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Locational and market value of Renewable Energy Zones in Queensland

Author

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  • McDonald, Paul

Abstract

Efficient coordination in transmission planning and locating variable renewable energy (VRE) generation is important in transitioning to a low carbon electricity system. Renewable Energy Zones (REZ) provide an opportunity to strategically augment and expand the existing transmission network to maximise use of the available renewable resources. The Queensland region of Australia’s National Electricity Market provides a unique case for analysis, where complementary patterns of wind and solar supply exist across a broad geographical area. This article presents new information about the nine proposed REZ across the region and their utility in supplying energy as the incumbent fleet of baseload generators is forecast to retire. Understanding their locational and market value provides insight into the underlying cost of energy and its ability to satisfy energy demands. The recent entry cost shocks impacting the VRE industry in the post-pandemic recovery have been quantified, where increases of 23%–44% to the cost of energy have been observed. These increases have been driven by shifts in the capital and operating costs for new projects, which are compounded by the simultaneous increases to the cost of capital. Real world analysis has occurred to support the modelled outcomes and highlight the value of REZ in Queensland.

Suggested Citation

  • McDonald, Paul, 2023. "Locational and market value of Renewable Energy Zones in Queensland," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 198-213.
    • Handle: RePEc:eee:ecanpo:v:80:y:2023:i:c:p:198-213
    DOI: 10.1016/j.eap.2023.08.008
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    More about this item

    Keywords

    Renewable Energy Zones; Cost of energy; Market value;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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