Advanced Search
MyIDEAS: Login

The economics of transmission constraints on wind farms: some evidence from South Australia

Contents:

Author Info

  • Boerema, Nicholas
  • MacGill, Iain
Registered author(s):

    Abstract

    The impacts of transmission congestion and network investment on the development of the Australian wind energy industry have received growing attention from wind farm developers as well as relevant policy stakeholders such as the Australian Energy Market Commission (AEMC). There are many potential wind farm sites across the country with excellent wind regimes yet only limited transmission capacity. At least one wind farm in South Australia has spent a period following construction where its output was curtailed by transmission constraints (NEMMCO, 2009). Current market rules do not guarantee dispatch to an existing wind farm as more wind generation connects to the same transmission. Given the expense of transmission network extension and augmentation, there are interesting questions of what economic impacts such constraints might have for wind farm operators. This paper examines this issue in the context of the South Australian region of the Australian National Electricity Market (NEM). The State currently hosts almost half of total Australian wind generation capacity and has significant transmission capacity limitations for further development. Half hour wholesale electricity spot prices were used along with generation data from nine South Australian wind farms over the 2008-9 and 2009-10 financial years to assess the potential impact that transmission constraints might have had on wind farm revenue. Results showed that a number of the wind farms would have suffered only very limited revenue reductions from having significantly greater wind farm capacity than the rating of their transmission connection to the NEM. Importantly, some wind farms could be limited to a maximum power output of half their rated capacity and still achieve higher capacity factors then other already existing unconstrained wind farms. The key reasons for this are that wind farms do not generate at rated capacity for a great deal of the time over the year, periods of high wind generation appear to be associated with lower wholesale prices and there is significant variance between the wind farms capacity factors. Our findings suggest that there may be circumstances where wind farm developers might benefit from installing more wind turbines than the capacity of their transmission connection.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://purl.umn.edu/107741
    Download Restriction: no

    Bibliographic Info

    Paper provided by Australian National University, Environmental Economics Research Hub in its series Research Reports with number 107741.

    as in new window
    Length:
    Date of creation: Sep 2010
    Date of revision:
    Handle: RePEc:ags:eerhrr:107741

    Contact details of provider:
    Postal: Crawford Building, Lennox Crossing, Building #132, Canberra ACT 0200
    Phone: +61 2 6125 4705
    Fax: +61 2 6125 5448
    Email:
    Web page: http://www.crawford.anu.edu.au/research_units/eerh/
    More information through EDIRC

    Related research

    Keywords: Integration; market price; NEM; South Australia; Wind; Environmental Economics and Policy; Farm Management; Resource /Energy Economics and Policy;

    This paper has been announced in the following NEP Reports:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ags:eerhrr:107741. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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