In Q1 2020, solar revenue in Victoria was around 4 percent of the total spot earnings (excluding coal revenues), about the same share for solar in Q1 2019. Wind revenue made up around 21 percent of total non-coal spot earnings in the state in Q1 2020. This was up 5 percentage points from Q1 2019; with wind seeing around 600MW increase in generation capacity in that time. Gas power generation’s share these spot earnings was down by around 5 percentage points between Q1 2019 and Q1 2020.
“These trends emphasise the competition GPG faces from wind today and is likely to face in future, especially during evening peaks when prices tend to be higher given solar is then out of the generation stack” said Lumi Adisa, Lead Consultant – Market Analysis and Business Development at Cornwall Insight Australia. “It is evident there is a clear intraday value shift mainly driven by increased solar; both rooftop (reduced grid demand during the day) and grid-scale (coincident increased supply during the day). This creates an ideal market for energy storage. With impending retirements and increased rooftop and grid solar output, there will be an increasing need to shift large amounts of excess energy during the day (with reduced operational demand) to meet evening peaks. So far, we have not seen any storage technology with large exposure to the merchant market; how long this remains, the case is left to be seen. Overall, the merchant outlook for coal replacement technologies continues to look healthy. However, exactly what role GPGs will play during the transition remains unclear as they continue to feel the squeeze from wind and potentially storage for high-value pockets of the day.”
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