Thread by @TennantReed

Yesterday I attended a briefing to energy users by @alintaenergy boss Jeff Dimery, who said many interesting things, digested in this thread withminimal comment!

Closure of Northern: regrets, but Alinta wasn’t prepared to underwrite the SA market. Tried to delay with cost+ offers but a large user rejected in belief they could do better by taking spot prices (closure sent spot way up). Also knocked back on $8m request to then SA gov

Northern closed early because solar was hollowing out the daytime market; old coal plant couldn’t flex to capture higher price times without damage, but couldn’t wear losses from staying on when prices were low. Expects similar dynamics for other old plants.

On coal:
Only one player in Aust power markets is interested in new coal. New coal won’t lower wholesale prices (but nothing will on average, he argues below). Younger coal assets like Loy Yang B worth buying, will have last man standing premium as older ones close.

On renewables:
Over time new RE will push wholesale down if projects can connect, get workable MLF
But baseload will keep closing in big lumps in response
So wholesale prices will sawtooth for some time
50% RE will happen anyway eventually; targeting for 2030 is pricy symbolism

On Snowy 2:
Hard to believe it’s economic, but will be great nation building project to ease much higher RE levels
Not in til 2024 but scaring off other investment in meantime - Alinta pulled out of a peaker project to avoid crushing by Snowy
Multi big PH along East > 1 huge

On gas:
Bass depleting fast
QLD CSG overcommitted
Supply issues will return - prices are high but hard to contract gas at any price
Frack bans block some affordable gas
LNG imports would build in higher cost base
WA gas cheap cos reservation, will rise as NW Shelf stops supply

Wholesale power:
Prices sitting at $80-$110/MWh
Shaped by high gas prices, central flex role of gas, low Snowy storages and dispatch
Low futures prices are a mirage in low-liquidity out years - will keep sliding back

Big Stick:
Bad policy though wouldn’t impact Alinta directly
Big players underpin a lot of needed investment, unrealistic to think others are going to build enough capacity

Liddell:
Alinta’s offer was serious, thought they could operate profitably for extra 2-3 years

Emissions policy:
Thinks 50% RE target pointless but will comply if set
Thinks NEG was the best policy of past decade, wide support, travesty that it didn’t get through. If ALP reintroduced with tougher target that would be good.

Default market offer:
Customers on standing offers are those who haven’t engaged (~15% of whole)
Some are poor and vulnerable, but most are wealthy & time-poor
Inactive customers cross-subsidize sharp offers to competitive segments; DMO will change
Competitive resi margins thin

Underwriting:
Nothing will happen from this program
Alinta saw free money on offer, so put best foot forward - submitted 11 of 66 EOIs - not surprised others sat pat
There will be shortage/demand for dispatchables as RE grows
Want to underpin projects with customer contracts

Batteries:
At a very early stage, lots of learning to be done
Good for stability
Pumped hydro better for filling longer gaps
Alinta used a 30MW battery in WA to shut a duplicate peaker while maintaining reliability of primary peaker - big saving

Policy uncertainty:
A big barrier to investment. Need to sort out policy, but also design should give time to adjust (cites SA as too fast a rate of change)