REPORTS

A wind turbine is the same piece of engineering no matter where on earth it is located, yet assuming largely similar natural wind resources, the variety of risks and value wind turbines create is very much driven by the market characteristics in which they operate. As a pre-eminent energy research, consulting and market intelligence business that operates in Australia and Great Britain (GB), we have analysed how the outlook for wind in each market is being shaped by market design and infrastructure as well as network realities. Here we share some of our findings.

On balance, whilst both markets will see growth, and both have their challenges, the characteristics of the GB market means it will see greater growth. But there are good opportunities in Australia if challenges of system rules, resilience, and unpredictable market value drivers are addressed and can be navigated.

The outlook for Great Britain:

• GB is a mature wind market with well-progressed investments in system resilience and balancing services to accommodate ever-growing proportions of the generation mix coming from wind
• High volumes of wind growth to come will create substantial levels of power price cannibalisation
• Given that capacity markets dampen flexibility signals, delivering flexible load to accommodate wind is likely to rely on building effective new balancing service solutions
• There is a disparity between the prospects for offshore and onshore wind. The lack of price stabilisation available to onshore wind farms, now locked out of subsidies, is likely to mean that volumes of onshore deployment will reduce, with offshore wind continuing to grow at an extraordinary rate under fixed-price Contracts for Difference (CfD).

Australia by contrast:

• Is a less mature wind market, but with high levels of recent growth as a result of subsidies
• Whilst federal wind support schemes roll-off, state-level policy programmes could see the continued growth of onshore wind capacity in selected regions where the wind resource is attractive
• Wind will impact power prices but will have the most profound impact when combined with solar and interconnection issues in selected regions
• There is the possibility of better flexibility signals in an energy-only market like Australia, which could help bring through solutions to manage wind variability. Although how the market rules evolve over the coming years will be key to the realisation of this
• There is a major unpredictable long-term risk for wind in Australia that simply does not exist in GB in the form of the application of Marginal Loss Factors (MLFs). Unless and until developers and investors can find a way to better model and forecast MLFs, based on integrated system planning tools, the prospects for wind development in Australia will always be uncertain.