energy transmission expansion planning in the australian … · 2019. 8. 6. · south australia...

109
1 Energy Transmission Expansion Planning in the Australian Context: an integrated solution for the gas and electricity markets Sergio A. Díaz Pizarro, BSc. and MSc. in Electronics Eng. Project submitted in partial fulfilment for the requirements for the degree of MSc. Energy and Resources Management UCL School of Energy and Resources Australia I, Sergio A. Diaz confirm that the work presented in this report is my own. Where information has been derived from other sources, I confirm that this has been indicated in the report. JULY 2014

Upload: others

Post on 10-Sep-2020

2 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

1

Energy Transmission Expansion Planning in

the Australian Context: an integrated

solution for the gas and electricity markets

Sergio A. Díaz Pizarro, BSc. and MSc. in Electronics Eng.

Project submitted in partial fulfilment for the requirements for the degree of

MSc. Energy and Resources Management

UCL School of Energy and Resources Australia

I, Sergio A. Diaz confirm that the work presented in this report is my own. Where

information has been derived from other sources, I confirm that this has been indicated

in the report.

JULY 2014

Page 2: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

2

Acknowledgments

First I would like to thank my tutor and supervisor Dr. Ady James for his advices,

recommendations and conversations, it has been a pleasure to know him.

I also would like to thank Energy Exemplar, especially to Glenn and Louise for giving

the opportunity to perform my research in a friendly and amazing work environment.

Certainly without the support of my fellows, Felipe, Allen and Lummi would it be

impossible to develop the work presented in this thesis.

I would like to thank Maria and Pixie which perform a wonderful work supporting

students at UCL. You have a special place in our heart, thank you Maria and Pixie.

Finally to the love of my life, thank you Lorena.

Page 3: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

3

Abstract

Australia is in the verge of an energy planning dilemma. Most of its electricity

generation capacity is through coal resulting in enormous contribution of CO2 into the

atmosphere. In contrast, in 2007 Australia has acknowledged the climate change and

related to this fact a carbon fee was proposed and implemented in 2012 in order to

diminish the contribution of CO2 to global warming. Therefore the logical question

should it be which future energy path must Australia follows: business as usual, where

coal is the predominant fuel to generate electricity or a shift into a low carbon

economy?

The power generation and transmission expansion planning of the electricity sector

seeks an optimal answer to the following questions: when, what and where new

generation and transmission assets will be built over a specific period of time. The types

of answer that this plan will provide are influenced by the uncertainties mentioned

above: electricity demand, fossil fuel prices, new technologies and environmental

policies.

Policies making usually is a long process where the design at least in the energy sector

has powerful mathematical basis. It could be argued that any policy that overlaps with

engineering topics has powerful mathematical background in its design. For that reason

mathematical models especially in the energy sector are powerful tools for testing and

proving future path.

The motivation of this paper is related to a more efficiency approach to deal with the

expansion planning of the electricity sector. It is proposed for this thesis a co-optimized

expansion planning of the electricity and gas system which implicitly includes dynamics

of the consumption and production of the different basins connected to the gas network.

Page 4: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

4

This fact is important because points out possible constraints not only in the electrical

transmission lines, but also in gas transmission pipelines.

The integration of the gas network into the electricity planning has important outcomes

due to the projects developed in Curtis Island. In the forthcoming years, the Australian

gas market will evolve from an only domestic market to an international one where the

price of gas will be linked to its international value. Linked to this aspect, the period of

development projects coincides with major large-customer contract roll-off and the

resetting of prices considerably higher than historical levels.

Page 5: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

5

Table of Contents

Table of Contents ....................................................................................................... 5

List of Figures ............................................................................................................ 7

List of Tables.............................................................................................................. 9

1 Overview ........................................................................................................... 10

1.1 Introduction ...................................................................................................... 10

1.2 Motivation ........................................................................................................ 13

1.3 Objectives ......................................................................................................... 15

1.4 Thesis Structure ................................................................................................ 15

2 Background Information ................................................................................... 17

2.1 Introduction ...................................................................................................... 17

2.2 Electrical Power Expansion Planning .............................................................. 18

2.2.1 Strategies for solving optimization problem in electric planning ............. 20

2.2.2 Expansion planning uncertainties ............................................................. 21

2.3 Co-optimization of gas and electricity transmission expansion planning ........ 22

3 Gas and Electricity Modelling for the Expansion Co-Optimisation Planning.. 27

3.1 Introduction to Electricity and Gas System Modelling .................................... 27

3.2 Steps in a Power System Planning ................................................................... 29

3.3 A brief introduction to DC Load Flow ............................................................. 30

3.3.1 Transmission Line Modelling ................................................................... 31

3.3.2 Losses on a Line ........................................................................................ 32

3.4 A brief introduction to Optimisation ................................................................ 33

3.5 The National Electricity Market (NEM) .......................................................... 34

3.5.1 The Wholesale Market .............................................................................. 35

3.5.2 Transmission Congestion .......................................................................... 38

3.5.3 Electricity Demand.................................................................................... 40

3.5.4 Generators ................................................................................................. 41

3.6 The Australian South Eastern Gas Network ..................................................... 45

3.6.1 Overview of the South Eastern Gas System ............................................. 45

Page 6: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

6

3.6.2 Gas Basins ................................................................................................. 47

3.6.3 Pipelines .................................................................................................... 49

3.6.4 LNG committed Projects (Curtis Island) (Group, 2013) .......................... 51

3.6.5 Gas Demand Profile .................................................................................. 52

4 The formulation of the Long Term Planning Problem in PLEXOS® .............. 59

4.1 Introduction ...................................................................................................... 59

4.2 Energy Planning Tool ....................................................................................... 59

4.3 Formulation of the problem .............................................................................. 61

5 Results ............................................................................................................... 65

5.1 The Gas Model ................................................................................................. 65

5.1.1 Scenario 1 .................................................................................................. 66

5.1.2 Scenario 2 .................................................................................................. 68

5.2 The Co-optimized model .................................................................................. 70

5.2.1 Scenario 1, Co-optimisation of the Electricity and gas model including

Bowen-Surat Basin .................................................................................................. 73

5.2.2 Scenario 2, Co-optimisation of the Electricity and gas model: sensitive

analysis of the Bowen-Surat Basin .......................................................................... 76

6 Conclusions and Future Work .......................................................................... 80

7 Bibliography ..................................................................................................... 83

A. Annex 1- Lagrange Multiplier .......................................................................... 86

B. Annex 2 – Gas Demand Profile Algorithm ...................................................... 87

C. Annex 3 – Data used for the Gas Model (IES, 2013, SKM, 2013) .................. 91

D. Annex 4 – Gas projections (AEMO, 2013b) .................................................... 93

E. Annex 5 – Capacity built results Scenario 1: Co-optimization of the gas and

electricity system. (AEMO, 2013b) ......................................................................... 98

F. Annex 5 – Capacity built results Scenario 1: Co-optimization of the gas and

electricity system. ................................................................................................... 102

Page 7: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

7

List of Figures

Figure 3-1 Flows across the network (AEMC) ........................................................ 39

Figure 3-2 Input-output curve of a steam unit (Wood et al., 2014) ........................ 43

Figure 3-3: Locations of Australian’s gas resources and two potential gas basins.

Source: (Industry and Resources, 2013) .................................................................. 48

Figure 3-4 Contract Supply for LNG exports in Queensland for the (2013-2029):

Australia Pacific LNG (APLNG), Gladstone LNG (GLNG) and Queensland Curtis

LNG (QCLNG) ........................................................................................................ 52

Figure 3-5 Brisbane’s daily demand profile [TJ] for the year 2013 (Bulletin, 2013)54

Figure 3-6 Brisbane’s demand profile forecasted [TJ] (2013 -2031) ...................... 55

Figure 3-7 Gladstone’s demand profile forecasted [TJ] (2013 -2031) .................... 55

Figure 3-8 Mount Isa’s demand profile forecasted [TJ] (2013 -2031) .................... 56

Figure 3-9 New South Wales’ demand profile forecasted [TJ] (2013-2031) .......... 56

Figure 3-10 South Australia’s demand profile forecasted [TJ] (2103-2031) ........... 57

Figure 3-11 Tasmania’s demand profile forecasted [TJ] (2013-2031) .................... 57

Figure 3-12 Victoria’s demand profile forecasted [TJ] (2013-2031)....................... 58

Figure 5-1 Gas network modelled in PLEXOS®, the main demand zones included in

this study are: Mount Isa, Gladstone, Brisbane, Adelaide, Sydney, Melbourne and

Hobart ....................................................................................................................... 66

Figure 5-2 Gas cost at the demand nodes................................................................. 67

Figure 5-3 End volume basins (TJ) (Bowen-Surat is not included)......................... 67

Figure 5-4 End volume Basins (TJ) ......................................................................... 68

Figure 5-5 End volume basin (TJ) not including Bowen-Surat ............................... 69

Figure 5-6 End volume Basins (TJ) including Bowen-Surat ................................... 70

Figure 5-7 a) The NEM b) Model used for this thesis ............................................. 71

Page 8: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

8

Figure 5-8 Electricity Demand in the NEM (AEMO) ............................................. 72

Figure 5-9 Renewable requirements [MW] ............................................................. 73

Figure 5-10 Electricity Price over the period simulated ($/MWh) .......................... 74

Figure 5-11 Generation Capacity Built (MW) ......................................................... 75

Figure 5-12 Generation Capacity Retired (MW) ..................................................... 76

Figure 5-13 End volume basin (TJ) not including Bowen-Surat in the domestic

consumption ............................................................................................................. 77

Figure 5-14 Electricity Price over the period simulated ($/MWh) .......................... 78

Figure 5-15 Generation Capacity Built (MW) ......................................................... 78

Figure 5-16 Generation Capacity Retired (MW) ..................................................... 79

Page 9: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

9

List of Tables

Table 3-1 Major Gas Pipelines Summary (Bulletin, 2013)...................................... 51

Table 4-1, decision variables used for the expansion planning problem ................. 61

Table 4-2 parameters for the formulation of the expansion planning problem........ 62

Table C-1 Reserves by basin and type - PJ .............................................................. 91

Table C-2 Maximum production capacity – TJ/day ................................................ 91

Table C-3 Production costs by basin and type -$/GJ ............................................... 91

Table C-4 Pipeline capacities and tariff – TJ/day and $/GJ ..................................... 92

Table D-1. South Australia annual gas demand ....................................................... 93

Table D-2. 2013 Victorian annual gas demand ........................................................ 94

Table D-3. Queensland domestic annual gas ........................................................... 94

Table D-4. Tasmanian annual gas demand .............................................................. 95

Table D-5. New South Wales and Australian Capital Territory annual gas demand96

Table E-1. South Australia annual gas demand ....................................................... 98

Table E-2. 2013 Victorian annual gas demand ........................................................ 98

Table E-3. Queensland domestic annual gas............................................................ 99

Table E-4. Tasmanian annual gas demand ............................................................. 100

Table E-5. New South Wales and Australian Capital Territory annual gas demand101

Page 10: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

10

1 Overview

1.1 Introduction

Australia is in the verge of an energy planning dilemma. Most of its electricity

generation capacity is through coal resulting in enormous contribution of CO2 into the

atmosphere. In contrast, in 2007 Australia has acknowledged the climate change and

related to this fact a carbon fee was proposed and implemented in 2012 in order to

diminish the contribution of CO2 to global warming. Therefore the logical question

should it be which future energy path must Australia follows: business as usual, where

coal is the predominant fuel to generate electricity or a shift into a low carbon

economy? (Falk and Settle, 2011)

Electricity generation and transmission investment projects are highly influenced by

factors such as fossil fuel prices, electricity demand patterns and environmental taxes

(Owen and Berry, 2013). Decision making related to potential investment can be

hindered because of the risks associated with uncertainties related to the variables

mentioned above (Nagl et al., 2013).

The first critical issue that adds uncertainty to the future of electricity generation is the

price of fossil fuels, especially the gas price. The shale gas revolution has not only

impacted the United States but the international gas market as well (IEA, 2012a,

Stevens, 2012). A classic illustration of this impact is the role that the United States has

performed as a net importer of fossil fuel in the past years, and due to the shale

revolution this situation could change achieving self sufficiency of energy for over a

century (IEA, 2012b).

Page 11: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

11

Australia is endowed with important quantities of natural gas which allows to be an

important exporter of LNG (Goverment, 2010). Similarly to the United States,

breakthroughs in specific technologies such as fracturing and carbon capture & storage

will result in critical trade-off between domestic and international consumption adding

volatility to the gas price.

The importance of gas in the Australian energy context is mainly related to two factors:

CO2 content of its combustion and supporting role for intermittency of renewable

generation. Therefore, investment either in gas power generation or renewable energies

would be affected by the gas price especially in States for instance South Australia

where the participation of renewable is important (Goverment, 2010).

The National Electricity Market (NEM) is the longest worldwide interconnected system

with an extension of approximately 4500 KM. The system begins in Port Douglas in the

State of Queensland and it extends until Port Lincoln in South Australia. Huge

quantities of electrical energy are traded in the NEM (Owen, 2011). In an extensive

country as Australia, energy substructures are costly especially with low values of

population density (Falk and Settle, 2011).

According to the NEM electricity demand is the main driver for investment in this

sector (AEMO, 2012a) determining electricity forecasting and location of future

generation and transmission assets.

Last but not least, the Australian carbon tax has been on the table of discussion among

politicians, academics and stakeholders from the energy and industry sectors especially

in the last election period. A carbon tax of A$23/tonne CO2 was established in July

2012 under the government of the former Prime Minister Julia Guillard from the

Australian Labor Party (Goverment, 2011). However, the future of this fee has a

Page 12: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

12

deadline owing to the suspension of this tax because of the new government of the

Prime Minister Tony Abbot.

For the reasons mentioned above, Australia will face critical and unknown changes in

the electricity mix, driven by climate changes policies and energy demand patterns.

Indeed, this uncertain future will add risks to possible assets investment which will

affect the electricity price.

The power generation and transmission expansion planning of the electricity sector

seeks an optimal answer to the following questions: when, what and where new

generation and transmission assets will be built over a specific period of time

(Unsihuay-Vila et al., 2010). The types of answer that this plan will provide are

influenced by the uncertainties mentioned above: electricity demand, fossil fuel prices,

new technologies and environmental policies.

In order to address the demand of energy in Australia, the Australian Energy Market

operator (AEMO) uses PLEXOS (AEMO, 2012d) for their National Transmission

Network Development Plan (NTNDP) yearly report (AEMO, 2012c). NTNDP provides

several energy scenarios taking into account the least-cost generation approach where

the optimal expansion solution for electrical generation and high voltage transmission

system is obtained.

Similarly, the AEMO develops an expansion planning report related to the gas sector

called Gas Statement of Opportunities (GSOO) where the results take into consideration

transmission pipelines, wells and storage facilities (AEMO, 2012b).

Recently Australia has faced a number of challenges in the electric and gas networks

affecting planning reports and also commodity prices. Firstly, projected demand for

Liquefied Natural Gas (LNG) exports out of Queensland means that demand for gas in

Page 13: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

13

that part of the system is forecast to rise over the next 10 years, firstly to create storage

of LNG and then to supply the export market. At the same time gas supply in NSW is

becoming constrained, and the demand in Queensland will only add to the forecast

supply shortages.

1.2 Motivation

Australia is one of the main carbon polluters per capita in the world. Political and

environmental reasons have promoted that in 2007 Australia had signed and ratified the

Kyoto Protocol. Certainly, this agreement directly or indirectly way pushed the

implementation of a carbon tax to electricity generation. Nonetheless, in the last year

due to election period the future of this fee is uncertain. The critical aspect of the carbon

tax on Australia is related to the most influential electricity generation that has the

continent which is electricity generation through coal. Therefore a tax for carbon

emission could certainly influence future investment in fossil fuel power plant.

Besides the carbon tax there are others variables that create this big question mark over

electricity generation and transmission, for instance: electricity demand, new energy

technologies and fuel prices, especially gas price. As Owen and Berry (2013) have

observed the outcome of those aspects will result in an important variation in the

relative cost of new electricity generation.

Policies making usually is a long process where the design at least in the energy sector

has powerful mathematical basis. It could be argued that any policy that overlaps with

engineering topics has powerful mathematical background in its design. For that reason

mathematical models especially in the energy sector are powerful tools for testing and

proving future path.

Page 14: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

14

Effective Energy Policies are based in mathematical models mainly because through

them it is possible to model behaviour or patterns from real life1. In fact, the gap

between the outcome of a mathematical model and the real pattern will depend of the

accuracy of the model and certainly the complexity of it.

Despite the fact that Energy policies are linked with the political approach that

government or stakeholders have, it is likely that behind any energy policy there is a

mathematical model which support the effectiveness of this policy. The complexity of

these mathematical models has increased in the last years due to the improvements on

computational management and an increase in the effectiveness of the algorithms used

for deals with complex models or systems.

The motivation and novelty of this paper is related to a more efficiency approach to deal

with the expansion planning of the electricity sector in Australia, adding complexity and

accuracy to the current approach performs by AEMO in the National Transmission

Network Development Report mentioned in the previous section. It is proposed for this

thesis a co-optimized expansion planning of the electricity and gas system which

implicitly includes dynamics of the consumption and production of the different basins

connected to the gas network. This fact is important because points out possible

constraints not only in the electrical transmission lines, but also in gas transmission

pipelines.

The integration of the gas network into the electricity planning has important outcomes

due to the projects developed in Curtis Island. In the forthcoming years, the Australian

1 For example the mathematics of classical mechanics it is possible to describe physical

events such as the movement of an apple following down from a tree. However, with

another perspective the same event can be explained with a more complex mathematical

approach.

Page 15: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

15

gas market will evolve from an only domestic market to an international one where the

price of gas will be linked to its international value. Linked to this aspect, the period of

development projects coincides with major large-customer contract roll-off and the

resetting of prices considerably higher than historical levels.

1.3 Objectives

Develop a single gas model in PLEXOS about the South Eastern gas Network

including LNG projects in Curtis Island. With the use of this model the

following objectives are proposed:

o Determine if gas reserves and production are sufficient to meet demand

in relation to LNG projects on Curtis Island.

o Determine if gas transmission pipelines and processing facilities are

sufficient to meet demand and deliver new gas production with the

interaction of the LNG projects on Curtis Island

Develop a co-optimized electricity and gas model that co-optimises the National

Electricity Market and the South Eastern gas network. The resulting model will

allow achieving a better result in relation to the expansion planning of the NEM.

Currently both models are simulated separately by AEMO iterating their

outcomes until the user decides.

1.4 Thesis Structure

The first chapter will introduce the reader with the problem and brief explanation about

the main objectives of the current work. The second chapter will provide with

background information about the problem of the expansion planning in electrical

system. It will also describe some strategies used in electrical expansion problem.

Page 16: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

16

Finally, it will describe the main works in relation to optimize both system electricity

and gas.

The third chapter is the introduction and explanations related to the methodology used

for modelling the National Electricity Market and the South Eastern Gas System. The

importance of this chapter is linked to provide the reader with information to understand

the procedure behind a co-optimize model for the electricity and gas market.

The formulation and structure of the optimisation problem is addressed in chapter 4. It

will provide the reader with information about PLEXOS and some assumption

performed for the model addressed in this paper.

Chapter 5 will provide results linked to the use of the gas single model and also the co-

optimised solution using the gas and the electricity model.

Chapter 6 will provide the conclusions of the report and proposal for future

development using the present work as basis to employ this new co-optimized tendency

in Energy expansion planning.

Page 17: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

17

2 Background Information

2.1 Introduction

Several changes have taken place in the electricity sector over the last two decades, and

these changes have been influenced by competition with the aim of bringing about the

achievement of an efficient allocation of resources (Griffin and Puller, 2005).

Undoubtedly, the most important change in this sector (at least in the developed world)

has been the transition from a regulated to a deregulated market, and this transition

implies the unbundling of electrical services (generation, transmission and distribution)

which were usually administrated and/or owned by state companies in a regulated

environment.

This adjustment to the market structure has definitely created a more complex

environment for investment, thus adding risk and uncertainties to the electricity sector

and it is clear to see where these uncertainties originate when reviewing the new market

structure. In a deregulated environment, the number of participants will be greater than

that of those in a regulated one, which is indeed the very idea of competition. However,

the fact that competition is the basis of the system implies that a lack of information is

inherent in this environment , as this lack of information and cooperative interaction

among participants (especially among generation companies) is likewise part of the very

essence of competition (Kirschen and Strbac, 2007).

Furthermore, global warming has been on the table among politicians, academics and

stakeholders from the energy sector, especially in the developed world, but the lack of

agreements with regards to climate change has decreased the effectiveness of any

energy policy associated with it (Helm, 2011). A good example of this uncertain

environment with regards to CO2 regulations is the current discussion on the future of

Page 18: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

18

carbon tax in Australia. Linked to environmental policies are the regulations related to

renewable targets that not only add complexity to the system but also increase risk due

to the variability of renewable resources. Unfortunately for energy planners and policy

makers, the electricity sector is a complex environment with several variables

determining its behaviour.

On the contrary, the transmission business is by its very nature a monopoly. In more

simple terms, there is no economical reason to have multiple companies providing the

same transportation service due to the infrastructure needed and the capital costs

associated with what is an economy of scale. Investment in this sector is thus

particularly regulated and associated assets are long-life, which create a more complex

investment environment than that of the generation sector.

2.2 Electrical Power Expansion Planning

The expansion planning for electrical power systems is a mathematical problem that

seeks the optimal combination of different electrical generators and transmission lines

according to a specific objective function. As with any optimization problem, its

formulation is linked to several constraints or requirements. These constraints are

associated with variables such as electricity demand, the limitations of generators,

transmission restrictions and the regulation of the country concerned as defined in the

study period.

Several authors agree on the complexity of the problem (Wu et al., 2006), as do de la

Torre et al. (2008) on its complexity associated with the non-lineal feature and the

uncertainties surrounding it. In the same work, it is argued that the manner in which the

problem has been addressed in the new environment has changed, mainly driven by the

fact that administration is in the hands of various different companies.

Page 19: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

19

The most common approach (or objective) applied to this type of optimization problem

is to minimize the investment and operation costs of different assets which integrate or

could be part of the power systems analysed (Wood and Wollenberg, 1984). This

approach was commonly taken in a regulated market where generation and transmission

of electricity were under the administration of the same company or organization. It

should be mentioned that the term optimization in this cost minimization approach

means focusing on the reduction of the outgoing cash flow (investment and operation

expenses) for a specific period of time where uncertainties should be taken into account

(Covarrubias, 1979).

It is certainly intuitive to try to formulate the objective function as a cost minimization

problem of which the elements of capital and operation costs are parts. However, de la

Torre et al. (2008) propose another approach where social welfare maximization is the

key objective. This work develops a mixed-integer linear programming for the long-

term transmission expansion problem in a pool-based market. One of the assumptions

made by the authors is that the transmission business is planned by an individual

organization. Nonetheless, as the electricity market is a competitive environment,

generators and loads are part of several companies. According to the definition used by

the authors, social welfare is equal to the surplus of demand plus the surplus of the

generator plus the merchandising surplus (total payments from the demand minus total

payments to the generators) minus the cost of investment in new lines.

Usually, the generation and transmission system are planned separately for different

reasons, and perhaps the main one is that different parties administrate theses

companies. However, in their proposal, Cedeño and Arora (2013) integrate both

systems into a model which expands the generation and transmission capacities over

three regions in deregulated power systems. Actually, the results from the model

Page 20: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

20

suggest that generation expansion is associated with the addition of more renewables to

the system.

2.2.1 Strategies for solving optimization problem in electric planning

2.2.1.1 Linear Programming

This method has been popular through the years due to the simplicity of the

mathematics behind it. The objective function seeks to minimize the costs and the

constraints which are connected to the technical and economic aspects and system

reliability. For example, according toVillasana et al. (1985), in order to solve the linear

problem a combination of DC flow and a transport problem is proposed. The solution

identifies where there is a lack of power generation capabilities, so new power capacity

and transmission assets are added.

Another alternative is proposed by testing all the possible combinations (node by node)

in order to choose the combination that best allows to avoid overload in the transmission

lines and a combination with lower generation costs (Kaltenbach et al., 1970). At the

end of the period of study, an optimum network configuration is obtained. However, the

drawback of the proposed method is the high computational time linked to the number

of combinations tested. This is because the computational time increases exponentially

due to the quantity of nodes analysed.

Linear programming has a main advantage in the simplicity of the mathematical

formulation. Nonetheless, despite the fact they are not obsolete, they require that the

decision variables must be restricted in order to avoid extensive computation

calculation. It should be mentioned that in this type of model, uncertainty can be

incorporated.

Page 21: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

21

2.2.1.2 Dynamic programming

A similar method to a finite sequential Markov process in time is described by

Dusonchet and El-Abiad (1973). The main idea is a dynamic discrete optimization

combined with a deterministic searching procedure linked to probabilistic dynamic

programming and the use of heuristic criteria. This method is designed to take

advantage of any information known about the problem while performing probabilistic

analysis of the occurrence of different events. The main drawback of this method is the

use of fixed probabilities for the events, which ideally should be variable.

2.2.1.3 Heuristic method

Heuristic methods are an alternative to the classical optimization approach. The term

heuristic is used to describe techniques that find local solutions to the optimization

problem. This means that they solve or evaluate step by step, evaluating and choosing

expansion options. In order to perform this process, they applied logic, empirical or

sensitive guidance. The use of this technique is attractive because of its lesser

computational effort in comparison with the classical approach. However, is not

possible to guarantee that a global solution can be found (Serrano et al., 2005).

2.2.2 Expansion planning uncertainties

In either a generation or transmission expansion problem, uncertainties are key aspects

in the evaluation and results of the models and how uncertainties in an optimization

problem are treated is not a trivial aspect. The method used to model uncertainty has

been approached with different techniques in the transmission planning problem. A

generation expansion problem tries to answer the questions of why, where, what and

when specific generators will be built or retired. Indeed, the evaluation of uncertainties

is an important aspect, and this is especially so with stochastic variables such as demand

or weather patterns. Jin et al. (2011) addressed uncertainties related to demand and fuel

Page 22: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

22

prices with a two-stage stochastic mixed-integer program. Likewise, the objective

function uses the minimization approach. However, the expected cost and the risk of the

investment are the focus, while the stochastic approach is taken for treating

uncertainties in relation to gas prices and demand for electricity.

2.3 Co-optimization of gas and electricity transmission expansion planning

There is a growing tendency to bring together both systems and to obtain an optimal

solution from both an operation and planning perspective. Geidl and Andersson (2007)

developed a novel approach with the concept of energy carriers. The novelty of this

work was related to the bringing together of three types of energies-electricity, gas and

district heating- and optimally dispatching them. Through this approach, dispatch and

optimal flow problems are solved in order to obtain an optimal solution. Despite the fact

that it is a novel approach, the extension of the area addressed by the study is compact

with the proposed area in this study, the National Electricity Market (NEM).

With Bakken et al. (2007) a novel optimization approach takes also considers the

concept of energy carriers addressing the interaction between different energy

structures. The optimal problem is defined by taking multiple energy infrastructures and

capital cost of the different generation alternatives into account. However, the model

developed is again uncomplicated because it does not address an extensive area and thus

the computational time would be short.

In recent years, due to global warming and breakthroughs in generation and gas

extraction technologies, the relation between gas and electricity in transmission

planning has become stronger. This development requires new energy planning tools

that must consider the construction of new gas pipelines and compute natural gas prices

linked to the behaviour of the price in the entire sector.

Page 23: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

23

According to Chaudry et al. (2008), over the next decades it is predicted that natural gas

will be the fastest growing fossil fuel in use, with growth being driven mostly by

electricity demand from the generation sector. Of all fossil fuels, gas has the lowest

carbon content in its combustion (Shahidehpour et al., 2005). Furthermore, open cycle

gas power plants usually act as a back-up system for renewable generation due to their

high flexibility in turning on/off their electricity generation. In addition, close cycle gas

power plants boast the greatest efficiency among fossil fuel power plants. Rubio et al.

(2008) describe a detailed survey on the relation between gas and electricity systems,

highlighting the paramount importance of the integration of the gas system into the

power system operation.

Environmental and economic reasons have definitely encouraged these novel

approaches, especially for the advantages that electricity generation using gas has in

comparison with other fossil fuels. , and Several of the advantages that gas power plants

have over other plants make these types of plants good candidates in a low carbon

economy (Owen, 2011).

An integrated approach has been suggested by Unsihuay-Vila et al. (2010) where the

formulation of the expansion problem takes into account both systems. The authors’

approach is the use of a mixed integer linear model for the long-term planning. In order

to validate this model, a case study from Brazil is presented where the minimization of

capital and operation costs is used as the objective function. It is worth mentioning that

the model includes strong interaction between hydro and thermal plants. Another

interesting observation made by the authors is related to the link between both systems

(electric and gas) where they explicitly stated that this connection is made by the gas

power plants. They conclude that the model proposed, called the GP model (Long-term

multi-area expansion plan of natural gas systems), has been integrated into another

Page 24: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

24

model resulting from the GEP model (Long-term, multi-area expansion plan of

electricity and natural gas systems). In addition, the importance of natural gas when

hydro power is considered is linked to the complementary role of gas power plants in

order to mitigate the risks derived from water inflow uncertainties. The obvious result,

but no less important, is that the integral gas/electricity expansion planning results in

cheaper costs when compared to the disaggregated option. The authors propose the

resulting conclusion as an indicative valuating point to be taken into account in a

market-oriented environment. Integrated planning is able to strategically contemplate

both sectors in terms of operational and economical relations.

The interdependencies between electricity and gas market have been researched by

Lienert and Lochner (2012). The authors acknowledge the importance of the

relationship between gas and electricity in developing and evaluating a model for

electricity investment and dispatch integrated with the natural gas market dispatch. They

conclude that the competitiveness of gas-fired power stations has been determined by

seasonal gas prices. In order to support this argument, they performed simultaneous

analysis on other technologies. Accordingly, they point out that if seasonal gas prices

appear, gas-fired power plants should be built near the natural gas sources. In addition,

it highlights the importance of evaluating different paths for the transportation of

energy, either through transmission lines or gas transmission pipelines defining the

relocation of gas-fired power plants. According to the scenarios analysed in this paper,

it is better to transport electricity instead of gas. However, there is a contradiction with

the paradigm regarding the construction generator associated with renewable energy.

This is because the planner has the option of choosing where the gas power plant will be

located. On the contrary, in the case of renewable energies, the location of the

generation facilities is defined by the availability of the renewable source. Linked to this

Page 25: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

25

argument is the fact that one of the main drawbacks of renewable energies facilities is

their location in relation to the demand zone.

The interrelation between gas and electric systems is also examined by Li et al. (2008).

It should be mentioned that the approach of this work is addressed from the operational

framework of a power system not taking into account the expansion planning in its

research proposal. The integrated model incorporates the natural gas network

constraints into the optimal solution of security-constrained unit commitment. The

outcome is a consolidated model which seeks to increase the system security.

Nonetheless, Li et al. (2008) have proved that the interrelation between both systems

could directly impact an electrical system in its economics and security. For instance the

gas price market would impact the cost of the electricity supply. Furthermore, a an

interruption to supply in pipelines could directly affect the power system if they are

connected to a gas-fired power plant. Although this is true, it is also true that pipeline

capacity can act, as a battery system which would smooth a sudden lack of supply from

the gas facility, similar to as in an electrical environment.

A qualitative and descriptive analysis is performed by Unsihuay et al. (2007). They

argued that most of the time, the generation expansion models consider a detailed

representation of the power system, but do not consider the integration with production,

storage and transportation of the natural gas industry. This paper proposes a method that

integrates the natural gas and electricity systems in which the objective is co-

optimisation expansion. A mathematical model of this problem is formulated as a

multistage mixed optimization problem where the objective function is to minimize the

integrated gas-electricity investment and operation costs. The referenced work provides

the reader with an accurate description of the equations associated with natural gas

wells and pipelines.

Page 26: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

26

As previously mentioned, the integration of gas networks in the power expansion

planning would guide policies through a sustainable path. Unsihuay-Vila et al. (2011)

develop a model where three objectives are formulated: investment and operational

costs minimization which includes costs management on the demand side as well as the

cost of investment in carbon capture technology projects, minimization of greenhouse

emission from power generation plants and finally, maximization of supply security

based on the diversity of primary resources including energy imports. In the literature,

this approach is categorized as a multi-area, multi-objective and multi-stage model.

The evolution of computational systems has helped to address more complex problems

that include uncertainties due to stochastic variables. In Jin et al. (2011) the expansion

problem over the area of the Midwest USA is addressed. In this paper, both systems gas

and electricity are gathered in order to obtain the optimal solution of the planning cost

function. The problem is solved in two stages as a stochastic mixed-integer. The

importance of a stochastic approach is fundamental in treating uncertainties in fuel

prices and demand patterns. It should also be mentioned that uncertainties related to

environmental taxes are not taken into account.

Also worthy of mention is the importance in including a stochastic approach that is not

only related to uncertainties associated with carbon tax, fuel prices or even electricity

demand. The importance of including a stochastic approach in an expansion planning

solution is related to the characteristic of certain renewable energies that are determined

by weather patterns such as hydro, wind and solar. For instance, in Unsihuay-Vila et al.

(2010) they analysed the planning in the Brazilian scenario with a stochastic approach

due to the influence of hydro and wind power plants.

Page 27: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

27

3 Gas and Electricity Modelling for the Expansion Co-Optimisation

Planning

3.1 Introduction to Electricity and Gas System Modelling

The abundance of natural resources and their consumption define the economic growth

of a country and hence the well being of it. Energy is a key factor for the society’s

development, though in some countries can be limited due to natural or imposed

restrictions. It worth to mention that by definition, natural resources are limited which

implies the existence of regulations and policies behind the management of them.

Energy policies are designed and implemented in order to achieve a specific objective

which is usually aligned with the society’s welfare of a country. Certainly, the

elaboration of them is a long and complex process which includes several stages.

Among them and especially in the energy sector, mathematical modelling is a key

element in the efficient implementation of a specific policy. Through mathematical

modelling, several scenarios and strategies can be analysed in order to achieve a desired

simulated outcome.

The evolution of the energy markets has increased the necessity to use complex models

to achieve a more accurate and deep approach (Foley et al., 2010, Wallace and Fleten,

2003). There are two main factors that determine this new elaborate environment:

competition and uncertainties (Stoft, 2002). Liberalized markets are intrinsically riskier

than regulated, linked to the fact of lack of information and interaction among

participants. In relation to uncertainties, basically there are three main uncertain

elements that add complexities to an energy environment: fuel price, energy

Page 28: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

28

consumption patterns and finally the introduction of intermittent2 renewables energies

such as wind and solar.

Among the diversity of models that can be modelled in the area of energy, especially in

the electricity sector there are two types of approach. The first one is closed to the

behaviour of the network from the point of view of dynamics of electrical systems. In

this context several studies are related, for example: short-circuit analysis, behaviour of

electrical harmonics in the system, transient patterns of power systems and finally

power flow analysis. Mathematical models linked to those studies are not included in

this report3 due to the complexities mathematics associated to it (Grainger and

Stevenson, 1994).

The second approach is associated with the operation and economics of power systems

(Wood et al., 2014, Kirschen and Strbac, 2004). That is to satisfy energy demand taking

into account aspects such as: reliability, infrastructure, renewable energies, and

stochastic elements. For the context of this chapter, the following models will be

described from the optimization approach mentioned where variables of heat rate,

starting cost maintenance scheduled and investment projects are important.

The aim of Chapter 3 is to provide the reader with the methodology behind the

construction of the model for the Australian Electricity and Gas system. The stages of

the power system planning are presented in section 3.2 which defines some of the

milestones described in this thesis. The importance of section 3.2 and 3.3 are linked to

the basic understanding of the mathematics behind a power system optimisation

2 The term intermittent is associated with the unpredictable characteristic of weather

conditions. 3 However a brief explanation of DC power flow is included due to the importance

associated with the dispatch and transmission process.

Page 29: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

29

problem which is the case of the present work. Section 3.5 and 3.6 described the two

systems that will be modelled and coupled in this paper.

3.2 Steps in a Power System Planning

The tools and methodologies associated with power system planning have changed

dramatically over the years, influenced by uncertainties, competition and improvements

in computer calculation. Nonetheless, the basic steps for this process have been

maintained and can be summarized (Covarrubias, 1979) :

a) The use of demand forecasting with projections over periods of 5-30 years. In

these projections there are two key elements: peak and annual demand. Energy

planning must take both elements into account in order to maintain system

reliability and security.

b) Analysis of the different alternatives to supplying the energy demand in the

evaluation period. This analysis includes environmental, technical and economic

constraints.

c) Analysis of current generation units from a technical and economic framework.

The objective of this analysis is related to choosing which generating candidates

are appropriate from the expansion point of view. In addition, this analysis also

includes which unit will be retired. It should be noted that the economic analysis

must include long and short term cost and also construction times.

d) Compilation and determination of technical information regarding assets

involved in expansion planning.

e) Determination of the economic and technical parameters which affect

investment: discount rate, level or reliability required from the generating

systems.

Page 30: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

30

f) Determination of the procedure which will be used for determining the optimal

expansion strategy within the imposed constraints over the period of analysis.

g) Qualitative revision of the results with the aim of confirming the viability of the

answer obtained.

The milestones mentioned are fundamental steps in order to build an energy expansion

planning. Some of them explicitly and implicitly are performed by the optimisation

software’s and even by energy planners.

3.3 A brief introduction to DC Load Flow

The present paper deals with power system analysis from the economic point of view of

the system. However, the physical constraints associated to assets of the network follow

physical laws such as the Kirchhoff’s Law. In addition, most of the elements of the

NEM are Alternating Current (AC) assets. However, to deal with optimisation problems

the most suitable and common approach used in the academia is to assume that the

power system is a Direct Current system (DC). For that reason the present section will

briefly discuss this simplistic approach which is used by the software utilized in this

report.

The DC load flow model provides approximate but simple relationships between

generation and demand levels at the buses and real power flows through the lines

(Wood et al., 2014). These relationships yield explicit formulas giving the marginal

impact on network losses or specific line flows from incremental changes in demand or

generation at some bus of the network.

The DC load flow provides an approximate solution for a network carrying AC

(alternating current) power. The term “DC” comes from an old method of computing a

Page 31: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

31

solution using an “analog computer” built out of resistors and batteries where direct

currents were measured.

3.3.1 Transmission Line Modelling

Consider a balanced three-phase transmission line between two buses (or nodes) of a

network. Assume at Bus j and Bus k the “a” phase voltages are respectively

( ) ( 4 ) ( 3-1)

( ) ( ) ( 3-2)

with phases “b” and “c” shifted in place by 120° and 240°.

Let’s define Real power leaving Bus j and Real power leaving Bus j and flowing

towards Bus k (may be + or -). Then:

( 3-3)

Where the summation is over all buses connected to Bus j. Qj and Qjk are defined

similarly representing the imaginary or reactive power.

Assume line i connects Bus j to Bus k. The equation that relates Pjk to the voltage

magnitudes Vj, Vk and voltages phases , and the characteristics of line i is

( ) ( )

( 3-4)

4 : Voltage phase angle at Bus j, has been introduced to denote the fact that the phases

of the voltage sine waves vary with location on the network. The voltage magnitude and

angles vary continuously between buses.

Page 32: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

32

Ri: Resistance of Line i

Xi: Reactance of Line i

In order simplified the equation ( 3-5) the following assumptions need to be done. The

first assumption is related to the difference between ( ). The angle’s difference in

high-voltage systems is negligible which implies that

( )

( ) ( )

( 3-6)

In a per unit system (high voltage rating), Vj and Vk then equation ( 3-7)

reduces to:

( ) ( 3-8)

3.3.2 Losses on a Line

Define Li to be the real power losses on line i. By definition is

( 3-9)

Using equation ( 3-10)

(

( )) ( 3-11)

Keeping the assumption of high power systems where the difference ( ) is small

and using the second order term of the approximation in ( 3-4):

( ) ( )

( 3-12)

Assuming a per unit system:

Page 33: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

33

( ) ( 3-13)

If Xi> Ri that yields with Li=Ri*PJK. This result provides an acceptable assumption for

high voltage systems which allows achieving a lower complexity in the optimization

formulation, hence the computational timing for solving the problem.

3.4 A brief introduction to Optimisation

The present paper deals with the problem of Energy Expansion Problem in the

Australian context. In the academic literature, capacity and transmission expansion

problems are grouped together as optimisation problems. Therefore, in order to

introduce the problem addressed in this paper, a brief introduction of mathematical

optimisation is included in this section.

An optimisation problem is mainly composed of two parts: an objective function and

restrictions (or constraints). The objective function can be easily identified because it is

a mathematical equation that can be minimized or maximized depending on the problem

which will be solved.

The canonical expression for an optimum problem is:

( 3-14)

( 3-15)

In order to keep this section brief, linear programming will be described. Linear

programming is a technique that deals with linear problems (objective function) and

which is subject to linear equality and linear inequality constraints.

The objective function for the canonical expression is described by the equation ( 3-14)

. The objective of the linear programme is to maximize (or minimize) this objective

function composed by the vector X determined by the transposed matrix C. The second

Page 34: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

34

part of an optimization problem is described by the equation ( 3-15) which sets the

restrictions or constraints in relation to the problem to be solved5. In mathematical terms

equation ( 3-15) defines the feasible area where the optimisation problem will be

allocated.

3.5 The National Electricity Market (NEM)

The National Electricity Market (NEM) is one of the longest worldwide interconnected

system with an extension of approximately 4500 Km (AER, 2013b). Until 1997,

electricity in Australia was supply by state-owned companies with minimal interactions

between states (Weron, 2007). The system commenced its operation in 1998, working

as a wholesale market supplying electricity to the states of Queensland, South Australia,

Victoria, Australian Capital Territory and New South Wales. In 2005 the state of

Tasmania was included in the system.

The NEM begins in Port Douglas in the State of Queensland and it extends as far as

Port Lincoln in South Australia. According to Falk and Settle (2011), structures linked

with the Australian power system are expensive owing to the low levels of population

density. Electricity demand is the main driver for investments in this sector (AEMO,

2012c) determining electricity forecasting and location of future generation and

transmission assets. Currently, the market includes six jurisdictions which are

interconnected by transmission networks. Every year, electricity transactions in the

NEM exceeds $10 billion to meet electricity demand supplying electricity to eight

million customers (AEMO, 2010).

One of the main characteristic of the NEM is its extension, which is reflected by two

aspects: geographical location of electricity generator and load centres; and the

5 The region defined by the constraints is said to be the feasible region for the

independent variables. If the constraints

Page 35: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

35

interconnection between the five regions of the NEM. The NEM depends on the

regional transmission interconnectors for transaction of the vast bulk of electricity to its

end use consumers (AEMO, 2010). Every state in the NEM is connected through

regional transmission interconnectors, which are characterized by high voltage and

power ratings. These interconnectors are the backbone of electricity trading in the NEM

due to their transportation role when one demand’s state requires energy from another

state. The transaction is performed if the price in the region lacking in electricity is

equal or greater than the price of production and transportation from the export region.

The presence of these interconnectors makes inter-regional electricity trade possible and

hence contributes to the increased supply reliability in the NEM.

3.5.1 The Wholesale Market

The introduction of competition in the electricity sector has created profound changes,

which have determined how electricity is traded today. In a deregulated system such as

the Australian one, electricity is pooled as it flows from generators and supplies to

loads. This means that suppliers and consumers trade electricity in a virtual market

managed for the Australian Market Operator. This virtual markets are known as

electricity pools (Kirschen and Strbac, 2004).

The NEM is an energy wholesale market having a gross pool model where transactions

are performed ex-ante. The predominant costumers are energy retailers which bundle

electricity to residential, commercial and industry energy users. Demand and supply are

matched immediately in real time through a centrally-coordinated dispatch process. The

market operator (AEMO) manages the dispatch6 process taking into account physical

6 An brief explanation of the Lagrange multiplier is done in Appendix A. This

coefficient is the basis to understand how the dispatch process is performed.

Page 36: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

36

system restrictions (transmission and generation), of which the most important is to

match electricity demand with supply. In addition, not all generators have to trade in the

NEM, but it is mandatory for those with a capacity over 30 MW to trade in it. Biddings

are performed every five minutes by generators, offering a specific quantity of

electricity associated with its respective price.

The dispatch process is managed by the AEMO7 which is also the system operator (SO).

When the bidding stage has been performed by generators, the system operator ranks

them from the lowest to highest value and then it dispatches the generation units which

have the minimum cost to supply electricity to match demand. The dispatch price or

clearing price8 corresponds to the price of the last unit dispatched (Kirschen and Strbac,

2004). This price is the same for each unit dispatched which at first may seem odd, but

it has key implications in relation to the market efficiency. For example, if the clearing

price would not be the same for all the dispatched units, some generators would try to

bid high in order to obtain more revenues. The problem with this approach is linked to

an error in the price estimation, i.e. if these units have low marginal costs, but their bids

are highly mismatched with the real price, they could be out of the dispatch process

which implies that the real dispatch price would be higher due to the most economical

units being outside it. The spot price of electricity is generated every 30 minutes taking

into consideration the average price of the six clearing prices (Weron, 2007). AEMO

uses the spot price to define the settlements for transactions in relation to energy traded

in the NEM.

7 According to regulations provided in the National Energy Law

8 It is also called the System Marginal Price (SMP)

Page 37: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

37

As previously mentioned, Australia operates an energy9 only market which yields

compensation for both variable and fixed costs. Actually, as the Australia experience

has shown, an energy market provides clear signals for investments through energy

spikes. One of the best examples among the cases in Australia is that if the state of

South Australia. Air-conditioning has determined and modified the peak demand of this

state which is why South Australia has a “peaky” shape of electricity demand. In the

beginning of the wholesale market (1999-2000), the NEM spot price for South Australia

repeatedly reached the 5000 AUD/MWh price cap during peak hours due to high

temperatures in summer. Because of this fact, the government decided to increase the

cap to 10000 AUD/MWh, which provides notorious signals to investors for new

generation project due to the new safe and reliable environment created with the raising

of the ceiling price. Thus, the installed capacity has grown by almost 50% in the period

1998-2003, of which an important part corresponded to open cycle gas turbines which

are used for peaking purposes (Weron, 2007).

The structure of the market certainly defines how much faster new generation

investment would be committed. The idea behind an energy-only market is to provide

9 There has a lot of discussion about which market design provides optimal signal for

investment. According to Weron (2007) the debate is between three main designs: to

establish capacity payments, organize markets and a energy only market. The basis

behind a capacity market, which was first introduced in Chile 1982, is to pay generator

a daily proportion which is proportional to the reliability that this generator provides to

the power system, for instance its availability. Despite of this interesting approach,

international experience has shown that this design gives little incentives to solve

capacity investment. For example, generators in order to receive more revenues in

relation to capacity payments would try to reduce the capacity instead to increase it.

Page 38: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

38

compensation for both variable and fixed costs. Price spikes provide strong and direct

feedback to investors in relation to new electricity generation assets (Newham, 2008).

Those signals came from the spot market in periods of high short-term electricity

providing suppliers and retailers to possibly sign long-term contracts with the aim of

supporting new investment in power generation (Galetovic et al., 2013). Australia

differs from other countries in its lack of capacity payments instruments which certainly

provide softer signals to go ahead with investments (Galetovic et al., 2013).

3.5.2 Transmission Congestion

As it was mentioned previously, AEMO selects the bids and offers that optimally clear

the market whilst ensuring that security constrains imposed by the transmission network

are fulfilled. An important aspect of the electricity market is the transport of electricity

from the source to the demand zone through transmission networks. Congestion10

is

generated when elements of the network reach their limit and are not capable to

transport more energy (AEMC).

The price that consumers and producers pay or are paid is the same for all participants

connected to the same node. For example in Figure 3-1 Flows across the network

(AEMC)Figure 3-1 a simple network is depicted with three nodes. In node A, a generator

is connected in order to supply electricity to consumers connected in node C. In order to

explain the congestion phenomenon, an infinity capacity of the line is assumed and

losses are not included in the calculation. The price to generate electricity in node A is

equal to marginal cost of the last MWh produced by the generator. Because the network

depicted has infinite capacity, congestion is not present; hence the cost paid by the

10

Congestion is a phenomenon that could occur in any sector associated with to

transport.

Page 39: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

39

consumer will be equal to the marginal cost of the generator. Therefore, the lack of

transmission congestion results in a unique market clearing price for the entire system.

As can be observed in Figure 3-1, electricity can go through node C by two paths. If the

shorter path is constrained and demand of electricity has not been supplied, another path

has to be used in order to deliver the commodity. When congestion is present, the price

of electricity for the consumer is composed by the value at the generator’s node and the

cost to transport electricity to the node C (Kirschen and Strbac, 2004).

Figure 3-1 Flows across the network (AEMC)

A congested element implies that electricity in this point has reached its maximum

transportation quantity. This definition is usually related to the security point of view.

Congestion could affect the price of electricity supplied because another generator or

path should be used for satisfied demand, which implies a more expensive alternative to

the former. As a matter of fact, because of this aspect the price of electricity in

Australia varies from state to state11

.

11

This a very simplified explanation and other aspects must be taken into account.

Page 40: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

40

The question about congestion is whether it is a good thing or bad thing for the efficient

performance of the market. Congestion affects economically generators and retailers

because creates risks. Moreover, it affects the efficiency of the network. However, from

an investment point of view, it provides a clear signal for transmission investment

where the opportunity cost of having a constrained network is evaluated against the

benefits of future transactions in unconstrained network.

The presence of congestion means that the locational marginal price or the zonal market

clearing price might be employed (Weron, 2007). The first method is the addition of

the generation marginal cost, transmission cost and cost of marginal losses. This amount

can vary for different nodes and even for busses within local area. Nodal price is the

best example of this method where the electricity prices are valued according to the

place where it is generated and supplied. Despite the simplicity of the description, this

method leads to higher transaction costs and complexity. On the contrary, zonal price

defines the value for nodes within the zone and obviously different price for different

zone. Certainly the latter system has fewer complexities than nodal prices, though

phenomenon like negatives prices can appear. The Australian system uses zonal prices

rather locational pricing.

3.5.3 Electricity Demand

An important part of the capacity and transmission expansion problem is the estimation

of the electricity demand over the period analysed. This is not a trivial task, due to the

fact that this equation is one of the restrictions of the optimization problem described in

equation (4-2), which can determined the answer to the optimisation problem.

Electricity supply must match with the electricity demand. However there are two

aspects that complicate this process. First, as mentioned, the dispatch process is

Page 41: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

41

performed before the electricity has been consumed. Second, the electricity demand

usually grows in time which implies new generation assets will be built. Therefore, a

forecasting of the electricity demand must be made. In the case of the expansion

problem, as the consumption of electricity in forthcoming years is unknown, forecasting

is performed by AEMO in order to decide whether to support investment decisions in

relation to the quantities of generators have to be built or retired. Forecasting is key task

in energy planning.

For the purpose of this paper, the forecasting in shown Figure 5-8 will be used. It was

built with data informed by Australian Electricity Market Operator.

3.5.4 Generators

The cost of electricity generation is based on three aspects:

1. The fuel cost used for electricity generation.

2. The efficiency of the generation process, which is defined by the type of

technology used.

3. The maintenance cost of the plant.

3.5.4.1 Thermal Power Plants

Through the years the problem of economic dispatch for thermal systems has been

solved by numerous mathematical methods. However, it is still a growing area in

electrical planning due to computational calculations improvements (Wood and

Wollenberg, 1984). Nowadays, environmental regulations have defined new constraints

for thermal dispatch, where the objective function has been focused in minimizing the

quantity of pollutants into the environment and also the cost of dispatch.

Thermal Power Plants are supplied by fossil fuels: gas, oil and coal. Each of these units

has their own input-output curves which describe the amount of fuel required to produce

Page 42: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

42

and give constant power output for one hour Figure 3-2. Because these curves represent

the consumption of the fuel used to generate electricity, they are a key element in order

to model the electricity market and its interaction with the gas supply chain.

It could be argued that the most popular thermal generation is the steam unit. Basically

this technology is composed by three elements: a boiler, a turbine and a generator. In

the boiler, steam is produced which is used to drive a turbine couple to an electrical

generator. Usually, these generators are categorized as synchronic induction machines

due to the rotor frequency are proportional to the electrical frequency of the grid. It

worth to mention that a steam unit supply electricity to the grid and also the auxiliary

system consuming between 2-6% of the electrical gross output (Wood et al., 2014). A

common figure for the efficiency of these units is around 30% and 35% which is

equivalent to heat rates of 11,4 Btu/kWh and 9,8 Btu/kWh12

.

12

A kWh has a thermal equivalence of approximately 3412 Btu.

Page 43: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

43

13

Figure 3-2 Input-output curve of a steam unit (Wood et al., 2014)

The second types of thermal plants are the combustion units or also known as gas

turbines. The combustion process through hot gases drives an electrical generator (also

synchronic) to generate electricity. These units are grouped in open cycle and closed

cycle. The main difference of these two types of units is related to their efficiencies and

starting time.

Due to the intermittency of renewables, Open Cycle Power Plants (OCPP) are used as

back-up systems to supply electricity when for instance wind is not blowing. Because of

the high flexibility of their process, OCPPs are able to stop the electricity process

according to the demand requirements and renewable source availability. Mention

should also be made to the high energy efficiency process of Combined Cycle Power

Plants (CCPP). Among all the process of electricity generation using fossil fuel, CCPP

has the highest efficiency to transform mechanical energy into electricity. In addition, a

13

The resolution of optimisation problems are determined for the type of curve

modelled. From the point of view of complexity and computing timing, it is better to

have a smooth and convex curve.

Page 44: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

44

key factor in favour of gas power plants is linked to its modular and compact which

enables them to increase their installed capacity in relation to electricity demand (Owen,

2011).

For the purpose of the model used in this paper, a common practice was used to model

combined and open-cycle plant as conventional steam units for new generation

candidates in the expansion planning process. Due to the features mentioned in the

above paragraph OCGT plants are used to shape the demand and are grouped as peaking

power plants.

The calculation of the generation costs is performed in $/MWh units, which is called in

the academic literature short-run marginal cost or SRMC (Kirschen and Strbac, 2004).

Using the value of the Heat Rate14

(GJ/MWh) and the cost of fuel, the electricity

generation costs is obtained.

Generation costs can be categorized as:

1. Operation and maintenance costs

2. Stating and Shut down costs

3. Cost of the auxiliary system

4. Cost of debt and equity

3.5.4.2 Renewables Energies (Wind and Solar Technologies)

Wind and solar generation share a common property: intermittency. This concept

involves two unrelated aspects: non-controllable variability and partial unpredictability

(Pérez-Arriaga & Batlle, To appear). Generated electricity has to be consumed owing to

it can be stored economically. Electricity consumption is variable through time.

Therefore, electricity generation is variable as well. However, in fossil fuel generation,

14

The heat rate is the inverse of efficiency of the process

Page 45: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

45

it can be forecasted to a certain point. Linking to this argument is the pattern of

intermittency for renewable energies. Due to weather condition and complex

mathematic models, wind and solar generation would be more difficult to forecast in

comparison with fossil fuel generation. The key point to note is that the non-controllable

variability means that a generator could be unavailable when is demanded due to

consumption. Hence the non-controllable variability from green energies will be higher

than conventional fossil fuel generation.

Wind is generated indirectly by the action of the Sun which heats the surface of the

Earth. This process will produce flows of warm air which will rise resulting in vertical

and horizontal air currents. The wind velocity is determined by the sun, land surface and

season. Thereby, electricity generation through wind could be highly variable in a

specific area. Linking to this argument, forecasting generation is more complex than the

usual prediction made for conventional fossil fuel generators.

Electricity generation using directly the Sun is determined by sun exposition and

seasonal patterns. The lack of an electrical generator, hence inertia, makes solar

photovoltaic system highly sensitive to cloudy phenomenon, resulting in an important

diminishing of output power in a PV system. Despite this fact, the predictability of PV

solar systems is higher than wind energy generation due to certainty of weather

prediction.

3.6 The Australian South Eastern Gas Network

3.6.1 Overview of the South Eastern Gas System

Government reforms to the gas sector in the 1990s led to structural reform and

significant changes in ownership (Verikios and Zhang, 2011). In particular, vertically

integrated gas utilities were disaggregated and most government-owned transmission

Page 46: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

46

pipelines were privatised. Additional modifications related to these changes have

improved competition in the Australian gas sector.

Among the most modified states has been Victoria, where the gas distribution and retail

business are managed by the private sector. In addition, the establishment of a spot

market has formally created an environment for transactions. Certainly, the

improvement of the infrastructure for gas transportation has supported the establishment

of an official market. For that reason, the interconnection with the Moomba to Sydney

pipelines (MSP) at Culcairn and the construction of the Iona Gas Plant and storage

facilities near Port Campbell have helped to increase the market efficiency.

Several infrastructures have helped to interconnect and increase the number of

consumers (and competition), including the construction of the Eastern Gas pipeline to

provide natural gas to Tasmania in 2002, the development of the Otway and Bass basins

and finally, the construction of the Sea Gas Pipeline (SEA Gas) connection with the

Iona Gas Plant in Victoria to Adelaide in 2004.

Not only appropriate infrastructures necessary are to increase competition, so too are

higher numbers of gas suppliers and reserves. The development of unconventional

reserves such as coal-seam and shale gas has helped to bring about more alternatives for

supplying gas in the forthcoming years. The Queensland Gas Scheme in 2005 has had

an important part to play in stimulating the development of CSM reserves. This scheme

has been replaced by the carbon tax.

An abundance of coal seam gas reserves and the prospect of higher margins selling

LNG into the Asian market have led to the establishment of an LNG export industry

comprising of 3 committed projects on Curtis Island near Gladstone.

Page 47: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

47

This section will describe the gas model developed by the South Eastern Gas systems in

PLEXOS. It also will provide a description of the Southern Eastern Gas System. This

description will include the main pipelines, basins and the new LNG project on Curtis

Island. Moreover, as any energy system model such as the gas one needs a consumption

profile, this section will describe how a gas demand profile was built for the demand

zones described in this model.

To clarify for the reader, the described model is not a model of the dynamics of the gas

process. That is, the present model will describe the supply chain process where the

final product is gas delivered to a demand point (gas node). In fact, the final price

depicted in the results section has been generated by the cost of all stages in the gas

supply chain.

3.6.2 Gas Basins

A basin is defined as a depression, usually of considerable size, which may be erosional

or structural in origin (Allaby, 2008). It should be mentioned that the modelling

addressed in this report is not from the perspective of basic dynamics, known commonly

as basin modelling.

Page 48: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

48

Figure 3-3: Locations of Australian’s gas resources and two potential gas basins. Source: (Industry

and Resources, 2013)

The main features modelled are:

Production per day

Initial volume

End volume

For the context of the paper, the following basins were taken into account: Bass,

Bowen/Surat, Cooper-Eromanga, Gippsland, Gunnedah, Otway, Galilee, Moranbah,

Clarence-Moreton, Gloucester, Sydney and Cooper (shale gas). Gas reserves are

reported under the Petroleum Resource Management System as proven (1P-90%

certainty of an economic resource), proven plus probable (2P – 50% certainty of an

economic resource) and proven plus probable plus possible (3P-10% certainly of an

Page 49: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

49

economic resource). For the purpose of this paper 2P reserves were considered as 100%

of certainty in the evaluation of the basins mentioned. Moreover, 3p reserves were also

included in the analysis, however due to the high price associated with this type of

reserves; the optimal answer with the respective scenarios modelled did not include the

use of these types of reserves.

In Annex 3 – Data used for the Gas Model (IES, 2013, SKM, 2013)the data used for the gas

basin modelling can be found. In addition, it was assumed for the purposes of this report

that gas fields are named using the associated basin where they are located. The only

category used is related to the type of reserve: conventional or non-conventional.

3.6.3 Pipelines

The gas transmission pipeline’s structure is similar to the electricity’s. The gas

transmission sector is characterised by features associated with a monopoly due to its

capital intensity and a decrease in the marginal cost as the quantity of gas transmitted

increases.

The extension of the Australian gas transmission network is about 20,000 Km (AER,

2013a). These types of structures have wide diameters and operate at high pressure

values with the aim of optimising shipping capacity. Gas is transported from upstream

producers to energy consumers located in major demand centres or hubs through

pipelines. For the purpose of the present report, only transmission gas pipelines are

covered. The model developed in this paper assumed that the major demand zones are

located in: Gladstone, Brisbane, Mt. Isa, Adelaide, Melbourne, Sydney and Tasmania.

Regulatory changes in the market structure have allowed Australia’s gas pipelines to be

privately- owned (Table 3-1 Major Gas Pipelines Summary (Bulletin, 2013)). The main

owner of these structures is the APA Group which has stakes in the distribution and

Page 50: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

50

transmission sector. In addition, State Grid Corporation of China and Singapore Power

International also have stakes through the companies Jemena and SP AusNet.

Competition has been supported by investment over the last years, creating an

interconnected gas network in the south-eastern part of Australia. Most of the

investment in the transmission network has been driven by two factors: new supply

sources and the increment of supply security. The result is an interconnected pipeline

network covering Queensland, New South Wales, Victoria, South Australia, Tasmania

and the Australian Capital Territory. Gas is obtained from the closest point of

distribution. Nonetheless, interconnection of the large pipelines has allowed the increase

of the number of transaction, thus facilitating competition in the market. The

development of unconventional reserves and the integration of them into the network

have diversified the options for gas supply. Certainly, this diversification would benefit

the final consumer by allowing a competitive price for the commodity, driven by a

competitive environment and appropriate structures for its transportation.

The pipeline sector is under the jurisdiction of the Australian Energy Regulator where

the regulatory structure is defined by the National Gas Law and Rules. There are two

elements that determine the regulation in the gas sector: competition and significance

criteria (AER, 2013a). The type of regulation applied to different pipelines can be

categorized as: full and light regulation.

In full regulation, the regulator has to approve an access arrangement submitted by the

pipeline provider. The function of an access arrangement is to set out terms and

conditions under which third parties can use a pipeline. This agreement has to stipulate

one reference service that a significant part of the market is likely to seek and a

reference tariff for the service.

Page 51: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

51

On the other hand light regulation means that the pipeline provider must publish access

prices and other terms and conditions on its website. Among the gas pipelines in eastern

Australia that are covered by light regulation are: the Carpentaria Gas Pipeline in

Queensland, the covered portions of the Moomba to Sydney Pipeline and the Central

West Pipeline in New South Wales. No distribution network is currently subject to light

regulation.

Table 4 in Appendix 3 details the characteristic of the pipelines addressed in this study.

Table 3-1 Major Gas Pipelines Summary (Bulletin, 2013)

Pipeline name Owner Regulation Capacity factor

(2011-2013)

Capacity (TJ/day)

Queensland Gas

Pipeline

Jemena None 83% 142

Carpentaria APA Light 84% 119

Roma – Brisbane

Pipeline

APA Full 73% 240

South West

Queensland Pipeline

APA None 32% 385

Moomba to Sydney

Pipeline System

APA Light 39% 439

Moomba to

Adelaide Pipeline

System

QIC None 51% 253

SEA Gas Pipeline APA (50%) None 61% 314

Eastern Gas Pipeline Jemena None 73% 268

NSW –Victoria

Interconnector

APA Full 37% 90/73

Longford to

Melbourne

APA Full 48% 1030

Tasmania Gas

Pipeline

TGP None 35% 129

3.6.4 LNG committed Projects (Curtis Island) (Group, 2013)

According to the projections of the LNG projects in Queensland, the following demand

requirements will be requested in the following years. These requirements are modelled

in PLEXOS® which is illustrated in Figure 3-4 Figure 3-4. There are three projects

located in Curtis Island which are confirmed: Australia Pacific LNG (APLNG),

Gladstone LNG (GLNG) and Queensland Curtis LNG (QCLNG). The Arrow’s project

Page 52: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

52

was not included in this study due to lack of information, nonetheless with PLEXOS®

different scenarios can be modelled, for instance: project start date, demand request,

pipelines maintenance schedule, etc.

Figure 3-4 Contract Supply for LNG exports in Queensland for the (2013-2029): Australia Pacific

LNG (APLNG), Gladstone LNG (GLNG) and Queensland Curtis LNG (QCLNG)

3.6.5 Gas Demand Profile

A fundamental part of an energy expansion study is an appropriate projection of

demand in order to plan the supply. The case of gas demand is not the exception. For

the purpose of the model and study presented in this paper, a demand profile was

developed using data from the 2013 Gas Forecast developed by AEMO (AEMO,

2013b) and the National Gas Bulletin Board (Bulletin, 2013).

In order to develop the gas profile used for this study, it is necessary to introduce the

reader to some mathematical background information related to analysis of linear

systems. This is useful for explaining the methodology used to build the gas demand

profile.

APLNG QCLNG

GLNG

Page 53: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

53

Any function in the domain of time can be represented by the addition of several

sinusoidal terms. Depending of the accuracy of the representation, the number of terms

could be infinite. Equation (3-16) describes the representation of the function y(t),

through the addition of sinusoidal terms defined by amplitude, frequency and phase

angle.

( ) ∑ ( )

( 3-17)

Moreover equation (3-18) can be represented in the frequency domain using the Fourier

transform. A representation of this concept is shown in equation (3-19) where every

term of the addition represents the natural mode of the function y(t) (Goodwin et al.,

2000). When two functions in time have the same frequency content, but they are

different in magnitude, it means that both functions have the same components

∑ ( ) , where the only difference is related to the magnitude of the function, that

is the Bi coefficients.

( ) ∑ ( )

( 3-20)

For the purpose of this study, the same concept has been applied in order to build the

forecast of the gas demand. The assumption is that the frequency content of annual

demand profile is keep constant at least with the lower frequencies. This is reasonable

due to the main frequencies of the demand functions are seasonally determined by

weather conditions and human behaviour (Weron, 2007).

The year used as a basis for the mathematical model is 2013, where daily data was

obtained from the National Gas Bulletin Board (Figure 3-5). The hypothesis in using

this year assumes that the main frequencies (related to weather conditions and human

Page 54: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

54

behaviour) will be presented in the following years and the only difference will be

defined by the amplitude (coefficients) Bi. AEMO publishes the projections for the

annual demand in the forthcoming years (Annex 4). Using this information and an

algorithm developed in the language Visual Basic language, a daily demand profile was

developed. The algorithm takes into account the main frequencies of the year 2013 and

the amplitudes determined by data provided by AEMO. The algorithm is presented in

the Annex 2.

Figure 3-5 Brisbane’s daily demand profile [TJ] for the year 2013 (Bulletin, 2013)

3.6.5.1 Gas Demand Profiles created

AEMO categorized the domestic demand of gas using the following segments (AEMO,

2013a):

Mass market (MM), comprising residential and business demand of less than 10

TJ/a.

Large industrial (LI), comprising consumers with gas demand greater than 10

TJ/a.

Gas-power generation (GPG)

Using the projections supplied by AEMO in the Gas Statement of Opportunities

(GSOO) and with the demand profiles created, the following demand profiles were

created

Page 55: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

55

Figure 3-6 Brisbane’s demand profile forecasted [TJ] (2013 -2031)

Figure 3-7 Gladstone’s demand profile forecasted [TJ] (2013 -2031)

Page 56: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

56

Figure 3-8 Mount Isa’s demand profile forecasted [TJ] (2013 -2031)

Figure 3-9 New South Wales’ demand profile forecasted [TJ] (2013-2031)

Page 57: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

57

Figure 3-10 South Australia’s demand profile forecasted [TJ] (2103-2031)

Figure 3-11 Tasmania’s demand profile forecasted [TJ] (2013-2031)

Page 58: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

58

Figure 3-12 Victoria’s demand profile forecasted [TJ] (2013-2031)

Page 59: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

59

4 The formulation of the Long Term Planning Problem in

PLEXOS®

4.1 Introduction

Australia is endowed with a variety of both renewable and non-renewable resources. In

fact, Australia is worldwide known by its uranium and coal reserves (Goverment, 2010).

Furthermore, electricity generation through renewable sources is significant in the states

of Tasmania and South Australia. In a first shallow analysis of the energy situation in

Australia, it could be incorrectly concluded that electricity generation is uncomplicated

and inexpensive due to the variety of natural resources in the country.

Despite the positive framework described above, Australia is at the verge of an

energetic dilemma due to the uncertainty of the variables that determine energy

investment, for instance: carbon tax, fuel prices and electricity demand patterns. Indeed,

those variables add uncertainty and risk to the investment sector.

The current chapter will present the reader the software used for modelling the

Australian Electricity and Gas system. It also will explain the objective function behind

the optimisation problem proposed in this thesis.

4.2 Energy Planning Tool

Energy planners need specialized tools in order to manage the complexity of this

changing commercial and regulatory landscape. The software chosen for this project is

PLEXOS® from the company Energy Exemplar. PLEXOS® is a integrated gas and

electricity software which provides specialized answers to different planning cases.

The integrated gas-electric model allows detailed modelling of the physical delivery of

gas from fields, through pipelines and storage to gas and electricity demand points. The

Page 60: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

60

gas and electric models are solved simultaneously allowing decision makers to trade-off

gas investments, constraints and costs against other alternatives.

The long-term planning problem analysed in this thesis uses a mixed integer

deterministic optimization where electricity and gas systems are co-optimized. The

software’s process can be categorized in three stages: long, medium and short term,

where the extension of the process is linked to the period of time studied.

In the long-term (LT) process, the expansion planning is performed. Generation and

transmission investments (different alternatives) are provided before the simulation

begins. The algorithm will optimise the different choices and also it will take into

account the current generation and transmission capacity in order to find if some

retirements are also needed. The optimisation problem takes into account energy costs,

constraints in transmission systems (lines and pipelines) and demand profiles. It should

be mentioned that usually, long-term planning problems use load blocks for

representing each load duration curve (LDC). However for the purpose of this thesis the

chronological approach is used (Nweke et al., 2012).

To solve the capacity expansion problem presented in this paper implies to find an

optimal answer for the mixture of the new generation and transmission capabilities in

conjunction with the gas network system analysed. It should be mentioned that not only

addition of elements could occur, but also retirements of assets can happen. The

objective function is to minimize the net present value (NPV) of the total system cost

evaluated over a long-term planning horizon (Berry, 2012), which means to solve

simultaneously the expansion problem and the dispatch process of electricity and gas

from a long-term framework.

Page 61: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

61

The minimisation of the objective function described by the equation (4-1) will result in

a co-optimised expansion plan where generation and inter-regional (electricity and gas)

options are considered. In addition restrictions are included in order to meet reliability

requirements. From data obtained from the AEMO which points out the transmission

power flows between the states, it is possible to evaluate possible transmission upgrade

of the current transmission system.

As it was mentioned previously, Linear Programming is basis for the formulation the

understanding of any optimisation problem. The main characteristic from an

optimization framework of energy expansion problems is the use of integer variables

and non-linear constraints (linked with power flow equations). In addition, the use of

discrete variables provides the optimisation problem with a combinatorial formulation

mostly determined by decisions to build new assets (Newham, 2008). The high number

of decision variables will imply a exponential number of calculations, which is usually

refers as the ‘Curse of Dimensionality’(Newham, 2008).

The energy expansion problem addressed in this work is formulated in PLEXOS as a

Mixed-Integer Linear Program (MILP). That is the variable decisions of the problem

can be discrete and continuous. Usually, the numbers of generation units built and

retired are categorized as discrete variables. It worth to mention that the formulation of

a MILP implies a higher computation time in comparison to use only continues decision

variables.

4.3 Formulation of the problem

In order to formulate the problem the following variables (Table 4-1) and parameters

are defined for the formulation of the core expansion problem:

Table 4-1, decision variables used for the expansion planning problem

Page 62: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

62

Variable Description Type

Number of generating units build in year y for Generator g Integer

Dispatch level of generating unit g in period t Continuous

Unserved energy in dispatch period t Continuous

Capacity shortage in year y Continuous

Table 4-2 parameters for the formulation of the expansion planning problem

Element Description Unit

D

Discount rate. We then derive

( )

which is the discount factor applied to year y,

and DFt which is the discount factor applied to

dispatch period t

Duration of dispatch period t Hours

Overnight build cost of generator g $

Maximum number of units of

generator g allowed to be built by the end of

year y

Maximum generating capacity of each unit of

generator g MW

Number of installed generating units of

generator g

Value of lost load (energy shortage price) $/MWh

Short-run marginal cost of generator g which is

composed of Heat Rate × Fuel Price + VO&M15

Charge

$/MWh

Fixed operations and maintenance charge of

generator g $

Average power demand in dispatch period t MW

System peak power demand in year y MW

Margin required over maximum power demand

in year y MW

Capacity shortage price $/MW

FOMChargeg Fixed operations and maintenance charge of $

15

VO&M = variable operation and maintenance costs

Page 63: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

63

generator g

The following formulation will include only build decisions, due to the extension of the

equation to address the problem. The objective function of the expansion problem

minimized the net present value of the summation of the generation investment, fixed

operations and maintenance costs and operation costs over a planning horizon. The

expansion problem is based on the least-cost algorithm which is formulated using mixed

integer programming where the objective function represents the total system costs.

Equation (4-1) represents the summarized formulation of the objective function used in

this thesis. The first term of the objective function is linked with the investment cost of

new assets to be built, composed by individual unit build cost* multiplied by the amount

built**

(CapEx). The second term refers to the production cost, composed by individual

unit production cost***

multiplied by individual unit production****

(OpEx). Finally, the

third term is defined by the multiplication between VOLL and Unserved Energy.

∑∑(

)

∑(∑

)

( 4-1)

The following constraints impose physical and system limitations to the cost

minimisation MIP model.

Subject to

1) Supply and Demand Balance. This restriction defines that the total supply has to

meet the total demand in any dispatch period. Any supply short-fall resulting in

an involuntary load curtailment appears as unserved demand (Shortaget) in this

Page 64: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

64

equation to satisfy the supply-demand balance requirement. Therefore the supply

and demand balance is represented as:

( 4- 2)

2) Production Feasible. This restriction addresses on a feasible amount of supply

available for any dispatch period. Generator outages, approximated by forced

outage rate (FOR) and maintenance outrage (MOR) derate the energy

contribution from a generator in a dispatch period.

( 4-3)

3) Expansion Feasible. This restriction relates the limit on the maximum number of

new generation entry that can be built in a year.

( 4-4)

4) Integrality. This constraint refers to the discrete feature of new generation build

for a specific year.

( 4-5)

In the next chapter results of the model presented in Chapter 3 and 5 will be depicted.

Page 65: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

65

5 Results

This section will present the results of the model developed for this thesis. In the first

section, the results from the gas model will be presented. This is compulsory due to the

need to validate the gas model. The following section will show the results of the

expansion planning co-optimisation of the gas and electricity network.

5.1 The Gas Model

For this section the demand zones are modelled as three demand profiles which are built

with data from the AEMO (AEMO, 2013b) and the National Gas Market Bulletin

Board (Bulletin, 2013). In Figure 5-1 the gas network modelled is shown. As it was

mentioned there are seven demand zones for the network modelled. In addition the

study of the integration of the LNG projects is presented in this section.

Page 66: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

66

Figure 5-1 Gas network modelled in PLEXOS®, the main demand zones included in this study are:

Mount Isa, Gladstone, Brisbane, Adelaide, Sydney, Melbourne and Hobart

5.1.1 Scenario 1

Scenario 1 does not include the projects in Curtis islands and also only 2p16

reserves are

included in the analysis. Figure 5-2 shows the price of gas in the different demand

zones described for this simulation. Tasmania has the higher cost due to the extensive

network of pipelines to supply this state. Prices along the network simulated vary

between 4.5 and 7 $/GJ. This range has important implications for the evaluation about

export or import gas according to the international value.

16

Despite of 3p reserves were included in the model; the optimal solution did not

include these type of reserves due to the high price.

Page 67: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

67

Figure 5-2 Gas cost at the demand nodes

Figure 5-3 End volume basins (TJ) (Bowen-Surat is not included)

Figure 5-3 shows the rates of reduction of the different basins included in this study.

Bowen-Surat was not included in this figure due to its larger reserves, which can be

observed in Figure 5-4. According to the information consulted, the Bowen-Surat basin

Page 68: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

68

will provide most of the production for the LNG projects located in Queensland. For

that reason in Figure 5-4 production in this basin is almost constant.

Figure 5-4 End volume Basins (TJ)

5.1.2 Scenario 2

The only difference for the model simulated in this scenario is the inclusion of the LNG

projects in the gas network.

From the integration of LNG demand into the gas network analysed, from Figure 5-6 it

can be observed that there is an increase in the rate of extraction from the Bowen-Surat

basin driven by the deployment of nonconventional coal gas seam gas which likely will

supply the future demand of LNG in Curtis Island (Queensland).

It is interesting to notice that with the development of the three mentioned projects, the

production of the Bowen-Surat Basin increases addressing possible restrictions on the

current network. From the data analysed and the model simulated, gas fields located on

Page 69: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

69

the Bowen-Surat Basin would have to ensure their overall production above 1,6 [PJ] in

order to supply demand requirements including domestic and international market.

Figure 5-5 End volume basin (TJ) not including Bowen-Surat

Page 70: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

70

Figure 5-6 End volume Basins (TJ) including Bowen-Surat

5.2 The Co-optimized model

The National Electricity Market is structured as a zonal price. Figure 5-7 a) shows the

current configuration of the NEM conformed by 16 zones. For the purpose of the work

presented, the configuration was simplified grouping 5 nodes for the NEM. This

assumption allows reflecting interactions between the states in terms of power flows.

The co-optimized model is the junction between the networks depicted in Figure 5-1

and Figure 5-7 b). For a single electricity model, fuel prices are exogenous values which

are input data for this model. For the co-optimized model the gas price values and the

reserves are dynamic inputs. The linking between both systems is performed through

the gas node which allows connection with the gas power generation plant.

Page 71: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

71

Figure 5-7 a) The NEM b) Model used for this thesis

Similarly to the results presented in the previous section, in the following section two

scenarios are presented:

Scenario 1: Co-optimization of the NEM and the South Eastern Australian gas

network

Scenario 2: Co-optimization of the NEM and the South Eastern Australian gas

network with the integration of LNG projects on Curtis Island, Queensland.

In addition the following inputs are included in the model:

Electricity Demand. Similarly to the demand profiles included in the gas section,

the expansion planning has to deal with supply the forthcoming demand build

Page 72: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

72

new generation capacity. As main difference with the gas model, gas demand

related to electricity generation is modelled dynamically due to the direct link

with the gas demand. For that reason the integrated gas model has two static

demands (commercial and industrial) and one dynamic demand linked to the

electricity generation. Figure 5-8 describes how electricity demand is forecasted

for the forthcoming years where Queensland and New South Wales have the

higher growing rates in comparison with other states.

Figure 5-8 Electricity Demand in the NEM (AEMO)

Another important input that has relation to the gas consumption is the how

much renewable energy is required over a period of analysis. For the current

model the following restriction was included in the model.

Page 73: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

73

Figure 5-9 Renewable requirements [MW]

5.2.1 Scenario 1, Co-optimisation of the Electricity and gas model including

Bowen-Surat Basin

Results related to scenario 1 addresses the co-optimisation of the NEM and the South

Eastern Gas Network including the Bowen-Surat basin. For the purposes of the present

paper, this basin was chosen due to its high content of coal seam gas having the higher

quantity of reserves among the basin in this part of Australia.

Figure 5-10 shows the evolution of the electricity price over the period of study. The

states of Tasmania and South Australia shows a decrease in the electricity price

especially in the year 2022 which coincides with the constrains related to the renewable

target set in the model in 2022. On the contrary Queensland and Victoria have a

growing tendency in relation to the electricity price.

Page 74: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

74

Figure 5-11 shows the generation capacity is built over the period of analysis. In relation

to the extension of this report only the year 2016 will be explained. A detail description

of these results is shown in Annex 5. In the year 2016 most of the capacity built is

composed by wind and CCGT:

New South Wales: Wind 2700 [MW] and Combine Gas Cycle Turbine 2400

[MW]

Victoria: Wind 1839 [MW] and Combine Gas Cycle Turbine 3655 [MW]

South Australia: Wind 2300 [MW]

Tasmania Wind 750 [MW]

Queensland: Combine Gas Cycle Turbine 3600 [MW]

Figure 5-10 Electricity Price over the period simulated ($/MWh)

Page 75: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

75

Figure 5-11 Generation Capacity Built (MW)

On the contrary to the Figure 5-11, Figure 5-12 shows the results of the capacity retired

for the period modelled. All the units retired correspond to coal power plants. The

retirement is driven by the carbon price used, the renewable target and the gas prices.

Page 76: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

76

Figure 5-12 Generation Capacity Retired (MW)

5.2.2 Scenario 2, Co-optimisation of the Electricity and gas model: sensitive

analysis of the Bowen-Surat Basin

The following analysis points out the importance of the Bowen-Surat basin in the

context of the planning of the National Electricity Market. Projects in Curtis Island will

depend highly of this basin, which implies a trade-off between domestic and

international consumption. The following scenario does not include the Bowen-Surat’s

reserves. Therefore electrical planning will be determined by the gas consumption from

the basins described in Figure 5-13.

Page 77: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

77

Figure 5-13 End volume basin (TJ) not including Bowen-Surat in the domestic consumption

The allocation of the reserves from the Bowen-Surat to the international market results

in an increase in the electricity price (Figure 5-14) in comparison with Figure 5-10.

South Australia is one of the states more affected by this allocation due to its high

dependency on gas for electricity generation.

Page 78: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

78

Figure 5-14 Electricity Price over the period simulated ($/MWh)

Figure 5-15 Generation Capacity Built (MW)

Page 79: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

79

Figure 5-15 described the results of the generation capacity built for scenario 2. There

are clearly differences between results from Figure 5-11 and Figure 5-15 which are

determined by the absence of the reserves from Bowen-Surat basin. For instance most

of the investment in allocate for wind energy generation highlighting the lack of gas

power generation.

.

Figure 5-16 Generation Capacity Retired (MW)

Figure 5-16 described the generation capacity retired which is characterized by only

coal power plants. However in comparison with the results from scenario 1, the quantity

retired is less than results from Figure 5-12. This result is logic due to the quantity of

base generation is built. Therefore, if less base capacity is built, less base capacity

should be retired, which is the case of coal power plants.

Page 80: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

80

6 Conclusions and Future Work

Australia is facing an energy planning dilemma. Electricity generation is predominantly

sourced by highly emission intense coal power plants. In 2007 Australia ratified the

Kyoto Protocol which set the first steps towards a low carbon future having as an

important milestone the implementation of the carbon tax an emission trading system

(ETS). Australia faces difficult decisions and considerable uncertainty about its future

energy path: business as usual versus a shift to a low carbon economy.

In addition, unconventional gas resources have become commercially attractive due to

technological breakthroughs in exploration and environmental advantages in regards to

CO2 pollution with regards to electricity generation. Moreover the growing

international market for LNG has been a game-changer in the energy sector and

Australia is right in the middle of this expected boom.

As it was described in this report the complexity of energy models increases when more

variables are included in it. The importance of integrate gas and electricity has

economic and physical implications especially in the current context of the Australian

system, for that reason the significance of modelling a coupled market. In addition, the

current approach taken from AEMO where both markets are analysed separately in an

iterative process proves that the approach taken in this thesis is the correct. The reasons

to support this argument are three: mathematical, computing time and dynamic

interaction between both markets. Because AEMO performs an iterative process where

there are at least two simulations (electricity and gas models) for each market, the

model presented in this thesis reduces the time for modelling both systems. In relation

to the argument of dynamic interaction, it is always a more correct approach to integrate

dynamic interaction between two systems instead of static interactions as AEMO

Page 81: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

81

performs its analysis. Finally, the mathematical approach mentioned is related to the

mathematical certainty or probe that the optimal solution for a coupled system is always

better than the optimal solution obtained from a decoupled analysis. In other words, the

objective function of the co-optimised problem evaluated in the optimal point will be

less than the addition of the two objective functions in their respective optimal points.

The mathematical proof of this last argument is beyond the objectives of the present

work; however it is highly recommended to be proposed as a research project for the

complexity and stringency associated with it.

As it was shown in the results from the sensitive analysis of scenario 2, the lack of

reserves from the Bowen-Surat basin has important implication on the investment for

gas power generation affecting the state of South Australia due to its dependency to this

type of plant.

Another interesting point addressed in the sensitive analysis relates the quantity of units

retired associated with coal fired power plants. Because investment in gas power

generation decreases when the Bowen-Surat basin in not included, the quantity of base

coal power plant retired also diminishes due to demand has to match with supply.

In relation to the gas network, the information presented in this report has shown that

significant new investments in gas pipelines have improved interconnection and hence

the market competition. Also based on the results either in the single gas model section

or in the co-optimised section there is enough gas in the Bowen-Surat basins to supply

the three projects on Curtis Island in a period over 20 years. As it was mentioned the

current project was developed taking into account 2P reserves in the optimal answers

from PLEXOS. Despite of 3P reserves were included in the model, the optimal solution

provided by the software did not use 3P reserves due to its high cost, it would be

Page 82: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

82

interesting to analyse what are the implications of a sensitive analysis that will force the

use 3P reserves. In addition, the approach performed in relation to 2P and 3P reserves

was without the use of a statistical point of view. That is 2P and 3P reserves imply a

50% and 10% respectively of certainty of the economic benefits from the reserve.

There are several research paths taking as basis the model developed. The first has to do

with the implications of including the international market of LNG into the model.

Through this proposal, different policies can be tested in order to satisfy international

and domestic demand. In addition, future projects related to shale gas or 3p reserves

could complement the research proposal mentioned where probability should be

included.

In relation to the electricity model, it is interesting to use the current model in order to

tests stochastic variables using the features that PLEXOS provides. Some of the

variables that could be addressed are: wind speed, fuel prices, solar patterns and

electricity consumption behaviour.

Finally, as the Australian gas market is growing at fast speed, it would be interesting to

analyse which alternative for the gas market would be appropriate taking into account

the influence of an international price for LNG.

Page 83: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

83

7 Bibliography

AEMC An Introduction to congestion in the NEM. Australian Energy Market Commision. AEMO 2010. An Introduction to Australia's National Electricity Market. Australia Energy Market

Operator. AEMO 2012a. Demand Trace Development for the 2012 National Transmission Network

Development Plant. Australian Energy Market Operator. AEMO 2012b. Gas Statement of Opportunities. Australian Energy Market Operator. AEMO 2012c. National Transmission Network Development Plan. Australian Energy Market

Operator. AEMO 2012d. National Transmission Network Development Plan Plexos and Prophet

Databases. Australian Energy Market Operator. AEMO 2013a. Gas Statement of Opportunities. The Australian Energy Market Operator. AEMO 2013b. National Gas Forecast. Australian Energy Market Operator AER 2013a. Gas Pipelines. In: REGULATOR, T. A. E. (ed.) State of the energy market 2013. The

Australian Energy Regulator. AER 2013b. National Electricity Market. In: REGULATOR, T. A. E. (ed.) State of the energy

market 2013. The Australian Energy Regulator. ALLABY, M. 2008. Dictionary of Earth Sciences (3rd Edition). Oxford University Press. BAKKEN, B. H., SKJELBRED, H. I. & WOLFGANG, O. 2007. eTransport: Investment planning in

energy supply systems with multiple energy carriers. Energy, 32, 1676-1689. BERRY, N. 2012. Opportunities for New Electricity Generation Technologies in South Australia.

M.Sc., University College London. BULLETIN, N. G. M. 2013. Actual Flows Previous Month. CEDEÑO, E. & ARORA, S. 2013. Integrated transmission and generation planning model in a

regulated environment. Frontiers in Energy, 7, 182-190. COVARRUBIAS, A. 1979. Expansion planning for electric power systems. IAEA Bulletin, 21, 55-

64. CHAUDRY, M., JENKINS, N. & STRBAC, G. 2008. Multi-time period combined gas and electricity

network optimisation. Electric Power Systems Research, 78, 1265-1279. DE LA TORRE, S., CONEJO, A. J. & CONTRERAS, J. 2008. Transmission expansion planning in

electricity markets. Ieee Transactions on Power Systems, 23, 238-248. DUSONCHET, Y. P. & EL-ABIAD, A. 1973. - Transmission Planning Using Discrete Dynamic

Optimizing. - PAS-92, - 1371. FALK, J. & SETTLE, D. 2011. Australia: Approaching an energy crossroads. Energy Policy, 39,

6804-6813. FOLEY, A. M., GALLACHOIR, B. P. O., HUR, J., BALDICK, R. & MCKEOGH, E. J. 2010. A strategic

review of electricity systems models. Energy, 35, 4522-4530. GALETOVIC, A., MUÑOZ, C. M. & WOLAK, F. A. 2013. Capacity Payments in a Cost-Based

Wholesale Electricity Market: The Case of Chile. University Stanford. GEIDL, M. & ANDERSSON, G. 2007. Optimal power flow of multiple energy carriers. Ieee

Transactions on Power Systems, 22, 145-155. GOODWIN, G. C., GREABE, S. & SALGADO, M. 2000. Control System Design, Prentice Hall. GOVERMENT, A. 2010. Australian Energy Resource Assessment. Department of Resources,

Energy and Tourism. GOVERMENT, A. 2011. Clean Energy Act 2011 [Online]. Australian Goverment. Available:

http://www.comlaw.gov.au/Details/C2011A00131/Html/Text#_Toc308513405 [Accessed 1-09-2013 2013].

GRAINGER, J. J. & STEVENSON, W. D. 1994. Power system analysis, McGraw-Hill New York.

Page 84: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

84

GRIFFIN, J. M. & PULLER, S. L. 2005. A primer on Electricity and the Economics of Deregulation. In: GRIFFIN, J. M. & PULLER, S. L. (eds.) Electricity Deregulation: Choices and Challenges. University Of Chicago Press.

GROUP, C. E. 2013. Projections of Gas Demand for LNG Export from Eastern and South Eastern Australia. Australian Energy Market Operator.

HELM, D. 2011. The Economics and Politics of Climate Change, Oxford University Press. IEA 2012a. Golden Rules for a Golden Age of Gas, International Energy Agency. IEA 2012b. World Energy Outlook 2012. International Energy Agency. IES 2013. Study on the Australian Domestic Gas Market. INDUSTRY, D. O. & RESOURCES, B. O. 2013. Eastern Australian Domestic Gas Market Study.

Canberra, Australia. JIN, S., RYAN, S., WATSON, J.-P. & WOODRUFF, D. 2011. Modeling and solving a large-scale

generation expansion planning problem under uncertainty. Energy Systems, 2, 209-242.

KALTENBACH, J. C., PESCHON, J. & GEHRIG, E. H. 1970. - A Mathematical Optimization Technique for the Expansion of Electric Power Transmission Systems. - PAS-89, - 119.

KIRSCHEN, D. S. & STRBAC, G. 2004. Fundamentals of Power System Economics, The Atrium, Southern Gate, Chichester, West Sussex, England, John Wiley & Sons, Ltd.

KIRSCHEN, D. S. & STRBAC, G. 2007. Fundamentals of Power System Economics, West Sussex, England, John Wiley & Sons Ltd.

LI, T., EREMIA, M. & SHAHIDEHPOUR, M. 2008. Interdependency of Natural Gas Network and Power System Security. Ieee Transactions on Power Systems, 23, 1817-1824.

LIENERT, M. & LOCHNER, S. 2012. The importance of market interdependencies in modeling energy systems - The case of the European electricity generation market. International Journal of Electrical Power & Energy Systems, 34, 99-113.

NAGL, S., FÜRSCH, M. & LINDENBERGER, D. 2013. The Costs of Electricity Systems with a High Share of Fluctuating Renewables: A Stochastic Investment and Distpatch Optimization Model for Europe. The Energy Journal, 34, 151-179.

NEWHAM, N. 2008. Power System Investment Planning using Stochastic Dual Dynamic Programming. Doctor of Philosophy in Electrical and Computer Engineering University of Canterbury.

NWEKE, C. I., LEANEZ, F., DRAYTON, G. R. & KOLHE, M. 2012. - Benefits of chronological optimization in capacity planning for electricity markets. IEEE International Conference on Power System Technology (POWERCON) Auckland, New Zealand.

OWEN, A. D. 2011. The economic viability of nuclear power in a fossil-fuel-rich country: Australia. Energy Policy, 39, 1305-1311.

OWEN, A. D. & BERRY, N. 2013. An Optimal Portfolio of New Power Generation Technologies: An Illustration for South Australia. 32nd USAEE/IAEE North American Conference. Anchorage, Ak.

RUBIO, R., OJEDA-ESTEYBAR, D., ANO, O. & VARGAS, A. 2008. Integrated Natural Gas and Electricity Market: A Survey of the State of the Art in Operation Planning and Market Issues.

SERRANO, R., ZOLEZZI, J., RUDNICK, H. & ARANEDA, J. C. 2005. - Transmission expansion in the Chilean system via cooperative game theory. -, - 6.

SHAHIDEHPOUR, M., FU, Y. & WIEDMAN, T. 2005. Impact of natural gas infrastructure on electric power systems. Proceedings of the Ieee, 93, 1042-1056.

SKM 2013. Gas Market Modelling. STEVENS, P. 2012. The 'Shale Gas Revolution': Developments and Changes. Chatham House:

Chatham House. STOFT, S. 2002. Power System Economics. UNSIHUAY-VILA, C., MARANGON-LIMA, J. W., DE SOUZA, A. C. Z. & PEREZ-ARRIAGA, I. J. 2011.

Multistage expansion planning of generation and interconnections with sustainable

Page 85: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

85

energy development criteria: A multiobjective model. International Journal of Electrical Power & Energy Systems, 33, 258-270.

UNSIHUAY-VILA, C., MARANGON-LIMA, J. W., DE SOUZA, A. C. Z., PEREZ-ARRIAGA, I. J. & BALESTRASSI, P. P. 2010. A Model to Long-Term, Multiarea, Multistage, and Integrated Expansion Planning of Electricity and Natural Gas Systems. Ieee Transactions on Power Systems, 25, 1154-1168.

UNSIHUAY, C., MARANGON-LIMA, J. W., DE SOUZA, A. C. Z. & IEEE 2007. Integrated power generation and natural gas expansion planning.

VERIKIOS, G. & ZHANG, X.-G. 2011. The Distributional Effects on the Hilmer reforsm on the Australian Gas. Centre of Policy Studies and the Impact Project.

VILLASANA, R., GARVER, L. L. & SALON, S. J. 1985. TRANSMISSION NETWORK PLANNING USING LINEAR-PROGRAMMING. Ieee Transactions on Power Apparatus and Systems, 104, 349-356.

WALLACE, S. W. & FLETEN, S.-E. 2003. Stochastic Programming Models in Energy. 10, 637-677. WERON, R. 2007. Modeling and Forecasting Electricity Loads and Prices. WOOD, A., WOLLENBERG, B. & SHEBLÉ, G. B. 2014. POWER GENERATION OPERATION &

CONTROL, Hoboken, New Jersey, John Wiley & Sons. WOOD, A. J. & WOLLENBERG, B. F. 1984. Power Generation, Operation, and Control, John

Wiley & Sons. WU, F. F., ZHENG, F. L. & WEN, F. S. 2006. Transmission investment and expansion planning in

a restructured electricity market. Energy, 31, 954-966.

Page 86: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

86

A. Annex 1- Lagrange Multiplier

The Lagrange Multiplier is commonly used to address optimization problems in order to find

the minimum or maximum values of an objective function. In the area of power system, this

approach is used for resolving the economic dispatch problem (Wood and Wollenberg, 1984).

An optimization problem is composed by an objective function which could be maximized or

minimized; and also composed by several constraints according with the requirements of the

problem. The most common problem in a power system is related to the dispatch problem.

Usually the objective in a power system is to minimize the cost of electricity generation among

N generators as it is defined by the equation (A-1). is the power generated by unit with a

cost associated of .

Electricity cannot be stored efficiently and economically, therefore the overall quantity of

electricity generated should match with demand (load). This constraint is defined by the

equation (A-2).

∑ ( )

(A-1)

(A-2)

In order to solve the optimization problem proposed in the equation (A-1) a Lagrangian function

is defined in equation Error! Reference source not found.. It should be noted that according to

he Lagrarian strategy, constrains (A-2) have to be multiplied by the factor.

( ) ∑ ( )

( ∑ )

(A-3)

Equation (A-4) defines the problem of dispatch optimization based on the minimization of

generation cost. That is generator will be ranked in a term of which of them is the cheapest. In

order to find the optimum point, the partial derivates of the Lagrarian function are equalized to

zero which follows resolving the resulting equations:

( ∑

)

(A-4)

From the equation (A-4), it can be inferred that the marginal cost of every generating unit is

equal to the Lagrange multiplier. Usually this multiplier receives the name of shadow price for

several generators that belong to a same portfolio. Every generator from the portfolio in order to

be dispatch optimally should operate at the same marginal cost.

Page 87: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

87

B. Annex 2 – Gas Demand Profile Algorithm

Sub read_demand()

Dim demand_file As Excel.Workbook

Dim list_files As Excel.Workbook

Dim demand_sheet As Excel.Worksheet

Dim demand_files As Excel.Worksheet

Dim i As Integer

Dim output_workbook As Excel.Workbook

Dim output_sheet As Excel.Worksheet

Dim path_demand As String

Dim file_demand_name As String

Dim z As Integer

path_demand = "E:\investigacion\tesis australia\gas\data from BB\Flow\"

Excel.Workbooks.Open (path_demand & "list_files.xlsx")

Set list_files = Excel.Workbooks("list_files.xlsx")

Set demand_files = list_files.Worksheets("Sheet1")

z = 1

Do While (demand_files.Cells(z, 1) <> "")

file_demand_name = demand_files.Cells(z, 1)

Excel.Workbooks.Open (path_demand & file_demand_name)

Set demand_file = Excel.Workbooks(file_demand_name)

Set demand_sheet = demand_file.Worksheets(Left(file_demand_name, 31))

'Gladstone

Set output_sheet = Sheet1

Call extraer("Queensland Gas Pipeline", "Queensland Gas Pipeline (QGP)", demand_sheet,

output_sheet)

'Brisbane (RBP)

Set output_sheet = Sheet2

Call extraer("Roma - Brisbane Pipeline", "Roma to Brisbane Pipeline (RBP)", demand_sheet,

output_sheet)

'Adelaide (MAP)

Set output_sheet = Sheet3

Call extraer("Moomba to Adelaide Pipeline System", "Adelaide (ADL)", demand_sheet,

output_sheet)

'Adelaide (SEAGas)

Set output_sheet = Sheet4

Call extraer("SEA Gas Pipeline", "Adelaide (ADL)", demand_sheet, output_sheet)

'Hobart (TGP)

Set output_sheet = Sheet5

Call extraer("Tasmania Gas Pipeline", "Tasmanian Gas Pipeline (TGP)", demand_sheet,

output_sheet)

'Mount Isa (CGP)

Set output_sheet = Sheet6

Call extraer("Carpentaria Pipeline", "Carpentaria Gas Pipeline (CGP)", demand_sheet,

output_sheet)

'Moomba Gas Plant

Page 88: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

88

Set output_sheet = Sheet7

Call extraer("Moomba Gas Plant", "Moomba (MOO)", demand_sheet, output_sheet)

'Sydney (EGP)

Set output_sheet = Sheet8

Call extraer("Eastern Gas Pipeline", "Sydney (SYD)", demand_sheet, output_sheet)

'Canberra (EGP)

Set output_sheet = Sheet9

Call extraer("Eastern Gas Pipeline", "Aust. Capital Territory (ACT)", demand_sheet,

output_sheet)

'EGP

Set output_sheet = sheet10

Call extraer("Eastern Gas Pipeline", "Eastern Gas Pipeline (EGP)", demand_sheet,

output_sheet)

'Sydney (MSPS)

Set output_sheet = sheet11

Call extraer("Moomba to Sydney Pipeline System", "Sydney (SYD)", demand_sheet,

output_sheet)

'Canberra (MSPS)

Set output_sheet = sheet12

Call extraer("Moomba to Sydney Pipeline System", "Aust. Capital Territory (ACT)",

demand_sheet, output_sheet)

'MSPS

Set output_sheet = sheet13

Call extraer("Moomba to Sydney Pipeline System", "Moomba to Sydney Pipeline System

(MSP)", demand_sheet, output_sheet)

'LNG Storage Dandenong

Set output_sheet = sheet14

Call extraer("LNG Storage Dandenong", "Victorian Principal Transmission System",

demand_sheet, output_sheet)

'Lang Lang Gas Plant Victoria

Set output_sheet = sheet15

Call extraer("Lang Lang Gas Plant", "Victoria", demand_sheet, output_sheet)

'Longford Gas Plant Gippsland (GIP)

Set output_sheet = sheet16

Call extraer("Longford Gas Plant", "Gippsland (GIP)", demand_sheet, output_sheet)

'Orbost Gas Plant Gippsland (GIP)

Set output_sheet = sheet17

Call extraer("Orbost Gas Plant", "Gippsland (GIP)", demand_sheet, output_sheet)

'Iona Underground Gas Storage Port Campbell (PCA)

Set output_sheet = sheet18

Call extraer("Iona Underground Gas Storage", "Port Campbell (PCA)", demand_sheet,

output_sheet)

'Minerva Gas Plant Port Campbell (PCA)

Set output_sheet = sheet19

Call extraer("Minerva Gas Plant", "Port Campbell (PCA)", demand_sheet, output_sheet)

'Otway Gas Plant Port Campbell (PCA)

Set output_sheet = sheet20

Call extraer("Otway Gas Plant", "Port Campbell (PCA)", demand_sheet, output_sheet)

Page 89: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

89

'NSW-Victoria Interconnect Victorian Principal Transmission System

Set output_sheet = sheet21

Call extraer("NSW-Victoria Interconnect", "Victorian Principal Transmission System",

demand_sheet, output_sheet)

'Longford to Melbourne Victorian Principal Transmission System

Set output_sheet = sheet22

Call extraer("Longford to Melbourne", "Victorian Principal Transmission System",

demand_sheet, output_sheet)

'South West Pipeline Victorian Principal Transmission System

Set output_sheet = sheet23

Call extraer("South West Pipeline", "Victorian Principal Transmission System", demand_sheet,

output_sheet)

'Wallumbilla Roma(ROM)

Set output_sheet = sheet24

Call extraer("Wallumbilla", "Roma (ROM)", demand_sheet, output_sheet)

'South West Queensland Pipeline South West Queensland Pipeline (SWQ)

Set output_sheet = sheet25

Call extraer("South West Queensland Pipeline", "South West Queensland Pipeline (SWQ)",

demand_sheet, output_sheet)

'Kogan North Roma (ROM)

Set output_sheet = sheet26

Call extraer("Kogan North", "Roma (ROM)", demand_sheet, output_sheet)

'Kincora Roma(ROM)

Set output_sheet = sheet27

Call extraer("Kincora", "Roma (ROM)", demand_sheet, output_sheet)

'Peat Roma(ROM)

Set output_sheet = sheet28

Call extraer("Peat", "Roma (ROM)", demand_sheet, output_sheet)

'Spring Gully Roma (ROM)

Set output_sheet = sheet29

Call extraer("Spring Gully", "Roma (ROM)", demand_sheet, output_sheet)

'Strathblane Roma(ROM)

Set output_sheet = sheet30

Call extraer("Strathblane", "Roma (ROM)", demand_sheet, output_sheet)

'Taloona Roma(ROM)

Set output_sheet = sheet31

Call extraer("Taloona", "Roma (ROM)", demand_sheet, output_sheet)

'Berwyndale South Roma (ROM)

Set output_sheet = sheet32

Call extraer("Berwyndale South", "Roma (ROM)", demand_sheet, output_sheet)

'Fairview Roma(ROM)

Set output_sheet = sheet33

Call extraer("Fairview", "Roma (ROM)", demand_sheet, output_sheet)

'Scotia Roma(ROM)

Set output_sheet = sheet34

Call extraer("Scotia", "Roma (ROM)", demand_sheet, output_sheet)

'Rolleston Roma(ROM)

Set output_sheet = Sheet35

Page 90: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

90

Call extraer("Rolleston", "Roma (ROM)", demand_sheet, output_sheet)

'Yellowbank Roma(ROM)

Set output_sheet = Sheet36

Call extraer("Yellowbank", "Roma (ROM)", demand_sheet, output_sheet)

'Ballera Gas Plant Ballera (BAL)

Set output_sheet = Sheet37

Call extraer("Ballera Gas Plant", "Ballera (BAL)", demand_sheet, output_sheet)

'SEA Gas Pipeline SEA Gas (SEA)

Set output_sheet = Sheet38

Call extraer("SEA Gas Pipeline", "SEA Gas (SEA)", demand_sheet, output_sheet)

'Moomba to Adelaide Pipeline System Moomba to Adelaide Pipeline System (MAP)

Set output_sheet = Sheet39

Call extraer("Moomba to Adelaide Pipeline System", "Moomba to Adelaide Pipeline System

(MAP)", demand_sheet, output_sheet)

demand_file.Close

z = z + 1

Loop

End Sub

Function extraer(condition1 As String, condition2 As String, in_sheet As Excel.Worksheet,

out_sheet As Excel.Worksheet)

Dim x As Integer

Dim y As Integer

x = 2

If (out_sheet.Cells(1, 1) = "") Then

y = 1

Else

y = 1

Do While (out_sheet.Cells(y, "A") <> "")

y = y + 1

Loop

End If

Do While (in_sheet.Cells(x, "A") <> "")

If (in_sheet.Cells(x, "A") = condition1 And in_sheet.Cells(x, "B") = condition2) Then

out_sheet.Cells(y, "A") = in_sheet.Cells(x, "A")

out_sheet.Cells(y, "B") = in_sheet.Cells(x, "B")

out_sheet.Cells(y, "c") = in_sheet.Cells(x, "c")

out_sheet.Cells(y, "d") = in_sheet.Cells(x, "e")

y = y + 1

End If

x = x + 1

Loop

End Function

Page 91: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

91

C. Annex 3 – Data used for the Gas Model (IES, 2013, SKM, 2013) Table C-1 Reserves by basin and type - PJ

Gas Source Geological Basin 2P 3P

Conventional Bass 254 254

Conventional Bowen/Surat 160 203

Conventional Cooper-Eromanga 1835 1835

Conventional Gippsland 3890 3890

Conventional Gunnedah 0 0

Conventional Otway 720 720

CSG Bowen/Surat 39148 57783

CSG Galilee 0 0

CSG Moranbah 2472 5504

CSG Clarence-Moreton 445 2922

CSG Gloucester 669 832

CSG Gunnedah 1426 1426

CSG Sydney 282 457

CSG Cooper 0 0

Table C-2 Maximum production capacity – TJ/day

Basin TJ/day

Bowen-Surat 1099

Cooper-Eronmanga 490

Sydney 26

Bass 70

Gippsland 1245

Otway 848

Clarence-Moreton 100

Gloucester 90

Gunnedah 100

Galiee No modelled

Table C-3 Production costs by basin and type -$/GJ

Type Geological Basin 2P 3P

Conventional Bass 4.77 5.02

Conventional Bowen/Surat 4.4 4.84

Conventional Cooper-Eromanga 4.2 4.62

Conventional Gippsland 4.76 5.01

Conventional Otway 4.77 5.02

CSG Bowen/Surat 4.42 4.86

CSG Clarence-Moreton 4.82 5.3

CSG Galilee 5.01 5.51

CSG Gloucester 4.42 4.85

CSG Gunnedah 4.62 5.08

CSG Moranbah 4.62 5.08

CSG Sydney 5.58 6.08

Unconventional Cooper-Eromanga 6.01 6.61

Page 92: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

92

Table C-4 Pipeline capacities and tariff – TJ/day and $/GJ

Pipeline From Townsville Tariff

($/GJ)

Max

cap

North Queensland Gas Pipeline Moranbah Townsville 1.42 68

Carpentaria Gas Pipeline Ballera Mt Isa 1.4 119

Queensland Gas Pipeline Wallumbilla Gladstone 0.87 249

Roma to Brisbane Pipeline Wallumbilla Brisbane 0.49 232

South West Queensland Pipeline Ballera Wallumbilla 1.04 694

South West Queensland Pipeline

Reverse Flow

Wallumbilla Ballera 1.04 595

QSN Link Ballera Moomba 0.40 694

QSN Link Reverse Flow Moomba Ballera 0.40 595

Moomba to Sydney Pipeline Moomba Young 0.75 439

Moomba to Sydney Pipeline Young Dalton 0.06 439

Moomba to Sydney Pipeline Dalton Sydney 0.13 439

Moomba to Sydney Pipeline

Reverse Flow

Sydney Dalton 0.13 315

Moomba to Sydney Pipeline

Reverse Flow

Dalton Young 0.06 315

Moomba to Sydney Pipeline

Reverse Flow

Young Moomba 0.75 315

Dalton to Canberra pipeline Dalton Canberra 0.15 439

Eastern Gas pipeline Longford Hoskinstown 0.71 288

Eastern Gas pipeline Hoskinstown Sydney 0.43 288

Longford to Canberra via Eastern

Gas Pipeline

Hoskinstown Canberra 0.43 77

NSW-VIC Interconnect (VIC to

NSW)

Melbourne Culcairn 0.32 92

NSW-VIC Interconnect (VIC to

NSW)

Culcairn Wagga

Wagga

0.06 92

NSW-VIC Interconnect (VIC to

NSW)

Wagga Wagga Young 0.09 92

Longford-to-Melbourne Pipeline Longford Dandenong 0.2 1030

Longford-to-Melbourne Pipeline Dandenong Melbourne 0.07 1030

South West Pipeline Port Campbell Melbourne 0.27 429

South West Pipeline Reverse

Flow

Melbourne Port

Campbell

0.27 429

SEAGas Pipeline Port Campbell Penola 0.25 314

SEAGas Pipeline Penola Adelaide 0.5 314

Moomba to Adelaide Pipeline Moomba Whyte

Yarcowie

1 253

Moomba to Adelaide Pipeline Whyte

Yarcowie

Adelaide 0.3 253

Moomba to Adelaide Pipeline

Reverse Flow

Adelaide Whyte

Yarcowie

0.3 380

Moomba to Adelaide Pipeline

Reverse Flow

Whyte

Yarcowie

Moomba 1 380

Tasmanian Gas Pipeline Longford Bell Bay 1.3 130

Tasmanian Gas Pipeline Bell Bay Hobart 1.0 130

Queensland Hunter Pipeline Wallumbilla Gunnedah 1.0 230

Queensland Hunter Pipeline Gunnedah Newcastle 0.75 230

Page 93: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

93

(then to

Sydney)

Queensland Hunter Pipeline

Reverse Flow

Gunnedah Wallumbilla 1.0 230

Central Queensland Pipeline Moranbah Gladstone 0.7 0

Lions Way Pipeline Casino

(Clarence-

Moreton Basin)

Ipswich

(then to

Brisbane)

0.5 74

Stratford to Hexham Pipeline Stratford

(Gloucester

Basin)

Hexham

(then to

Sydney)

0.35 100

D. Annex 4 – Gas projections (AEMO, 2013b) Table D-1. South Australia annual gas demand

Historic

Planning

Scenario

Forecasts

GPG MM LI Total GPG MM LI Total

Annual

demand (PJ)

2008 73 13 2

5 11

1

2009 63 14 2

5 10

1

2010 63 14 24

10

0

2011 60 13 2

4 97

2012 63 13 2

2 98

2013 52 13 21 86

2014 43 13 21 77

2015 31 13 21 65

2016 31 13 21 65

2017 29 13 21 62

2018 27 13 21 61

2019 27 14 21 62

2020 27 14 21 62

2021 27 14 21 62

2022 28 14 21 63

2023 28 14 21 63

2024 28 14 21 63

2025 28 14 21 63

2026 28 14 21 64

2027 29 14 21 64

2028 29 14 22 65

2029 30 14 22 66

2030 33 15 22 70

2031 39 15 22 75

Page 94: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

94

2032 39 15 22 76

2033 40 15 22 77

Table D-2. 2013 Victorian annual gas demand

Historic Planning Scenario

Forecasts

GPG MM LI Total GPG MM LI Total

Annual

demand (PJ)

2008 23 120 90 233

2009 17 122 84 223

2010 7 122 84 213

2011 9 122 82 214

2012 16 124 79 219

2013 9 125 78 212

2014 1 126 77 204

2015 1 127 76 204

2016 1 128 76 205

2017 2 130 76 208

2018 3 132 77 211

2019 3 133 77 213

2020 3 135 78 215

2021 3 136 78 217

2022 4 137 77 218

2023 4 138 77 219

2024 4 139 77 221

2025 4 141 78 223

2026 5 142 78 225

2027 5 144 79 228

2028 6 146 79 231

2029 6 148 80 233

2030 7 149 80 236

2031 10 151 80 241

2032 11 153 80 243

2033 11 154 79 245

Table D-3. Queensland domestic annual gas

Historic

Planning

Scenario

Forecasts

GPG MM LI Total GPG MM LI Total

Annual

demand (PJ)

2008 50 8 96 15

5

Page 95: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

95

2009 62 7 96 16

4

2010 92 6 10

7 20

4

2011 79 6 11

6 20

2

2012 78 6 125

20

9

2013 52 6 130 189

2014 55 7 136 198

2015 41 7 140 188

2016 17 7 143 167

2017 16 8 144 168

2018 13 8 145 166

2019 11 8 146 165

2020 8 8 148 164

2021 10 8 150 169

2022 12 8 154 174

2023 13 9 157 179

2024 15 9 160 184

2025 17 9 161 188

2026 21 9 163 193

2027 26 10 164 199

2028 29 10 165 203

2029 33 10 166 209

2030 38 10 170 218

2031 42 10 177 229

2032 45 10 183 239

2033 49 11 186 246

Table D-4. Tasmanian annual gas demand

Historic Planning Scenario

Forecasts

GPG MM LI Total GPG MM LI Total

Annual

demand (PJ)

2008 9 0 4 14

2009 7 0 4 12

2010 10 0 4 14

2011 12 1 4 16

2012 12 1 4 17

2013 6 1 5 12

2014 1 1 5 7

2015 1 1 5 7

2016 0 1 5 6

2017 1 1 5 7

2018 1 1 5 7

2019 1 1 5 7

Page 96: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

96

2020 1 1 5 7

2021 1 1 6 7

2022 1 1 6 8

2023 1 1 6 8

2024 1 1 6 8

2025 1 1 6 8

2026 1 1 6 8

2027 1 1 6 8

2028 1 1 6 8

2029 1 1 6 9

2030 2 1 6 9

2031 2 1 6 9

2032 2 1 6 10

2033 2 1 6 10

Table D-5. New South Wales and Australian Capital Territory annual gas demand

Historic

Planning

Scenario

Forecasts

GPG MM LI Total GPG MM LI Total

Annual

demand

(PJ)

2008 12 42 69 123

2009 28 43 69 139

2010 32 43 69 144

2011 29 42 67 138

2012 33 42 69 144

2013 30 42 66 138

2014 29 43 65 136

2015 20 43 65 128

2016 15 44 67 126

2017 23 45 69 137

2018 24 46 72 142

2019 25 47 74 146

2020 27 48 75 149

2021 20 48 76 144

2022 13 49 76 138

2023 13 50 75 138

2024 13 51 75 138

2025 13 51 75 139

2026 13 52 75 141

2027 14 53 76 143

2028 14 54 77 145

2029 15 54 78 147

2030 17 55 79 150

2031 18 56 80 154

2032 19 57 81 156

Page 97: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

97

2033 19 57 83 159

Page 98: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

98

E. Annex 5 – Capacity built results Scenario 1: Co-optimization of

the gas and electricity system. (AEMO, 2013b) Table E-1. South Australia annual gas demand

Historic

Planning

Scenario

Forecasts

GPG MM LI Total GPG MM LI Total

Annual

demand (PJ)

2008 73 13 2

5 11

1

2009 63 14 2

5 10

1

2010 63 14 24

10

0

2011 60 13 2

4 97

2012 63 13 2

2 98

2013 52 13 21 86

2014 43 13 21 77

2015 31 13 21 65

2016 31 13 21 65

2017 29 13 21 62

2018 27 13 21 61

2019 27 14 21 62

2020 27 14 21 62

2021 27 14 21 62

2022 28 14 21 63

2023 28 14 21 63

2024 28 14 21 63

2025 28 14 21 63

2026 28 14 21 64

2027 29 14 21 64

2028 29 14 22 65

2029 30 14 22 66

2030 33 15 22 70

2031 39 15 22 75

2032 39 15 22 76

2033 40 15 22 77

Table E-2. 2013 Victorian annual gas demand

Historic Planning Scenario

Forecasts

GPG MM LI Total GPG MM LI Total

Annual

demand (PJ)

Page 99: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

99

2008 23 120 90 233

2009 17 122 84 223

2010 7 122 84 213

2011 9 122 82 214

2012 16 124 79 219

2013 9 125 78 212

2014 1 126 77 204

2015 1 127 76 204

2016 1 128 76 205

2017 2 130 76 208

2018 3 132 77 211

2019 3 133 77 213

2020 3 135 78 215

2021 3 136 78 217

2022 4 137 77 218

2023 4 138 77 219

2024 4 139 77 221

2025 4 141 78 223

2026 5 142 78 225

2027 5 144 79 228

2028 6 146 79 231

2029 6 148 80 233

2030 7 149 80 236

2031 10 151 80 241

2032 11 153 80 243

2033 11 154 79 245

Table E-3. Queensland domestic annual gas

Historic

Planning

Scenario

Forecasts

GPG MM LI Total GPG MM LI Total

Annual

demand (PJ)

2008 50 8 96 15

5

2009 62 7 96 16

4

2010 92 6 10

7 20

4

2011 79 6 11

6 20

2

2012 78 6 125

20

9

2013 52 6 130 189

2014 55 7 136 198

2015 41 7 140 188

2016 17 7 143 167

2017 16 8 144 168

Page 100: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

100

2018 13 8 145 166

2019 11 8 146 165

2020 8 8 148 164

2021 10 8 150 169

2022 12 8 154 174

2023 13 9 157 179

2024 15 9 160 184

2025 17 9 161 188

2026 21 9 163 193

2027 26 10 164 199

2028 29 10 165 203

2029 33 10 166 209

2030 38 10 170 218

2031 42 10 177 229

2032 45 10 183 239

2033 49 11 186 246

Table E-4. Tasmanian annual gas demand

Historic Planning Scenario

Forecasts

GPG MM LI Total GPG MM LI Total

Annual

demand (PJ)

2008 9 0 4 14

2009 7 0 4 12

2010 10 0 4 14

2011 12 1 4 16

2012 12 1 4 17

2013 6 1 5 12

2014 1 1 5 7

2015 1 1 5 7

2016 0 1 5 6

2017 1 1 5 7

2018 1 1 5 7

2019 1 1 5 7

2020 1 1 5 7

2021 1 1 6 7

2022 1 1 6 8

2023 1 1 6 8

2024 1 1 6 8

2025 1 1 6 8

2026 1 1 6 8

2027 1 1 6 8

2028 1 1 6 8

2029 1 1 6 9

2030 2 1 6 9

Page 101: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

101

2031 2 1 6 9

2032 2 1 6 10

2033 2 1 6 10

Table E-5. New South Wales and Australian Capital Territory annual gas demand

Historic

Planning

Scenario

Forecasts

GPG MM LI Total GPG MM LI Total

Annual

demand

(PJ)

2008 12 42 69 123

2009 28 43 69 139

2010 32 43 69 144

2011 29 42 67 138

2012 33 42 69 144

2013 30 42 66 138

2014 29 43 65 136

2015 20 43 65 128

2016 15 44 67 126

2017 23 45 69 137

2018 24 46 72 142

2019 25 47 74 146

2020 27 48 75 149

2021 20 48 76 144

2022 13 49 76 138

2023 13 50 75 138

2024 13 51 75 138

2025 13 51 75 139

2026 13 52 75 141

2027 14 53 76 143

2028 14 54 77 145

2029 15 54 78 147

2030 17 55 79 150

2031 18 56 80 154

2032 19 57 81 156

2033 19 57 83 159

Page 102: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

102

F. Annex 5 – Capacity built results Scenario 1: Co-optimization of

the gas and electricity system.

Generator Year Build Retire Net Build Cap.

Cost

(GW) (GW) (GW) ($Mln's)

--------------------------------------------------------------------------------------------------------------------

------------

BW01 2016 0.00 0.68 -0.68 0.00

BW02 2016 0.00 0.68 -0.68 0.00

BW03 2016 0.00 0.68 -0.68 0.00

BW04 2016 0.00 0.68 -0.68 0.00

ER01 2016 0.00 0.72 -0.72 0.00

ER02 2016 0.00 0.72 -0.72 0.00

ER03 2016 0.00 0.72 -0.72 0.00

ER04 2016 0.00 0.72 -0.72 0.00

LD01 2016 0.00 0.52 -0.52 0.00

LD02 2016 0.00 0.52 -0.52 0.00

LD03 2016 0.00 0.52 -0.52 0.00

LD04 2016 0.00 0.52 -0.52 0.00

REDBANK1 2016 0.00 0.15 -0.15 0.00

VP5 2016 0.00 0.66 -0.66 0.00

VP6 2016 0.00 0.66 -0.66 0.00

WW7 2021 0.00 0.50 -0.50 0.00

WW8 2021 0.00 0.50 -0.50 0.00

CALL_B_1 2016 0.00 0.35 -0.35 0.00

CALL_B_2 2016 0.00 0.35 -0.35 0.00

COLNSV_1 2015 0.00 0.03 -0.03 0.00

COLNSV_2 2015 0.00 0.03 -0.03 0.00

COLNSV_3 2015 0.00 0.03 -0.03 0.00

Page 103: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

103

COLNSV_4 2015 0.00 0.03 -0.03 0.00

COLNSV_5 2015 0.00 0.07 -0.07 0.00

CPP_3 2016 0.00 0.45 -0.45 0.00

CPP_4 2016 0.00 0.45 -0.45 0.00

GSTONE1 2016 0.00 0.28 -0.28 0.00

GSTONE2 2016 0.00 0.28 -0.28 0.00

GSTONE3 2016 0.00 0.28 -0.28 0.00

GSTONE4 2016 0.00 0.28 -0.28 0.00

GSTONE5 2016 0.00 0.28 -0.28 0.00

GSTONE6 2016 0.00 0.28 -0.28 0.00

KPP_1 2016 0.00 0.72 -0.72 0.00

MPP_1 2019 0.00 0.43 -0.43 0.00

MPP_2 2023 0.00 0.43 -0.43 0.00

STAN-1 2016 0.00 0.37 -0.37 0.00

STAN-2 2016 0.00 0.37 -0.37 0.00

STAN-3 2016 0.00 0.37 -0.37 0.00

STAN-4 2016 0.00 0.37 -0.37 0.00

TARONG1 2016 0.00 0.35 -0.35 0.00

TARONG2 2016 0.00 0.35 -0.35 0.00

TARONG3 2016 0.00 0.35 -0.35 0.00

TARONG4 2016 0.00 0.35 -0.35 0.00

TNPS1 2016 0.00 0.44 -0.44 0.00

APS 2016 0.00 0.16 -0.16 0.00

HWPS1 2016 0.00 0.20 -0.20 0.00

HWPS2 2016 0.00 0.20 -0.20 0.00

HWPS3 2016 0.00 0.20 -0.20 0.00

HWPS4 2016 0.00 0.20 -0.20 0.00

HWPS5 2016 0.00 0.20 -0.20 0.00

HWPS6 2016 0.00 0.20 -0.20 0.00

Page 104: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

104

HWPS7 2016 0.00 0.20 -0.20 0.00

HWPS8 2016 0.00 0.20 -0.20 0.00

LOYYB1 2016 0.00 0.48 -0.48 0.00

LOYYB2 2016 0.00 0.49 -0.49 0.00

LYA1 2016 0.00 0.55 -0.55 0.00

LYA2 2016 0.00 0.55 -0.55 0.00

LYA3 2016 0.00 0.55 -0.55 0.00

LYA4 2016 0.00 0.55 -0.55 0.00

MOR1 2016 0.00 0.07 -0.07 0.00

MOR2 2025 0.00 0.03 -0.03 0.00

YWPS1 2016 0.00 0.36 -0.36 0.00

YWPS2 2016 0.00 0.36 -0.36 0.00

YWPS3 2016 0.00 0.38 -0.38 0.00

YWPS4 2016 0.00 0.38 -0.38 0.00

NPS1 2016 0.00 0.27 -0.27 0.00

NPS2 2016 0.00 0.27 -0.27 0.00

CAN Wind 2016 0.80 0.00 0.80

1,803.51

CAN Wind T2 2020 0.52 0.00 0.52

1,022.17

CAN Wind T2 2021 0.28 0.00 0.28

535.52

NCEN Wind 2019 0.31 0.00 0.31

630.22

NNS Wind 2016 0.31 0.00 0.31

703.87

NNS Wind T2 2020 0.31 0.00 0.31

612.91

SWNSW Wind 2016 0.13 0.00 0.13

289.56

SWNSW Wind 2017 0.38 0.00 0.38

811.34

Page 105: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

105

SWNSW Wind T2 2021 0.29 0.00 0.29

547.82

NQ Wind 2019 0.15 0.00 0.15

307.07

NQ Wind 2020 0.11 0.00 0.11

222.24

SWQ Wind 2017 0.14 0.00 0.14

292.10

SWQ Wind 2018 0.13 0.00 0.13

267.23

CVIC Wind 2017 0.30 0.00 0.30

644.19

CVIC Wind 2018 0.24 0.00 0.24

500.54

CVIC Wind 2019 0.19 0.00 0.19

387.14

LV Wind 2019 0.08 0.00 0.08 165.11

MEL Wind 2016 0.82 0.00 0.82

1,839.49

NSA Wind 2016 0.77 0.00 0.77

1,732.96

NSA Wind 2017 0.05 0.00 0.05

100.21

NSA Wind 2018 0.02 0.00 0.02

41.60

NSA Wind 2019 0.06 0.00 0.06

115.40

SESA Wind 2016 0.23 0.00 0.23

519.85

SESA Wind 2019 0.17 0.00 0.17

334.57

SESA Wind 2020 0.06 0.00 0.06

112.92

TAS Wind 2016 0.33 0.00 0.33

742.09

Page 106: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

106

TAS Wind 2018 0.46 0.00 0.46

945.92

TAS Wind T2 2018 0.12 0.00 0.12

249.05

TAS Wind T2 2019 0.02 0.00 0.02

45.36

TAS Wind T2 2020 0.05 0.00 0.05

99.98

TAS Wind T2 2021 0.08 0.00 0.08

151.26

CAN OCGT 2029 0.12 0.00 0.12

95.38

NCEN CCGT 2016 2.11 0.00 2.11

2,399.25

NCEN CCGT 2017 0.04 0.00 0.04

44.27

NCEN CCGT 2018 0.21 0.00 0.21

234.21

NCEN CCGT 2019 0.17 0.00 0.17

194.36

NCEN CCGT 2021 1.05 0.00 1.05

1,223.96

NCEN CCGT 2022 0.10 0.00 0.10

123.30

NCEN CCGT 2023 0.15 0.00 0.15

182.30

NCEN OCGT 2025 0.09 0.00 0.09

77.00

NCEN OCGT 2026 0.11 0.00 0.11

90.10

NCEN OCGT 2027 0.06 0.00 0.06

50.34

NCEN OCGT 2028 0.12 0.00 0.12

94.68

NCEN OCGT 2029 0.02 0.00 0.02

14.69

Page 107: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

107

Can Biomass 2016 0.10 0.00 0.10

520.25

NCEN Biomass 2015 0.10 0.00 0.10

520.25

NCEN Solar PV (SFP) 2020 0.20 0.00 0.20

185.08

NNS Biomass 2017 0.10 0.00 0.10

520.25

CQ CCGT 2015 2.27 0.00 2.27

2,595.27

CQ CCGT 2016 2.21 0.00 2.21

2,511.95

CQ CCGT 2019 0.08 0.00 0.08

93.25

CQ CCGT 2023 0.62 0.00 0.62

745.37

CQ CCGT 2025 0.22 0.00 0.22

279.22

CQ CCGT 2026 0.13 0.00 0.13

170.18

CQ CCGT 2028 0.04 0.00 0.04

49.90

CQ CCGT 2029 0.38 0.00 0.38

499.24

SEQ CCGT 2016 1.02 0.00 1.02

1,160.99

SEQ CCGT 2017 0.14 0.00 0.14

158.36

SEQ CCGT 2018 0.04 0.00 0.04

46.06

CQ Solar CLF (FSP) 2020 0.02 0.00 0.02

38.04

NQ Biomass 2020 0.01 0.00 0.01

54.53

NQ Biomass 2021 0.09 0.00 0.09

465.72

Page 108: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

108

NQ Solar PV (SFP) 2018 0.20 0.00 0.20

226.11

NQ Solar PV (SFP) 2019 0.20 0.00 0.20

205.24

NQ Solar PV (SFP) 2020 0.20 0.00 0.20

185.08

SWQ Solar PV (SFP) 2020 0.20 0.00 0.20

185.08

SESA Biomass 2018 0.10 0.00 0.10

520.25

SESA Biomass 2019 0.10 0.00 0.10

520.25

SESA Biomass 2020 0.09 0.00 0.09

465.72

SESA Biomass 2021 0.01 0.00 0.01

54.53

LV CCGT CCS 2028 0.02 0.00 0.02

48.15

LV CCGT CCS 2029 0.08 0.00 0.08

212.55

LV CCGT CCS 2030 0.09 0.00 0.09

236.77

MEL CCGT CCS 2026 0.15 0.00 0.15

367.30

MEL CCGT CCS 2027 0.21 0.00 0.21

521.99

MEL CCGT CCS 2028 0.15 0.00 0.15

378.88

NVIC CCGT 2016 3.21 0.00 3.21

3,655.93

NVIC CCGT 2017 0.17 0.00 0.17

187.50

NVIC CCGT 2018 0.02 0.00 0.02

21.08

NVIC CCGT 2019 0.03 0.00 0.03

31.81

Page 109: Energy Transmission Expansion Planning in the Australian … · 2019. 8. 6. · South Australia annual gas demand ... The shale gas revolution has not only impacted the United States

109

NVIC CCGT 2021 0.18 0.00 0.18

207.21

NVIC CCGT 2022 0.11 0.00 0.11

133.18

NVIC CCGT 2023 0.09 0.00 0.09

111.40

NVIC CCGT 2024 0.07 0.00 0.07

86.08

NVIC CCGT 2025 0.16 0.00 0.16

206.03