement of 36.4 million STCs, due to the higher target percentage of 21.26% compared to 20.5% in 2023.

With the status of the clearing house being in surplus of 500,000 certificates, market participants are anticipating the increased target may generate enough demand to reduce this surplus, bringing the clearing house back into a deficit and placing upward pressure on the STC Price throughout the year.

Update on Telemarketing Ban in the VEU program

Last year, the Minister for Energy Resources announced an intention to ban telemarketing and other high-risk forms of unsolicited marketing under the VEU program.

On Monday 19th of February 2024, the second round was opened consumers and industry stakeholders are encouraged to provide feedback on the proposed ban and policy options. Below are the options to be implemented:

• Banning only telemarketing starting May 1st, 2024.
• Banning both telemarketing and door-to-door sales starting May 1st, 2024.
• Banning telemarketing in May and door-to-door sales in August of 2024.

Other marketing channels such as online and traditional advertising would still be allowed under the proposed methods. The VEU has provided commentary that their preferred option is Option 3, however, feedback will still be considered from scheme participants.

El Niño weather in Australia

Australia might be bracing for warmer and drier times as the Bureau of Meteorology predicts a 70% chance of an El Niño developing in 2024. This phenomenon typically lasts for 9-12 months, bringing average temperature increases of 0.5-1°C above normal, particularly in southeastern regions. While the specific impacts can vary across states, conditions such as lower rainfall, higher bushfire risk, and potentially hotter summers may ensue – potentially resulting in a higher electricity demand.

Clearer skies could boost solar power generation, especially during peak summer demand. Dust storms and extreme weather pose challenges, though advancements in technology are making panels more resilient. Strategic responses like energy storage investments and grid modernisation offer opportunities to mitigate risks and strengthen the renewable sectors’ resilience.

At Ecovantage, we consistently analyse market activity, policy changes, consultation releases, and creation rates in conjunction with wider landscape activity. This allows us to keep our clients at the forefront of all relevant changes, and to leverage the advantage that this presents. Thank you for your continued support, and please reach out if you have any general or project-specific questions.

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