Experts from Aurora discuss grid modeling in APAC, focusing on locational price signals, market responses to policy changes, and transitioning to renewable energy zones. They explore investment efficiency, policy impacts, and navigating grid modeling challenges in the region.
Sharp price signals impact generator location choices and transmission efficiency.
Market responses involve battery co-location, innovative contracting, and renewable energy zones to tackle grid challenges.
Deep dives
Overview of Policy and Modeling Debates on Locational Pricing
The podcast delves into the debates surrounding locational pricing and curtailment signals in global markets like Japan and Australia. It discusses the spectrum of options, pros and cons, and issues with policy coherence. There is a focus on modeling debates, distinguishing between policy and asset-specific grid modeling to optimize investment locations and transmission efficiency.
Explanation of Different Market Models for Locational Pricing
Various market models like nodal, zonal, and hybrid are explored, exemplified by California, Australia, and Japan. Nodal markets feature individual price signals at thousands of nodes, incorporating congestion and losses. Zonal markets like Australia incorporate locational signals through loss factors and imposed constraints, yet maintain zonal pricing within states.
Challenges and Benefits of Sharper Price Signals
Sharp price signals bring efficiency challenges and benefits to investment and dispatch decisions. The discussion highlights the impact on generator investment location choices, potential risks borne by consumers, and the efficiency of transmission investment. Associated grid charges and policy coherence play essential roles in these pricing mechanisms.
Mitigating Grid Challenges Through Innovative Market Responses
Market responses to grid challenges include battery co-location to manage congestion and curtailment risks, innovative contracting for risk management, and the development of renewable energy zones to streamline investments. The integration of hubs for energy generation and demand centers, as well as leveraging existing grid capacity effectively, emerge as strategies to address evolving grid complexities.
On this week’s Energy Unplugged episode, the Aurora team analyses grid modelling in APAC, both from a policy and investment perspective.
Hugo Batten, our Managing Director for APAC, welcomes our colleagues Kento Yoshimura, Market Lead, Japan; Rowan von Spreckelsen, Head of New Markets, APAC; and James Ha, Research Lead, Australia to discuss the following:
• Policy debates around locational price signals • Modelling debates around locational price signals, including its quality and reliability • Market responses to policy changes and grid issues