National Electricity Market (NEM) Model
Reliable and Affordable Electric Power Generation Booklet
This report is based on modelling undertaken with the EPC NEM generation mix model. Download a copy of the 4 page “Reliable and Affordable Electric Power Generation” booklet here: Booklet
Dr Robert Barr AM BE(Hons) ME PhD FIE(Aust) CPEng , Director Electric Power Consulting Pty Ltd
Barry Murphy BScApp, BE(Chem) CSci MBA FIChemE FTSE FAICD, Former Chairman & CEO Caltex Australia
Dr Mark Ho PhD, President Australian Nuclear Association
Martin H Thomas AM FTSE HonFIEAust HonFAIE
Barrie Hill BE MiMechE MIPENZ FIE(Aust), Managing Director SMR Nuclear Technology Pty Ltd
About the Electric Power Consulting (EPC) National Electricity Market (NEM) Model
- Built by Electric Power Consulting Pty Ltd.
- Designed to explain some basic principles of power system engineering that are missing from many other models.
- Providing new insights for possible NEM development.
- Future enhancements are being planned as new needs become apparent and assumptions are revisited.
How does the EPC NEM Model Work?
- The model is a cost model – no attempt is made to estimate prices from the pool.
- The model provides a comparison of cost between generation mix options.
- The model uses historic data from the period 3 January 2017 to 3 January 2018 – this data includes:
- half hour NEM load data.
- Actual half hour NEM wind farm and solar PV generation data.
- The model can analyse any selected generation mix from Black Coal, Brown Coal, Nuclear, Open Cycle Gas, Combined Cycle Gas, Wind, Solar PV, Battery Storage and Pump Storage.
- The model generally dispatches generation in order of lowest marginal cost in every half hour interval.
- Storage is dispatched and charged so as to maximise reliability, storage devices are charged as soon as possible and applied to loads only when there is insufficient available generation to meet load demands.
- The model calculates the “Levelised Cost of Energy” (LCOE) for each generation source.
- The model also calculates the “System Levelised Cost of Energy” (SLCOE) for the whole NEM power system from the following items:
- all generation sources.
- plus – all storage devices (battery & pump storage)
- plus – extra transmission and related costs above and beyond what is required to supply a compact power system comprising of all despatchable generation.
- The model calculates Capacity Factors for all generation types.
- The model also calculates a “System Wide Capacity Factor” for the complete generation mix.
- The model calculates the abatement cost of a generation mix from a base reference costing supplied by the user.
Model Assumptions Include
- No transmission constraints – power can be transmitted as required from and to any part of the NEM . e.g. Cairns to Adelaide. Some allowance is made for the cost of constraints in “Transmission and Related Costs”.
- No network losses are used in the despatch process. An allowance is made for the cost of losses in “Transmission and Related Costs”.
- “Transmission and Related Costs “covers Transmission and related costs including, subtransmission, generator connection, system strength provision, voltage control, congestion costs and a component of network losses .
- Efficiency of fossil fuel generators is constant at all output levels.
- Actual half hour diversified wind & solar PV generation patterns are applied to all new wind and solar PV generation.
- Existing Rooftop Solar PV is already built into the load curve.
- Any post 2018 rooftop solar PV is aggregated in with utility solar PV and appears as a separate generation source (yellow on the graphs).
- The half hour NEM load is taken as the diversified sum of the Qld, NSW, Vic, SA and Tas regional loads (3/1/2017 to 3/1/2018 from AEMO).
- Storage strategy:
- maximise storage levels at all times.
- used only for supplying peak demands when there is insufficient available generation.
- battery storage is charged first and dispatched last.
- pump storage is charged last and dispatched first.
- Provides warnings only of unsustainable base load generator variations.
- Transmission and Related Costs vary in proportion to the total nameplate MW capacity of the generation and storage sources.
- Calculated CO2 emissions are based on:
- power station construction.
- mining and fugitive emissions (0.5%).
- Generator costs, efficiencies, asset lives and emissions are generally based on data from:
- the AEMO Integrated System Plan – 2018 costs. AEMO forecasts of future cost reductions in wind, solar PV and storage are not used.
- Nuclear costs are based on experience from a recent study tour of South Korea adjusted upwards for Australian conditions.
- Pump storage costs are applied in two levels:
- level 1 costs associated with new pump storage where reservoirs are existing (Snowy 2.0 & Tasmania battery of the nation).
- Level 2 costs associated with new pump storage where new reservoirs need to be constructed.
- A LCOE discount rate of 6% p.a.
Some examples of Model runs
|Base Case 1 ‐ Existing NEM approximation – Case 1|
|Case 2 – Replace Brown Coal Generation with Nuclear (3,889MW) – Case 2|
|Case 3 – Replace all Coal Generation with Nuclear (18,889MW) – Case 3|
|Case 4 – AEMO Neutral case Fig. 9 – 2040 approximation – ISP 2018 – Case 4|
|Case 5 – Replace all Coal Generation with Combined Cycle Gas (CCGT) – Case 5|
|Case 6 – 100% Renewables with Solar PV, Wind and Hydro – supported by Pumped Hydro – Case 6|
This modelling and documents contains data provided by or collected from third parties, and conclusions, opinions, assumptions or forecasts are based on that data.
Electric Power Consulting Pty Ltd has made every effort to ensure the quality of the information in this modelling and documents but cannot guarantee that the information, forecasts and assumptions in it are accurate, complete or appropriate for your circumstances. This modelling and documents do 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 modelling and documents should independently verify and check its accuracy, completeness and suitability for purpose, and obtain independent and specific advice from appropriate experts.
This modelling and documents will likely be subsequently updated or amended. This document does not constitute legal or business advice. Electric Power Consulting Pty Ltd has made every effort to ensure the quality of the information in this modelling and document but cannot guarantee its accuracy or completeness.
Accordingly, to the maximum extent permitted by law, Electric Power Consulting Pty Ltd and its officers, employees and consultants involved in the preparation of this document:
• make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of the information in this document and modelling; and
• are not liable (whether by reason of negligence or otherwise) for any statements, opinions, information or other matters contained or derived from this document and modelling, or any omissions from it, or for any use or reliance on the information in it.