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Quarterly Renewables Report - Q1 2015

17 Apr 2015

Report higlights

  • A total of 17.1 million LGCs are expected to be created for 2015 generation year which is 141,000 less than we projected in our previous report. This is largely due to lower than expected hydro generation somewhat offset by additional wind generation.
  • We are expecting the LGC surplus to be 19.3 million at the end of 2015 and then to fall to 13.8 million by the end of 2016 and 3.6 million at the end of 2017. The 2017 surplus is 700,000 higher than our previous report due to the contribution of the Bald Hills and Chepstowe wind farms. (refer to Figure 1-1).
  • We have reduced the assumed minimum level of surplus LGCs to maintain market liquidity from 10 million to 5 million. We have assumed that the spot LGC will rise above the forward price which creates an incentive for the early creation of LGCs and the deferral of surrender by Liable Parties (up to 10 per cent). To maintain a minimum 5 million LGC surplus 4,200 MW of new projects need to be committed by the end of 2016.
  • The RET target positions of the Government and the ALP have come together with now only 1,500 GWh (in 2020) separating them. We have analysed a range of scenarios representing the revised positions of the parties. Under the Government’s 32,000 GWh Target 5,200 MW of new projects need to be committed by 2020. The compromise 33,500 GWh Target results in new project commitments of 5,650 MW.
  • The LGC spot price reached a high of more than $50 in early March as a deal on the RET was getting close. The LGC price closed the quarter at $48 and has drifted lower in April reaching $47.30 on 10 April 2015.

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Green Energy Markets' Quarterly Renewables Report provides comprehensive analysis on:

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