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Electricity market transitions in Australia: Evidence using model-based clustering

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  • Csereklyei, Zsuzsanna
  • Anantharama, Nandini
  • Kallies, Anne

Abstract

We examine the energy profiles and paths of the participating states of Australia's National Electricity Market between 2011 and 2019, using a model-based clustering approach. We identify 25 distinct electricity generation clusters or profiles, ranked based on their fossil-fuel generation shares. We find that all Australian states show a transition towards more sustainable electricity generation profiles, but the speed and extent of these transitions vary widely across time and states. States showing faster transitions exhibit a combination of high hydro, wind and solar endowments, retiring fossil-fuel infrastructure, and ambitious state-level policies. We find that electricity generation profiles with high shares of gas generation exhibit high prices, while profiles with high shares of coal generation exhibit low prices. However, increasing shares of renewables, particularly when these set the marginal prices, are associated with decreasing prices. Wholesale price variance has increased in all clusters over the examined period, but high-priced events are not exclusively associated with any particular state or profile.

Suggested Citation

  • Csereklyei, Zsuzsanna & Anantharama, Nandini & Kallies, Anne, 2021. "Electricity market transitions in Australia: Evidence using model-based clustering," Energy Economics, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:eneeco:v:103:y:2021:i:c:s0140988321004588
    DOI: 10.1016/j.eneco.2021.105590
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    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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