The Weekly Dispatch: It’s tricky – the challenges of price interventions

In this edition of the Weekly Dispatch:

  1. Gas spot prices have been above $12/GJ since 28 March and have averaged $17/GJ so far in May.
  2. Energy Policy WA has released a consultation paper proposing significant reforms to the Reserve Capacity Mechanism. Some of the key proposed changes include:
    • amending the expected unserved energy (EUE) planning criteria to 0.0002%
    • introducing a new ramping capacity product – with IRCR based on load shape in high ramp periods
    • Replacement of Availability Class 1/2 with three classes: Firm capacity (available for 14 hour of daily operation), Energy limited capacity (i.e Storage), Intermittent.
  3. Still in Western Australia, the state government will provide funding for Synergy to build a 500 MW/2,000 MWh battery in Collie. The battery is planned to be commissioned by the end of 2025.
  4. Following on from a number of EU proposals last year, FERC Commissioner Mark Christie writes that it’s time to consider the costs and benefits of multiple clearing prices. Given the strong interest, stay tuned for a longer Endgame post on this topic.
  5. Jacob Mays has published a paper arguing that long-term FTRs can provide a more complete risk market, lowering the cost of capital for investors and promoting efficient investment.
  6. Meanwhile, Germany is proposing a shift to multiple pricing zones (translated from German). Uniform pricing has resulted in costly interventions and is estimated to have cost consumers billions of euros.
  7. Podcasts of the week: Europe’s energy security challenge on Columbia Energy Exchange. The Interchange look at the required investment in the “four horsemen of the transition”: solar, wind, hydrogen and nuclear.
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