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Over 10,000 megawatts of new large-scale power stations announced and accreditations are accelerating.
The pace of accreditation of large-scale renewable projects is accelerating and the outlook for accreditations in 2018 and 2019 is considerably higher than our previous estimates.
We previously estimated in our
May 2018 Market Update that 2600 megawatts would be accredited during 2018 and around 3500 megawatts in 2019. We have now exceeded the original 2018 estimate by a considerable margin with over 3500 megawatts accredited or currently under application.
We now estimate more than 3400 megawatts of new large-scale renewable energy capacity will be accredited this year and up to 4300 megawatts in 2019. Our 2019 accreditation estimate may increase due to the continued pace of new announcements.
The outlook for LGC supply incorporates the effect of changes by the Australian Energy Market Operator (AEMO) to network connection arrangements and updated marginal loss factors. We continue to monitor construction closely and use various information sources, including satellite imagery, for real-time updates on progress. Further updates on construction and generation projections will be published before the 2018 surrender date of 14 February 2019.
Since 1 January 2016, 10,066 megawatts in new capacity has been firmly announced. From this total, 8332 megawatts of capacity is under construction or already built.
An additional 1734 megawatts is subject to power purchase agreements, including the successful projects from the Victorian Government reverse auction. We expect these projects to be fully financed and under construction soon. The breakdown of the total pipeline of renewable energy projects as at 27 September 2018 is below.
Under construction or already built
Signed power purchase agreements that we expect will be fully financed and under construction soon
The Clean Energy Regulator has been approached regarding our position on carried forward shortfall (up to 10 per cent) and paid shortfall (over 10 per cent). Now that the Renewable Energy Target will be exceeded by a significant margin in 2020, the Clean Energy Regulator acknowledges that electricity retailers may choose to use LGC shortfall.
Our previous market update stated that we regard this as a commercial decision for liable entities to arbitrage surrender over a number of years. Given that the Renewable Energy Target will be clearly exceeded we have no objections to the use of shortfall in the expectation that clients would true up these positions with the surrender of LGCs in a subsequent year, as allowed for under the law.
For further information, see carrying forward LGC shortfalls.
LGC prices have fallen significantly since our last market update. Spot LGCs closed at $71.90 on 27 September 2018, having dropped to the lowest price levels since October 2015. Forward contract prices for delivery at the end of 2018 and 2019 have also fallen during this period.
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The Clean Energy Regulator is a Government body responsible for accelerating carbon abatement for Australia.