Esso Methodology

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2013 ESOO METHODOLOGYMethodology for the Electricity Statement of Opportunities

2013


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2013 ESOO METHODOLOGY

ii Contents AEMO 2013

Disclaimer

Note this document is subject to an important disclaimer which limits and/or excludes AEMOs liability for reliance

on the information in it.

Please read the full disclaimer at the end of the document at page D1.

Revision History

Published by

AEMOAustral ian Energy Market OperatorABN 94 072 010 327

Copyright 2013 AEMO

Number Date Notes

1 August 2013 First issue


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AEMO 2013 Introduction iii

CONTENTS

CONTENTS III

FIGURES IV

1 INTRODUCTION 1

2 ESOO MODELLING 1

2.1 Aims and scope 1

2.1.1 The Reliability Standard 12.1.2 Inter-regional reserve sharing 2

2.2 Inputs 2

2.3 Methodology 4

2.3.1 Modelling and reporting demand in the ESOO 4

3 ACCOMPANYING INFORMATION 5

3.1 Modelling results 5

3.1.1 Interpreting the ESOO adequacy chart 6

3.2 NEM Historical Market Information report 7

3.2.1 Wind contribution to peak demand 7

3.3 Changes from 2012 8

IMPORTANT NOTICE D1


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2013 ESOO METHODOLOGY

iv Figures AEMO 2013

FIGURES

Figure 1 ESOO modelling inputs and outputs 3

Figure 2 ESOO modelling methodology flow-chart 4Figure 3 Example ESOO adequacy chart 7


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AEMO 2013 Introduction 1

1 INTRODUCTION

The purpose of this document is to provide further information on the following:

The methodology used to develop the 2013 Electricity Statement of Opportunities (ESOO).

The detailed modelling results that accompany the 2013 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 conducted a review of the process used to both calculate reserve requirements and assess supply

adequacy in the ESOO. This has resulted in an improved modelling methodology for the 2013 ESOO. The new

methodology uses detailed time-sequential market simulations1rather than the higher-level deterministic approach

used in previous years. The time-sequential model performs optimised electricity dispatch for every hour in the

modelled horizon.

Further information on the time-sequential model itself (used for a range of AEMOs planning studies) is available inthe 2013 Planning Consultation Methodology and Input Assumptionsdocument.

2

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 new generation and demand-side investments.

In 2013, 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.3

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.

2.1.1 The Reliabilit y Standard

In the context of the National Electricity Market (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.

1The time-sequential model is implemented using the Prophet software from Intelligent Energy Systems.

2AEMO. 2013 Planning Consultation Methodology and Input Assumptions. 12 June 2013. Available:

http://www.aemo.com.au/Electricity/Planning/Related-Information/2013-Planning-Assumptions. Viewed 19 June 2013.3Represented in the 2013 ESOO as 50% probability of exceedance (POE) and 10% POE demand conditions.
http://www.aemo.com.au/Consultations/National-Electricity-Market/~/media/Files/Other/planning/2013Consultation/Planning_Studies_2013_Methodology_and_Input_Assumptions.ashxhttp://www.aemo.com.au/Consultations/National-Electricity-Market/~/media/Files/Other/planning/2013Consultation/Planning_Studies_2013_Methodology_and_Input_Assumptions.ashxhttp://www.aemo.com.au/Consultations/National-Electricity-Market/~/media/Files/Other/planning/2013Consultation/Planning_Studies_2013_Methodology_and_Input_Assumptions.ashx


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2 ESOO Modelling AEMO 2013

The Reliability Standard4established by the Australian Energy Market Commissions (AEMC) Reliability Panel

defines the minimum acceptable level of reliability to be met in each region, and places a limit on the amount of

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 regions 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 ofdemand diversity. Reserve-sharing allows a regions 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.

4Australian Energy Market Commission. Guidelines & Standards. Available: http://aemc.gov.au/Panels-and-Committees/Reliability-

Panel/Guidelines-and-standards.html.Viewed 4 July 2012.
http://aemc.gov.au/Panels-and-Committees/Reliability-Panel/Guidelines-and-standards.htmlhttp://aemc.gov.au/Panels-and-Committees/Reliability-Panel/Guidelines-and-standards.htmlhttp://aemc.gov.au/Panels-and-Committees/Reliability-Panel/Guidelines-and-standards.htmlhttp://aemc.gov.au/Panels-and-Committees/Reliability-Panel/Guidelines-and-standards.html


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AEMO 2013 ESOO Modelling 3

Figure 1 ESOO modelling inputs and outputs

Each of the inputs inFigure 1 is described in further detail as follows:

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

narratives are used to create detailed assumptions that govern the growth of demand over time. AEMO did

not update the planning scenario descriptions for the 2013 planning publications; they remain as per the 2012

scenario descriptions document.5

Electricity demand forecasts. These are published in the National Electricity Forecasting Report (NEFR)

each year. Section2.3.1 below provides detail on how demand is reflected in the ESOO modelling.

Develop load traces. See Section2.3.1 and step one of the modelling methodology in Section2.3 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.6

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.

5AEMO. Available:http://www.aemo.com.au/Electricity/Planning/Related-

Information/~/media/Files/Other/planning/2012_Scenarios_Descriptions.ashx.Viewed 13 May 2013.6AEMO. Available:http://www.aemo.com.au/Electricity/Planning/Related-Information/Generation-Information.Accessed 13 May 2013.

Existing and committed projects

Supply-demand

modelling

Electricity demand

forecasts

NEM system

normal network

constraint

equations

ESOO Report

Define scenarios

Generator

information

survey

Develop load

traces
http://www.aemo.com.au/Electricity/Planning/Related-Information/~/media/Files/Other/planning/2012_Scenarios_Descriptions.ashxhttp://www.aemo.com.au/Electricity/Planning/Related-Information/~/media/Files/Other/planning/2012_Scenarios_Descriptions.ashxhttp://www.aemo.com.au/Electricity/Planning/Related-Information/~/media/Files/Other/planning/2012_Scenarios_Descriptions.ashxhttp://www.aemo.com.au/Electricity/Planning/Related-Information/Generation-Informationhttp://www.aemo.com.au/Electricity/Planning/Related-Information/Generation-Informationhttp://www.aemo.com.au/Electricity/Planning/Related-Information/Generation-Informationhttp://www.aemo.com.au/Electricity/Planning/Related-Information/~/media/Files/Other/planning/2012_Scenarios_Descriptions.ashxhttp://www.aemo.com.au/Electricity/Planning/Related-Information/~/media/Files/Other/planning/2012_Scenarios_Descriptions.ashx


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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

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

AEMOs planning studies is available from the 2013 Planning Assumptions webpage.

7

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 supplydemand 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 decreased until the resulting USE matches

0.002% of regional energy. The amount by which the gap was decreased represents the current reserve

deficit or an estimate of the additional capacity required to bring the system back within the Reliability

Standard.

Weighting

AEMOs 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 Assumptions8document for further

information on deriving weighting factors.

2.3.1 Modelling and repor ting demand in the ESOO

For consistency across planning publications, operational demand has been used in the 2013 ESOO unless

specified otherwise.9However, as a result of the demand trace development process

10, 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 the2013 ESOO.

7AEMO. 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 15

July 2013.8AEMO. 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 June13.9For instance, as described in Section3.2.1, the wind contribution to peak demand calculations used total demand, not operational demand. Where

operational demand has not been used, it has been specified.10

See reference at note7 for further detail.

(2) Run time

sequential

model over the

outlook period.

(4) Use results from

the year in which LRC

occurs to determine

reserve deficits.

(1) 10% and

50% POE

demand

trace.

(3) Identify the year

in which USE

exceeds 0.002% (the

LRC point).


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AEMO 2013 Accompanying information 5

Modelled ESOO demand

The NEFR publishes a list of power stations used for operational and annual energy demand forecasts in each

state.11

The list of generators used in operational demand for each region forms the basis of the generation and

demand modelled in the ESOO. Angaston is included in the South Australian generators as it is a significant non-

scheduled non-wind generator that has an impact on network constraint equations.

3 ACCOMPANYING INFORMATION

The accompanying information derived from the 2013 ESOO modelling that is published on AEMOs 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 tostakeholders 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.

A glossary of terms used throughout the ESOO and its accompanying information is available from the ESOO

website.12

The following section describes the modelling results data files in more detail.

3.1 Modelling results

As stated in Section1,the format of the 2013 ESOO is shorter then previous reports to highlight key messages. Asa result, the 2013 ESOO has accompanying spreadsheets presenting further modelling results for stakeholders.

These spreadsheets also contain additional information made available by the new modelling methodology.

Five spreadsheets accompany the ESOO; one for each NEM region. Each spreadsheet contains the following

figures and underlying data for each of the three economic growth scenarios (high, medium, and low).

The chart shown in Section 4 of the ESOO for each region, which shows (and provides data for):

Yearly 10% and 50% POE maximum demand.

The percentage of USE against the 0.002% reliability standard.

The maximum firm generation capacity (see Section3.1.1 for further detail).

Any LRC points within the outlook period.

Section3.1.1 provides a guide to interpreting this chart. Note that for 2013, few LRC points were identified

within the 10-year outlook period for most regions, so they may not be visible in the output.

A supplydemand chart for the region presenting monthly energy modelling output in MWh of the following

parameters:

11See Appendix E of the NEFR Methodology Information Paper. AEMO. Available:

http://www.aemo.com.au/Electricity/Planning/Forecasting/National-Electricity-Forecasting-Report-2013/NEFR-Supplementary-Information-2013.

Viewed 1 August 2013.12

ESOO Abbreviations, Glossary, and List of Company Names. AEMO. Available: http://www.aemo.com.au/Electricity/Planning/Electricity-

Statement-of-Opportunities.
http://www.aemo.com.au/Electricity/Planning/Electricity-Statement-of-Opportunitieshttp://www.aemo.com.au/Electricity/Planning/Electricity-Statement-of-Opportunitieshttp://www.aemo.com.au/Electricity/Planning/Electricity-Statement-of-Opportunitieshttp://www.aemo.com.au/Electricity/Planning/Electricity-Statement-of-Opportunities


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Energy demand.

Generation by type (coal, hydro, gas, wind, other).

Import/export, where exports are shown below the x-axis, but equal to the additional energy generated

within the region above the demand required. Energy pumped to storage (where applicable), which represents the energy required to pump water for

hydro generation.

A supplydemand chart for the region presenting monthly modelling output in MW of the following parameters

against a weighted 10% POE and 50% POE maximum demand (see Section2.3):

Weighted maximum demand.

Import at weighted maximum demand.

Export at weighted maximum demand.

Unmet load at weighted maximum demand (USE).

Generation.

An import/export chart depicting the total imports and exports from the region for each year.

3.1.1 Interpreting the ESOO adequacy chart

Figure 3 shows an example adequacy chart provided for each NEM region in the main ESOO report. This chart

summarises the results from the supplydemand modelling relevant to supply adequacy for that region over the

10-year outlook period. In particular, it highlights any USE for that region compared to the Reliability Standard as

described in Section2.1.1,which enables the LRC point (if any) to be derived. As there is a high level of supply

adequacy across the NEM to meet demand in both the medium and low scenarios, many of the charts in the 2013

ESOO do not have an LRC point.

Of note, the maximum firm generation capacity figure shown only includes firm wind generation capacity for peak

demand. For instance, if a regions scheduled and semi-scheduled generation capacity is 4,000 MW (excluding

wind generation), there is 400 MW of additional installed wind capacity and an assumed wind contribution to peak

demand of 7%13, the maximum firm generation capacity represented in the chart would be:

4,000 + (400 x wind contribution to peak demand (7%)) = 4,028 MW.

There are times when the modelled wind output exceeds these firm generation capacities, and is therefore able to

contribute more towards total energy production than towards meeting peak demands. The extent to which this is

the case can be observed from the supplydemand chart (and underlying data) provided for each region presenting

monthly energy modelling output.

13See Section3.2.1 for further information on the methodology for developing the wind contribution to peak demand.


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AEMO 2013 Accompanying information 7

Figure 3 Example ESOO adequacy chart

Projected USE tends to grow exponentially after it appears, particularly if demand is growing. To ensure the charts

focus on the key information relevant to supply adequacy, USE presentation beyond LRC points has been

truncated. This information is still available in the underlying data set.

3.2 NEM Historical Market Information report

The NEM Historical Market Information report14

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. Some methodological information in relation to the wind contribution to

peak demand is included here as these figures are used across various components of the 2013 ESOO and other

publications.

3.2.1 Wind contr ibution 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 AEMOs systems. The analysis commences from the

time at which each wind farm was fully installed and started transmitting energy to the NEM.

14Available: http://www.aemo.com.au/Electricity/Planning/Electricity-Statement-of-Opportunities.

0

0.001

0.002

0.003

0.004

0.005

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1314 1415 1516 1617 1718 1819 1920 2021 2122 2223

%Unservedenergy

Maximumcapacity/load(MW)

Financial year

USE (%) 10% POE maximum demand (MW)

Maximum firm generation capacity (MW) 50% POE maximum demand (MW)

Reliability standard (%) LRC Point

LRC point - represents the firstyear that the projected USE

exceeds the reliability standard.

Maximum firm generation capacity -the forecast installed capacity wherewind generation is only represented asits contribution to peak demand.

AEMC reliability standard - '...themaximum expected unserved energy

in any region should not exceed0.002% of the regions total annualenergy consumption'.

10% & 50% POE maximum demand -the modelled annual demandprojections.


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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.15The 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 VictoriaTasmania interconnector). For this

reason, wind contribution in Tasmania was measured during the top 10% of the combined Tasmanian andVictorian 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.

For 2013, contribution factors over the past five years (only four years of data was included for NSW to ensure the

data used was representative of the current generation conditions) were then averaged.

The Queensland region was not studied as there was insufficient wind farm data available.

3.3 Changes from 2012

The 2012 and 2013 ESOOs have employed different methodologies to determine the adequacy of supply. The

2012 ESOO use a supplydemand calculator, and the 2013 ESOO used the time-sequential modelling approach

described in this document. Testing and external auditing was conducted to ensure the new methodology was

accurate. Overall, the new methodology achieves the following:

Provides more comprehensive results in terms of the value and amount of information for stakeholders.

Increases the quality and accuracy of the LRC points.

Increases the consistency between the ESOO supply adequacy assessment and other AEMO planning

studies (for example, the network support constraint ancillary service (NSCAS), minimum reserve level

calculation, the National Transmission Network Development Plan (NTNDP) and Victorian Annual Planning

Report (VAPR)).

15The standard definition of summer for Tasmania for the ESOO and electricity planning is usually 1 December to 28 February. See ESOO glossary

on the ESOO webpage. Available: http://www.aemo.com.au/Electricity/Planning/Electricity-Statement-of-Opportunities.


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AEMO 2013 Important Notice D1

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 NationalElectricity 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 personsuse of the information in this publication.

Acknow ledgement

AEMO acknowledges the support, co-operation and contribution of all participants in providing data and information

used in this publication.

Copyright

2013 Australian Energy Market Operator Limited. The material in this publication may be used in accordance

with the copyright permissions on AEMOs website.


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ESOO METHODOLOGY

D2 Important Notice AEMO 2013

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