IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v45y2024i1p201-229.html
   My bibliography  Save this article

The Levelised Cost of Frequency Control Ancillary Services in Australia’s National Electricity Market

Author

Listed:
  • Joel Gilmore
  • Tahlia Nolan
  • Paul Simshauser

Abstract

Over the period 2016–2021 Australia’s National Electricity Market (NEM) experienced an investment supercycle with 16,000MW of new utility-scale renewable plant commitments in a power system with a peak demand of 35,000MW, and the disorderly loss of 5,000MW of synchronous coal-fired plant. This placed strains on system security, most visibly in the distribution of the power systems’ frequency, requiring material changes to the NEM’s suite of Frequency Control Ancillary Service (FCAS) markets. Utility-scale batteries are ideally suited for FCAS duties, but there is no forward price curve for FCAS markets, nor is there any systematic framework for determining equilibrium prices that might otherwise be used for investment decision-making. In this article, we develop an approach for quantifying long run equilibrium costs and stochastic spot prices in the markets for Frequency Control Ancillary Services, with the intended application being to guide the suitability of utility-scale battery investments under conditions of uncertainty and missing forward FCAS markets.

Suggested Citation

  • Joel Gilmore & Tahlia Nolan & Paul Simshauser, 2024. "The Levelised Cost of Frequency Control Ancillary Services in Australia’s National Electricity Market," The Energy Journal, , vol. 45(1), pages 201-229, January.
    • Handle: RePEc:sae:enejou:v:45:y:2024:i:1:p:201-229
    DOI: 10.5547/01956574.45.1.jgil
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.45.1.jgil
    Download Restriction: no
    File URL: https://libkey.io/10.5547/01956574.45.1.jgil?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Roth, Ian F. & Ambs, Lawrence L., 2004. "Incorporating externalities into a full cost approach to electric power generation life-cycle costing," Energy, Elsevier, vol. 29(12), pages 2125-2144.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Enevoldsen, Peter & Sovacool, Benjamin K., 2016. "Integrating power systems for remote island energy supply: Lessons from Mykines, Faroe Islands," Renewable Energy, Elsevier, vol. 85(C), pages 642-648.
    2. Jiyong Li & Zeyi Hua & Lin Tian & Peiwen Chen & Hao Dong, 2024. "Optimal Capacity Allocation for Life Cycle Multiobjective Integrated Energy Systems Considering Capacity Tariffs and Eco-Indicator 99," Sustainability, MDPI, vol. 16(20), pages 1-22, October.
    3. Bachmann, Till M. & van der Kamp, Jonathan, 2014. "Environmental cost-benefit analysis and the EU (European Union) Industrial Emissions Directive: Exploring the societal efficiency of a DeNOx retrofit at a coal-fired power plant," Energy, Elsevier, vol. 68(C), pages 125-139.
    4. Magnani, Natalia & Vaona, Andrea, 2013. "Regional spillover effects of renewable energy generation in Italy," Energy Policy, Elsevier, vol. 56(C), pages 663-671.
    5. Bueno, C. & Carta, J.A., 2006. "Wind powered pumped hydro storage systems, a means of increasing the penetration of renewable energy in the Canary Islands," Renewable and Sustainable Energy Reviews, Elsevier, vol. 10(4), pages 312-340, August.
    6. Stocker Klaus, 2020. "Financial and Economic Assessment of Tidal Stream Energy—A Case Study," IJFS, MDPI, vol. 8(3), pages 1-20, August.
    7. Alizadeh, Sadegh & Avami, Akram, 2021. "Development of a framework for the sustainability evaluation of renewable and fossil fuel power plants using integrated LCA-emergy analysis: A case study in Iran," Renewable Energy, Elsevier, vol. 179(C), pages 1548-1564.
    8. Wang, Zanxin & Wei, Wei, 2017. "External cost of photovoltaic oriented silicon production: A case in China," Energy Policy, Elsevier, vol. 107(C), pages 437-447.
    9. Jenniches, Simon & Worrell, Ernst & Fumagalli, Elena, 2019. "Regional economic and environmental impacts of wind power developments: A case study of a German region," Energy Policy, Elsevier, vol. 132(C), pages 499-514.
    10. Jacqueline Adelowo & Mathias Mier & Christoph Weissbart, 2021. "Taxation of Carbon Emissions and Air Pollution in Intertemporal Optimization Frameworks with Social and Private Discount Rates," ifo Working Paper Series 360, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    11. Sergey Kinzhikeyev & József Rohács & Dániel Rohács & Anita Boros, 2020. "Sustainable Disaster Response Management Related to Large Technical Systems," Sustainability, MDPI, vol. 12(24), pages 1-25, December.
    12. Colla, Martin & Ioannou, Anastasia & Falcone, Gioia, 2020. "Critical review of competitiveness indicators for energy projects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 125(C).
    13. Chen, Zhang & Yiliang, Xie & Hongxia, Zhang & Yujie, Gu & Xiongwen, Zhang, 2023. "Optimal design and performance assessment for a solar powered electricity, heating and hydrogen integrated energy system," Energy, Elsevier, vol. 262(PA).
    14. Carneiro, Patrícia & Ferreira, Paula, 2012. "The economic, environmental and strategic value of biomass," Renewable Energy, Elsevier, vol. 44(C), pages 17-22.
    15. Fahlén, E. & Ahlgren, E.O., 2010. "Accounting for external costs in a study of a Swedish district-heating system - An assessment of environmental policies," Energy Policy, Elsevier, vol. 38(9), pages 4909-4920, September.
    16. McDonald, N.C. & Pearce, J.M., 2010. "Producer responsibility and recycling solar photovoltaic modules," Energy Policy, Elsevier, vol. 38(11), pages 7041-7047, November.
    17. Koroneos, C. & Xydis, G. & Polyzakis, A., 2010. "The optimal use of renewable energy sources--The case of the new international "Makedonia" airport of Thessaloniki, Greece," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(6), pages 1622-1628, August.
    18. van Kooten, G. Cornelis, 2015. "All you want to know about the Economics of Wind Power," Working Papers 241693, University of Victoria, Resource Economics and Policy.
    19. Pérez Odeh, Rodrigo & Watts, David & Flores, Yarela, 2018. "Planning in a changing environment: Applications of portfolio optimisation to deal with risk in the electricity sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 3808-3823.
    20. García Redondo, Antonio José & Román Collado, Rocío, 2014. "An economic valuation of renewable electricity promoted by feed-in system in Spain," Renewable Energy, Elsevier, vol. 68(C), pages 51-57.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:45:y:2024:i:1:p:201-229. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.