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Wind speed and electricity demand correlation analysis in the Australian National Electricity Market: Determining wind turbine generators’ ability to meet electricity demand without energy storage

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  • Bell, William Paul
  • Wild, Phillip
  • Foster, John
  • Michael, Hewson

Abstract

This paper analyses wind speed and electricity demand correlation to determine the ability of wind turbine generators to meet electricity demand in the Australian National Electricity Market (NEM) without the aid of energy storage. With the proposed increases in the number of windfarms to meet the Large-scale Renewable Energy Target (LRET), this correlation study is formative to identifying price and power stability issues and determining what transmission structure is required to best facilitate the absorption of wind power. We calculate correlations between wind speed and electricity demand data for the years 2010 to 2012 using Weather Research & Forecasting Model (WRF 2015) wind speed data and Australian Energy Market Operator (AEMO) electricity demand data. We calculate state level correlations to identify potential bottlenecks in the interconnectors that link each state’s transmission network. The transmission lines within each state tend to be less of a constraint. We find a small temporal increase in correlation between electricity demand and wind speed. This we attribute to an unwitting renewable energy portfolio effect with the increase in solar PV and solar water heating. Strengthening this portfolio effect is the decline in manufacturing that makes household domestic demand relatively larger. Comparing our study with an earlier correlation analysis by Bannister and Wallace (2011) tends to confirm our initial findings. We find the most advantage from the lack of correlation between wind speed between the NEM’s peripheral states including Queensland, South Australia and Tasmania. Additionally, the correlation between electricity demand and wind speed is strongest between these states. Similarly, we find the most advantage from the lack of correlation between electricity demand in each of these states. The self-interest groups within Victoria and New South Wales and the transmission companies geographically contained within each state hinders the development of optimal interconnector capacity to maximise the benefit of wind power in the peripheral states and the NEM generally.

Suggested Citation

  • Bell, William Paul & Wild, Phillip & Foster, John & Michael, Hewson, 2015. "Wind speed and electricity demand correlation analysis in the Australian National Electricity Market: Determining wind turbine generators’ ability to meet electricity demand without energy storage," MPRA Paper 68185, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:68185
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    References listed on IDEAS

    as
    1. Bell, William Paul & Wild, Phillip & Foster, John, 2013. "The transformative effect of unscheduled generation by solar PV and wind generation on net electricity demand," MPRA Paper 46065, University Library of Munich, Germany.
    2. Elliston, Ben & MacGill, Iain & Diesendorf, Mark, 2013. "Least cost 100% renewable electricity scenarios in the Australian National Electricity Market," Energy Policy, Elsevier, vol. 59(C), pages 270-282.
    3. Woo, C.K. & Horowitz, I. & Moore, J. & Pacheco, A., 2011. "The impact of wind generation on the electricity spot-market price level and variance: The Texas experience," Energy Policy, Elsevier, vol. 39(7), pages 3939-3944, July.
    4. Cutler, Nicholas J. & Boerema, Nicholas D. & MacGill, Iain F. & Outhred, Hugh R., 2011. "High penetration wind generation impacts on spot prices in the Australian national electricity market," Energy Policy, Elsevier, vol. 39(10), pages 5939-5949, October.
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    Citations

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    Cited by:

    1. Newbery, D., 2022. "Wind, water and wires: evaluating joint wind and interconnector capacity expansions in hydro-rich regions," Cambridge Working Papers in Economics 2212, Faculty of Economics, University of Cambridge.
    2. Bell, William Paul & Wild, Phillip & Foster, John & Hewson, Michael, 2017. "Revitalising the wind power induced merit order effect to reduce wholesale and retail electricity prices in Australia," Energy Economics, Elsevier, vol. 67(C), pages 224-241.
    3. Simshauser, P., 2019. "On the impact of government-initiated CfD’s in Australia’s National Electricity Market," Cambridge Working Papers in Economics 1901, Faculty of Economics, University of Cambridge.
    4. Paolo Falbo & Carlos Ruiz, 2021. "Joint optimization of sales-mix and generation plan for a large electricity producer," Papers 2110.02016, arXiv.org.
    5. Simshauser, Paul, 2018. "Garbage can theory and Australia's National Electricity Market: Decarbonisation in a hostile policy environment," Energy Policy, Elsevier, vol. 120(C), pages 697-713.
    6. Rai, Alan & Nunn, Oliver, 2020. "On the impact of increasing penetration of variable renewables on electricity spot price extremes in Australia," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 67-86.
    7. Simshauser, Paul, 2020. "Merchant renewables and the valuation of peaking plant in energy-only markets," Energy Economics, Elsevier, vol. 91(C).
    8. Jiang, Ping & Li, Ranran & Liu, Ningning & Gao, Yuyang, 2020. "A novel composite electricity demand forecasting framework by data processing and optimized support vector machine," Applied Energy, Elsevier, vol. 260(C).
    9. Álvaro García-Cerezo & Luis Baringo & Raquel García-Bertrand, 2020. "Representative Days for Expansion Decisions in Power Systems," Energies, MDPI, vol. 13(2), pages 1-18, January.
    10. Unger, Elizabeth A. & Ulfarsson, Gudmundur F. & Gardarsson, Sigurdur M. & Matthiasson, Thorolfur, 2018. "The effect of wind energy production on cross-border electricity pricing: The case of western Denmark in the Nord Pool market," Economic Analysis and Policy, Elsevier, vol. 58(C), pages 121-130.
    11. Falbo, Paolo & Ruiz, Carlos, 2023. "Joint optimization of sales-mix and generation plan for a large electricity producer," Energy Economics, Elsevier, vol. 120(C).
    12. Ian M. Trotter & Torjus F. Bolkesj{o} & Eirik O. J{aa}stad & Jon Gustav Kirkerud, 2021. "Increased Electrification of Heating and Weather Risk in the Nordic Power System," Papers 2112.02893, arXiv.org.
    13. William Paul Bell & John Foster, 2017. "Using solar PV feed-in tariff policy history to inform a sustainable flexible pricing regime to enhance the diffusion of energy storage and electric vehicles," Journal of Bioeconomics, Springer, vol. 19(1), pages 127-145, April.
    14. Newbery, David, 2023. "Wind, water and wires: Evaluating joint wind and interconnector capacity expansions in hydro-rich regions," Energy Economics, Elsevier, vol. 117(C).
    15. Falbo, Paolo & Ruiz, Carlos, 2019. "Optimal sales-mix and generation plan in a two-stage electricity market," Energy Economics, Elsevier, vol. 78(C), pages 598-614.
    16. Paul Simshauser & Joel Gilmore, 2020. "Is the NEM broken? Policy discontinuity and the 2017-2020 investment megacycle," Working Papers EPRG2014, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    17. Mwampashi, Muthe Mathias & Nikitopoulos, Christina Sklibosios & Konstandatos, Otto & Rai, Alan, 2021. "Wind generation and the dynamics of electricity prices in Australia," Energy Economics, Elsevier, vol. 103(C).
    18. Simshauser, Paul, 2019. "Missing money, missing policy and Resource Adequacy in Australia's National Electricity Market," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.
    19. Nelson, Tim & Rai, Alan & Esplin, Ryan, 2021. "Overcoming the limitations of variable renewable production subsidies as a means of decarbonising electricity markets," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 544-556.
    20. Paul Simshauser, 2019. "On the Stability of Energy-Only Markets with Government-Initiated Contracts-for-Differences," Energies, MDPI, vol. 12(13), pages 1-24, July.

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    More about this item

    Keywords

    Wind speed Electricity demand Correlation Australian National Electricity Market Wind turbine generators Renewable energy Renewable energy portfolio solar PV;

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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