Identify the needs to install interconnectors to the National Electricity Market of Australia

Student: John Colquhoun

Supervisor: Zhao Dong

Category: Engineering Thesis Project - Power

The National Electricity Market (NEM) in Australia is a gross pool market facilitating the wholesale trade of electrical energy. The NEM consists of infrastructure to supply and deliver electrical energy to the consumers when it is demanded. The NEM is currently divided into five pricing regions. Interconnectors enable the flow of electrical energy between the regions of the NEM. This paper aimed at identifying the costs and benefits of augmenting interconnectors in the NEM. Through the comparison of the costs and benefits a basic forecast of the requirement for interconnectors can be established. It is important that the market identifies the need for investment prior to the time of investment so that market benefits are not foregone as a result of late investment. Correct signalling will also maximise the probability of efficient investments in both interconnectors and supply or demand side options.

The feasibility of interconnection is established in theory and demonstrated with market simulations. This thesis outlines the theories required to understand the costs and benefits that interconnection provides to the NEM. Through identifying the cost and benefits of future interconnection in the NEM, the optimum timing of new interconnections can be identified. Forecasting future changes in interconnection capacity allows the market to plan allowing for these changes.

The thesis identifies that the following costs and benefits need to be taken into account when determining the optimal timing of interconnectors:

-Costs of Maintenance and Construction

-Reliability Benefits

-Market Benefits (net producer and consumer benefits)

The thesis defines each benefit and describes techniques for quantifying these benefits through market simulation. Required inputs for the market simulation are discussed including demand and generation forecast, forced outage rates and energy limits on plant. Techniques for simulation of the market are reviewed with particular attention paid to the following:

-Setting of price

-Modeling of interconnector capability

-Modeling forced outages

Techniques for quantifying market benefits from simulation outputs are discussed.

Thesis Document (PDF)

Poster Presentation (PDF)